TESSCO Annual Report 2018

Plain-text annual report

ANNUAL REPORT FY18 NASDAQ: TESS A Strategic, Indispensable Link In The Wireless Ecosystem Creating an efficient route to market HUNDREDS OF MANUFACTURER PARTNERS VALUE ADD Public Network Operators Private System Operators THOUSANDS OF CUSTOMERS VARs Credit Capacity Superior Logistics Capabilities Sales & Marketing Expertise Technical Proﬁciency Government Retail Dear Fellow Shareholder: After completing my first full year at Tessco, I am increasingly optimistic and enthusiastic about our future. In fiscal 2018, we focused on implementing a significant number of changes to better position Tessco for what we believe will be tremendous growth in the broader wireless industry. We made key changes in our executive team, enhanced our go-to-market strategy, geographically aligned our salesforce, strategically placed the right people in the right jobs, and allocated resources to drive increased efficiency and effectiveness. I am confident that these changes form the foundation for heightened financial success in the coming years. Although overall telecom-related spending by the tier one carriers was relatively flat, Tessco had a strong performance in fiscal 2018, delivering 9% growth in revenues, our largest annual revenue growth in six years, and 259% growth in diluted earnings per share. All of our commercial markets grew, and revenue from our public carrier market specifically grew 40%. These results serve as validation that we are gaining market share and our value proposition is resonating with our suppliers and customers. As we look to fiscal 2019, we remain deeply focused on customer satisfaction, leveraging the investments and changes we implemented to improve customer engagement. We will also continue to invest in E- commerce and technology tools to enhance productivity, increase responsiveness to our vendors and customers and create the optimal user experience. Lastly, we will continue to enrich our value proposition, expanding our palette of product, supply chain, logistics, technical support, and retail merchandise and training services, solidifying our reputation as the total source and destination of choice for wireless solutions. We expect to see increased customer spending on infrastructure buildouts such as FirstNet and 5G, and we anticipate that demand to pick up significantly in the latter half of calendar 2018 and become even stronger in the next few years. The foundational and operational changes made this year have us well positioned to capitalize on rising market demand across all of our markets. We anticipate year-over-year earnings growth in fiscal 2019, driven by the combination of increased revenues, cost management initiatives and strong operating leverage. We are excited about our progress, our opportunities and our momentum throughout the business. I am proud of our entire team, whose commitment and execution helped prove that we can deliver strong results while also implementing significant strategic changes. I am grateful to our customers, manufacturers and shareholders for your continued support, and I look forward to building on our momentum to drive increased shareholder value. Sincerely, Murray Wright President and Chief Executive Officer June 8, 2018 Leadership Directors Robert B. Barnhill, Jr. Chairman and Executive Chairman of Tessco Technologies Incorporated Jay G. Baitler Former Executive Vice President of Staples, Inc., Contract Division John D. Beletic Board Member at J5 Infrastructure and Shareablee Paul J. Gaffney Executive Vice President & Chief Technology Officer of Dick’s Sporting Goods Benn R. Konsynski, Ph.D. George S. Craft Professor of Business Administration for Information Systems and Operations Management at the Goizueta Business School of Emory University Dennis J. Shaughnessy Retired Chairman of the Board of FTI Consulting Inc. Murray Wright President and Chief Executive Officer of Tessco Technologies Incorporated Morton F. Zifferer, Jr. Chairman and CEO of New Standard Corporation, a metal products manufacturer Officers Murray Wright President & Chief Executive Officer Charles W. Kriete Senior Vice President of Commercial Sales, Product Marketing & Supply Chain Douglas A. Rein Senior Vice President of Performance Systems & Operations Elizabeth S. Robinson Senior Vice President of Retail Sales & Product Marketing Aric M. Spitulnik Senior Vice President and Chief Financial Officer Brenda J. Budzynski Vice President William A. Moten Vice President Joseph M. Cawley, Jr. Vice President Marika H. Patto Vice President Michael J. Chase Vice President Tammy S. Ridgely Vice President James R. Gaarder Vice President Jeffrey L. Shockey Vice President Jeffrey A. Kaufman Vice President Matthew Simmons Vice President Cynthia L. King Vice President Mary Beth Smith Vice President James B. Markisohn Vice President David E. Strauss Vice President Shareowner Information Annual Meeting The Annual Meeting of Shareowners of TESSCO Technologies Incorporated is scheduled to be held at 9:00 a.m. ET, Wednesday, July 18, 2018 at: TESSCO Technologies Incorporated 375 West Padonia Road Timonium, MD 21093 Investor Relations Analysts, investors and shareowners seeking additional information about Tessco Technologies Incorporated are invited to contact: Sharon Merrill 77 Franklin Street Boston, MA 02110 Telephone: 617.542.5300 Facsimile: 617.423.7272 Internet: www.investors.com Aric M. Spitulnik 375 West Padonia Road Timonium, MD 21093 Telephone: 410.229.1419 Facsimile: 410.229.1669 Email: spitulnik@tessco.com A copy of the Company’s Annual Report on Form 10-K as ﬁled with the United States Securities and Exchange Commission is available without charge on the SEC website, www.sec.gov, or upon request to the address above. TESSCO on NASDAQ Tessco’s common stock trades on the NASDAQ Global Market under the symbol TESS. Transfer Agent & Registrar EQ Shareowner Services P.O. Box 64874 Saint Paul, MN 55164 Corporate Counsel Ballard Spahr LLP Baltimore, MD Independent Registered Public Accounting Firm Ernst & Young LLP Baltimore, MD Corporate Governance The highest ethical standards have always been integral to TESSCO’s culture and business success. Guided by the “TESSCO Way,”each director, officer and team member is expected to observe the highest standards of ethical behavior in the performance of his or her duties for the Company. The Company’s Code of Business Conduct and Ethics can be found in the Investors section of our website, www.tessco.com. From a corporate governance perspective, our eight member Board of Directors includes six independent directors. The four standing committees of the Board of Directors are comprised of independent directors with the exception of Mr. Barnhill, who is a member of the Risk and Strategy Committee. In addition, each of the four committees is chaired by an independent director. TESSCO is an Affirmative Action-Equal Opportunity Employer M/F/D/V. Forward-Looking Statements This Annual Report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, all of which are based on current expectation. These forward-looking statements may generally be identiﬁed by the use of the words "may," "will," "expects," "anticipates," “targets,” “goals,” “projects,” “intends,” “plans,” “seeks,” "believes," "estimates," and similar expressions, but the absence of these words or phrases does not necessarily mean that a statement is not forward-looking. These forward-looking statements are only predictions and involve a number of risks, uncertainties and assumptions, many of which are outside of our control. Our actual results may differ materially and adversely from those described in or contemplated by any such forward-looking statement for a variety of reasons, including those risks identiﬁed in our most recent Annual Report on Form 10-K and other periodic reports ﬁled with the Securities and Exchange Commission (the “SEC”), under the heading "Risk Factors" and otherwise. Consequently, the reader is cautioned to consider all forward-looking statements in light of the risks to which they are subject. We are not able to identify or control all circumstances that could occur in the future that may adversely affect our business and operating results. Without limiting the risks that we describe in our periodic reports and elsewhere, among the risks that could lead to a materially adverse impact on our business or operating results are the following: termination or non-renewal of limited duration agreements or arrangements with our vendors and affinity partners which are typically terminable by either party upon several months or otherwise relatively short notice; loss of signiﬁcant customers, vendors or relationships, including affinity relationships; loss of customers or reduction in customer business either directly or indirectly as a result of consolidation among large wireless service carriers and others within the wireless communications industry; any deterioration in the strength of our customers', vendors' or affinity partners' businesses; negative or adverse economic conditions, including those adversely affecting consumer conﬁdence or consumer or business spending or otherwise adversely affecting our vendors or customers, including their access to capital or liquidity, or our customers' demand for, or ability to fund or pay for, the purchase of our products and services; our dependence on a relatively small number of suppliers and vendors, which could hamper our ability to maintain appropriate inventory levels and meet customer demand; changes in customer and product mix that affect gross margin; effect of “conﬂict minerals” regulations on the supply and cost of certain of our products; failure of our information technology system or distribution system; exposure to cyber-attacks, and the cost associated with ongoing efforts to maintain cyber-security measures and to meet applicable compliance standards; damage or destruction of our distribution or other facilities; prolonged or otherwise unusual quality or performance control problems; technology changes in the wireless communica- tions industry or technological failures, which could lead to signiﬁcant inventory obsolescence or devaluation and/or our inability to offer key products that our customers demand; third-party freight carrier interruption; increased competition from competitors, including manufacturers or national and regional distributors of the products we sell and the absence of signiﬁcant barriers to entry which could result in pricing and other pressures on proﬁtability and market share; our relative bargaining power and inability to negotiate favorable terms with our vendors and customers; our inability to access capital and obtain or retain ﬁnancing as and when needed; transitional and other risks associated with acquisitions of companies that we may undertake in an effort to expand our business; claims against us for breach of the intellectual property rights of third parties; product liability claims; our inability to protect certain intellectual property, including systems and technologies on which we rely; our inability to hire or retain for any reason our key professionals, management and staff; changes in political and regulatory conditions, including tax and trade policies and the possibility that, for unforeseen or other reasons, we may be delayed in entering into or performing, or may fail to enter into or perform, anticipated contracts or may otherwise be delayed in realizing or fail to realize anticipated revenues or anticipated savings. Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10‑K ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FORTHE FISCAL YEAR ENDED April 1, 2018 ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD FROM ______ TO ______ Commission file number 001-33938 TESSCO Technologies Incorporated(Exact name of registrant as specified in its charter) DELAWARE52-0729657(State or other jurisdiction of(I.R.S. Employerincorporation or organization)Identification No.) 11126 McCormick Road, Hunt Valley, Maryland21031(Address of principal executive offices)(Zip Code) Registrant’s telephone number, including area code (410) 229-1000 Securities registered pursuant to Section 12(b) of the Act: Title of each className of each exchange on which registeredCommon Stock, $0.01 par valueNASDAQ Global Select Market Securities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Act). Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past90 days.Yes ☒ No ☐ Indicate by check mark whether the registrant submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submittedand posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant wasrequired to submit and post such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not becontained, to the best of registrant's knowledge, in definitive proxy or other information statements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerginggrowth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 ofthe Exchange Act. Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ (Do not check if a smaller reporting company)Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The aggregate market value of Common Stock, $0.01 par value, held by non-affiliates of the registrant based on the closing sales price of the Common Stock as quotedon the NASDAQ Global Market as of September 24, 2017, was $80,064,597. The number of shares of the registrant's Common Stock, $0.01 par value, outstanding as of May 29, 2018, was 8,426,655. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the definitive Proxy Statement for the registrant’s 2018 Annual Meeting of Shareholders,scheduled to be held July 18, 2018, are incorporated by reference into Part III of this Annual Report on Form 10-K. Table of ContentsTABLE OF CONTENTS PART I PageItem 1. Business3Item 1A. Risk Factors12Item 1B. Unresolved Staff Comments24Item 2. Properties24Item 3. Legal Proceedings25Item 4. Mine Safety Disclosures25PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and IssuerPurchases of Equity Securities26Item 6. Selected Financial Data28Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations29Item 7A. Quantitative and Qualitative Disclosures About Market Risk41Item 8. Financial Statements and Supplementary Data42Item 9. Changes in and Disagreements With Accountants on Accounting and FinancialDisclosure72Item 9A. Controls and Procedures72Item 9B. Other Information74PART III Item 10. Directors, Executive Officers and Corporate Governance74Item 11. Executive Compensation74Item 12. Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters74Item 13. Certain Relationships and Related Transactions, and Director Independence74Item 14. Principal Accounting Fees and Services74Part IV Item 15. Exhibits, Financial Statement Schedule74Schedule II: Valuation and Qualifying Accounts78Signatures 79 2 Table of Contents Part I Item 1. Business. General TESSCO Technologies Incorporated (TESSCO, we, or the Company) is a value-added technology distributor,manufacturer, and solutions provider. TESSCO was founded more than 30 years ago with a commitment to deliver industry-leading products, knowledge, solutions, and customer service; and we support customers in the public and private sector.TESSCO supplies approximately 50,000 products from approximately 440 of the industry’s top manufacturers in mobilecommunications, Wi-Fi, Internet of Things, wireless backhaul, and more. TESSCO is a single source for outstanding customerexperience, expert knowledge, and complete end-to-end solutions for the wireless industry. Our customers include a diversified mix of carrier and public network operators, tower owners, program managers,contractors and integrators, private system operators (including railroads, utilities, mining operators and oil and gasoperators), federal, state and local governments, manufacturers, value-added resellers, retail carrier stores and theirindependent agents, as well as other local and national retailers. We currently serve an average of approximately 11,600different non-consumer customers per month. We provide our customers with products, services and support to help them build and maintain these primarysystems: ·Enhanced Cellular Coverage and Capacity·Wireless Base Station·In-Vehicle and Mobile Communications·Wi-Fi Networks·Site Survey Test and Maintenance·Wireless Backhaul·Machine to Machine Communications·Internet of Things·Mobile Devices and Accessories We offer products in these broad categories: base station infrastructure; network systems; mobile devices andaccessories; and installation, test and maintenance products. We source and develop our product offering from leadingmanufacturers throughout the world, and also offer products developed and manufactured under our own proprietary brands,including Ventev. Our operational platform allows customers and manufacturers the opportunity to streamline the supply chain processand lower total inventories and costs by providing guaranteed availability and complete, on-time delivery to the point ofuse. We began our “total source” operations in 1982, reincorporated as a Delaware corporation in 1987, and have beenlisted on the NASDAQ Market (currently, NASDAQ Global Select) (symbol: TESS), since 1994. We operate under ISO9001:2008 and TL 9000 R6.0 registrations. For information regarding our website address and regarding material available free of charge through the website,see the information appearing under the heading “Available Information” included in Item 7 to this Annual Report on Form10-K for the fiscal year ended April 1, 2018. Customers The Company evaluates its business within two segments: commercial and retail. The commercial segment consists of thefollowing customer markets: (1) public carriers that are generally responsible for building and maintaining the infrastructuresystem and provide airtime service to individual subscribers; (2) government including federal agencies3 ®Table of Contentsand state and local governments that run wireless networks for their own use as well as value-added resellers who specializein selling to the government; (3) private system operators including commercial entities such as enterprise customers, majorutilities 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. Theretail segment consists of the market which includes retailers, independent dealer agents and carriers. The evaluation of theCompany's business in this manner began with the first quarter of fiscal year 2018, and reflects the modification at that timeof the Company's internal organization structure in an effort to better serve the market place. Retail inventory typically has ashorter more defined life cycle and is, typically, ultimately used by individual end users. Commercial inventory typically hasa life cycle that tends to be tied to changes in regulation or technology and includes products typically used by businessentities or governments. Reflective of these differences, our sales and product teams were reorganized and each now report toeither a retail or commercial leader. All prior financial periods presented in this Annual Report on Form 10-K reflect thischange. Public carriers are system operators that are generally responsible for building and maintaining the publicinfrastructure system and providing airtime service to individual subscribers, and accounted for approximately 20% of ourfiscal year 2018 revenues. Government, including federal agencies and state and local governments, accounted for 7% offiscal year 2018 revenues. Private system operators, including commercial entities, major utilities, transportation companies,manufacturers, and installation centers, accounted for 16% of fiscal year 2018 revenues. Value-added resellers sell, installand/or service cellular telephone, wireless networking, broadband, and two-way radio communications equipment for theenterprise and consumer markets, and accounted for 24% of fiscal year 2018 revenues. Our retailers, independent dealeragents and carriers market accounted for 33% of fiscal year 2018 revenues. Our top ten customer relationships totaled 28% of our total revenue for fiscal year 2018, and no customerrelationship accounted for more than 10% of our total revenues. Approximately 98% of our sales have been made to customers in the United States during each of the past threefiscal years, although we currently sell to customers in almost 100 countries. Due to our diverse product offering and ourwide customer base, our business is not significantly affected by seasonality in the aggregate. However, sales to our retailersgenerally peak in our second and third quarters in conjunction with significant handset launches and the winter holiday,season and decline significantly in our fourth quarter. Also, our base station infrastructure sales are typically affected byweather conditions in the United States, especially in our fourth quarter. For more detailed financial information regarding customer market and product category activity within our twooperating segments for each of the past three fiscal years, see Note 10 to our Consolidated Financial Statements included inItem 8 to this Annual Report on Form 10-K for the fiscal year ended April 1, 2018. Products and Services We principally offer competitively priced, manufacturer brand-name products, ranging from simple hardware itemsto sophisticated test equipment, with per item prices ranging from less than $1 to over $50,000 and gross profit marginsranging from less than 5% to 100%. We offer products classified into our four business categories: base station infrastructure;network systems; installation, test and maintenance products; and mobile devices and accessories, which accounted forapproximately 43%, 17%, 6%, and 34% of fiscal year 2018 revenues, respectively. Base station infrastructure products areused to build, repair and upgrade wireless broadband systems. These products include base station antennas, cable andtransmission lines, small towers, lightning protection devices, connectors, power systems, enclosures, grounding, jumpers,miscellaneous hardware, and mobile antennas. Our base station infrastructure service offering includes program management,connector installation, custom jumper assembly, site kitting and logistics integration. Network systems products are used tobuild and upgrade public and private wireless broadband networks. Products include fixed and mobile broadband radioequipment, wireless networking filtering systems, distributed antenna systems, two-way radios and security and surveillanceproducts. This product category also includes training classes, technical support and engineering design services.Installation, test and maintenance products are used to install, tune, and maintain wireless communications equipment.Products include sophisticated analysis equipment and various frequency-, voltage- and power-measuring devices, as well asan assortment of tools, hardware, GPS, safety, replacement and component parts and supplies required by servicetechnicians. Mobile devices and accessory products include cellular,4 Table of Contentssmart phone and data device accessories such as power supplies, cases, screen protectors, speakers, mobile amplifiers,bluetooth and corded headsets, mounts, car antennas, music accessories and data and memory cards. While we principally provide manufacturer brand-name products, a variety of products are developed, manufacturedand offered under TESSCO-owned brands including Ventev, Wireless Solutions, and TerraWave. The products we offerunder these brands generally consist of device accessory products that fall into the mobile device and accessory productcategory, as well as WLAN and network systems accessory products and remote monitoring and control solutions that fallinto the base station and network systems category. We have not incurred significant research and development expendituresin any of the last three fiscal years. Sales of proprietary products were 13% of our total sales in fiscal year 2018. Our products are sold as part of our integrated product and supply chain solutions. Our supply chain services for allproduct areas are grouped under either Knowledge, Configuration, Delivery or Control. Knowledge solutions include theentire suite of TESSCO knowledge tools that focus on educating the industry, including product highlights, showcasesand/or comparisons, with comprehensive specifications on the products, solutions and applications that are offered andreinforced by engineering, sales and technical support. Configuration services are comprised of customized product solutionkitting and assembly, logistics management and consumer and retail merchandising and marketing, allowing the products tobe delivered ready for immediate use, installation or resale. Our Delivery system allows the customer to select speed ofdelivery options and to select specific delivery locations, all designed to eliminate the customer’s need for staging andwarehousing. Our services that increase customer control include predetermined monthly pricing levels, the ability tomonitor multi-site purchasing with pre-approved, customized parameters indicating who is able to order how much of whichspecific products, order delivery tracking, product usage tracking, history reporting and alternative financing options. As part of our commitment to customer service, we typically allow most customers to return most products for anyreason, for credit, within 30 days of the date of purchase. Total returns and credits have been less than 3% of revenues in eachof the past three fiscal years. Revenues from sales of products purchased from our largest wireless infrastructure and mobile device andaccessories supplier accounted for 11% and 10%, respectively, of total fiscal year 2018 revenues. Sales of products purchasedfrom our ten largest vendors generated approximately 43% of our total fiscal year 2018 revenues. The amount of purchases we make from each of our approximately 440 vendors may significantly increase ordecrease over time. As the level of business changes, we may request, or be requested by our vendors, to adjust the terms ofour relationships. Therefore, our ability to purchase and re-sell products from each of our vendors depends on being able toreach and maintain agreements with these vendors on acceptable business terms. In addition, the agreements andarrangements on which most of our larger vendor relationships are based are typically of limited duration and terminable forany or no reason by either party upon notice of varying lengths, usually between several months or otherwise short notice. Generally, we believe that alternative sources of supply are available for many of the product types we carry, although wemay be unable, or find it more difficult, to source branded products from other than the manufacturer. The scope of products available for purchase from a given vendor may fluctuate, and is generally limited only bythe scope of the vendor’s catalog and available inventory. Therefore, we often source the same product type from multiplevendors, although in some instances branded products are available only from the manufacturer or a particular vendor, and insome instances, customers might favor one vendor or brand over another. The terms of the vendor contract typically apply toall products purchased from a particular vendor, whether or not the item is specifically identified in the contract. When negotiating with vendors, we seek the most favorable terms available under the circumstances. Our preferredterms include among others, terms that provide for product warranty and return rights, as well as product liability andintellectual property indemnification rights, in each case consistent with our preferred business methods and objectives. Wehave not been able, nor do we expect in the future to be able, to negotiate the inclusion of all our preferred terms, or ourpreferred language for those terms, in every vendor contract. The degree of our success in this regard is largely a function ofthe parties’ relative bargaining positions. 5 ÒÒ®Table of ContentsWe are dedicated to superior performance, quality and consistency of service in an effort to maintain and expandvendor relationships but there can be no assurance that we will continue to be successful in this regard in the future, or thatcompetitive pressures or other events beyond our control will not have a negative impact on our ability to maintain theserelationships or to continue to derive revenues from these relationships. Method of Operation We believe that we have developed a highly integrated, technologically advanced and efficient method ofoperation based on the following key tenets: ·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, throughour knowledge tools, including GoConnect and the TESSCO.com Solution and Transaction System;·Responding to what we refer to as "the moments of truth" by providing customers with sales, service andtechnical 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 supplychain solutions; and·Helping customers enhance their operations by providing real-time order tracking and performancemeasurement. We operate as a team of teams structured to enhance marketing innovation, customer focus and operationalexcellence. Market Development and Sales: In order to meet the needs of a dynamic and diverse marketplace, our sales and marketingactivities are organized on an end-market basis. Sales teams are focused on our customers: 1) public carriers 2) government 3)private system operators, 4) value-added resellers, and 5) retailers, independent dealer agents and carriers. This organizationallows for the development of unique product and solution offerings to meet the needs of our diverse customer base.We understand and anticipate our customers’ needs, building comprehensive solutions and long-lastingrelationships. Our customer base includes more than 125,000 contacts across the full breadth of the wireless industry, with550,000 additional contacts representing potential new customers also among our database. We are able to identify eachcontact’s unique needs and deliver targeted marketing materials, including email marketing, web marketing, advertisements,direct mailers, and trade show marketing, to drive purchases and new business development. For instance, our emailpublication The Wireless Update is sent to a targeted list of 103,000 contacts each week.Our dedicated sales team provides unparalleled customer service and maintains key information about everycustomer or potential customer in a Customer Relationship Marketing (CRM) system, ensuring a positive experience at everyinteraction and allowing us to identify promising leads and allocate resources to convert them to customers. We serve morethan 12,600 (largely repeat) customers each month and our paramount goal is to create an experience that nurtures loyaltyamong our customers and delivers mutually beneficial outcomes in every transaction. 6 ®®®Table of ContentsSolutions Development and Product Management: We actively monitor advances in technologies and industry trends,through both market research and continual customer and manufacturer interaction, and continue to enhance our productoffering as new wireless communications products and technologies are developed. To complement our broad productportfolio, we provide technical expertise and consultation to assist our customers in understanding technology and choosingthe right products for their specific application. Our personnel, including those we refer to as “Solution Architects” offerapplications engineering to market-specific applications such as DAS systems (Distributed Antennae Systems), wirelessbackhaul and fiber networks, custom integrated solutions for power systems, and site kitting and flexible custom networkdesign services for areas such as in-building coverage, tower design, and wireless video surveillance systems. In addition to determining the product offering, our Product and Solutions Development Teams provide thetechnical foundation for both customers and our personnel. Our product management software is continually updated to addnew products and additional technical information in response to manufacturer specification changes and customer inquiries.This system contains detailed information on each stock keeping unit offered, including full product descriptions, categoryclassifications, technical specifications, illustrations, product cost, pricing and delivery information, alternative andassociated products, and purchase and sales histories. This information is available on a real-time basis to all of our personnelfor product development, procurement, technical support, cataloging and marketing. Strategic Marketing – As a thought leader in the wireless industry, TESSCO’s marketing materials educate the industry andpromote our added value and services. Through WirelessNow, our retail focused industry publication, we offer productrecommendations, trend reports, and expert market analysis to help thousands of retail customers improve sell through, drivetraffic and sales, and maximize their revenue. Our weekly commercial email newsletter, The Wireless Update, keeps 103,000of our customers informed on the latest news in the industry, new products and solutions from our manufacturers, upcomingevents and training opportunities, and more. In addition, strategic marketing supports the organization through thedevelopment of compelling sales content, knowledge features, training programs, and other customer and manufacturerprograms that solve business challenges and increase the value TESSCO provides to the industry. TESSCO.com is our e-commerce site and the digital gateway to our comprehensive knowledge, products, andsolutions for wireless. In addition to access to our inventory of products for every solution, TESSCO.com features: ·Customer-specific home pages with customized presentations of relevant, market-specific content, tailored tologged-in users’ specific roles in wireless;·Powerful product and knowledge search capabilities enabled by advanced search engine logic;·Real-time product availability;·Customer-specific pricing based on a customer’s aggregated recent purchase history;·Easy ordering capabilities that allow for the construction and configuration of complete, end-to-end solutionthat can be converted to an order, or saved, copied, shared, uploaded and emailed;·A content library that enables the streamlined navigation of TESSCO’s knowledge content (articles, whitepapers, illustrations, videos, installation guides, product selection guides, or any other content featured onTESSCO.com);·A variety of customer service, financial and technical support pages, including account controls which includeall of the tools necessary to track and manage orders, update an account, find the right support, review savedorders, handle warranty claims, and explore TESSCO’s capabilities;·Order confirmation – specifying the contents, order status, delivery date, tracking number and total cost of anorder;·Order reservations, order status, back-order details and four-month order history; and·Manufacturer portal pages designed to showcase each manufacturer partner’s offer in a custom fashion. 7 ®Table of ContentsTESSCO.com empowers our customers to make better decisions by delivering product knowledge so they are fullyinformed. This destination also enables our manufacturers to reach a broad and diverse customer base with their product offerand brand features. Customer Support and Order Entry: Our customer support teams are responsible for responding to what we refer to as "themoments 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, customersurveys and regular interaction with customers. By combining our broad product offering with a commitment to superiorcustomer service, we seek to reduce a customer's overall procurement costs by enabling the customer to consolidate thenumber of suppliers from which it obtains products, while also reducing the customer's need to maintain high inventorylevels. Our information technology system provides detailed information on every customer account, including recentinquiries, buying and credit histories, separate buying locations within a customer account and contact diaries for keypersonnel, as well as detailed product information, including technical, product availability and pricing information. Theinformation technology system increases sales productivity by enabling any customer support representative to provide anycustomer with personalized service and also allows non-technical personnel to provide a high level of technical productinformation and order assistance. We believe that our commitment to providing prompt, friendly and efficient customer service before, during andafter the sale enables us to maximize sales, customer satisfaction and customer retention. The monthly average number ofnon-consumer customers decreased from approximately 12,500 for fiscal year 2017 to approximately 11,600 in fiscal year2018, primarily due to consolidation in the retail market. The average monthly purchase per customer increased from $3,600in fiscal year 2017 to $4,200 in fiscal year 2018. Procurement and Inventory Management: Our product management and purchasing system aims to provide customers with atotal source of broad and deep product availability, while maximizing the return on our inventory investment. We use our information technology system to monitor and manage our inventory. Historical sales results, salesprojections and information regarding vendor lead times are all used to determine appropriate inventory levels. Theinformation technology system also provides early warning reports regarding upcoming inventory requirements. As of April1, 2018, and March 26, 2017, we had an immaterial level of backlog orders. Most backlog orders as of April 1, 2018 areexpected to be filled within 90 days of fiscal year-end. For fiscal years ended April 1, 2018 and March 26, 2017, inventorywrite-offs were 1.0% and 0.7% of total purchases, respectively. In many cases, we are able to return slow-moving inventory toour vendors pursuant to stock rotation agreements. Inventory turns for fiscal years 2018 and 2017 were 6.8 and 7.2,respectively. Fulfillment and Distribution: Orders are received at our Timonium, Maryland, Reno, Nevada and San Antonio, Texascustomer sales support centers. As orders are received, customer representatives have access to technical information,alternative and complementary product selections, product availability and pricing information, as well as customerpurchasing and credit histories and recent inquiry summaries. An automated warehouse management system, which isintegrated with the product planning and procurement system, allows us to ensure inventory control, to minimize multipleproduct shipments to complete an order and to limit inventory duplication. Bar-coded labels are used on every product,allowing distribution center personnel to utilize radio frequency scanners to locate products, fill orders and update inventoryrecords in real-time, thus reducing overhead associated with the distribution functions. We contract with a variety of freightline and parcel transportation carrier partners to deliver orders to customers. Performance and Delivery Guarantee (PDG) charges are generally calculated on the basis of the weight of theproducts ordered and on the delivery service requested, rather than on distance to the customer. We believe that thisapproach emphasizes on-time delivery instead of shipment dates, enabling customers to minimize their inventories andreduce their overall procurement costs while guaranteeing date specific delivery, thereby encouraging them to make us theirtotal source supplier. 8 Table of ContentsInformation Technology: Our information technology system is critical to the success of our operations. We have madesubstantial 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 technologysystem includes highly developed customer and product databases and is integrated with our Configuration, Fulfillment andDelivery system. The information contained in the system is available on a real-time basis to all of our employees as neededand is utilized in every area of our operations. We believe that we have been successful to date in pursuing a highly integrated, technologically advanced andefficient method of operations; however, disruption to our day-to-day operations, including failure of our informationtechnology or distribution systems, or freight carrier interruption, could impair our ability to receive and process orders or toship products in a timely and cost-efficient manner. Competition The wireless communications distribution industry is competitive and fragmented, and is comprised of distributorssuch as Brightstar, D&H, Superior Communications and VoiceComm in our retail segment and Alliance Corporation,Anixter, Comstor, Graybar, Hutton Communication, KPGCo Logistics, Ingram Micro, Talley Communications, Tech Data,Site Pro 1, VAV Wireless, Westcon and Winncom in our commercial markets. In addition, many manufacturers sell and fulfilldirectly to customers. Barriers to entry for distributors are relatively low, particularly in the mobile devices and accessorymarket, and the risk of new competitors entering the market is high. In addition, the agreements or arrangements with ourcustomers or vendors looking to us for product and supply chain solutions are typically of limited duration and are oftenterminable by either party upon several months or otherwise short notice. Accordingly, our ability to maintain theserelationships is subject to competitive pressures and challenges. Some of our current competitors have substantially greatercapital resources and sales and distribution capabilities than we do. In response to competitive pressures from any of ourcurrent or future competitors, we may be required to lower selling prices in order to maintain or increase market share, andsuch measures could adversely affect our operating results. We believe, however, that our strength in service, the breadth anddepth of our product offering, our information technology system, our knowledge and expertise in wireless technologies andthe wireless marketplace, and our large customer base and purchasing relationships with approximately 440 manufacturers,provide us with a significant competitive advantage over new entrants to the market. Continuing changes in the wireless communications industry, including risks associated with conflictingtechnology, changes in technology, inventory obsolescence, and consolidation among wireless carriers, could adverselyaffect future operating results. We believe that the principal competitive factors in supplying products to the wireless communications industry arethe quality and consistency of customer service, particularly timely delivery of complete orders, breadth and quality ofproducts offered and total procurement costs to the customer. We believe that we compete favorably with respect to each ofthese factors. In particular, we believe we differentiate ourselves from our competitors based on the breadth of our productoffering, our ability to quickly provide products and supply chain solutions in response to customer demand andtechnological advances, our knowledge and expertise in wireless technologies and the wireless marketplace, the level of ourcustomer service and the reliability of our order fulfillment process. Intellectual Property We seek to protect our intellectual property through a combination of trademarks, service marks, confidentialityagreements, trade secret protection and, if and when appropriate, patent protection. Thus far, we have generally sought toprotect our intellectual property, including our product data and information, customer information and informationtechnology systems, through trademark filings and nondisclosure, confidentiality and trade secret agreements. We typicallyrequire our employees, consultants, and others having access to our intellectual property, to sign confidentiality andnondisclosure agreements. There can be no assurance that these confidentiality and nondisclosure agreements will behonored, or whether they can be fully enforced, or that other entities may not independently develop systems, technologiesor information similar to that on which we rely. 9 Table of ContentsTESSCO Communications Incorporated, a wholly-owned subsidiary of TESSCO Technologies Incorporated,maintains a number of registered trademarks and service marks in connection with our business activities, including: ASimple Way of Doing Business Better, LinkUPS, ORDERflow, Solutions That Make Wireless Work, TerraWaveSolutions, TESSCO, TESSCO Making Wireless Work, TESSCO Technologies, TESSCO.com, Ventev, The Vital Linkto a Wireless World, The Wireless Bulletin, Wireless Now, Wireless Solutions, The Wireless Update, Your TotalSource, Chargesync, and Your Virtual Inventory, among many others. Our general policy is to file for trademark andservice mark protection for each of our trademarks and trade names and to enforce our rights against any infringement. We currently hold one patent related to our online order entry system and seven patents related to our Ventevproducts. We intend, if and when appropriate, to seek patent protection for any additional patentable technology. The abilityto obtain patent protection involves complex legal and factual questions. Others may obtain patent protection fortechnologies that are important to our business, and as a result, our business may be adversely affected. In response to patentsof others, we may need to license the right to use technology patented by others, or in the event that a license cannot beobtained, to design our systems around the patents of others. Environmental Regulation We are subject to various laws and governmental regulations concerning environmental matters and employeesafety and health in the United States. We are also subject to regulation by the Occupational Safety and HealthAdministration concerning employee safety and health matters. Compliance with these federal, state and local laws andregulations related to protection of the environment and employee safety and health has had no material effect on ourbusiness. There were no material capital expenditures for environmental projects in fiscal year 2018, and there are no materialexpenditures planned for such purposes in fiscal year 2019. Employees As of April 1, 2018, we had 768 full-time equivalent employees. Of our full-time equivalent employees, 359 wereengaged in customer and vendor service, marketing, sales and product management, 297 were engaged in fulfillment anddistribution operations and 112 were engaged in administration and technology systems services. No employees are coveredby collective bargaining agreements. We consider our employee relations to be excellent. 10 ®®®®®®®®®®®®®®®®®®®Table of ContentsExecutive Officers Executive officers are appointed annually by the Board of Directors and, subject to the terms of any applicableemployment agreement, serve at the discretion of the Board of Directors. Information regarding our executive officers is asfollows: Name Age Position Murray Wright 62 President and ChiefExecutive Officer Murray Wright joined the Company in September2016. Mr. Wright served as Chief Executive Officerof Zones, Inc. from 2013 to 2015. At Tech DataCorporation, Mr. Wright served as Senior VicePresident, US Sales from 2006 to 2010 and asPresident, the Americas, from 2011 to 2013. Aric M. Spitulnik 46 Senior Vice President,Secretary, and ChiefFinancial Officer Aric Spitulnik joined the Company in 2000. Mr.Spitulnik was appointed Controller in 2005 andVice President in 2006. In 2012, he was appointedCorporate Secretary, and in 2014 he was appointedSenior Vice President. Since October 2013, Mr.Spitulnik has served as the Company’s ChiefFinancial Officer. Douglas A. Rein 58 Senior Vice President ofPerformance Systems andOperations Douglas Rein joined the Company in July 1999 asSenior Vice President of Performance Systems andOperations. Previously, he was director ofoperations for Compaq Computer Corporation andvice president, distribution and logistics operationsfor Intelligent Electronics. Elizabeth S. Robinson 51 Senior Vice President,Retail Sales and ProductMarketing Elizabeth Robinson joined the Company in 1998. Ms. Robinson was appointed Director of Sales in2001, and Vice President in 2004. In 2011, she wasappointed Vice President of Mobile Devices andAccessories, and then for the Mobility Group in2016. In 2017, she was appointed Senior VicePresident, leading Retail Sales and ProductManagement. Charles W. Kriete 40 Senior Vice President,Commercial Sales, ProductMarketing and SupplyChain Charles Kriete joined the company in January 2017.Mr. Kriete served as Chief Marketing Officer ofKore Wireless Group in 2016 and was ChiefRevenue Officer of Wyless from 2013 to 2016.Previously he served as Executive Vice President ofTD Mobility at Tech Data from 2010 to 2013. 11 Table of Contents Item 1A. Risk Factors. We are not able to identify or control all circumstances that could occur in the future that may adversely affect ourbusiness and operating results. The following are certain risk factors that could adversely affect our business, financialposition and results of operations. These risk factors and others described in this Annual Report on Form 10-K should beconsidered in connection with evaluating the forward-looking statements contained in this Annual Report on Form 10-Kbecause these factors could cause the actual results and conditions to differ materially from those projected in the forward-looking statements. Additional risks and uncertainties that management is not aware of or focused on, or that managementcurrently deems immaterial may also adversely affect our business, financial position and results of operations. If ourbusiness, financial position and results of operations are adversely affected by any of these or other adverse events, our stockprice would also likely be adversely affected. RISKS RELATING TO OUR BUSINESS We face significant competition in the wireless communications distribution industry. The wireless communications distribution industry is competitive and fragmented, and is comprised of severalnational distributors, as well as numerous regional distributors. In addition, many manufacturers sell and fulfill directly tocustomers. Barriers to entry for distributors are relatively low, particularly in the mobile devices and accessory market, andthe risk of new competitors entering the market is high. Some of our current competitors have substantially greater capitalresources and sales and distribution capabilities than we do. In response to competitive pressures from any of our current orfuture competitors, we may be required to lower selling prices in order to maintain or increase market share, and suchmeasures could adversely affect our operating results. We are also seeing increased competition in the form of e-commercesites as consumers and business are increasingly looking to the internet to purchase goods. We offer no assurance that we will not lose market share, or that we will not be forced in the future to reduce ourprices in response to the actions of our competitors, thereby reducing our gross margins. Furthermore, to remain competitivewe may be forced to offer more credit or extended payment terms to our customers. This could increase our required capital,financing costs, and the amount of our bad debt expenses. We typically purchase and sell our products and services on the basis of individual sales or purchase orders, and even inthose cases where we have standing agreements or arrangements with our customers and vendors, those agreements andarrangements typically contain no purchase or sale obligations and are otherwise terminable by either party upon severalmonths or otherwise short notice. Our sales to customers and our purchases from vendors are largely governed by individual sales or purchase orders,so there is no guarantee of future business. In some cases, we have formal agreements or arrangements with significantcustomers or vendors, but they are largely administrative in nature and are terminable by either party upon several months orotherwise short notice, and they typically contain no purchase or sale obligations. Many of our customer and vendorcontracts contain “evergreen” clauses, although this too is largely a matter of administrative convenience, because thecontracts are nevertheless typically terminable on short notice, and because no purchase and sale obligation in any eventarises other than pursuant to an accepted purchase order. When negotiating with customers and vendors, we seek the mostfavorable terms available under the circumstances. Our preferred vendor terms include, among others, terms that provide forproduct warranty and return rights, as well as product liability and intellectual property indemnification rights, in each caseconsistent with our preferred business methods and objectives. We have not been able, nor do we expect in the future to beable to negotiate the inclusion of all our preferred terms, or our preferred language for those terms, in every contract. Thedegree of our success in this regard is largely a function of the parties’ relative bargaining positions. 12 Table of ContentsWhen unable to negotiate the inclusion of our preferred terms or preferred language in a particular vendor contract,we assess any increased risk presented, as well as mitigating factors, analyze our overall business objectives, and thenproceed accordingly. In some instances, we refuse the contract and seek other sources for the product, and in other instancesbusiness objectives and circumstances are determined to outweigh or mitigate any increased risk, or otherwise dictate that weproceed with the contract, notwithstanding. We consistently seek to manage contractual risks resulting from vendorcontracts not including our preferred terms or language. However, these risks persist, and even when we are successful innegotiating our preferred terms, performance of these terms is not assured. If our vendors or suppliers refuse to, or for any reason are unable to, supply products to us in sufficient quantities tomeet demand, or at all, and if we are not able to procure those products from alternative sources, we may not be able tomaintain appropriate inventory levels to meet customer demand and our financial position and results of operations would beadversely affected. Similarly, if customers decide to purchase from other sources, instead of from us, or experience significantchanges in demand internally or from their own customer bases, become financially unstable, or are acquired by anothercompany, our ability to generate revenues from these customers may, or in some cases would, be significantly affected,resulting in an adverse effect on our financial position and results of operations. The loss or any change in the business habits of key customers or vendors may have a material adverse effect on ourfinancial position and results of operations. Because our standing arrangements and agreements with our customers and vendors typically contain no purchaseor sale obligations and are terminable by either party upon several months or otherwise relatively short notice, we are subjectto significant risks associated with the loss or change at any time in the business habits and financial condition of keycustomers or vendors. We have experienced the loss and changes in the business habits of key customer and vendorrelationships in the past and expect to do so again in the future. Sales of products purchased from our largest wireless infrastructure (11%) and mobile device and accessories (10%)suppliers, generated approximately 21% of our total revenues in fiscal year 2018, and sales from our largest ten vendorsgenerated approximately 43% of fiscal year 2018 total revenues. As is the case with many of our vendor and customerrelationships, our contractual arrangements with these large vendors are terminable by either party upon several months’notice. If these contracts or our relationships with these vendors terminate for any reason, or if any of our other significantvendor relationships terminate for any reason, and we are not able to sell or procure a sufficient supply of those products fromalternative sources, or at all, our financial position and results of operations would be adversely affected. Our vendors aresubject to many if not all of the same (or similar) risks and uncertainties to which we are subject, as well as other risks anduncertainties, and we compete with others for their business. Accordingly, we are at a continual risk of loss of their businesson account of a number of factors and forces, many of which are largely beyond our control. In fiscal year 2018, no customer accounted for more than 10% of our total revenues. However, in the retail market,46% of our sales are made to five customers. Also, customer mix can change rapidly, and we may see changes in customerconcentrations in the future. If any of our significant customer relationships terminate for any reason, and we are not able toreplace those customers and associated revenues, our financial position and results of operations would be adversely affected. The loss of customer relationships and the corresponding reduction in the volume of product sales identified tothose relationships, can also affect our negotiating ability with vendors supplying those products. This can affect ourmargins in sales of those products to other customers. If we are unable to replace those products at favorable pricing andterms, or if we are unable to acquire those products from vendors or offer those products to our customers on favorable terms,our competitiveness may suffer and result in reduced revenues and profits. Like our vendors, our customers are subject tomany if not all of the same (or similar) risks and uncertainties to which we are subject, as well as other risks and uncertainties,and we compete with others for their business. Accordingly, we are at continual risk of loss of their business on account of anumber of factors and forces, many of which are largely beyond our control. There can be no assurance that we will be successful in replacing any of our past, present or future vendor orcustomer relationships if and when lost, or that we will not suffer a substantial reduction in revenues as a result of loss of13 Table of Contentsany such relationship. As such, vendor, customer, or revenue loss would adversely affect our financial position and results ofoperations. Changes in customer or product mix could cause our gross margin percentage to decline. We continually experience changes in customer and product mix that affects gross margin. Changes in customer andproduct mix result primarily from changes in customer demand, customer acquisitions, selling and marketing activities andcompetition. Our business depends on the continued tendency of wireless equipment manufacturers and network operators to outsourceaspects of their business to us in the future. We provide functions such as distribution, inventory management, fulfillment, customized packaging, e-commercesolutions, and other outsourced services for many wireless manufacturers and network operators. Certain wireless equipmentmanufacturers and network operators have elected, and others may elect, to undertake these services internally. Additionally,our customer service levels, industry consolidation, competition, deregulation, technological changes or other developmentscould reduce the degree to which members of the global wireless industry rely on outsourced logistic services such as theservices we provide. Any significant change in the market for our outsourced services could have a material adverse effect onour business. Our outsourced services are generally provided under short-term contractual arrangements. The failure to obtainrenewals or otherwise maintain these agreements on terms, including price, consistent with our current terms could have anadverse effect on our business. We require substantial capital to operate, and the inability to obtain financing on favorable terms will adversely impactour business, financial position and results of operations. Our business requires substantial capital to operate and to finance accounts receivable and product inventory thatare not financed by trade creditors. We have historically relied upon cash generated from operations, revolving creditfacilities and trade credit from our vendors to satisfy our capital needs and finance growth. As the financial markets changeand new regulations come into effect, the cost of acquiring financing and the methods of financing may change. Changes inour credit rating or other market factors may increase our interest expense or other costs of capital, or capital may not beavailable to us on competitive terms to fund our working capital needs. Our existing secured revolving credit facilitycontains various financial and other covenants that may limit our ability to borrow or limit our flexibility in responding tobusiness conditions. The inability to maintain or when necessary obtain adequate sources of financing could have an adverseeffect on our business. Our existing secured revolving credit facility includes variable rate debt, thus exposing us to risk offluctuations in interest rates. Such fluctuations in interest rates could have an adverse effect on our business, financialposition and results of operations. We may in the future use interest rate swaps in an effort to achieve a desired proportion offixed and variable rate debt. We would utilize these derivative financial instruments to enhance our ability to manage risk,including interest rate exposures that exist as part of our ongoing business operations. However, our use of these instrumentsmay not effectively limit or eliminate our exposure to a decline in operating results due to changes in interest rates. Our ability to maintain and borrow under our revolving credit agreement could be constrained by the level of eligiblereceivables and by any failure to meet certain financial and other covenants in our revolving credit agreement. Our borrowing availability under our secured revolving credit facility is determined in part by a borrowing base andis limited to certain amounts of eligible accounts receivable. If the value of these accounts receivable were to decreasesignificantly, the amount available for borrowing under the facility would decrease and our ability to borrow under thefacility could be significantly impacted. Borrowing under the facility is also conditioned upon compliance with financialand other covenants included in the revolving credit agreement and a related guaranty and security agreement. Among theseis a covenant to maintain a fixed charge coverage ratio at any time during which the borrowing availability is otherwise lessthan $10 million. There are no assurances that we will be able to comply with all applicable covenants in these agreements,and in the event that we do not, our ability to borrow under our secured revolving credit facility could be limited orsuspended, or could terminate. 14 Table of ContentsIf we fail to meet our payment or other obligations under our secured revolving credit facility, our lenders could forecloseon, and acquire control of, a significant portion of our assets. Indebtedness under our secured revolving credit facility is secured by continuing first priority security interests inour inventory, accounts receivable, and deposit accounts, and on all documents, instruments, general intangibles, letter ofcredit rights, and chattel paper relating to inventory and accounts, and to all proceeds of the foregoing. If we fail to meet ourpayment or other obligations under our secured revolving credit facility, our lenders could foreclose on these assets, whichwould have a material adverse effect on our business, results of operations and financial condition. Compliance with regulations regarding the use of “conflict minerals” could limit the supply and increase the cost ofcertain of our products, and customers may seek other sources if we are unable to demonstrate to their satisfaction that ourproducts are conflict free. Increased focus on environmental protection and social responsibility initiatives led to the passage of Section 1502of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act"), and its implementingSEC regulations. The Dodd-Frank Act imposes supply chain diligence and disclosure requirements for certain manufacturersof products containing specific minerals that may originate in or near the Democratic Republic of the Congo (the "DRC") andfinance or benefit local armed groups. These "conflict minerals" are commonly found in certain of the products that weacquire from vendors and distribute to customers and are also found in certain products in our Ventev product line that wecontract to be manufactured by others or that we assemble. The implementation of these regulations may limit the sourcingand availability of some of the raw materials used in certain of these products. This in turn may affect our ability to obtainsufficient quantities of our products and may affect related pricing. Because we are considered a manufacturer of certain ofour Ventev products, we are subject to additional “conflict minerals” diligence and disclosure requirements with regard tothese products. Some of our customers may elect to disqualify us as a supplier if we are unable to verify that the products wesell to them are DRC conflict free. Weakness in the global economic environment may have significant effects on our customers and suppliers that couldresult in material adverse effects on our business, operating results, and stock price. Weakness in the global economic environment – may include, among other things, significant reductions inavailable capital and liquidity from banks and other providers of credit, substantial reductions and/or fluctuations in equityand currency values worldwide, significant decreases in consumer confidence and consumer and business spending, highrates of unemployment and concerns that the worldwide economy experience other significant challenges – could materiallyadversely affect our customers’ access to capital or willingness to spend capital on our products, and/or their levels of cashliquidity with which to pay for our products. In addition, our suppliers’ access to capital and liquidity could be affected,which may in turn adversely impact their ability to maintain inventories, production levels, and/or product quality, or causethem to raise prices or lower production levels, or result in their ceasing operation. The potential effects of weakness in the global economic environment are difficult to forecast and mitigate. As aconsequence, our operating results for a particular period may be more difficult to predict. Any of the foregoing effects couldhave a material adverse effect on our results of operations and financial condition, and could adversely affect our stock price. We may be unable to successfully execute our merchandising and marketing strategic initiatives. We are focusing our sales and marketing efforts and initiatives to maximize sales. If we fail to successfully executethese initiatives, our business, financial position and results of operations could be adversely affected. 15 ®®Table of ContentsThe telecommunications products marketplace is dynamic and challenging because of the continued introduction of newproducts and services. We must constantly introduce new products, services and product features to meet competitive pressures. We may beunable to timely change our existing merchandise sales mix in order to meet these competitive pressures, which may result inincreased inventory costs, inventory write-offs or loss of market share. Additionally, our inventory may also lose value due to price changes made by our significant vendors, in caseswhere our arrangements with these vendors do not provide for inventory price protection, or in cases where the vendor isunable or unwilling to provide these protections. Consolidation among wireless service carriers could result in the loss of significant customers. The wireless service carrier industry has experienced significant consolidation in recent years. If any of oursignificant customers or partners are acquired or consolidate with other carriers, or are otherwise involved in any significanttransaction that results in them ceasing to do business with us, or significantly reducing the level of business that they dowith us, our revenues from those customers could be affected, resulting in an adverse effect on our financial position andresults of operations. The failure of our information systems, or our inability to maintain or upgrade our information systems without incident ordelay, could have a material adverse effect on our business, financial position and results of operations. We are highly dependent upon our internal computer and electronic and telecommunication systems, many ofwhich are proprietary, to operate our business. These systems support all aspects of our business operations, including meansof internal and external communication, inventory and order management, shipping, receiving and accounting. Most of ourinformation systems contain a number of internally developed applications. In addition, all of these systems requirecontinued maintenance and also require upgrading or replacement from time to time. There can be no assurance that thesesystems will not fail or experience disruptions, that we will be able to attract and retain qualified personnel necessary for theoperation of such systems, that we will be able to expand and improve our systems, that we will be able to convert to newsystems efficiently as and when necessary, or that we will be able to integrate new programs effectively with our existingprograms. We like most businesses are continually engaged in an effort to defend against and to ward off attacks from hackersand others, and have experienced cyber-attacks from time to time. Any of such problems, or any significant damage ordestruction of these systems, including pursuant to or as a result of system security breaches, data protection breaches orother cyber-attacks, could harm our relationship with our customers or suppliers. Corrective action and compliance withapplicable privacy and data protection laws could be costly. Any of these or similar events or occurrences could have anadverse effect on our business, financial position and results of operations. We depend heavily on e-commerce, and website security breaches or internet disruptions could have a material adverseeffect on our business, financial position and results of operations. We rely on the internet (including TESSCO.com) for a significant percentage of our orders and informationexchanges with our customers. The internet and individual websites have experienced a number of disruptions andslowdowns, some of which were caused by organized attacks. In addition, some websites have experienced securitybreakdowns. There can be no assurances that our website will not experience any material breakdowns, disruptions orbreaches in security. If we were to experience a security breakdown, disruption or breach that compromised sensitiveinformation, this could harm our relationship with our customers or suppliers. Disruption of our website or the internet ingeneral could impair our order processing or more generally prevent our customers and suppliers from accessing informationor placing orders. This could have an adverse effect on our business, financial position and results of operations. 16 ®Table of ContentsSystem security breaches or data protection breaches could adversely disrupt our business and harm our reputation,financial position and results of operations. We manage and store various proprietary information and sensitive or confidential data relating to our business. Inaddition, we routinely process, store and transmit large amounts of data, including sensitive and personally identifiableinformation, including customer credit card data and other information. Breaches of our security measures or the accidentalloss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about usor our customers or vendors, including the potential loss or disclosure of such information or data as a result of fraud, trickeryor other forms of deception, could expose us, our customers or the individuals affected to a risk of loss or misuse of thisinformation, result in litigation and potential liability for us, damage our brand and reputation or otherwise harm ourbusiness. In addition, the cost and operational consequences of implementing further data protection measures could besignificant. Such breaches, costs and consequences could adversely affect our business, results of operations or cash flows. We are also subject to payment card association operating rules, certification requirements and rules governingelectronic funds transfers, including the Payment Card Industry Data Security Standard (PCI DSS), a security standardapplicable to companies that collect, store or transmit certain data regarding credit and debit cards, holders andtransactions. From time to time we may not be fully or materially compliant with PCI DSS or other payment card operatingrules. Any failure to comply fully or materially with the PCI DSS now or at any point in the future may violate payment cardassociation operating rules and the terms of our contracts with payment processors and merchant banks, and could subject usto fines, penalties, damages and civil liability, and could result in the loss of our ability to accept credit and debit cardpayments. Recently, we conducted an internal assessment of systems relative to PCI-DSS compliance and determined that wewere unable to certify as to full compliance with current standards. As a result, we are now upgrading select systems in orderto address identified issues or concerns. These efforts are costly and there is no guarantee that we will be successful or avoidfines, penalties, damages or civil liability, and even if successful, there is no guarantee that PCI DSS compliance will preventillegal or improper use of our payment systems or the theft, loss or misuse of data pertaining to credit and debit cards, creditand debit card holders and credit and debit card transactions. The inability to hire or retain certain key professionals, management and staff could adversely affect our business,financial condition and results of operations. The nature of our business includes (but is not limited to) a high volume of transactions, business complexity, widegeographical coverage, and broad scope of products, suppliers, and customers. In order to compete, we must attract, retainand motivate executives and other key employees, including those in managerial, technical, sales, marketing and supportpositions. Hiring and retaining qualified executives, information technology and business generation personnel are criticalto our business. The loss of any of the members of our senior management team, could have an adverse effect on ourbusiness, financial position and results of operations. To attract, retain and motivate qualified employees, we rely heavily on stock-based incentive awards such asPerformance Stock Units (PSUs) and stock options. If performance targets associated with PSUs are not met, or the value ofsuch awards does not appreciate as measured by the performance of the price of our common stock and/or if our other stock-based compensation, such as stock options, otherwise ceases to be viewed as a valuable benefit, our ability to attract, retainand motivate our employees could be adversely impacted, which could negatively affect our business, financial position andresults of operations and/or require us to increase the amount we spend on cash and other forms of compensation. Our abilityto issue PSUs, stock options and other equity instruments is also limited by the provisions of and our available shares underour current and/or future stock incentive plans, which may be subject to shareholder approval. We may currently issue awardsunder our incentive plan only through July 21, 2021, and as of May 10, 2018, there were 245,450 shares available for futureawards. Therefore, our ability to offer stock-based incentive awards may be limited, which may have an adverse effect on ourcontinued ability to attract and retain, and motivate, our employees, and, subsequently, on our business, financial positionand results of operations. In addition, an increase in the number of shares for future awards, under either current or futurecompensation or incentive plans or arrangements could lead to dilution of our other stockholders. 17 Table of ContentsThe damage or destruction of any of our principal distribution or administrative facilities could materially adverselyimpact our business, financial position and results of operations. If either of our distribution centers in Hunt Valley, Maryland or Reno, Nevada, were to be significantly damaged ordestroyed, we could suffer a loss of product inventory and our ability to conduct our business in the ordinary course could bematerially and adversely affected. Similarly, if our office locations in Maryland, Nevada or Texas were to be significantlydamaged or destroyed, our ability to conduct marketing, sales and other corporate activities in the ordinary course could beadversely affected. We depend on third parties to manufacture products that we distribute and, accordingly, rely on their quality controlprocedures. Product manufacturers typically provide limited warranties directly to the end consumer or to us, which wegenerally pass through to our customers. If a product we distribute for a manufacturer has quality or performance problems,our ability to provide products to our customers could be disrupted, which could adversely affect our operations. We are subject to potential declines in inventory value. We are subject to the risk that the value of our inventory will decline as a result of price reductions by vendors ortechnological obsolescence or failure. It is the policy of many of our vendors to protect distributors like us from the loss invalue of inventory due to technological change or failure, or the vendors’ price reductions. Some vendors (including thosewho manufacture our proprietary products), however, may be unwilling or unable to pay us for price protection claims orproducts returned to them under purchase agreements. No assurance can be given that such practices to protect distributorslike us will continue, that unforeseen new product developments, product failure or product obsolescence will not adverselyaffect us, or that we will be able to successfully manage our existing and future inventories. Our future operating results depend on our ability to purchase a sufficient amount of finished goods and bulk inventory tomeet the demands of our customers. Our ability to meet customers' demands depends, in part, on our ability to obtain timely and adequate delivery ofinventory from our suppliers. We have experienced shortages in the past that have negatively impacted our operations.Although we work closely with our suppliers to avoid these types of shortages, there can be no assurances that we will notencounter these problems in the future. Furthermore, certain of our products or components are available only from a singlesource or limited sources. We may not be able to diversify sources in a timely manner. A reduction or interruption in suppliesor a significant increase in the price of supplies could have a negative impact on our results of operations or financialcondition. If our business does not perform well, or if we otherwise experience a decline in the fair values of a portion or all of ourbusiness, we may be required to recognize impairments of our intangible or other long-lived assets, which could adverselyaffect our results of operations or financial condition. Goodwill and indefinite lived intangible assets are initially recorded at fair value and are not amortized, but arereviewed for impairment at least annually or more frequently if impairment indicators are present. In assessing the recoverability of goodwill and indefinite lived intangible assets, we make estimates andassumptions about sales, operating margin, growth rates and discount rates based on our budgets, business plans, economicprojections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors andmanagement’s judgment in applying these factors. We first perform a qualitative analysis to determine if it is more likelythan not that goodwill or indefinite lived intangible assets are impaired. This analysis includes assumptions and estimatesrelated to macroeconomic, industry and company specific events and trends. In the event that we find it is more likely thannot that an impairment has occurred a quantitative analysis is performed. Goodwill and indefinite lived asset valuations arecalculated using an income approach based on the present value of future cash flows of each reporting unit. We could berequired to evaluate the recoverability of goodwill and indefinite lived assets prior to the annual assessment if we experiencedisruptions to the business, unexpected significant declines in operating results, divestiture of a significant18 Table of Contentscomponent of our business or sustained market capitalization declines. These types of events and the resulting analysescould result in goodwill and indefinite lived asset impairment charges in the future. Impairment charges could substantiallyaffect our financial results in the periods of such charges. In addition, impairment charges would negatively impact ourfinancial ratios and could limit our ability to obtain financing in the future. As of April 1, 2018, we had $12.5 million ofgoodwill and indefinite lived intangible assets, which represented approximately 6.3% of total assets. Deferred income tax represents the tax effect of the differences between the book and tax bases of assets andliabilities. Deferred tax assets are assessed periodically by management to determine if they are realizable. Factors inmanagement’s determination include the performance of the business, projections of future taxable income, and thefeasibility of ongoing tax planning strategies. If based on available information, it is more likely than not that the deferredincome tax asset will not be realized then a valuation allowance must be established with a corresponding charge to netincome. Such charges could have an adverse effect on our results of operations or financial condition. Our future results of operations may be impacted by prolonged weakness in the economic environment which mayresult in an impairment of any goodwill recorded and/or other long-lived assets or the recording of a valuation allowance onour deferred tax assets, which could adversely affect our results of operations or financial condition. We primarily rely on trademark filings and confidentiality agreements to protect our intellectual property rights. In an effort to protect our intellectual property, including our product data, customer information and informationtechnology systems, through trademark filings and nondisclosure, confidentiality and trade secret agreements, we typicallyrequire our employees, consultants and others having access to this information or our technology to execute confidentialityand non-disclosure agreements. These agreements, however, may not provide us with adequate protection against improperuse or disclosure of confidential information, and these agreements may be breached. A breach of confidentiality couldadversely affect our business. In addition, in some situations, these agreements may conflict with, or be subject to, the rightsof third parties with whom our employees, consultants and others have previous employment or consulting relationships.Also, others may independently develop substantially equivalent proprietary information and techniques or otherwise gainaccess to our trade secrets. Adequate remedies may not exist in the event of unauthorized use or disclosure of our confidentialinformation. The disclosure of our proprietary information or trade secrets could impair our competitive position and couldhave an adverse effect on our business, financial condition and results of operations. Others may obtain patent protection fortechnologies that are important to our business, and as a result, our business, financial position and results of operations maybe adversely affected. In response to patents of others, we may need to license the rights to use the technology patented byothers, or in the event that a license cannot be obtained, design our systems around the patents of others. There can be noassurances as to our ability to obtain any such licenses or to design around the patents of others, and our inability to do socould have an adverse effect on our business, financial position and results of operations. We offer credit to our customers and, therefore, are subject to significant credit risk. We sell our products to a large and diverse customer base. We finance a significant portion of such sales throughtrade credit, typically by providing 30-day payment terms. As a result, our business could be adversely affected in the eventof a deterioration of the financial condition of our customers, resulting in the customers’ inability to repay us. This risk mayincrease if there is a general economic downturn affecting a large number of our customers and in the event our customers donot adequately manage their business or properly disclose their financial condition. Also, several of our larger customers,including tier 1 carrier customers, require greater than 30-day payment terms which could increase our credit risk anddecrease our operating cash flow. We may explore additional growth through acquisitions. As part of our growth strategy, we may continue to pursue the acquisition of companies that either complement orexpand our existing business. As a result, we regularly evaluate potential acquisition opportunities, which may be material insize and scope. In addition to those risks to which our business and the acquired businesses are generally subject to, theacquisition of these businesses gives rise to transactional and transitional risks, and the risk that the anticipated benefits willnot be realized. 19 Table of ContentsRisks associated with the foreign suppliers from whom our products are sourced could adversely affect our financialperformance. The products we sell are sourced from a wide variety of domestic and international suppliers. Global sourcing ofmany of the products we sell is an important factor in our financial performance. Since the onset of the weakness in the globaleconomic environment in 2008, certain of our suppliers, particularly those in the far-east, have experienced financialdifficulties and we believe it is possible that a limited number of suppliers may either cease operations or require increasedprices in order to fulfill their obligations. Changes in our relationships with suppliers or increases in the costs of purchasedraw materials, component parts or finished goods could result in delays, inefficiencies or our inability to market products. Inaddition, our profit margins would decrease if prices of purchased raw materials, component parts, or finished goods increaseand we are unable to pass on those increases to our customers. The adoption or expansion of trade restrictions or theoccurrence of trade wars could have a material adverse effect on our business, financial position and results of operation. We rely on independent shipping companies to deliver inventory to us and to ship products to customers. We rely on arrangements with independent shipping companies, for the delivery of our products from vendors andto customers. The failure or inability of these shipping companies to deliver products, or the unavailability of their shippingservices, even temporarily, could have a material adverse effect on our business. We may also be adversely affected by anincrease in freight surcharges due to rising fuel costs and added security. This could adversely impact our selling, general andadministrative expenses or lead to price increases to our customers which could decrease customer demand for our products. Changes in accounting rules could have a material adverse impact on our results of operations. We prepare our financial statements in conformity with accounting principles generally accepted in the UnitedStates. These accounting principles are subject to interpretation by the Financial Accounting Standards Board, the PublicCompany Accounting Oversight Board, the United States Securities and Exchange Commission (SEC), the AmericanInstitute of Certified Public Accountants and various other bodies formed to interpret and create appropriate accountingpolicies. A change in these policies or a new interpretation of an existing policy could have a significant effect on ourreported results and may affect our reporting of transactions. Changes in income tax and other regulatory legislation. We operate in compliance with applicable laws and regulations and make plans for our structure and operationsbased upon existing laws and anticipated future changes in the law. When new legislation is enacted with minimal advancenotice, or when new interpretations or applications of existing laws are made, we may need to implement changes in ourpolicies or structure. We are susceptible to unanticipated changes in legislation, especially relating to income and othertaxes, import/export laws, hazardous materials and other laws related to trade, accounting and business activities. Suchchanges in legislation may have an adverse effect on our business. On December 22, 2017, President Trump signed into law the statute originally named the “Tax Cuts and Jobs Act”(the “2017 Tax Act”) which enacts a broad range of changes to the Internal Revenue Code of 1986, as amended. The 2017Tax Act, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on thedeductibility of interest and net operating losses, allows for the expensing of certain capital expenditures, and modifies thetax treatment of certain intercompany transactions. We continue to examine the impact this tax legislation may have on ourbusiness. We may be subject to litigation. We may be subject to legal claims or regulatory matters involving stockholder, consumer, antitrust, intellectualproperty and other issues. Litigation is subject to inherent uncertainties, and unfavorable rulings could occur. Anunfavorable ruling could include monetary damages or other adverse effects. Were an unfavorable ruling to occur, there20 Table of Contentsexists the possibility of a material adverse impact on our business, financial position and results of operations for the periodin which the ruling occurred or future periods. We may incur product liability claims which could be costly and could harm our reputation. The sale of our products subjects us to the risk of product liability claims. We have also been increasing our focuson sales of our proprietary Ventev® products and on providing an increased level of support services, including product andnetwork designs, which also subjects us to risk of product liability and performance claim risk. We seek to allocate productliability risk to our vendors where available, but may not be successful in doing so. We currently maintain product liabilityinsurance, but our product liability insurance coverage is subject to various coverage exclusions and limits and may not beobtainable in the future on terms acceptable to us, or at all. We do not know whether claims against us with respect to ourproducts and services, if any, would be successfully defended or whether we might be successful in allocating that risk toothers, or whether our insurance would be sufficient to cover liabilities resulting from such claims. Any claims successfullybrought against us could adversely affect our financial condition, and if substantial and relating to our products or industrygenerally, could adversely affect our business as a whole. Our expanding offering of private labeled products may have a negative impact on our relationship with our manufacturerpartners. Our product offering includes a growing number of our own proprietary products, which represented approximately13% of our sales in fiscal year 2018. Our proprietary products often compete with other manufacturers' branded items that weoffer. A manufacturer may choose to not sell its products to us, or may substantially increase the price of products to us, inresponse to the competition created by the sales of our proprietary branded products. Either could have an adverse effect onour business and financial performance. A significant portion of our product offerings, including a majority of our private label Ventev products and products weacquire from our vendors, are manufactured in foreign countries, making the price and availability of these productssusceptible to international trade risks and other international conditions. A significant portion of our products are manufactured in foreign countries, including Mexico and China. Thecountries, specifically Mexico and China, in which many of our products currently are manufactured or may be manufacturedin the future could become subject to trade restrictions imposed by the U.S., including increased tariffs or quotas, embargoesand customs restrictions, which could increase the cost or reduce the supply of products available to us and have a materialadverse effect on our business, financial condition and results of operations. Recently, uncertainty has increased regardingtax and trade policies, border adjustments, tariffs and government regulations affecting trade between the U.S. and othercountries, such as Mexico and China. This includes the possibility of imposing tariffs or penalties on products manufacturedoutside the United States, including the March 22, 2018 announcement of the United States government’s institution of a25% tariff on a range of products from China. China thereafter announced a plan to impose tariffs on a wide range ofAmerican products in retaliation for such American tariffs. There is also a concern that the imposition of additional tariffs bythe United States could result in the adoption of tariffs by other countries as well. Such tariffs on imports from foreigncountries, as well as changes in tax and trade policies such as a border adjustment tax or disallowance of certain taxdeductions for imported product, if enacted, could materially increase our manufacturing costs, the costs of our importedproduct or our income tax expense, which would have a material adverse effect on our financial condition and results ofoperations. Any tariffs by China or other foreign countries on imports of our products could also adversely affect ourinternational e-commerce sales. Any increase in manufacturing costs, the cost of our products or limitation on the amount ofproducts we are able to purchase, could have a material adverse effect on our financial condition and results of operations. 21 Table of ContentsLegislative or regulatory action could be taken that could limit our ability to use certain foreign vendors to supply us withproducts. Members of the U.S. Congress and certain regulatory agencies have raised concerns about American companiespurchasing equipment and software from Chinese telecommunications companies, including concerns relating to allegedviolations of intellectual property rights by Chinese companies and potential security risks posed by U.S. companiespurchasing technical equipment and software from Chinese companies. In October 2012, the U.S. House of RepresentativesPermanent Select Committee on Intelligence issued a report asserting that network equipment manufactured by Chinesetelecommunications companies poses a security threat to the United States and recommending the use of other networkvendors. The report also recommends that Congress consider adopting legislation to address these and other purportedrisks. U.S. intelligence agencies have warned American citizens regarding the potential security risk associated withproducts – including cellular phones and other equipment – manufactured by Huawei Technology Co. and ZTE Corporation.While we do not currently include either of these companies among our vendors, any legislative or regulatory requirementthat restricts us from purchasing or utilizing equipment or software from Chinese or other foreign companies with which wedo or seek to do business, any determination by foreign companies upon which we rely to cease doing business in the UnitedStates, or any determination that we otherwise make that it is either necessary or advantageous for us to cease doing businesswith such foreign companies, could limit our product offerings, result in increased costs of goods and have a material adverseeffect on our financial condition and results of operations. Claims that our products infringe the proprietary rights of others could harm our business and cause us to incur significantcosts. Our industry has increasingly been subject to patent and other intellectual property rights litigation. We expect thistrend to continue and accelerate and expect that we may be required to defend against this type of litigation, not onlyasserted against our own intellectual property rights, but also against the intellectual property of products which we havepurchased for resale. Further, we may be obligated to indemnify and defend our customers if the products or services wesupply to them are alleged to infringe a third party’s intellectual property rights. While we may be able to seekindemnification from our suppliers to protect our customers and us from such claims, there is no assurance that we will besuccessful in negotiating contractual terms with our suppliers to provide for such indemnification, or that we will otherwisebe successful in obtaining such indemnification or that we will be protected from such claims. We may also be prohibitedfrom marketing products, could be forced to market products without desirable features, or could incur substantial costs todefend legal actions, including where third parties claim that we or vendors who may or may not have indemnified us areinfringing upon their intellectual property rights. In recent years, individuals and groups have begun purchasing intellectualproperty assets for the sole purpose of making claims of infringement and attempting to extract settlements from targetcompanies. Even if we believe that such infringement claims are without merit, the claims can be time-consuming and costlyto defend and divert management’s attention and resources away from our business. Claims of intellectual propertyinfringement may require us to enter into costly settlements or pay costly damage awards, or face a temporary or permanentinjunction prohibiting us from marketing or selling certain products or services, which could affect our ability to competeeffectively. If an infringement claim is successful, we may be required to pay damages or seek royalty or licensearrangements, which may not be available on commercially reasonable terms. Even if we have an agreement that indemnifiesus against such costs, the indemnifying party may be unable or unwilling to uphold its contractual obligations to us.We may be adversely affected by future laws or regulations. We are subject to various U.S. Federal, state and local, and non-U.S. laws and regulations. We cannot predict thesubstance or impact of pending or future legislation or regulations, or the application thereof. The introduction of new lawsor regulations or changes in existing laws or regulations, or the interpretations thereof, could increase the cost of doingbusiness for us or our customers or vendors or restrict our actions and adversely affect our financial condition, operatingresults and cash flows. For example, annual disclosure and reporting requirements relating to the SEC’s conflict minerals rulerequire us to perform a reasonable country of origin inquiry and conduct further due diligence measures on our supply chain.There are costs and uncertainties associated with complying with these disclosure requirements, including for diligence todetermine the sources of conflict minerals that we may find to be used in our products. 22 Table of ContentsRISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK A significant portion of our voting stock is controlled by our executive officers, directors and beneficial owners of 5% ormore of our common stock. Our executive officers, directors and beneficial owners of 5% or more of our common stock and their affiliates, in theaggregate, beneficially owned approximately 49% of our outstanding common stock as of April 1, 2018. Robert B. Barnhill,Jr., our Executive Chairman and Chairman of the Board, beneficially owned approximately 20% of our outstanding commonstock as of April 1, 2018. Should these shareholders decide to act together, they would have the ability to significantlyinfluence all matters requiring shareholder approval, including the election of directors and any significant corporatetransaction requiring shareholder approval. We may not be able to continue to pay dividends on our common stock in the future, which could impair the value of ourcommon stock. We have paid a quarterly dividend on our common stock since the second quarter of fiscal year 2010. Anyfuture declaration of dividends remains subject to further determination from time to time by our Board of Directors. Ourability to pay dividends in the future will depend on our financial results, liquidity and financial condition. Under Delawarelaw, dividends to shareholders may be made only from the surplus of a company, or, in certain situations, from the net profitsfor the current fiscal year or the fiscal year before which the dividend is declared. Our secured revolving credit facilityrestricts our ability to pay cash dividends upon a default, and when our borrowing availability is below $15.0 million, or incertain more limited circumstances $11.3 million, and contains other financial covenants and ratios that could restrict futuredividend payments. There is no assurance that we will be able to pay dividends in the future, or if we are able to, that ourBoard of Directors will continue to declare dividends in the future, at current rates or at all. If we discontinue or reduce theamount or frequency of dividends, the value of our common stock may be impaired. Our quarterly financial results may fluctuate, which could lead to volatility in our stock price. Our revenue and operating results have fluctuated from quarter to quarter in the past and may continue to do so inthe future. As a result, you should not rely on quarter-to-quarter comparisons of our operating results as an indication of ourfuture performance. Fluctuations in our revenue and operating results could negatively affect the trading price of our stock.In addition, our revenue and results of operations may, in the future, be below the expectations of analysts and investors,which could cause our stock price to decline. Factors that are likely to cause our revenue and operating results to fluctuateinclude the risk factors discussed throughout this section. Without approval of our Board of Directors, it may be difficult for a third party to acquire control of the Company. Thiscould affect the price of our common stock. Certain provisions of our certificate of incorporation and bylaws, including advance notice bylaws, certainarrangements to which we are party, and applicable provisions of the Delaware General Corporation Law (DGCL) may eachmake it more difficult for or may prevent a third party from acquiring control of us or changing our Board of Directors andmanagement. We are afforded the protections of Section 203 of the DGCL, which will prevent us from engaging in a businesscombination with a person who acquires at least 15% of our common stock for a period of three years from the date suchperson acquired such common stock, unless Board of Director or shareholder approval were obtained. Some believe that theprovisions described above, as well as any resulting delay or prevention of a change of control transaction or changes in ourBoard of Directors or management, could deter potential acquirers or prevent the completion of a transaction in which ourshareholders 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, to preserve and maximize thevalue of the Company for all shareholders, and to better ensure that each shareholder will be treated fairly in the event of anunsolicited offer to acquire the Company. 23 Table of ContentsPotential uncertainty resulting from unsolicited acquisition proposals and related matters may adversely affect ourbusiness. In the past we have received, and in the future, we may receive, unsolicited proposals to acquire our company or ourassets. For example, in September 2010, the Board of Directors received an unsolicited non-binding proposal for theacquisition of all of our stock. The review and consideration of acquisition proposals and related matters could require theexpenditure of significant management time and personnel resources. Such proposals may also create uncertainty for ouremployees, customers and vendors. Any such uncertainty could make it more difficult for us to retain key employees and hirenew talent, and could cause our customers and vendors to not enter into new arrangements with us or to terminate existingarrangements. Additionally, we and members of our Board of Directors could be subject to future lawsuits related tounsolicited proposals to acquire us. Any such future lawsuits could become time consuming and expensive. Our quarterly operating results are subject to significant fluctuation. Our operating results have fluctuated from quarter to quarter in the past, and we expect that they will continue to doso in the future. Our earnings may not continue to grow at rates similar to the growth rates achieved in recent years and mayfall short of either a prior fiscal period or investors’ expectations. Most of our operating expenses, such as compensationexpenses, do not vary directly with the amount of sales and are difficult to adjust in the short term. As a result, if sales in aparticular quarter are below expectations for that quarter, we may not proportionately reduce operating expenses for thatquarter, and therefore such a sales shortfall would have a disproportionate effect on our net income for the quarter. Item 1B. Unresolved Staff Comments. None. Item 2. Properties. Our corporate headquarters and primary distribution center, known as the Global Logistics Center (GLC), is locatedin a Company-owned 184,000 square-foot facility north of Baltimore, in Hunt Valley, Maryland. Our sales, marketing and administrative offices are located in 102,200 square feet of leased office space near theGLC, in Timonium, Maryland. The monthly rent payments range from $169,400 to $185,100 throughout the remaining leaseterm, which expires on December 31, 2020. In addition, we lease 66,000 square feet of office and warehouse space adjacent to the GLC in Hunt Valley,Maryland. The monthly rent for this facility ranges from $37,100 to $39,300 throughout the remaining lease term, whichexpires on July 31, 2020, subject to our annual option to terminate. Additional sales and marketing offices are located in 13,100 square feet of leased office space in San Antonio,Texas. Monthly rent payments range from $16,900 to $19,100 and the lease expires October 31, 2021. West coast sales and fulfillment are 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 chainsolutions, provide disaster backup for the GLC, and allow for future growth of staffing and increased fulfillment capabilities. While we anticipate the need for additional space, we believe our existing facilities are generally adequate for ourcurrent requirements and that suitable additional space will be available as needed to accommodate future expansion of ouroperations. 24 Table of Contents Item 3. Legal Proceedings. Lawsuits and claims are filed against us from time to time in the ordinary course of business. We do not believe thatany lawsuits or claims currently pending against the Company, individually or in the aggregate, are material, or will have amaterial adverse effect on our financial condition or results of operations. In addition, from time to time, we are also subjectto review from federal and state taxing authorities in order to validate the amounts of income, sales and/or use taxes whichhave been claimed and remitted. No federal, state and local tax returns are currently under examination. As we are routinely audited by state taxing authorities, we have estimated exposure and established reserves for ourestimated sales tax audit liability. Item 4. Mine Safety Disclosures Not applicable. 25 Table of Contents Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities. Our common stock has been publicly traded since September 28, 1994, on the NASDAQ Market (currently NASDAQGlobal Select), under the symbol "TESS." The quarterly range of prices per share during fiscal years 2017 and 2018 are asfollows: Dividends High Low Declared Fiscal Year 2017 First Quarter $18.18 $12.05 $0.20 Second Quarter 14.86 12.25 0.20 Third Quarter 13.55 9.75 0.20 Fourth Quarter 15.50 12.50 0.20 Fiscal Year 2018 First Quarter $16.25 $12.35 $0.20 Second Quarter 14.75 12.15 0.20 Third Quarter 18.00 12.35 0.20 Fourth Quarter 24.85 17.45 0.20 As of May 29, 2018, the number of shareholders of record of the Company was 168. We estimate that the number ofbeneficial owners as of that date was approximately 3,333. On July 28, 2009, we announced that our Board of Directors decided to commence a dividend program and we havesince declared dividends on a quarterly basis. Any future declaration of dividends and the establishment of anycorresponding 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 years 2018 and 2017 is contained in ourSelected Financial Data. The declaration and payment of future dividends will depend on many factors, including, but notlimited to, our earnings, financial condition, business development needs and regulatory considerations, and is at thediscretion of our Board of Directors. Our revolving credit facility may limit the amount of cash dividends that we may paybased on financial covenants and ratios that may restrict the future payment of dividends. We also withhold shares from our employees and directors from time to time to facilitate employees’ minimumfederal and state tax withholdings related to vested performance stock units, restricted stock and exercised stock options. Forfiscal years 2018 and 2017 the total value of shares withheld for taxes were $65,400 and $192,400, respectively. Our secured revolving credit facility with SunTrust Bank restricts our ability to pay dividends and to repurchase our shares,either upon a default or when our borrowing availability is below $15.0 million, or in certain more limited circumstances$11.3 million, and also limits to $2.0 million the aggregate dollar value of shares that may be withheld or repurchased inconnection with satisfaction of tax withholding obligations related to vested equity grants during any 12 month period. Thisrevolving credit facility also contains other financial covenants and ratios that could restrict dividends and repurchases. AtApril 1, 2018 we had the ability to withhold or repurchase $1.9 million in additional shares of our common stock duringfiscal 2018, without violating this covenant.The information required by Item 201(d) of Regulation S-K, pursuant to paragraph (a) of Item 5 of Form 10-K, isincorporated by reference to the information set forth under the caption “Equity Compensation Plan Information” in theCompany’s Proxy Statement for the 2018 Annual Meeting of Shareholders, which is anticipated to be filed pursuant toRegulation 14A no later than one hundred twenty (120) days following the end of the fiscal year reported on. 26 Table of ContentsStock Performance Graph The graph set forth below shows the value of an investment of $100 on April 1, 2013 in each of the Company’scommon stock, the Russell 2000 Index and a peer group for the period of April 1, 2013 to April 1, 2018. The graph assumesthat all dividends, if any, were reinvested. 3/31/2013 3/30/2014 3/29/2015 3/27/2016 3/26/2017 4/1/2018 TESSCO TechnologiesIncorporated $100.00 $166.25 $123.90 $87.10 $80.99 $131.59 Russell 2000 100.00 122.64 133.80 118.08 150.37 172.09 Peer Group 100.00 119.06 111.33 110.57 123.88 138.75 – The Peer Group consists of the following: W.W. Grainger, Inc., Anixter International Inc., ScanSource, Inc., InfoSonics Corporation, andTech Data Corp.27 (1)(1)Table of ContentsThe peer group was selected based on a review of publicly available information about these companies and theCompany’s determination that they are engaged in business similar to that of the Company. Item 6. Selected Financial Data. Fiscal Years Ended April 1, 2018 March 26, 2017 March 27, 2016 March 29, 2015 March 30, 2014 STATEMENT OF INCOME DATA Revenues $580,274,700 $533,295,100 $530,682,100 $549,619,000 $560,086,600 Cost of goods sold 460,046,300 421,527,300 418,716,200 431,980,500 433,728,700 Gross profit 120,228,400 111,767,800 111,965,900 117,638,500 126,357,900 Selling, general andadministrative expenses 112,326,700 108,416,300 102,932,300 102,686,700 99,868,000 Restructuring charge — 806,600 — 573,400 — Operating expenses 112,326,700 109,222,900 102,932,300 103,260,100 99,868,000 Income from operations 7,901,700 2,544,900 9,033,600 14,378,400 26,489,900 Interest, net 429,100 58,600 161,300 167,300 177,700 Income before provision forincome taxes 7,472,600 2,486,300 8,872,300 14,211,100 26,312,200 Provision for income taxes 2,277,200 1,041,200 3,531,800 5,576,800 10,063,100 Net income $5,195,400 $1,445,100 $5,340,500 $8,634,300 $16,249,100 Diluted earnings per share $0.61 $0.17 $0.65 $1.04 $1.94 Cash dividends declared percommon share $0.80 $0.80 $0.80 $0.80 $0.74 Percentage of Revenues Revenues 100.0% 100.0% 100.0% 100.0% 100.0%Cost of goods sold 79.3 79.0 78.9 78.6 77.4 Gross profit 20.7 21.0 21.1 21.4 22.6 Selling, general andadministrative expenses 19.4 20.3 19.4 18.7 17.8 Restructuring charge — 0.2 — 0.1 — Operating expenses 19.4 20.5 19.4 18.8 17.8 Income from operations 1.4 0.5 1.7 2.6 4.7 Interest, net 0.1 — — — — Income before provision forincome taxes 1.3 0.5 1.7 2.6 4.7 Provision for income taxes 0.4 0.2 0.7 1.0 1.8 Net income 0.9% 0.3% 1.0% 1.6% 2.9% Fiscal Years Ended April 1,2018 March 26,2017 March 27,2016 March 29, 2015 March 30, 2014 SELECTED OPERATING DATA Average non-consumer buyers per month 11,600 12,500 12,200 12,400 12,700 Return on assets 2.8% 0.8% 3.0% 4.6% 8.5% Return on equity 4.8% 1.3% 4.7% 7.6% 14.9% 28 (1)(2)Table of Contents As of Fiscal Years Ended April 1, 2018 March 26, 2017 March 27, 2016 March 29, 2015 March 30, 2014 BALANCE SHEET DATA Working capital $74,789,400 $77,194,500 $82,523,600 $82,220,900 $88,090,400 Total assets 199,423,700 173,980,500 169,416,000 186,240,600 186,960,300 Short-term debt 10,862,700 26,500 251,100 250,700 250,200 Long-term debt 2,300 29,800 1,706,500 1,957,500 2,208,200 Shareholders' equity 108,051,600 108,016,300 112,527,300 113,142,100 114,828,100 (1)Net income divided by the average total assets. (2)Net income divided by the average total equity. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. This Management’s Discussion and Analysis of Results of Operations and Financial Condition (MD&A) should beread in conjunction with the other sections of this Annual Report on Form 10-K, including Part I, “Item 1: Business,” Part II,“Item 6: Selected Financial Data,” and Part II, “Item 8: Financial Statements and Supplementary Data.” The various sectionsof this MD&A contain a number of forward-looking statements, all of which are based on our current expectations and couldbe affected by the uncertainties and risk factors described throughout this filing, including Part I, “Item 1A: Risk Factors.”Our actual results may differ materially from those described in any such forward-looking statement. Business Overview and Environment TESSCO Technologies Incorporated (TESSCO, we, or the Company) architects and delivers innovative product andvalue chain solutions to support wireless systems. Although we sell products to customers in almost 100 countries,approximately 98% of our sales are to customers in the United States. We have operations and office facilities in Timoniumand Hunt Valley, Maryland, Reno, Nevada and San Antonio, Texas. Beginning with the first quarter of fiscal year 2018, we modified the structure of our internal organization, in aneffort 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 inregulation or technology and includes products typically used by business entities or governments. Reflective of thesedifferences, our sales and product teams were reorganized and each now reports to either a retail or commercial leader. Weconcluded that corresponding changes to our reportable segments are warranted and now evaluate our business within twosegments: commercial and retail. The commercial segment consists of the following customer markets: (1) public carriersthat are generally responsible for building and maintaining the infrastructure system and provide airtime service toindividual subscribers; (2) government, including federal agencies and state and local governments that run wirelessnetworks for their own use as well as value-added resellers who specialize in selling to the government; (3) private systemoperators, 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 radiocommunications equipment primarily for the enterprise market. The retail segment consists of the market which includesretailers, independent dealer agents and carriers. All prior financial periods presented in this Annual Report on Form 10-Kreflect this change. We offer a wide range of products that are classified into four business categories: base station infrastructure;network systems; installation, test and maintenance; and mobile devices and accessories. Base infrastructure products areused to build, repair and upgrade wireless telecommunications. Sales of traditional base station infrastructure products, suchas base station radios, cable and transmission lines and antennas are in part dependent on capital spending in the wirelesscommunications industry. Network systems products are used to build and upgrade computing and internet networks. Wehave also been growing our offering of wireless broadband, network equipment, security and surveillance products, which arenot as dependent on the overall capital spending of the industry. Installation, test and maintenance products are used toinstall, tune, and maintain wireless communications equipment. This category is made up of sophisticated analysisequipment and various frequency-, voltage- and power-measuring devices, replacement parts and components as well as anassortment of tools, hardware and supplies required by service technicians. Mobile devices and29 Table of Contentsaccessory products include cellular phone and data device accessories. Our customers generally have the ability to purchasefrom any of our product categories. The wireless communications distribution industry is competitive and fragmented, and is comprised of severalnational 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 chainsolutions are typically of limited duration and are terminable by either party upon several months or otherwise short notice.Our ability to maintain these relationships is subject to competitive pressures and challenges. We believe, however, that ourstrength in service, the breadth and depth of our product offering, our information technology system, our large customerbase and our purchasing relationships with approximately 440 manufacturers provide us with a significant competitiveadvantage over new entrants to the market. Results of Operations The following tables summarize the results of our operations for fiscal years 2018, 2017 and 2016: (Dollars in thousands, except per share data) 2017 to 2018 2016 to 2017 2018 2017 $ Change % Change 2016 $ Change % Change Segment Revenues Commercial Segment: Public Carriers $115,061 $82,015 $33,046 40.3% $89,171 $(7,156) (8.0)%Government 40,481 36,676 3,805 10.4% 33,009 3,667 11.1%Private System Operators 93,246 82,508 10,738 13.0% 76,809 5,699 7.4%Value-Added Resellers 136,888 130,486 6,402 4.9% 132,403 (1,917) (1.4)%Total Commercial Revenues 385,676 331,685 53,991 16.3% 331,392 293 0.1%Retail Segment: Retail 194,599 201,610 (7,011) (3.5)% 199,290 2,320 1.2%Total Revenues $580,275 $533,295 $46,980 8.8% $530,682 $2,613 0.5% 2017 to 2018 2016 to 2017 2018 2017 $ Change % Change 2016 $ Change % Change Segment Gross Profit Commercial Segment: Public Carriers $16,707 $13,706 $3,001 21.9% $15,155 $(1,449) (9.6)%Government 8,954 8,235 719 8.7% 7,713 522 6.8%Private System Operators 20,363 18,073 2,290 12.7% 18,071 2 0.0%Value-Added Resellers 35,303 35,530 (227) (0.6)% 34,840 690 2.0%Total Commercial Gross Profit 81,327 75,544 5,783 7.7% 75,779 (75,771) (100.0)%Retail Segment: Retail 38,901 36,224 2,677 7.4% 36,187 37 0.1%Total Gross Profit 120,228 111,768 8,460 7.6% 111,966 (198) (0.2)% Selling, general and administrative expenses 112,327 108,416 3,910 3.6% 102,932 5,484 5.3%Restructuring Charge — 807 (807) — — 807 — Operating Expenses 112,327 109,223 3,104 2.8% 102,932 6,291 6.1%Income from operations 7,901 2,545 5,356 210.5% 9,034 (6,489) (71.8)%Interest, net 429 59 371 632.3% 161 (102) (63.6)%Income before provision for income taxes 7,472 2,486 4,986 200.5% 8,873 (6,387) (72.0)%Provision for income taxes 2,277 1,041 1,236 118.8% 3,532 (2,491) (70.5)%Net income $5,195 $1,445 3,750 259.4% $5,341 (3,896) (72.9)% Diluted earnings per share $0.61 $0.17 $0.44 258.8% $0.65 (0.48) (73.8)% 30 Table of ContentsFiscal Year 2018 Compared to Fiscal Year 2017 Revenues. Revenue for fiscal year 2018 increased by 8.8% as compared to fiscal year 2017. In the commercialsegment, revenue increased by 16.3% with growth in all markets. The public carrier market revenue for fiscal year 2018increased by 40.3%, as compared to fiscal year 2017 due to increased spending among our tower owner and program managercustomers, and also due in part to better execution of our selling strategy in this market. We increased sales with our currentcustomers and cultivated new significant customer relationships. This revenue growth was echoed in our private systemsoperators market and value-added resellers market with growth of 13.0% and 4.9%, respectively. Revenue from ourgovernment market increased by 10.4% due primarily to growth from our federal government customers. The revenue growthwithin our commercial segment was partially offset by a 3.5% decrease in our retail segment revenue for fiscal year 2018 ascompared to fiscal year 2017. This decrease was due in part to consolidation of our customer base within the retail marketand due to a shift in customer behavior where customers are keeping the same phone for longer periods of time, resulting inlower accessories purchases. Gross Profit. Gross profit increased by 7.6% in fiscal year 2018 as compared to fiscal year 2017. In the commercialsegment, gross profit increased by 7.7%. This increase was primarily driven by increases in our public carriers and privatesystems operators markets of 21.9% and 12.7%, respectively. We experienced margin compression within our public carriermarket primarily due to a change in customer mix, with increased sales going to larger customers which required betterpricing. Gross profit within our government market increased by 8.7% in fiscal year 2018 as compared to fiscal year 2017.The growth in the public carriers, private systems and government markets was partially offset by a decrease in gross profit of0.6% within our value-added resellers market. Within the retail segment, gross profit increased by 7.4% in fiscal year 2018 ascompared to fiscal year 2017, despite a decline in revenue. This increase in gross margin was a result of product mix andincreased support from our vendors. Overall gross profit margin decreased slightly to 20.7% in fiscal year 2018, compared to21.0% in fiscal year 2017, primarily due to changes in customer and product mix. Our ongoing ability to earn revenues and gross profits from customers and vendors looking to us for product andsupply chain solutions is dependent upon a number of factors. The terms, and accordingly the factors, applicable to eachrelationship often differ. Among these factors are the strength of the customer’s or vendor’s business, the supply and demandfor the product or service, including price stability, changing customer or vendor requirements, and our ability to support thecustomer or vendor and to continually demonstrate that we can improve the way they do business. In addition, theagreements 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 partyupon several months or otherwise short notice. Our customer relationships could also be affected by wireless carrierconsolidation or global financial crisis. We account for inventory at the lower of cost or net realizable value and as a result write-offs/write-downs occur dueto damage, deterioration, obsolescence, changes in prices and other causes. These expenses have been less than 1% of overallpurchases for each of the last three fiscal years. Selling, General, Administrative and Restructuring Expenses. Total selling, general, administrative andrestructuring expenses increased 2.8% during fiscal year 2018 as compared to fiscal year 2017. Total selling, general,administrative and restructuring expenses as a percentage of revenues decreased from 20.5% in fiscal year 2017 to 19.4% infiscal year 2018. The following are descriptions of changes in significant components of selling, general, administrative andrestructuring expenses: ·Performance bonus expense (including both cash and equity plans) increased by $3.0 million in fiscal year2018 as compared to fiscal year 2017. Our bonus programs are typically based on achieving annualperformance targets. The relationship between expected performance and actual performance led to higherbonus accruals in fiscal 2018, as compared to fiscal 2017.·Freight out expense increased by $0.7 million in fiscal year 2018 as compared to fiscal year 2017 due to ourincreased sales.·Expenses related to information technology increased by $0.7 million in fiscal year 2018 as compared to fiscalyear 2017 primarily due to increased cost relating to Tessco.com improvements.31 Table of Contents·During fiscal year 2017 we incurred corporate support expenses including both recruiting and professionalservice fees relating to the transition to our new CEO. As the transition was completed during fiscal 2017,corporate support expense decreased by $0.9 million in fiscal year 2018 as compared to fiscal year 2017. We continually evaluate the credit worthiness of our existing customer receivable portfolio and provide anappropriate reserve based on this evaluation. We also evaluate the credit worthiness of prospective and current customers andmake decisions regarding extension of credit terms to such customers based on this evaluation. Accordingly, we recorded aprovision for bad debts of $797,100 and $674,200 for fiscal year 2018 and fiscal year 2017, respectively. Interest, Net. Net interest expense increased, from $58,600 in fiscal year 2017 to $429,100 in fiscal year 2018. Theincrease is primarily related higher borrowing levels on our secured revolving credit facility. Refer to Note 6 through 8 to thefinancial statements included as part of this Annual Report on Form 10-K for additional information on our borrowings. Income Taxes, Net Income and Diluted Earnings Per Share. The effective tax rates in fiscal year 2018 and 2017were 30.5% and 41.9%, respectively. The effective tax rate was lower for fiscal 2018, primarily due to the 2017 Tax Act thatwent into effect in the third quarter of fiscal 2018, as well as a change in treatment of a deferred tax liability relating to ouraccounting for a key man life insurance policy, discussed below. The 2017 Tax Act requires fiscal year companies to blendtheir federal tax rates this year. Our annual federal rate for fiscal 2018 will be based on 9 months at the old rate ofapproximately 35% rate and 3 months at the new 21% rate. We were also able to take a benefit on our net deferred taxliabilities in fiscal 2018, which now reflect the lower federal rate. See Note 13 Income Taxes to the financial statementsincluded as part of this Annual Report on Form 10-K for additional information on the effect of the 2017 Tax Act and thechange in treatment of the deferred tax liability. As a result of the factors discussed above, net income and diluted earningsper share for fiscal year 2018 increased 259.5% and 258.8%, respectively, compared with fiscal year 2017. After we announced our fourth quarter fiscal year 2018 financial results by press release dated May 7, 2018, wedetermined it necessary to change how we account for the cash surrender value of certain key-man life insurance policiesheld by us. We had for many years recorded a deferred tax liability related to the incremental increase year over year in thecash surrender value of the policies. After further analysis, it was determined that the annual change in cash surrender value,which has accumulated slowly over many years, should have been treated as an offset to the non-deductible insurancepremiums related to the same policies, and not as a deferred tax liability. As such, we adjusted our fiscal 2018 financialresults to reflect the favorable change in tax treatment as applied to the aggregate amount of the incremental increases thathave accumulated over the multi-year period. Specifically, net deferred tax assets increased by an aggregate of $0.5 millionand income tax expense correspondingly decreased by an aggregate of $0.5 million. Correspondingly, net income andearnings per share for the fourth quarter of fiscal 2018 increased by $0.5 million and $0.06 per share, respectively, due to aone-time adjustment resulting from this change in tax treatment. There was no impact on net cash flow used inoperations. This change has no impact on previously filed tax returns. Fiscal Year 2017 Compared to Fiscal Year 2016 Revenues. Revenue for fiscal year 2017 increased slightly by 0.5% as compared to fiscal year 2016. Revenue fromour government market increased by 11.1% for fiscal year 2017 as compared to fiscal year 2016. We have continued to investin this market, which has led to an increase in government contracts, especially with our state and local governmentcustomers. Revenues within our private system operators market increased by 7.4% for fiscal year 2017 as compared to fiscalyear 2016, primarily due to an increase in sales to our utility customers. Revenue from the public carrier and value-addedresellers markets, decreased by 8.0% and 1.4%, respectively, due to a dramatic slowdown in the purchases by our cellularcarrier customers and the general contractors and integrators doing work on their behalf, beginning in the third quarter offiscal 2015. During the second half of fiscal 2017, we saw improved year-over-year quarterly sales in the carrier markets aspurchases increased from key contractors and integrators. Revenue in the second half of fiscal 2017 increased 23.0% in thepublic carrier market as compared to the same period of fiscal 2016 as a result of these increased purchases. Gross Profit. Gross profit was essentially flat with a 0.2% decrease in fiscal year 2017 compared to fiscal year 2016.This decrease was primarily driven by a 9.6% decrease in our public carriers market for fiscal year 2017 as compared32 Table of Contentsto fiscal year 2016. This decrease was almost fully offset by increases in gross profit of our government market and our value-added resellers market of 6.8% and 2.0%, respectively. Overall gross profit margin decreased slightly to 21.0% in fiscal year2017, compared to 21.1% in fiscal year 2016, primarily due to changes in customer and product mix. Our ongoing ability to earn revenues and gross profits from customers and vendors looking to us for product andsupply chain solutions is dependent upon a number of factors. The terms, and accordingly the factors, applicable to eachrelationship often differ. Among these factors are the strength of the customer’s or vendor’s business, the supply and demandfor the product or service, including price stability, changing customer or vendor requirements, and our ability to support thecustomer or vendor and to continually demonstrate that we can improve the way they do business. In addition, theagreements 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 partyupon several months or otherwise short notice. Our customer relationships could also be affected by wireless carrierconsolidation or global financial crisis. We account for inventory at the lower of cost or net realizable value, and as a result write-offs/write-downs occur dueto damage, deterioration, obsolescence, changes in prices and other causes. These expenses have been less than 1% of overallpurchases for each of the last three fiscal years. Selling, General, Administrative and Restructuring Expenses. Total selling, general, administrative andrestructuring expenses increased 6.1% during fiscal year 2017 as compared to fiscal year 2016. Total selling, general,administrative and restructuring expenses as a percentage of revenues increased slightly from 19.4% in fiscal year 2016 to20.5% in fiscal year 2017. The following are descriptions of changes in significant components of selling, general,administrative and restructuring expenses: ·Marketing expenses increased by $1.4 million, or 16.7%, in fiscal year 2017 as compared to fiscal year 2016,primarily due to direct marketing costs associated with improved design and content of our TESSCO.comwebsite and increased market development funds associated with sales to our retail customers.·Compensation and benefits expense increased by $4.2 million, or 6.8%, in fiscal year 2017 as compared tofiscal year 2016, primarily related to higher business generation across all markets and operationscompensation costs to support the increase in retail sales volume. Additionally, we incurred $0.8 million inonetime severance costs in relation to a restructuring of our sales and product teams.·Performance bonus expense (including both cash and equity plans) increased by $1.1 million in fiscal year2017 as compared to fiscal year 2016. This increase is primarily related to bonuses paid to our former andcurrent CEO related to the transition that occurred during this fiscal year.·During the fourth quarter of fiscal year 2016, we received the results of a software license audit conducted by amajor software provider. After significant negotiations, we settled the audit for $1.5 million, which was accruedin the fourth quarter of fiscal year 2016 and was paid in the first quarter of fiscal year 2017. The ongoing annualcost from the results of this audit is minimal. We continually evaluate the credit worthiness of our existing customer receivable portfolio and provide anappropriate reserve based on this evaluation. We also evaluate the credit worthiness of prospective and current customers andmake decisions regarding extension of credit terms to such customers based on this evaluation. Accordingly, we recorded aprovision for bad debts of $674,200 and $637,100 for fiscal year 2017 and fiscal year 2016, respectively. Interest, Net. Net interest expense decreased, from $161,300 in fiscal year 2016 to $58,600 in fiscal year 2017. Thedecrease is primarily related to the extinguishment of our term loan and lower borrowing levels on our secured revolvingcredit facility. Refer to Note 6 through 8 to the consolidated financial statements included as part of this Annual Report onForm 10-K for additional information on our borrowings. Income Taxes, Net Income and Diluted Earnings Per Share. The effective tax rates in fiscal year 2017 and 2016were 41.9% and 39.8%, respectively. The increased rate is primarily a result of lower pre-tax income which increases theimpact of non-deductible tax differences. As a result of the factors discussed above, net income and diluted earnings pershare for fiscal year 2017 decreased 72.9% and 73.8%, respectively, compared with fiscal year 2016.33 Table of Contents Liquidity and Capital Resources In summary, our cash flows were as follows: 2018 2017 2016 Cash flow (used in) provided by operatingactivities $(9,247,100) $3,051,300 $20,141,100 Cash flow used in investing activities (3,539,400) (2,563,000) (3,513,800) Cash flow provided by (used in) financingactivities 4,265,800 (8,831,000) (7,268,500) Net decrease in cash and cash equivalents $(8,520,700) $(8,342,700) $9,358,800 We used $9.2 million of net cash from operating activities during fiscal year 2018. This outflow was driven byincreases in accounts receivable and inventory, partially offset by net income (net of depreciation and amortization and non-cash stock compensation expense), and an increase in accounts payable. Increasing sales to our public carrier customersrequired significant investments in inventory and at times has resulted in larger accounts receivable balances. Accountspayable also increased in response to our higher inventory levels. Both current and potential opportunities within our publiccarrier business have required an increase in working capital investments. As such, on October 19, 2017 we entered into theAmended and Restated Credit Agreement, as discussed below, based upon our anticipated borrowing and cash needs. We generated $3.1 million of net cash from operating activities during fiscal year 2017. This inflow was driven bynet income (net of depreciation and amortization and non-cash stock compensation expense), an increase in accountspayable and a decrease in prepaid expenses and other current assets partially offset by an increase in accounts receivable andproduct inventory. Accounts receivable increased due to higher sales in the fourth quarter of fiscal 2017 as compared to thefourth quarter of fiscal 2016. Inventory and accounts payable increased as a result of strategic purchases combined with ageneral increase in base station infrastructure inventory for our public system operators, contractors, and program managersmarket. Additionally, our inventory levels for certain Ventev product lines have also increased. The reduction in prepaidexpenses and other assets as well as the decrease in accrued expense and other liabilities are both primarily related to a towerowner customer whose inventory we have held on its behalf since fiscal year 2015. Because we held the inventory on thetower owner’s behalf, the cost of these goods was recorded in prepaid expenses and other current assets, and we were unableto recognize the revenue and related cost of goods sold associated with the transaction until the product physicallyshipped. During fiscal year 2017, most of the remaining inventory was shipped and therefore the corresponding portion ofthe deferred revenue and cost of goods sold were partially recognized. We generated $20.1 million of net cash from operating activities during fiscal year 2016. This inflow was driven bynet income (net of depreciation and amortization and non-cash stock compensation expense), a decrease in accountsreceivable and product inventory, and a decrease in prepaid expenses and other current assets, partially offset by a decreasein trade accounts payable and accrued expense and other current liabilities. The decrease in accounts receivable wasprimarily related to better collections in the fourth quarter of fiscal year 2016 as compared to the fourth quarter of fiscal year2015. The decrease in inventory was primarily due to an effort to reduce overall inventory levels while maintaining highservice levels. The reduction in prepaid expenses and other assets as well as the decrease in accrued expense and otherliabilities are both primarily related to the tower owner customer referred to above. During fiscal year 2016, the majority ofthis inventory was shipped and therefore the corresponding portion of deferred revenue and cost of goods sold were partiallyrecognized. Capital expenditures of $3.5 million in fiscal year 2018 were up from $2.6 million in fiscal year 2017 and flat with$3.5 million in fiscal year 2016. Fiscal year 2018, 2017 and 2016 capital expenditures were largely comprised of investmentsin information technology of $2.8 million, $2.4 million, and $3.1 million, respectively. Cash flows generated from financing in fiscal year 2018 were primarily related to borrowings from our line of34 ®Table of Contentscredit partially offset by cash dividends paid to shareholders. Cash flows used in financing activities in fiscal year 2017 wereprimarily related to cash dividends paid to shareholders and the repayment of our term loan which was secured by a firstposition deed of trust encumbering Company-owned real property in Hunt Valley, Maryland. Cash flows used in financingactivities in fiscal year 2016 were primarily related to cash dividends paid to shareholders. On April 23, 2014, our Board of Directors expanded our then existing stock buyback program and authorized thepurchase on a non-accelerated basis of up to $10.0 million of the Company’s stock over a 24-month period, ending in April2016. Our Board of Directors believes that the repurchase of our shares, when appropriate, is an excellent use of funds toenhance long-term shareholder value. Purchases were funded from working capital and/or our revolving credit facility. Sharescould be purchased from time to time in the open market, by block purchase, or through negotiated transactions, or othertransactions managed by broker-dealers. No shares were repurchased during fiscal years 2018, 2017, or 2016. The stockbuyback program expired in April 2016. We also withhold shares from our employees and directors, at their request, equal to the minimum federal and statetax withholdings related to vested equity grants. For fiscal years 2018 and 2017 this totaled $65,400 and $192,400,respectively. Our revolving credit facility with SunTrust Bank limits to $2.0 million the aggregate dollar value of shares thatmay be withheld or repurchased in connection with satisfaction of these tax withholding obligations during any 12 monthperiod. At April 1, 2018 we had the ability to withhold or repurchase $1.9 million in additional shares of our common stockduring fiscal 2018, without violating this covenant. On June 24, 2016, the Company and its primary operating subsidiaries entered into a Credit Agreement (the “CreditAgreement”) with SunTrust Bank, as Administrative Agent and Lender, and Wells Fargo Bank, National Association, as aLender, for a senior asset based secured revolving credit facility of up to $35 million (the “Revolving Credit Facility”). Thisreplaced our previously existing $35 million unsecured revolving credit facility with both SunTrust Bank and Wells FargoBank, National Association, which had no outstanding principal balance at the time of replacement. The replacementRevolving Credit Facility included terms providing for its maturity after five years, on June 24, 2021, and for a $5.0 millionsublimit for the issuance of standby letters of credit and a $10.0 million sublimit for swing line loans. Borrowing Availabilityunder the replacement Revolving Credit Facility as it was initially established is determined in part in accordance with aBorrowing 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 to be maintained atany time during which the borrowing availability, as determined in accordance with the Credit Agreement, falls below $10million, as well as terms that could limit our ability to engage in specified transactions or activities, including (but notlimited to) investments and acquisitions, sales of assets, payment of dividends, issuance of additional debt and other matters. Pursuant to a related Guaranty and Security Agreement by and among the Company, the other Company affiliateborrowers under the Credit Agreement and other subsidiaries of the Company, referred to collectively as the Loan Parties, andSunTrust Bank, as Administrative Agent, the Loan Parties’ obligations, which include the obligations under the CreditAgreement, were guaranteed by those Loan Parties not otherwise borrowers, and secured by continuing first priority securityinterests in the Company’s and the other Loan Parties’ (including both borrowers and guarantors) inventory, accountsreceivable and deposit accounts, and in all documents, instruments, general intangibles, letter of credit rights and chattelpaper, in each case to the extent relating to inventory and accounts, and all proceeds of the foregoing. The security interestswere granted in favor of the Administrative Agent, for the benefit of the Lenders party to the Credit Agreement from time totime. The obligations secured also include certain other obligations of the Loan Parties to the Lenders and their affiliatesarising from time to time, relating to swaps, hedges and cash management and other bank products. Effective July 13, 2017, we entered into a First Amendment to Credit Agreement, pursuant to which, the term“Availability” as used in the Credit Agreement was amended for a period of time ending no later than October 31, 2017, toallow for the inclusion of an additional sum when calculating “Availability” for certain limited purposes. This additionalsum equals the lesser of $10 million, and the amount by which the Borrowing Base exceeds $35 million. This FirstAmendment did not provide for any increase in the $35 million Aggregate Revolving Commitment Amount, but allowed theCompany greater flexibility under the Credit Agreement for a limited period of time, until October 31, 2017, and was35 Table of Contentssought by the Company in response to business opportunities identified by the Company. Capitalized terms used but nototherwise defined in this and the preceding three paragraphs have the meanings ascribed to each in the Credit Agreement orFirst Amendment, as applicable. On October 19, 2017, the Company and its primary operating subsidiaries, as co-borrowers, entered into anAmended and Restated Credit Agreement with SunTrust Bank, as Administrative Agent and Lender, and Wells Fargo Bank,National Association, as a Lender (the "Amended and Restated Credit Agreement"). Pursuant to the Amended and RestatedCredit Agreement, the Credit Agreement for the secured Revolving Credit Facility, as previously established in June 2016,was amended and restated in order to, among other things, increase the Company’s borrowing limit from up to $35 million toup to $75 million. Capitalized terms used but not otherwise defined in this and the following three paragraphs have themeanings ascribed to each in the Amended and Restated Credit Agreement. In addition to expanding the borrowing limit, the Amended and Restated Credit Facility extends the applicablematurity date 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 thoseapplicable to the facility as existing prior to the execution and delivery of the Amended and Restated Credit Agreement, butwith certain modifications. The Amended and Restated Credit Agreement provides for a $5.0 million sublimit for theissuance of standby letters of credit, a $12.5 million sublimit for swingline loans and an accordion feature which, subject tocertain conditions, could increase the aggregate amount of the commitments to up to $125 million, with the optionalcommitments being provided by existing Lenders or new lenders reasonably acceptable to the Administrative Agent. NoLender is obligated to increase its commitment. Availability is determined in accordance with a Borrowing Base, which hasbeen 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 181days; minus (B) Reserves. Upon closing, there was $23.4 million outstanding under the Amended and Restated CreditAgreement. Like the secured Revolving Credit Facility as existing prior to the execution and delivery of the Amended andRestated Credit Agreement, borrowings under the secured Revolving Credit Facility as now evidenced by the Amended andRestated Credit Agreement initially accrue interest from the applicable borrowing date at an Applicable Rate equal to theEurodollar 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 Rateplus 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 theEurodollar Rate plus the Applicable Margin to the Base Rate plus the Applicable Margin. In any event, following an Eventof Default, in addition to changing the Applicable Rate to the Base Rate plus the Applicable Margin, the Lenders’ may attheir option set the Applicable Margin at 0.50% if the Base Rate applies or 1.75% if the Eurodollar Rate applies, and increasethe Applicable Rate by an additional 200 basis points. The Applicable Rate adjusts on the first Business Day of eachcalendar month. The Company is required to pay a monthly Commitment Fee on the average daily unused portion of therevolving credit facility provided for pursuant to the Amended and Restated Credit Agreement, at a per annum rate equal to0.25%. As of April 1, 2018, we had a $10.8 million balance on the Revolving Credit Facility; therefore, we had $64.2 millionavailable, subject to the Borrowing Base limitations and compliance with the other applicable terms of the Credit Agreement,including the covenants referenced above. In connection with the entering into of the Amended and Restated Credit Agreement, the Company and the otherLoan Parties executed and delivered to SunTrust Bank, as Administrative Agent, a Reaffirmation Agreement, pursuant towhich the obligations of the Loan Parties under the Guaranty and Security Agreement delivered by the Loan Parties inconnection with the secured credit facility as previously existing (including the previously existing guaranty by the LoanParties not otherwise Borrowers and the previously existing grant by the Company and the other Loan Parties of a continuingfirst 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 arisingunder the Amended and Restated Credit Facility from time to time. At the end of fiscal year 2018, we were in compliance with the financial covenants applicable under our revolving36 Table of Contentscredit facility with SunTrust Bank. On March 31, 2009, we entered into a term loan with the Baltimore County Economic Development RevolvingLoan Fund for an aggregate principal amount of $250,000. The term loan is payable in equal monthly installments ofprincipal and interest of $2,300, with the balance due at maturity on April 1, 2019. The term loan bears interest at 2.00% perannum and is secured by a subordinate position on our Hunt Valley, Maryland facility. At April 1, 2018, the principalbalance of this term loan was approximately $29,600. Working capital (current assets less current liabilities) decreased to $74.8 million as of April 1, 2018, from $77.2million as of March 26, 2017. Shareholders' equity was flat at $108.1 million as of April 1, 2018, and $108.0 million as ofMarch 26, 2017. We believe that our existing cash, payments from customers, and availability under our revolving credit facility(including any amendment or replacement thereof), or if needed, financing we believe would be available to us from othersources, will be sufficient to support our operations for at least the next twelve months. We expect to meet short-termliquidity needs through cash on our balance sheet and operating cash flow, supplemented by our revolving credit facility;and we expect to meet long-term liquidity needs through these same resources. If we were to undertake an acquisition orother major capital purchases that require funds in excess of our existing sources of liquidity, we would look to sources offunding from additional credit facilities, debt and/or equity issuances. There can be no assurances that such additional futuresources of funding, either to fund an acquisition or major capital purchase, or to support our cash flow needs in the event ofthe termination of our existing revolving credit facility before it can be replaced with an asset based facility, would beavailable on terms acceptable to us, if at all. In addition, our liquidity could be negatively impacted by decreasing revenues and profits resulting from a decreasein demand for our products or a reduction in capital expenditures by our customers, or by the weakened financial conditionsof our customers or suppliers, in each case as a result of a possible downturn in the global economy, among other factors. 37 Table of ContentsContractual Obligations The following tables reflect a summary of our contractual cash obligations and other commercial commitments as of April 1,2018: Payment Due by Fiscal Year Less Than More Than Total 1 Year Years 1-3 Years 4-5 5 Years Long-Term Debt Obligations $29,600 $27,300 $2,300 $ — $ — Revolving credit facility 11,503,100 11,022,900 375,000 105,200 — Lease Obligations 8,330,100 3,003,400 5,108,600 218,100 — Interest payments 300 300 — — — Other Long-Term Liabilities 1,087,500 75,000 150,000 150,000 712,500 Tax contingency reserves 337,700 — — — — Total contractual cashobligations $21,288,300 $14,128,900 $5,635,900 $473,300 $712,500 (1)We are subject to a 0.25% fee on the unused portion of our revolving credit facility. This balance includes both theunused fees and current balance on our revolving credit facility.(2)Interest payments include amounts owed on notes payable at their stated contractual rate(3)Other Long-Term Liabilities reflected on the Consolidated Balance Sheet include amounts owed under a SupplementalExecutive Retirement Plan.(4)We are unable to make a reasonably reliable estimate of the period of the cash settlement with the respective taxingauthorities for the $0.3 million balance of our tax contingency reserves, net of federal tax benefits. See further discussionin Note 13—"Income Taxes" to the consolidated financial statements included as part of this Annual Report on Form10-K. Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of our operations are based on our consolidatedfinancial statements, which have been prepared in accordance with accounting principles generally accepted in the UnitedStates. The preparation of these financial statements requires us to make estimates and judgments that affect the reportedamount of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Actual resultsmay differ from these estimates under different assumptions or conditions. We have identified the policies below as critical to our business operations and the understanding of our results ofoperations: Revenue Recognition. We record revenues when 1) persuasive evidence of an arrangement exists, 2) delivery hasoccurred or services have been rendered, 3) our price to the buyer is fixed or determinable, and 4) collectability is reasonablyassured. Our revenue recognition policy includes evidence of arrangements for significant revenue transactions througheither receipt of a customer purchase order or a web-based order. We record revenues when risk of loss has passed to thecustomer. In most cases, shipments are made using FOB shipping terms. For a portion of our sales, we use FOB destinationterms 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 incentivessubsequent to a sale. We sell under normal commercial terms and, therefore, we only record revenues on transactions wherecollectability is reasonably assured. Because a large portion of our sales transactions meet the conditions set forth in the Financial Accounting StandardsBoard (“FASB”) Accounting Standards Codification (“ASC”) on revenue recognition, we recognize revenues from salestransactions containing sales returns provisions at the time of the sale. These conditions require that 1) our price besubstantially fixed or determinable at the date of sale, 2) the buyer is obligated to pay us, and such obligation is notcontingent on their resale of the product, 3) the buyer’s obligation to us does not change in the event of theft or physical38 (1)(2)(3)(4)Table of Contentsdestruction or damage of the product, 4) the buyer has economic substance apart from us, 5) we do not have significantobligations for future performance to directly bring about resale of the product by the buyer, and 6) the amount of futurereturns can be reasonably estimated. Because our normal terms and conditions of sale are consistent with conditions 1-5above, and we are able to perform condition 6, we make a reasonable estimate of product returns in sales transactions andaccrue a sales return reserve based on this estimate. Our current and potential customers are continuing to look for ways to reduce their inventories and lower their totalcosts, including distribution, order taking and fulfillment costs, while still providing their customers excellent service. Someof these companies have turned to us to implement supply chain solutions, including purchasing inventory, assisting indemand forecasting, configuring, packaging, kitting and delivering products and managing customer and vendor relations,from order taking through cash collections. In performing these solutions, we assume varying levels of involvement in thetransactions and varying levels of credit and inventory risk. As our offerings continually evolve to meet the needs of ourcustomers, we constantly evaluate our revenue accounting based on the guidance set forth in accounting standards generallyaccepted in the United States. When applying this guidance in accordance with the FASB standard regarding revenuerecognition for principal-agent considerations, we look at the following indicators: whether we are the primary obligor in thetransaction; whether we have general inventory risk; whether we have latitude in establishing price; the extent to which wechange the product or perform part of the service; whether we have responsibility for supplier selection; whether we areinvolved in the determination of product and service specifications; whether we have physical inventory risk; whether wehave credit risk; and whether the amount we earn is fixed. Each of our customer relationships is independently evaluatedbased on the above guidance and revenues are recorded on the appropriate basis. Based on a review of the factors above, inthe majority of our sales relationships, we have concluded that we are the principal in the transaction and we record revenuesbased upon the gross amounts earned and booked. However, we do have certain relationships where we are not the principaland we record revenues on a net fee basis, regardless of amounts billed (less than 1% of our total revenues for fiscal year2018). Allowance for Doubtful Accounts. We use estimates to determine the amount of the allowance for doubtful accountsnecessary to reduce accounts receivable and unbilled receivables to their expected net realizable value. We estimate theamount of the required allowance by reviewing the status of past-due receivables and analyzing historical bad debt trends.Actual collection experience has not varied significantly from estimates, due primarily to credit policies, collectionexperience and our stability as it relates to our current customer base. Typical payments from commercial customers are due30 days from the date of the invoice. We charge-off receivables deemed to be uncollectible to the allowance for doubtfulaccounts. Accounts receivable balances are not collateralized. Inventory Reserves. We establish inventory reserves for excess and obsolete inventory. We regularly reviewinventory to evaluate continued demand and identify any obsolete or excess quantities of inventory. We record a provisionfor the difference between excess and obsolete inventory and its estimated realizable value. Estimated realizable value isbased on anticipated future product demand, market conditions and liquidation values. Actual results differing from theseprojections could have a material effect on our results of operations. Impairment of Long-Lived and Indefinite-Lived Assets. Our Consolidated Balance Sheet as of April 1, 2018, includesgoodwill of approximately $11.7 million and other indefinite lived intangible assets of $0.8 million. We perform annualimpairment tests for goodwill and other indefinite lived assets on the first day of our fourth quarter. We also periodicallyevaluate our long-lived assets for potential impairment indicators. The goodwill and intangible assets impairment testinvolves an initial qualitative analysis to determine if it is more likely than not that an intangible asset’s fair value is lessthan its carrying amount. If qualitative factors suggest a possible impairment the company then performs an additional two-step approach. 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 ourgoodwill 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. Based on theCompany’s qualitative assessment for fiscal year 2018, we have concluded that it is not more likely than not that the carryingvalue of our reporting units with goodwill or intangible assets is above the fair value of the related reporting unit. Due to thechange in segment reporting, we performed a quantitative impairment test for goodwill on the annual impairment testing datein fiscal year 2018. Based on this quantitative testing we have concluded that it is not more likely than not that the carryingvalue of our reporting units with goodwill is above the fair value of the39 Table of Contentsrelated reporting unit. Future events, such as significant changes in cash flow assumptions, could cause us to conclude thatimpairment indicators exist and that the net book value of goodwill, long-lived assets or intangible assets are impaired. Wewill continue to monitor our market capitalization as a potential impairment indicator considering overall market conditionsand specific industry events. Had the determination been made that the goodwill and other indefinite lived intangible assetswere impaired, the value of these assets would have been reduced by an amount up to $12.5 million, resulting in acorresponding charge to operations. The methods of assessing fair value for reporting units with goodwill as well as for indefinite lived assets requiresignificant judgments to be made by management, including future revenues, expenses, cash flows and discount rates.Changes in such estimates or the application of alternative assumptions could produce significantly different results. Income Taxes. We recognize deferred tax assets and liabilities based on the differences between the financialstatement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets forrecoverability. This review is based on historical taxable income, projected future taxable income and the expected timing ofthe reversals of existing temporary differences. Based on this review, we have not established a valuation allowance becauseour deferred tax assets are more likely than not realizable. If we are unable to generate sufficient taxable income, or if there isa material change in the actual effective tax rates or time period within which the underlying temporary differences becometaxable or deductible, we could be required to establish a valuation allowance against all or a significant portion of ourdeferred tax assets that are not more likely than not realizable, resulting in a substantial increase in our effective tax rate anda material adverse impact on our operating results. We account for income taxes under the FASB’s ASC on accounting for uncertainty in income taxes recognized in anenterprise’s financial statements. This standard prescribes a recognition threshold and measurement attribute for the financialstatement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also providesguidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure andtransition. As of April 1, 2018, we had total net unrecognized tax benefits of approximately $377,700, all of which, ifrecognized, would favorably affect the effective income tax rate in future periods. Stock-Based Compensation. We record stock-based compensation in accordance with the FASB standard regardingstock compensation and share-based payments. We account for forfeitures as they occur rather than estimate expectedforfeitures. The standard also requires stock awards granted or modified after the adoption of the standard that include bothperformance conditions and graded vesting to be amortized by an accelerated method rather than the straight-line method. Off-Balance Sheet Arrangements We have no material off-balance sheet arrangements. Recent Accounting Pronouncements A description of recently issued and adopted accounting pronouncements is contained in Note 2 to ourConsolidated Financial Statements. Forward‑Looking Statements This Report may contain forward-looking statements. These forward-looking statements may generally be identifiedby the use of the words “may,” “will,” “expects,” “anticipates,” “believes,” “estimates,” and similar expressions, but theabsence of these words or phrases does not necessarily mean that a statement is not forward looking. Forward lookingstatements involve a number of risks and uncertainties. Our actual results may differ materially from those described in orcontemplated by any such forward-looking statement for a variety of reasons, including those risks identified in our mostrecent Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission, under theheading “Risk Factors” and otherwise. Consequently, the reader is cautioned to consider all forward-looking statements inlight of the risks to which they are subject. 40 Table of ContentsWe are not able to identify or control all circumstances that could occur in the future that may adversely affect ourbusiness and operating results. Without limiting the risks that we describe in our periodic reports and elsewhere, among therisks that could lead to a materially adverse impact on our business or operating results are the following: termination or non-renewal of limited duration agreements or arrangements with our vendors and affinity partners which are typically terminableby either party upon several months or otherwise relatively short notice; loss of significant customers, vendors orrelationships, including affinity relationships; loss of customers or a reduction in customer business either directly orindirectly as a result of consolidation among large wireless service carriers and others within the wireless communicationsindustry; any deterioration in the strength of our customers’, vendors’ or affinity partners’ businesses; increasingly negativeor prolonged adverse economic conditions, including those adversely affecting consumer confidence or consumer orbusiness spending, or otherwise adversely affecting our vendors or customers, including their access to capital or liquidity orour customers’ demand for our ability to fund or pay for the purchase of our products and services; our dependence on arelatively small number of suppliers and vendors, which could hamper our ability to maintain appropriate inventory levelsand meet customer demand; failure of our information technology systems or distribution systems, exposure to cyber-attacks,and the cost associated with ongoing efforts to maintain cyber security measures and to meet applicable compliancestandards; damage or destruction of our distribution or other facilities; prolonged or otherwise unusual quality orperformance control problems; technology changes in the wireless communications industry, or technological failures, whichcould lead to significant inventory obsolescence or devaluation and/or our inability to offer key products that our customersdemand; third-party freight carrier interruption; increased competition from competitors, including manufacturers or nationaland regional distributors of the products we sell and the absence of significant barriers to entry which could result in pricingand other pressures on profitability and market share; our relative bargaining power and inability to negotiate favorableterms with our vendors and customers; our inability to access capital and obtain or retain financing as and when needed;transitional and other risks associated with acquisitions of companies that we may undertake in an effort to expand ourbusiness; the possibility that, for unforeseen reasons, we may be delayed in entering into or performing, or may fail to enterinto or perform, anticipated contracts or may otherwise be delayed in realizing or fail to realize anticipated revenues oranticipated savings; our inability to protect certain intellectual property, including systems and technologies on which werely; claims against us for breach of the intellectual property rights of third parties; product liability claims; changes inpolitical and regulatory conditions, including tax and trade policies; and our inability to hire or retain for any reason our keyprofessionals, management and staff. Available Information Our internet web site address is: www.tessco.com. We make available free of charge through our website, our AnnualReport on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed orfurnished pursuant to Section 13 or 15(d) of the Exchange Act as soon as reasonably practicable after such documents areelectronically filed with, or furnished to, the Securities and Exchange Commission. Also available on our website is our Codeof Business Conduct and Ethics. We have not incorporated herein by reference the information on our website, and it shouldnot be considered a part of this filing. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk: We are exposed to an immaterial level of market risk from changes in interest rates. We have from time to timepreviously used interest rate swap agreements to modify variable rate obligations to fixed rate obligations, thereby reducingour exposure to interest rate fluctuations. We had no long-term variable rate debt obligations as of April 1, 2018. Based onApril 1, 2018 borrowing levels, a 1.0% increase or decrease in current market interest rates would have no material effect onour statement of income. Foreign Currency Exchange Rate Risk: We are exposed to an immaterial level of market risk from changes in foreign currency rates. Almost all of our salesare made in U.S. Dollars so we have an immaterial amount of foreign currency risk. Those sales not made in U.S. Dollars aremade in Canadian Dollars. 41 Table of Contents Item 8. Financial Statements and Supplementary Data. TESSCO TECHNOLOGIES INCORPORATED AND SUBSIDIARIESConsolidated Balance Sheets April 1, March 26, 2018 2017 ASSETS Current assets: Cash and cash equivalents $19,400 $8,540,100 Trade accounts receivable, net of allowance for doubtful accounts of $1,094,900 and$782,200, respectively 87,862,300 64,778,900 Product inventory, net 72,323,000 63,984,300 Prepaid expenses and other current assets 4,489,100 3,864,100 Total current assets 164,693,800 141,167,400 Property and equipment, net 13,662,800 13,830,900 Goodwill, net 11,677,700 11,677,700 Deferred tax assets 710,500 — Other long-term assets 8,678,900 7,304,500 Total assets $199,423,700 $173,980,500 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Trade accounts payable $67,041,100 $53,581,400 Payroll, benefits and taxes 8,291,100 6,772,100 Income and sales tax liabilities 2,339,200 1,364,700 Accrued expenses and other current liabilities 1,370,300 2,228,200 Revolving line of credit 10,835,400 — Current portion of long-term debt 27,300 26,500 Total current liabilities 89,904,400 63,972,900 Deferred tax liabilities — 386,800 Long-term debt, net of current portion 2,300 29,800 Other long-term liabilities 1,465,400 1,574,700 Total liabilities 91,372,100 65,964,200 Shareholders’ equity: Preferred stock, $0.01 par value, 500,000 shares authorized and no shares issued andoutstanding — — Common stock $0.01 par value, 15,000,000 shares authorized, 14,111,703 sharesissued and 8,396,537 shares outstanding as of April 1, 2018, and 14,048,392 sharesissued and 8,337,669 shares outstanding as of March 26, 2017 99,000 98,400 Additional paid-in capital 60,611,900 59,006,000 Treasury stock, at cost, 5,715,166 shares as of April 1, 2018 and 5,710,723 shares asof March 26, 2017 (57,503,000) (57,437,600) Retained earnings 104,843,700 106,349,500 Total shareholders’ equity 108,051,600 108,016,300 Total liabilities and shareholders’ equity $199,423,700 $173,980,500 The accompanying Notes to the Consolidated Financial Statements are an integral part of these consolidated statements. 42 Table of ContentsTESSCO TECHNOLOGIES INCORPORATED AND SUBSIDIARIESConsolidated Statements of Income Fiscal Years Ended April 1, 2018 March 26, 2017 March 27, 2016 Revenues $580,274,700 $533,295,100 $530,682,100Cost of goods sold 460,046,300 421,527,300 418,716,200Gross profit 120,228,400 111,767,800 111,965,900Selling, general and administrative expenses 112,326,700 108,416,300 102,932,300Restructuring Charge — 806,600 —Income from operations 7,901,700 2,544,900 9,033,600Interest expense, net 429,100 58,600 161,300Income before provision for income taxes 7,472,600 2,486,300 8,872,300Provision for income taxes 2,277,200 1,041,200 3,531,800Net income $5,195,400 $1,445,100 $5,340,500Basic earnings per share $0.62 $0.17 $0.65Diluted earnings per share $0.61 $0.17 $0.65Basic weighted-average common shares outstanding 8,370,742 8,312,731 8,220,023Effect of dilutive options and other equity instruments 100,263 27,686 —Diluted weighted-average common shares outstanding 8,471,005 8,340,417 8,220,023Cash dividends declared per common share $0.80 $0.80 $0.80 The accompanying Notes to these Consolidated Financial Statements are an integral part of these consolidated statements. 43 Table of ContentsTESSCO TECHNOLOGIES INCORPORATED AND SUBSIDIARIESConsolidated Statements of Changes in Shareholders' Equity Common Stock Additional Total Paid-in Treasury Retained Shareholders’ Shares Amount Capital Stock Earnings Equity Balance at March 29, 2015 8,159,592 96,100 56,517,600 (56,307,900) 112,836,300 113,142,100 Proceeds from issuance of stock 25,067 300 487,000 — — 487,300 Treasury stock purchases (40,623) — (937,300) — (937,300) Non-cash stock compensation expense 128,088 1,200 727,800 — — 729,000 Excess tax benefit from stock-based compensation — — 381,400 — — 381,400 Cash dividends paid — — — — (6,615,700) (6,615,700) Net income — — — — 5,340,500 5,340,500 Balance at March 27, 2016 8,272,124 97,600 58,113,800 (57,245,200) 111,561,100 112,527,300 Proceeds from issuance of stock 37,432 400 458,200 — — 458,600 Treasury stock purchases (12,453) — (192,400) — (192,400) Non-cash stock compensation expense 40,566 400 434,000 — — 434,400 Excess tax benefit from stock-based compensation — — — — — Cash dividends paid — — — — (6,656,700) (6,656,700) Net income — — — — 1,445,100 1,445,100 Balance at March 26, 2017 8,337,669 98,400 59,006,000 (57,437,600) 106,349,500 108,016,300 Proceeds from issuance of stock 44,458 400 604,000 — — 604,400 Treasury stock purchases (4,443) — (65,400) — (65,400) Non-cash stock compensation expense 18,853 200 1,001,900 — — 1,002,100 Cash dividends paid — — — — (6,701,200) (6,701,200) Net income — — — — 5,195,400 5,195,400 Balance at April 1, 2018 8,396,537 $99,000 $60,611,900 $(57,503,000) $104,843,700 $108,051,600 The accompanying Notes to these Consolidated Financial Statements are an integral part of these consolidated statements. 44 Table of ContentsTESSCO TECHNOLOGIES INCORPORATED AND SUBSIDIARIESConsolidated Statements of Cash Flows Year Ended April 1, 2018 March 26, 2017 March 27, 2016 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $5,195,400 $1,445,100 $5,340,500Adjustments to reconcile net income to net cash (used in) providedby operating activities: Depreciation and amortization 3,992,600 4,238,900 4,730,000Loss (gain) on sale of property and equipment — 114,500 —Non-cash stock-based compensation expense 1,002,100 434,400 729,000Deferred income taxes and other (2,866,100) (788,600) (47,700)Change in trade accounts receivable (23,158,400) (6,388,200) 1,256,400Change in product inventory (8,338,700) (10,080,400) 18,459,700Change in prepaid expenses and other current assets (625,000) 2,053,000 4,951,800Change in trade accounts payable 13,459,700 11,595,400 (9,818,200)Change in payroll, benefits and taxes 1,519,000 1,844,200 (604,000)Change in income and sales tax liabilities 974,500 (107,700) (375,600)Change in accrued expenses and other current liabilities (402,200) (1,309,300) (4,480,800)Net cash (used in) provided by operating activities (9,247,100) 3,051,300 20,141,100 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property and equipment (1,646,600) (730,200) (547,500)Purchases of internal use software licenses eligible for capitalization (1,892,800) (1,832,800) (2,966,300)Net cash used in investing activities (3,539,400) (2,563,000) (3,513,800) CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings from revolving line of credit 10,835,400 — —Proceeds from note receivable 75,000 — —Payments of debt issuance costs — (218,200) —Payments on long-term debt (26,700) (1,901,300) (250,600)Proceeds from issuance of common stock 148,700 137,600 153,700Cash dividends paid (6,701,200) (6,656,700) (6,615,700)Excess tax benefit from stock-based compensation — — 381,400Purchases of treasury stock and repurchases of stock from employees (65,400) (192,400) (937,300)Net cash provided by (used in) financing activities 4,265,800 (8,831,000) (7,268,500) Net (decrease) increase in cash and cash equivalents (8,520,700) (8,342,700) 9,358,800 CASH AND CASH EQUIVALENTS, beginning of period 8,540,100 16,882,800 7,524,000 CASH AND CASH EQUIVALENTS, end of period $19,400 $8,540,100 $16,882,800 The accompanying Notes to the Consolidated Financial Statements are an integral part of these consolidated statements. 45 Table of ContentsNote 1. Organization TESSCO Technologies Incorporated, a Delaware corporation (TESSCO, we, or the Company), architects and deliversinnovative product and value chain solutions to support wireless systems. The Company provides marketing and salesservices, knowledge and supply chain management, product-solution delivery and control systems utilizing extensiveinternet 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 allof the Company’s sales are made in United States Dollars. Note 2. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.Intercompany accounts and transactions have been eliminated in consolidation. Fiscal Year The Company's fiscal year is the 52 or 53 weeks ending on the Sunday falling on or between March 26 and April 1to allow the financial year to better reflect the Company's natural weekly accounting and business cycle. The fiscal yearended April 1, 2018 contained 53 weeks and the fiscal years ended March 26, 2017 and March 27, 2016 each contain 52weeks. Cash and Cash Equivalents Cash and cash equivalents include cash and highly liquid investments with an original maturity of 90 days or less. Allowance for Doubtful Accounts The Company uses estimates to determine the amount of the allowance for doubtful accounts necessary to reduceaccounts receivable to their expected net realizable value. The Company estimates the amount of the required allowance byreviewing the status of past-due receivables and analyzing historical bad debt trends and current economic conditions.Actual collection experience has not varied significantly from estimates, due primarily to consistent credit policies,collection experience, as well as the Company’s stability as it relates to its current customer base. Typical payments from alarge majority of commercial customers are due 30 days from the date of the invoice. The Company charges-off receivablesdeemed to be uncollectible to the allowance for doubtful accounts. Accounts receivable balances are not collateralized. Product Inventory Product inventory, consisting primarily of finished goods, is stated at the lower of cost or net realizable value, costbeing determined on the first-in, first-out (“FIFO”) method and includes certain charges directly and indirectly incurred inbringing product inventories to the point of sale. Inventory is written down for estimated obsolescence equal to thedifference between the cost of inventory and the estimated net realizable value, based upon specifically known inventory-related risks (such as technological obsolescence and the nature of vendor terms surrounding price protection and productreturns), and assumptions about future demand. At April 1, 2018 and March 26, 2017, the Company had a reserve for excessand/or obsolete inventory of $5,739,700 and $6,360,600, respectively. 46 Table of ContentsProperty and Equipment Property and equipment is stated at cost. Depreciation is recorded using the straight-line method over the estimateduseful lives of the assets as follows: Useful lives Information technology equipment 1-5yearsFurniture, telephone system, equipment and tooling 3-10yearsBuilding, building improvements and leasehold improvements 2-40years The Company capitalizes computer software costs incurred in connection with developing or obtaining computersoftware for internal use when both the preliminary project stage is completed and when management authorizes andcommits to funding the project and it is probable that the project will be completed. Development and acquisition costs arecapitalized when the software project is either for the development of new software, to increase the life of existing software orto add significantly to the functionality of existing software. Capitalization ceases when the software project is substantiallycomplete and ready for its intended use. Leasehold improvements are amortized over the shorter of their useful lives or the remaining lease term. Impairment of Long-Lived Assets Long-lived assets, including amortizable intangible assets, are reviewed for impairment whenever events or changesin circumstances indicate that the carrying amount of an asset or group of assets may not be fully recoverable. These eventsor changes in circumstances may include a significant deterioration of operating results, changes in business plans, orchanges in anticipated future cash flows. If an impairment indicator is present, the Company evaluates recoverability by acomparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets.Assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cashflows generated by other asset groups. If future undiscounted cash flows are less than the carrying value of the asset group,the Company calculates the fair value of the asset group. If the assets are impaired, the impairment recognized is measured bythe amount by which the carrying amount exceeds the fair value of the assets. Fair value is generally determined by estimatesof discounted cash flows. The discount rate used in any estimate of discounted cash flows would be the rate required for asimilar investment of like risk. There were no impairment charges in fiscal years 2018, 2017, or 2016. Assets to be disposed of are reported at the lower of carrying value or fair values, less estimated costs of disposal. Goodwill and Other Intangible Assets Goodwill represents the future economic benefits arising from other assets acquired in a business combination thatare not individually identified and separately recognized. Goodwill amounts and indefinite lived intangible assets are notamortized, but rather are tested for impairment at least annually or whenever an impairment indicator is identified. TheCompany performs its annual impairment test on the first day of its fourth quarter. Intangible assets that are not considered tohave an indefinite useful life are amortized over their useful life of 4 to 6 years using the straight-line method. Intangibleassets other than goodwill are recorded within other long-term assets in the Company’s Consolidated Balance Sheets. Thegoodwill impairment test involves an initial qualitative analysis to determine if it is more likely than not that an intangibleasset’s fair value is less than its carrying amount. If qualitative factors suggest a possible impairment, the Company thenperforms an additional two-step approach. Under the first step, the Company determines the fair value of each reporting unitto 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, withthe primary technique being a discounted cash flow or income approach, under which the Company estimates the presentvalue of the reporting unit’s future cash flows. Key assumptions used to determine the present value of a reporting unit’sfuture cash flows include (a) a cash flow period; (b) a terminal value based on a growth rate; and (c) a discount rate, which isbased on the Company’s weighted average cost of capital adjusted for risks associated with our operations. If the47 Table of Contentsfair value exceeds the carrying value, no impairment loss is recognized. If the carrying value exceeds the fair value, thegoodwill of the reporting unit is considered potentially impaired and the second step is completed in order to measure theimpairment loss. Under the second step, the Company calculates the implied fair value of goodwill by deducting the fairvalue of all tangible and intangible net assets, including any unrecognized intangible assets, of the reporting unit from thefair value of the reporting unit as determined in the first step. The Company then compares the implied fair value of goodwillto the carrying value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, theCompany recognizes an impairment loss equal to the difference. The indefinite lived intangible asset impairment test involves an initial qualitative analysis to determine if it ismore likely than not that an intangible asset’s fair value is less than its carrying amount. If qualitative factors suggest apossible impairment, the Company then determines the fair value of the intangible asset. If the fair value of the intangibleasset is less than its carrying value, an impairment loss is recognized for an amount equal to the difference. The intangibleasset is then carried at its new fair value. Fair value is determined using estimates of discounted cash flows. These estimates ofdiscounted cash flows will likely change over time as impairment tests are performed. Estimates of fair value are alsoadversely affected by increases in interest rates and the applicable discount rate. Based on the Company’s qualitative and/or quantitative impairment testing performed, the Company did notrecognize an impairment loss on goodwill or other indefinite lived intangible assets in fiscal years 2018, 2017, or 2016. The methods of assessing fair value for our reporting unit with goodwill as well as for indefinite lived assets requiresignificant judgments to be made by management, including future revenues, expenses, cash flows and discount rates.Changes in such estimates or the application of alternative assumptions could produce significantly different results. Revenue Recognition The Company records revenues when 1) persuasive evidence of an arrangement exists, 2) delivery has occurred orservices have been rendered, 3) price to the buyer is fixed or determinable, and 4) collectability is reasonably assured. TheCompany’s revenue recognition policy includes evidence of arrangements for significant revenue transactions through eitherreceipt of a customer purchase order or a web-based order. The Company records revenues when risk of loss has passed to thecustomer. 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. Prices are always fixed at the time ofsale. Historically, there have not been any material concessions provided to or by customers, future discounts provided bythe company, or other incentives subsequent to a sale. The Company sells under normal commercial terms and, therefore,only records sales on transactions where collectability is reasonably assured. The Company recognizes revenues net of salestax. Because the Company’s sales transactions meet the conditions set forth in the Financial Accounting StandardsBoard’s (“FASB”) Accounting Standards Codification (“ASC”) No. 605, it recognizes revenues from sales transactionscontaining sales returns provisions at the time of the sale. These conditions require that 1) the price be substantially fixed ordeterminable at the date of sale, 2) the buyer is obligated to pay, and the payment is not contingent on their resale of theproduct, 3) the buyer’s obligation to the Company does not change in the event of theft or physical destruction or damage ofthe product, 4) the buyer has economic substance apart from the Company, 5) the Company does not have significantobligations for future performance to directly bring about resale of the product by the buyer, and 6) the amount of futurereturns can be reasonably estimated. Because the Company’s normal terms and conditions of sale are consistent withconditions 1-5 above, and the Company is able to perform condition 6, it makes a reasonable estimate of product returns insales transactions and accrues a sales return reserve based on this estimate. Certain companies have turned to TESSCO to implement supply chain solutions, including purchasing inventory,assisting in demand forecasting, configuring, packaging, kitting and delivering products and managing customer and vendorrelations, from order taking through cash collections. In performing these solutions, the Company assumes varying levels ofinvolvement in the transactions and varying levels of credit and inventory risk. As the Company’s solutions offeringscontinually evolve to meet the needs of its customers, the Company constantly evaluates its revenue accounting based onthe guidance set forth in accounting standards generally accepted in the United States. When applying this guidance inaccordance with the ASC No. 605-45, the Company looks at the following indicators: whether it is the primary48 Table of Contentsobligor in the transaction; whether it has general inventory risk; whether it has latitude in establishing price; the extent towhich it changes the product or performs part of the service; whether it has discretion in supplier selection; whether it isinvolved in the determination of product and service specifications; whether it has physical inventory risk; whether it hascredit risk; and whether the amount it earns is fixed. Each of the Company’s customer relationships is independentlyevaluated based on the above guidance and revenues are recorded on the appropriate basis. Based on a review of the factorsabove, in the majority of the Company’s sales relationships, the Company has concluded that it is the principal in thetransaction and records revenues based upon the gross amounts earned and booked. However, the Company does haverelationships where it is not the principal and records revenues on a net fee basis, regardless of amounts billed (less than 1%of total revenues for fiscal year 2018). If applying this revenue recognition guidance resulted in recording revenues on adifferent basis from which the Company has previously concluded, or if the factors above change significantly, revenuescould increase or decrease; however, gross profit and net income would remain constant. Service revenue associated with training and other services is recognized when the training or work is complete andthe four criteria discussed above have been met. Service revenues have represented less than 1% of total revenues for fiscalyears 2018, 2017 and 2016. Other than sales relating to the Company’s private brands, we offer no product warranties in excess of originalequipment manufacturers’ warranties. The Company’s warranty expense is estimated and accrued at the time of sale.Warranty expense was immaterial for fiscal years 2018, 2017, and 2016. Vendor Programs Funds received from vendors for price protection, product rebates and marketing/promotion are recorded as areduction in cost of goods sold in accordance with ASC 605-50-45: Customer’s Characterization of Certain ConsiderationsReceived from a Vendor. Shipping and Handling Costs Shipping costs incurred to ship products from our distribution centers to our customers’ sites are included in selling,general and administrative expenses in the Consolidated Statements of Income and totaled $14,875,100, $14,179,700, and$13,642,700 for fiscal years 2018, 2017, and 2016, respectively. Stock Compensation Awards Granted to Team Members The Company records stock compensation expense for awards in accordance with ASC No. 718. The Companyaccounts for forfeitures as they occur rather than estimate expected forfeitures. The standard also requires stock awardsgranted or modified after the adoption of the standard that include both performance conditions and graded vesting based onservice to the Company to be amortized by an accelerated method rather than the straight-line method. Income Taxes The Company accounts for income taxes under the asset and liability method in accordance with ASC No. 740.Under this method, deferred income tax assets and liabilities arise from differences between the tax basis of assets orliabilities and their reported amounts in the financial statements. Deferred tax balances are determined by using the enactedtax rate to be in effect when the taxes are paid or refunds received. A valuation allowance related to deferred tax assets isrecorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In accordance with ASC No. 740, the Company recognizes a provision for tax uncertainties in its financialstatements. See Note 13 for further discussion of the standard and its impact on the Company’s consolidated financialstatements. 49 Table of ContentsUse of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP)requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenuesand expenses during the reporting period. On an ongoing basis, the Company reviews and evaluates its estimates andassumptions, including but not limited to, those that relate to tax reserves, stock-based compensation, accounts receivablereserves, inventory reserves and future cash flows associated with impairment testing for goodwill and other long-livedassets. Actual results could significantly differ from those estimates. Recently issued accounting pronouncements not yet adopted: In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts withCustomers. 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 promisedgoods or services to customers in an amount that reflects the consideration to which the company expects to be entitled inexchange for those goods and services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts withCustomers: Deferral of the Effective Date, as a revision to ASU 2014-09, which revised the effective date to fiscal years, andinterim periods within those years, beginning after December 15, 2017. Early adoption is permitted but not prior to periodsbeginning after December 15, 2016 (i.e. the original adoption date per ASU 2014-09). In March 2016, the FASB issued ASU2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies certain aspects ofthe principal-versus-agent guidance, including how an entity should identify the unit of accounting for the principal versusagent 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 anagent. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying PerformanceObligations and Licensing, which clarifies how an entity should evaluate the nature of its promise in granting a license ofintellectual property, which will determine whether it recognizes revenue over time or at a point in time. The amendmentsalso clarify when a promised good or service is separately identifiable (i.e., distinct within the context of the contract) andallow entities to disregard items that are immaterial in the context of a contract. The Company has assessed the impact thisnew standard will have on its ongoing financial reporting. The Company has identified its revenue streams both by contractand product type and has assessed each for potential impacts. The Company had determined there to be no impact to thetiming or amount of revenue recognized. The Company will modify the balance sheet presentation of the returns reservebeginning on April 2, 2018 in order to be in accordance with ASC 606. However, as the Company’s returns have historicallybeen less than 3% of revenue and this change will only affect the balance sheet, and this will not have a material impact onthe Financial Statements. Based on this assessment, the Company will adopt the standard on a modified retrospective basison April 2, 2018, the first day of fiscal 2019. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. This ASU requires lessees torecognize most leases on their balance sheets related to the rights and obligations created by those leases. The ASU alsorequires additional qualitative and quantitative disclosures related to the nature, timing and uncertainty of cash flows arisingfrom leases. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within thosefiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this new standardwill have on its Consolidated Financial Statements. In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Classification of Certain CashReceipts and Cash Payments. The new standard will change the classification of certain cash payments and receipts withinthe cash flow statement. Specifically, payments for debt prepayment or debt extinguishment costs, including third-partycosts, 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 asoperating expenses. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods withinfiscal years beginning after December 15, 2019, with early adoption permitted, and will be applied retrospectively. TheCompany does not expect that the adoption of this new standard will have a material impact on its Consolidated FinancialStatements. 50 Table of ContentsRecently 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 relatedtax accounting impacts, including the presentation in the statements of operations and cash flows of certain tax benefits ordeficiencies and employee tax withholdings, as well as the accounting for award forfeitures over the vesting period. Oneprovision within this pronouncement requires that excess income tax benefits and tax deficiencies related to share-basedpayments be recognized within income tax expense in the statement of income, rather than within additional paid-in capitalon the balance sheet. The Company adopted this provision in the first quarter of fiscal 2018. The adoption of this provisionwas applied prospectively. The impact to the Company's results of operations related to this provision in fiscal 2018 was anincrease in the provision for income taxes of $0.04 million, and a 0.4% higher effective tax rate than if the standard had notbeen adopted. There was no material impact on fiscal 2018. The impact of this provision on the Company's future results ofoperations will depend in part on the market prices for the Company's shares on the dates there are taxable events related toshare awards, but is not expected to be material. In connection with another provision within this pronouncement, theCompany has elected to account for forfeitures as they occur rather than estimate expected forfeitures. As our previousestimated forfeiture rate was 0%, no adjustment to prior periods is needed. The adoption of this and other provisions withinthe pronouncement did not have a material impact on the Company’s financial statements. In December 2016, the FASB issued Accounting Standards Update No. 2016-19, Technical Corrections andImprovements. Among other things, this ASU provides clarification on the presentation of the costs of computer softwaredeveloped or obtained for internal use. The Company retrospectively adopted this 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 toIntangible assets, net. The net carrying value of internal-use computer software was $4.0 million and $4.3 million,respectively, as of April 1, 2018 and March 26, 2017. In March 2018, the FASB issued Accounting Standards Update No. 2018-05, Income Taxes (Topic 740). Thisupdate provides accounting and disclosure guidance on accounting for income taxes. This guidance addresses therecognition of taxes payable or refundable for the current year and the recognition of deferred tax liabilities and deferred taxassets for the future tax consequences of events that have been recognized in the Company’s financial statements or taxreturns. Topic 740 also addresses the accounting for income taxes upon a change in tax laws or tax rates, including, forexample, adjusting (or re-measuring) deferred tax liabilities and deferred tax assets, as well as evaluating whether a valuationallowance is needed for deferred tax assets. The Company adopted this ASU in the fourth quarter of fiscal 2018. The adoptionof this pronouncement did not have a material impact on the Company’s financial statements. Note 3. Property and Equipment All of the Company’s property and equipment is located in the United States and is summarized as follows: 2018 2017 Land $4,740,800 $4,740,800 Building, building improvements and leaseholdimprovements 20,896,300 20,704,100 Information technology equipment 4,988,600 5,898,700 Furniture, telephone system, equipment and tooling 7,569,400 7,006,900 38,195,100 38,350,500 Less accumulated depreciation and amortization (24,532,300) (24,519,600) Property and equipment, net $13,662,800 $13,830,900 Depreciation and amortization of property and equipment was $3,992,600, $4,238,900, and $4,730,000 for fiscalyears 2018, 2017 and 2016, respectively. 51 Table of ContentsNote 4. Goodwill and Other Intangible Assets Other intangible assets, which are included in other long-term assets on the accompanying Consolidated BalanceSheets as of April 1, 2018 and March 26, 2017, consists of indefinite lived intangible assets in the amount of $795,400. AtApril 1, 2018 and March 26, 2017, amortizable intangible assets were fully amortized. There were no material changes in thecarrying amount of goodwill for the fiscal years ended April 1, 2018 and March 26, 2017. Capitalized internally developed computer software, net of accumulated amortization, as of April 1, 2018 andMarch 26, 2017 was $2,379,100 and $2,427,800, respectively. Amortization expense of capitalized internally developedcomputer software was $1,721,000, $1,355,000, and $1,194,200 for fiscal years 2018, 2017, and 2016. Note 5. Accrued expenses and other current liabilities Accrued expenses and other current liabilities consisted of the following: April 1, 2018 March 26, 2017 Deferred Revenue $58,400 $635,100 Other Accrued Expenses 1,311,900 1,593,100 Total Accrued Expenses $1,370,300 $2,228,200 Note 6. Borrowings Under Revolving Credit Facility Fiscal Year 2018 Revolving Credit Facility Activity On October 19, 2017, the Company and its primary operating subsidiaries, as co-borrowers, and SunTrust Bank, asAdministrative Agent and Lender, and Wells Fargo Bank, National Association, as a Lender, entered into an Amended andRestated Credit Agreement (the “Amended and Restated Credit Agreement”). Pursuant to the Amended and Restated CreditAgreement, the Credit Agreement for the secured Revolving Credit Facility as initially established in June 2016 wasamended and restated in order to, among other things, increase the Company’s borrowing limit from up to $35 million to upto $75 million. Capitalized terms used but not otherwise defined in this and the immediately following three paragraphs havethe meaning ascribed to each in the Amended and Restated Credit Agreement. In addition to expanding the Company’s borrowing limit, the Amended and Restated Credit Agreement extends theapplicable maturity date to October 19, 2021. The Amended and Restated Credit Agreement otherwise includesrepresentations, warranties, affirmative and negative covenants (including restrictions) and other terms generally consistentwith those applicable to the facility as existing prior to the execution and delivery of the Amended and Restated CreditAgreement, but with certain modifications. The Amended and Restated Credit Agreement provides for a $5.0 millionsublimit for the issuance of standby letters of credit, a $12.5 million sublimit for swing line loans, and an accordion featurewhich, subject to certain conditions, could increase the aggregate amount of the commitments to up to $125 million, with theoptional commitments being provided by existing Lenders or new lenders reasonably acceptable to the AdministrativeAgent. No Lender is obligated to increase its commitment. Availability continues to be determined in accordance with aBorrowing Base, which has been expanded to include not only Eligible Receivables but also Eligible Inventory and isgenerally: (A) the sum of (i) 85% of Eligible Receivables; (ii) the Inventory Formula Amount for all Eligible Inventory whichis aged less than 181 days; and (iii) the lesser of (x) $4 million and (y) the Inventory Formula Amount for all EligibleInventory which is aged at least 181 days; minus (B) Reserves. Upon closing, there was $23.4 million outstanding under theAmended and Restated Credit Agreement. Like the secured Revolving Credit Facility as existing prior to execution and delivery of the Amended and RestatedCredit Agreement, borrowings under the secured Revolving Credit Facility as now evidenced by the Amended and RestatedCredit Agreement initially accrue interest from the applicable borrowing date at an Applicable Rate equal to the EurodollarRate plus the Applicable Margin. The Eurodollar Rate is the rate per annum obtained by dividing (i) LIBOR by (ii) apercentage equal to 1.00 minus the Eurodollar Reserve Percentage. When the Applicable Rate is the Eurodollar Rate plus theApplicable Margin, the Applicable Margin is 1.50% if Average Availability is greater than or equal to $15 million, and1.75% otherwise. On April 1, 2018, the interest rate applicable to borrowings under the replacement Revolving52 Table of ContentsCredit Facility was 3.17%. The weighted average interest rate on borrowings under the Company’s revolving credit facilitiesduring fiscal year 2018 was 2.89%. 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 anEvent of Default, in addition to changing the Applicable Rate to the Base Rate plus the Applicable Margin, the Lenders’ mayat their option set the Applicable Margin at 0.50% if the Base Rate applies or 1.75% if the Eurodollar Rate applies, andincrease the Applicable Rate by an additional 200 basis points. The Applicable Rate adjusts on the first Business Day of eachcalendar month. The Company is required to pay a monthly Commitment Fee on the average daily unused portion of theRevolving Credit Facility provided for pursuant to the Amended and Restated Credit Agreement, at a per annum rate equal to0.25%. In connection with the entering into of the Amended and Restated Credit Agreement, the Company and other LoanParties executed and delivered to SunTrust Bank, as Administrative Agent, a Reaffirmation Agreement, pursuant to which theobligations of the Loan Parties under the Guaranty and Security Agreement delivered by them in connection with the securedcredit facility as previously existing (including the previously existing guaranty by the Loan Parties not otherwise Borrowersand the previously existing grant by the Company and the other Loan Parties of a continuing first priority security interest ininventory, accounts receivable and deposit accounts, and on all documents, instruments, general intangibles, letter of creditrights, and all proceeds) were ratified and confirmed as respects the Obligations arising under the Amended and RestatedCredit Facility from time to time. Interest expense on this Revolving Credit Facility for fiscal year 2018 totaled $444,200. Average borrowings underthis Revolving Credit Facility totaled $14,938,800 and maximum borrowings totaled $28,596,600 for fiscal year 2018. Theaverage In addition to the interest charged on borrowings, the Company is subject to a 0.25% fee on the unused portion ofthe Revolving Credit Facility. Borrowings under the Revolving Credit Facility may be used for working capital and other general corporatepurposes, and as further provided in, and subject to the applicable terms of, the Credit Agreement. As of April 1, 2018,borrowings under this Revolving Credit Facility totaled $10.8 million and, therefore, the Company had $64.2 millionavailable for borrowing as of April 1,2018, subject to the Borrowing Base limitation and compliance with the otherapplicable terms of the Amended and Restated Credit Agreement, including the covenants referenced above. The line ofcredit has a lockbox arrangement associated with it and therefore the outstanding balance is classified as a current liabilityon our balance sheet. The Company was in compliance with the terms and financial covenants applicable to the revolving credit facilityat the end of fiscal year 2018. Fiscal Year 2017 Revolving Credit Facility Activity On June 24, 2016, the Company and its primary operating subsidiaries entered into a Credit Agreement (the “CreditAgreement”) with SunTrust Bank, as Administrative Agent. The Credit Agreement provides for a senior asset based securedrevolving credit facility of up to $35 million (the “Revolving Credit Facility”). This replaced the Company’s previouslyexisting $35 million unsecured revolving credit facility with both SunTrust Bank and Wells Fargo Bank, NationalAssociation, which had no outstanding principal balance at the time of replacement. The replacement Revolving CreditFacility included terms providing for its maturity after five years, on June 24, 2021, and for a $5.0 million sublimit for theissuance of standby letters of credit and a $10.0 million sublimit for swing line loans. The Credit Agreement also included aprovision permitting the Company, subject to certain conditions and approval of the Lenders, to increase the aggregateamount of the commitments under the Revolving Credit Facility to up to $50 million, through optional increasedcommitments from existing Lenders or new commitments from additional lenders, although no Lender was obligated toincrease its commitment. Borrowing availability under the replacement Revolving credit Agreement as it was initiallyestablished was determined in part in accordance with a borrowing base, which is generally 85% of eligible receivablesminus reserves. The Credit Agreement also set forth certain financial covenants, including a fixed charge coverage ratio to bemaintained at any time during which the borrowing fell below $10 million, as well as terms that could the Company’s abilityto 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. 53 Table of ContentsPursuant to a related Guaranty and Security Agreement, by and among the Company, the other borrowers under theCredit Agreement and other subsidiaries of the Company, referred to collectively as the Loan Parties, and SunTrust Bank, asAdministrative Agent, the Loan Parties’ obligations, which include the obligations under the Credit Agreement, wereguaranteed by the Loan Parties not otherwise borrowers, and secured by continuing first priority security interests in theCompany’s and the other Loan Parties’ (including both borrowers and guarantors) inventory, accounts receivable, anddeposit accounts, and on all documents, instruments, general intangibles, letter of credit rights, and chattel paper, in eachcase to the extent relating to inventory and accounts, and all proceeds of the foregoing. The security interests were granted infavor of the Administrative Agent, for the benefit of the Lenders party to the Credit Agreement from time to time. Theobligations thereby secured also include certain other obligations of the Loan Parties to the Lenders and their affiliatesarising 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, asAdministrative Agent and Lender, and Wells Fargo Bank, National Association, as a Lender, entered into a First Amendmentto Credit Agreement (the “First Amendment”), to amend select terms of the Credit Agreement. Pursuant to the FirstAmendment, the term “Availability” as used in the Credit Agreement was amended for a period of time ending no later thanOctober 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. ThisFirst Amendment did not increase the $35 million Aggregate Revolving Commitment Amount, but allowed the Companygreater flexibility under the Credit Agreement for a limited period of time, until October 31, 2017, and was sought by theCompany in response to business opportunities identified by the Company. Capitalized terms used but not otherwise definedin this and the immediately preceding two paragraphs have the meaning ascribed to each in the Credit Agreement and FirstAmendment, as applicable. Borrowings initially accrue interest from the applicable borrowing date, generally the Eurodollar rate plus anapplicable margin ranging from 1.5% to 1.75%. Under certain circumstances, the applicable interest rate is subject to changefrom the Eurodollar rate plus the applicable margin to the base rate plus the applicable margin. The weighted average interestrate on borrowings under the Company’s revolving credit facilities during fiscal 2017 was 2.12%. Interest expense on thisrevolving credit facility for fiscal year 2017 totaled $45,500. Average borrowings under this revolving credit facility totaled$2,118,500, and maximum borrowings totaled $13,473,200 for fiscal year 2017, respectively. In addition to the interestcharged on borrowings, the Company was subject to a 0.25% fee on the unused portion of the revolving credit facility. As of March 26, 2017, the Company had a zero balance on its revolving credit facility. Therefore, the Company had$35.0 million available on its revolving line of credit facility as of March 26, 2017, subject to the applicable borrowing baselimitations and compliance with the other applicable terms. The Company was in compliance with the terms and financial covenants applicable to this prior revolving creditfacility at the end of fiscal year 2017. Fiscal Year 2016 Revolving Credit Facility Activity On May 31, 2007, pursuant to a Credit Agreement, the Company established a revolving credit facility with bothWells Fargo Bank, National Association and SunTrust Bank. The facility has since been replaced with the credit facilitymentioned above. The facility was unsecured and provided for monthly payments of interest accruing at a rate of LIBOR plusan applicable margin. The terms of the revolving credit facility required the Company to meet certain financial covenantsand ratios and contained other limitations, including certain restrictions on dividend payments. The facility provided for monthly payments of interest accruing at a rate of LIBOR plus an applicable marginranging from 1.50% to 2.50%. The weighted average interest rate on borrowings under the Company’s revolving creditfacilities was 2.12% fiscal years 2016, respectively. Interest expense on this revolving credit facility for fiscal year 2016 was$59,000. Average borrowings under this revolving credit facility totaled $3,454,500 and maximum borrowings totaled$12,301,100, for fiscal year 2016. 54 Table of ContentsAs of March 27, 2016, the Company had no outstanding balance on its revolving credit facility. Therefore, theCompany had $35.0 million available on its revolving line of credit facility as of March 27, 2016, subject to the applicableborrowing base limitations and compliance with the other applicable terms. The Company was in compliance with the terms and financial covenants applicable to this prior revolving creditfacility at the end of fiscal year 2016. Note 7. Extinguishment of Debt Simultaneously with entering into the senior asset based Revolving Credit Facility described in Note 6, in June2016 the Company terminated its previously existing $35 million unsecured revolving credit facility with SunTrust Bankand Wells Fargo Bank, National Association, which had no outstanding principal balance at the time of termination. At the same time, the Company also repaid in full its obligations under its Term Loan from Wells Fargo Bank,National Association and SunTrust Bank in the original principal amount of $4.5 million. The Term Loan was secured by afirst position deed of trust encumbering Company-owned real property in Hunt Valley, Maryland and had an outstandingprincipal balance of $1.9 million at the time of repayment. Note 8. Long-Term Debt On June 30, 2004, the Company refinanced its then existing indebtedness through a term loan with an originalprincipal amount of $4.5 million, payable in monthly installments of principal and interest. As discussed in Note 7, this loanwas repaid in full during the first quarter of fiscal 2017. The interest rate on this term loan was LIBOR plus 2.00%. The notewas secured by a first position deed of trust encumbering Company-owned real property in Hunt Valley, Maryland. Theweighted average interest rate on borrowings under this note was 2.40% and 2.21% for fiscal years 2017 and 2016,respectively. Interest expense under this note was $11,000 and $43,900, for fiscal years 2017, and 2016, respectively. On March 31, 2009, the Company entered into a term loan with the Baltimore County Economic DevelopmentRevolving Loan Fund for an aggregate principal amount of $250,000. At April 1, 2018 and March 26, 2017, the principalbalance of this term loan was $29,600 and $56,300, respectively. The term loan is payable in equal monthly installments ofprincipal and interest of $2,300, with the balance due at maturity on April 1, 2019. The term loan bears interest at 2.00% perannum. Interest expense under this note was $900, $1,300, and $2,000 for fiscal years 2018, 2017 and 2016, respectively.The term loan is secured by a subordinate position on Company-owned real property located in Hunt Valley, Maryland. As of April 1, 2018, scheduled annual maturities of long-term debt are as follows: Fiscal year: 2019 $27,300 2020 2,300 Thereafter — $29,600 Note 9. Commitments and Contingencies The Company is committed to making rental payments under non-cancelable operating leases covering variousfacilities and equipment. Rent expense for fiscal years 2018, 2017 and 2016 totaled $3,041,700, $3,047,500, and$3,035,600, respectively. The Company leases office space in Timonium, Maryland, where the Company’s sales, marketing andadministrative offices are located. This space is nearby to the Company’s Global Logistics Center in Hunt Valley,55 Table of ContentsMaryland. The Agreement of Lease expires on December 31, 2020. Monthly rent payments now range from $169,400 to$185,100 through the remaining lease term. The Company also leases office and warehouse space in Hunt Valley, Maryland, adjacent to the Company’s GlobalLogistics Center, expiring on July 31, 2020; however, the Company has an ongoing annual option to terminate the lease.The monthly rental fee ranges from $37,100 to $39,300 through the remaining lease term. Additional sales and marketing offices are located in additional leased office space in San Antonio, Texas. Thisspace is leased pursuant to a lease agreement expiring on October 31, 2021. Monthly rent payments range from $16,900 to$19,100 through the remaining lease term. The Company’s minimum future obligations as of April 1, 2018 under existing operating leases are as follows: Fiscal year: 2019 $3,003,400 2020 2,997,000 2021 2,111,600 2022 203,200 2023 14,900 Thereafter — $8,330,100 Lawsuits and claims are filed against the Company from time to time in the ordinary course of business. TheCompany does not believe that any lawsuits or claims pending against the Company, individually or in the aggregate, arematerial, or will have a material adverse effect on the Company’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 theamounts of income, sales and/or use taxes which have been claimed and remitted. No federal, state and local tax returns arecurrently under examination. As the Company is routinely audited by state taxing authorities, the Company has estimated exposure andestablished reserves for its estimated sales tax audit liability. Note 10. Operating Segments Beginning with the first quarter of fiscal year 2018, the Company modified the structure of its internal organizationin 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 inregulation or technology and includes products typically used by business entities or governments. Reflective of thesedifferences, our sales and product teams have been reorganized and 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 businesswithin two segments: commercial and retail. The commercial segment consists of the following customer markets: (1) publiccarriers, that are generally responsible for building and maintaining the infrastructure system and provide airtime service toindividual subscribers; (2) government, including federal agencies and state and local governments that run wirelessnetworks for their own use as well as value-added resellers who specialize in selling to the government; (3) private systemoperators 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 radiocommunications equipment primarily for the enterprise market. The retail segment consists of the market which includesretailers, independent dealer agents and carriers. All prior periods have been restated to reflect this change. During the first quarter of fiscal year 2018, in conjunction with the modification of the structure of the internalorganization of the Company, as described above, the Company reviewed several customer types, including a large repaircenter customer, and reclassified them from the private system operators market to either the value-added resellers market orthe retail segment, based on their purchase history. The Company has restated prior periods to reflect these changes.56 Table of Contents The Company evaluates revenue, gross profit and net profit contribution, and income before provision for incometaxes in the in the aggregate for both the commercial and retail segments. Net profit contribution is defined as gross profitless any expenses that can be directly attributed. This includes sales, product management, purchasing, credit andcollections and distribution team expenses, plus freight out and internal and external marketing costs. Corporate supportexpenses include administrative costs – finance, human resources, information technology, operating facility occupancyexpenses, depreciation, amortization and interest, plus the company-wide pay on performance bonus expense. Certain cost of sales and other applicable expenses have been allocated to each market based on a percentage ofrevenues and/or gross profit, where appropriate. Segment activity for the fiscal years ended 2018, 2017 and 2016 is as follows (in thousands): Year Ended April 1, 2018 Commercial Retail Segment Segment TotalRevenues Public Carrier $115,061 $ — $115,061Government 40,481 — 40,481Private System Operators 93,246 — 93,246Value-Added Resellers 136,888 — 136,888Retail — 194,599 194,599Total revenues $385,676 $194,599 $580,275 Gross Profit Public Carrier $16,707 $ — $16,707Government 8,954 — 8,954Private System Operators 20,363 — 20,363Value-Added Resellers 35,303 — 35,303Retail — 38,901 38,901Total gross profit $81,327 $38,901 $120,228 Directly allocable expenses 32,592 15,535 48,127Segment net profit contribution $48,735 $23,366 72,101Corporate support expenses 64,628Income before provision for income taxes $7,473 57 Table of Contents Year Ended March 26, 2017 Commercial Retail Segment Segment TotalRevenues Public Carrier $82,015 $ — $82,015Government 36,676 — 36,676Private System Operators 82,508 — 82,508Value-Added Resellers 130,486 — 130,486Retail — 201,610 201,610Total revenues $331,685 $201,610 $533,295 Gross Profit Public Carrier $13,706 $ — $13,706Government 8,235 — 8,235Private System Operators 18,073 — 18,073Value-Added Resellers 35,530 — 35,530Retail — 36,224 36,224Total gross profit $75,544 $36,224 $111,768 Directly allocable expenses 32,455 16,399 48,854Segment net profit contribution $43,089 $19,825 62,914Corporate support expenses 60,428Income before provision for income taxes $2,486 58 Table of Contents Year Ended March 27, 2016 Commercial Retail Segment Segment TotalRevenues Public Carrier $89,171 $ — $89,171Government 33,009 — 33,009Private System Operators 76,809 — 76,809Value-Added Resellers 132,403 — 132,403Retail — 199,290 199,290Total revenues $331,392 $199,290 $530,682 Gross Profit Public Carrier $15,155 $ — $15,155Government 7,713 — 7,713Private System Operators 18,071 — 18,071Value-Added Resellers 34,840 — 34,840Retail — 36,187 36,187Total gross profit $75,779 $36,187 $111,966 Directly allocable expenses 46,422 27,985 74,407Segment net profit contribution $29,357 $8,202 37,559Corporate support expenses 28,687Income before provision for income taxes $8,872 The Company also reviews revenue and gross profit by its four product categories: ·Base station infrastructure products are used to build, repair and upgrade wireless telecommunications. Productsinclude base station antennas, cable and transmission lines, small towers, lightning protection devices,connectors, power systems, miscellaneous hardware, and mobile antennas. Our base station infrastructureservice offering includes connector installation, custom jumper assembly, site kitting and logistics integration. ·Network systems products are used to build and upgrade computing and internet networks. Products includefixed and mobile broadband equipment, wireless networking, filtering systems, distributed antenna 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, and maintain wireless communicationsequipment. 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 componentparts and supplies required by service technicians. ·Mobile devices and accessory products include cellular phone and data device accessories such as replacementbatteries, cases, speakers, mobile amplifiers, power supplies, headsets, mounts, car antennas, music accessoriesand data and memory cards. Retail merchandising displays, promotional programs, customized order fulfillmentservices and affinity-marketing programs, including private label internet sites, complement our mobile devicesand accessory product offering.59 Table of Contents Supplemental revenue and gross profit information by product category for the fiscal years 2018, 2017 and 2016 areas follows (in thousands): April 1, 2018 March 26, 2017 March 27, 2016 Revenues Base station infrastructure $248,949 $209,869 $206,604 Network systems 98,642 87,222 83,480 Installation, test and maintenance 33,200 31,851 34,936 Mobile device accessories 199,484 204,353 205,662 Total revenues $580,275 $533,295 $530,682 Gross Profit Base station infrastructure 58,015 54,280 51,610 Network systems 14,649 11,897 12,893 Installation, test and maintenance 6,266 5,921 6,607 Mobile device accessories 41,298 39,670 40,856 Total gross profit $120,228 $111,768 $111,966 Note 11. Restructuring Charge In the fourth quarter of fiscal year 2017, in an effort to streamline the organization, the Company took actions torestructure its operations thereby reducing costs, resulting in a $0.8 million pre-tax charge, which is included in ourConsolidated Statements of Income for fiscal year 2017. The restructuring charge primarily consisted of severance-relatedexpenses associated with a reduction in headcount paid in the fourth quarter of fiscal year 2017 through the first quarter offiscal year 2018. Note 12. Stock Buyback The Company withholds shares of common stock from its employees and directors, at their request, equal to theminimum federal and state tax withholdings related to vested performance stock units, stock option exercises and restrictedstock awards. For fiscal years 2018, 2017, and 2016 the total value of shares withheld for taxes was $65,400, $192,400, and$937,300, respectively. Note 13. Income Taxes A reconciliation of the difference between the provision for income taxes computed at statutory rates and theprovision for income taxes provided in the consolidated statements of income is as follows: 2018 2017 2016 Statutory federal rate 31.3% 34.0% 34.0%State taxes, net of federal benefit 4.0 4.6 4.5 Non-deductible expenses 4.4 5.4 2.1 Change in deferred tax related to key man life insurance (7.3) — — Other (1.9) (2.1) (0.8) Effective rate 30.5% 41.9% 39.8% 60 Table of ContentsThe provision for income taxes was comprised of the following: 2018 2017 2016 Federal: Current $3,073,400 $1,083,600 $2,350,000 Deferred (1,081,600) (69,100) 763,100 State: Current 433,400 53,100 345,100 Deferred (148,000) (26,400) 73,600 Provision for income taxes $2,277,200 $1,041,200 $3,531,800 Total net deferred tax assets (liabilities) as of April 1, 2018 and March 26, 2017, and the sources of the differencesbetween financial accounting and tax basis of the Company's assets and liabilities which give rise to the deferred tax assetsand liabilities, are as follows: 2018 2017 Net deferred tax assets (liabilities): Deferred compensation $160,600 $142,600 Accrued vacation 340,200 566,900 Deferred rent 37,200 208,900 Allowance for doubtful accounts 249,700 259,300 Inventory reserves 1,414,600 2,338,800 Sales tax reserves 217,500 366,000 Other assets 1,364,900 800,000 Tax contingency reserve 83,400 215,800 Depreciation and amortization (2,542,800) (3,659,100) Other liabilities — (461,600) Accrued compensation — (286,300) Prepaid expenses (614,800) (878,100) Net Deferred Tax Assets/(Liabilities) $710,500 $(386,800) The Company has reviewed its deferred tax assets realization and has determined that no valuation allowance isrequired as of April 1, 2018 or March 26, 2017. The Company has changed the way in which it accounts for the cash surrender value of certain key-man lifeinsurance policies. The Company had for many years recorded a deferred tax liability related to the incremental increase yearover year in the cash surrender value of the policies. After further analysis, it was determined that the annual change in cashsurrender value, which has accumulated slowly over many years, should have been treated as an offset to the non-deductibleinsurance premiums related to the same policies, and not as a deferred tax liability. As such, the Company adjusted its fiscal2018 financial results to reflect the favorable change in tax treatment as applied to the aggregate amount of the incrementalincreases that have accumulated over the multi-year period. Specifically, net deferred tax assets increased by an aggregate of$0.5 million and income tax expense correspondingly decreased by an aggregate of $0.5 million. Correspondingly, netincome and earnings per share for the fourth quarter of fiscal 2018 increased by $0.5 million and $0.06 per share,respectively, due to a one-time adjustment for this change in tax treatment. There was no impact on net cash flow used inoperations. This change has no impact on previously filed tax returns. As of April 1, 2018, the Company had gross unrecognized tax benefit of $112,700 ($87,200 net of federal benefit).As of March 26, 2017, the Company had gross 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 classifythese amounts as income taxes. The total amount of interest and penalties related to tax uncertainties recognized in theconsolidated statement of income for fiscal year 2018 was a benefit of $38,100 (net of federal expense) and the cumulativeamount included as a liability in the consolidated balance sheet as of April 1, 2018 was $250,500 (net of federal benefit). Thetotal amount of interest and penalties related to tax uncertainties recognized in the consolidated statement of income61 Table of Contentsfor fiscal year 2017 was a benefit of $10,000 (net of federal expense) and the cumulative amount included as a liability in theconsolidated balance sheet as of March 26, 2017 was $314,300 (net of federal benefit). The total amount of interest andpenalties related to tax uncertainties recognized in the consolidated statement of income for fiscal year 2016 was an expenseof $16,600 (net of federal benefit). As of April 1, 2018, the total net amount of unrecognized tax benefits, inclusive of indirect tax benefits and deferredtax benefits was $87,200 and associated penalties and interest were $250,500. The net amount of $337,700, if recognized,would affect the effective tax rate. A reconciliation of the changes in the gross balance of unrecognized tax benefit amounts, net of interest, is as follows: 2018 2017 2016 Beginning balance of unrecognized tax benefit $204,500 $290,400 $394,400 Increases related to current period tax positions — 3,100 3,800 Reductions as a result of a lapse in the applicable statute of limitations (91,800) (89,000) (107,800) Ending balance of unrecognized tax benefits $112,700 $204,500 $290,400 The Company has adopted Accounting Standards Update No. 2016-09 Topic 718, Improvements to EmployeeShare-Based Payment Accounting, effective as of March 27, 2017. This new guidance requires all of the tax effects related toshare-based payments to be recognized through the income statement and is effective for public entities for annual andinterim reporting periods beginning after December 15, 2016. The Company treated the tax effects of share-basedcompensation awards as discrete items in the interim reporting periods in which the windfalls or shortfalls occurred. As aresult of the adoption of this ASU, the effective rate is 0.4% higher than if the ASU was not adopted for the fiscal year endedApril 1, 2018. On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act, which we refer to herein as the2017 Tax Act. ASC 740, Accounting for Income Taxes, requires companies to recognize the effect of tax law changes in theperiod of enactment even though the effective date for most provisions is for tax years beginning after December 31, 2017, orin the case of certain other provisions, January 1, 2018. Though certain key aspects of the new law are effective January 1,2018 and have an immediate accounting effect, other significant provisions are not effective or may not result in accountingeffects for fiscal year companies until the following fiscal year. In the Company’s case, the following fiscal year is the fiscalyear beginning April 2, 2018. Given the significance of the legislation, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), whichallows registrants to record provisional amounts during a one year “measurement period” similar to that used whenaccounting for business combinations. However, the measurement period is deemed to have ended earlier when the registranthas obtained, prepared and analyzed the information necessary to finalize its accounting. During the measurement period,impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made,and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzed. SAB 118summarizes a three-step process to be applied at each reporting period to account for andqualitatively disclose: (1) the effects of the change in tax law for which accounting is complete; (2) provisional amounts (oradjustments to provisional amounts) for the effects of the tax law where accounting is not complete, but that a reasonableestimate has been determined; and (3) a reasonable estimate cannot yet be made and therefore taxes are reflected inaccordance with law prior to the enactment of the 2017 Tax Act. Amounts recorded where a provisional estimate that has been determined for the fiscal year ended April 1, 2018principally relate to the reduction in the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. The newlaw requires companies with a fiscal year that includes January 1, 2018 to determine their federal income tax rate under ablended rate approach. The Company’s annual federal rate for fiscal 2018 will be based on 9 months at the tax rates in effectbefore the new tax law and 3 months at the new 21% rate for a blended rate of 31.3%. The company applied this blended rateto fiscal 2018 current taxable income. The company also re-measured its deferred tax assets and liabilities and theunrecognized tax benefit from uncertain tax positions discussed above based on the new 21% rate. As such, the Companyrecorded an income tax benefit of $0.2 million as a result of the new legislation. The Company is currently62 Table of Contentsevaluating the Tax Cuts and Jobs Act with its professional advisers; the full impact of the 2017 Tax Act on the Company infuture periods cannot be predicted at this time and no assurances in that regard are made by the Company. Changes on account of the 2017 Tax Act for which a reasonable estimate of the accounting effects has not yet beenmade include additional limitations on certain meals and entertainment expenses and repeal to the exception for performancebased compensation under the excessive compensation limitation rules. Other significant provisions of the 2017 Tax Act that are not yet effective but may impact income taxes in futureyears include: limitation on the current deductibility of net interest expense in excess of 30 percent of adjusted taxableincome and a limitation of net operating losses generated after fiscal 2018 to 80 percent of taxable income.The Company files income tax returns in U.S. federal, state and local jurisdictions. Certain income tax returns forfiscal years 2013 through 2017 remain open to examination by U.S. federal, state and local tax authorities. No federal, stateand local income tax returns are currently under examination.Note 14. Retirement Plans The Company has a 401(k) plan that covers all eligible employees. Contributions to the plan can be made byemployees and the Company may make matching contributions at its discretion. Expense related to this matchingcontribution was $928,100, $621,600, and $635,500 during fiscal years 2018, 2017, and 2016, respectively. As of April 1,2018, plan assets included 157,708 shares of common stock of the Company. The Company maintains a Supplemental Executive Retirement Plan for Robert B. Barnhill, Jr., our ExecutiveChairman and Chairman of the Board. This plan is funded through life insurance policies for which the Company is the solebeneficiary. The cash surrender value of the life insurance policies and the net present value of the benefit obligation ofapproximately $2,204,500 and $901,400, respectively, as of April 1, 2018 and $2,128,200 and $883,400, respectively, as ofMarch 26, 2017, are included in other long-term assets and other long-term liabilities, respectively, in the accompanyingConsolidated Balance Sheets. Note 15. Earnings Per Share The Company presents the computation of earnings per share (“EPS”) on a basic and diluted basis. Basic EPS iscomputed by dividing net income by the weighted average number of shares outstanding during the reported period. Dilutedearnings per share are computed similarly to basic earnings per share, except that the denominator is increased to include thenumber of additional common shares that would have been outstanding if the potential additional common shares that weredilutive had been issued. Shares of common stock are excluded from the calculation if they are determined to be anti-dilutive. 63 Table of ContentsThe following table presents the calculation of basic and diluted earnings per common share: Amounts in thousands, except per shareamounts Amounts in thousands, except per share amounts 2018 2017 2016 Earnings per share – Basic: Net earnings $5,195 $1,445 $5,341 Less: Distributed and undistributed earnings allocated to nonvested stock — — (15) Earnings available to common shareholders – Basic $5,195 $1,445 $5,326 Weighted average common shares outstanding – Basic 8,371 8,313 8,220 Earnings per common share – Basic $0.62 $0.17 $0.65 Earnings per share – Diluted: Net earnings $5,195 $1,445 $5,341 Less: Distributed and undistributed earnings allocated to nonvested stock — — (1) Earnings available to common shareholders – Diluted $5,195 $1,445 $5,340 Weighted average common shares outstanding – Basic 8,371 8,313 8,220 Effect of dilutive options 100 27 — Weighted average common shares outstanding – Diluted 8,471 8,340 8,220 Earnings per common share – Diluted $0.61 $0.17 $0.65 Anti-dilutive equity awards not included above 40 60 100 At April 1, 2018, March 26, 2017, and March 27, 2016 stock options with respect to 540,000, 420,000 and 100,000shares of common stock were outstanding, respectively. The anti-dilutive stock options outstanding at April 1, 2018, March26, 2017 and March 27, 2016 total 40,000, 60,000 and 100,000, respectively. There were no anti-dilutive Performance StockUnits or Restricted Stock outstanding as of April 1, 2018, March 26, 2017 or March 27, 2016. Note 16. Stock‑Based Compensation The Company’s selling, general and administrative expenses for the fiscal years ended April 1, 2018, March 26,2017, and March 27, 2016 includes $1,002,100, $434,400, and $729,000, respectively, of stock compensation expense.Provision for income taxes for the fiscal years ended April 1, 2018, March 26, 2017, and March 27, 2016 includes $305,400,$181,900, and $290,100, respectively, of income tax benefits related to our stock-based compensation arrangements. Stockcompensation expense is primarily related to our Performance Stock Units (PSUs), Restricted Stock Units (RSUs) and StockOptions, granted or outstanding under the Company’s Third Amended and Restated Stock and Incentive Plan (the “1994Plan”). As of April 1, 2018, 366,700 shares were available for issue in respect of future awards under the 1994 Plan.Subsequent to the Company’s 2018 fiscal year end, on May 10, 2018, based on fiscal year 2018 results, 16,750 shares relatedto Performance Stock Units (PSUs) were canceled, and as a result, these shares were made available for future grants. On May10, 2018, additional PSUs and restricted stock awards were made providing recipients with the opportunity to earn up to anaggregate of 71,000 and 18,000 additional shares, respectively of the Company’s common stock. Also, on May 10, 2018, theCompensation Committee of the Board of Directors with concurrence of the full Board of Directors, granted stock options toselect key employees to purchase an aggregate of 49,000 shares of the Company’s common stock. Accordingly, as of May10, 2018, an aggregate of 245,450 shares were available for issue pursuant to future awards. 64 Table of ContentsNo additional awards can be made under the 1994 Plan after July 21, 2021, without or unless made subject toshareholder approval of an extension of the plan term. Stock Options, restricted stock and PSU awards have historically beengranted as awards under the 1994 Plan. Shares which are subject to outstanding PSU or other awards under the 1994 Plan, andwhich are not earned, are returned to the 1994 Plan and become available for future issuance in accordance with andotherwise subject to the terms of the 1994 Plan. Performance Stock Units: The Company’s equity-based compensation philosophy has been generally focused on grantingperformance-based and time-vested stock grants, although over the last two fiscal years stock option grants have also beenmade to senior management. Under a program established by the Board of Directors, Performance Stock Units (PSUs) havebeen granted under the 1994 Plan to selected employees. 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 adefined 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 participantremains employed by or associated with the Company at the time of share issuance. Earnings per share targets, which takeinto account the earnings impact of this program, are set by the Board of Directors in advance for the complete performancecycle at levels designed to grow shareholder value. If actual performance does not reach the minimum annual or thresholdtargets, no shares are issued. In accordance with ASC No. 718, the Company records compensation expense on its PSUs overthe service period, based on the number of shares management estimates will ultimately be issued. Accordingly, theCompany determines the periodic financial statement compensation expense based upon the stock price at the PSU grantdate, net of the present value of dividends expected to be paid on TESSCO common stock before the PSU vests,management’s projections of future EPS performance over the performance period, and the resulting amount of estimatedshare issuances. As discussed in Note 2 above, the Company now accounts for forfeitures as they occur rather than estimateexpected forfeitures. To the extent that forfeitures occur, stock based compensation related to the restricted awards may bedifferent from the Company’s expectations. The following table summarizes the activity under the Company’s PSU program for fiscal years 2018, 2017 and2016: 2018 2017 2016 Weighted Weighted Weighted Average Fair Average Fair Average Fair Shares Value at Grant Shares Value at Grant Shares Value at Grant Unvested shares available for issue underoutstanding PSUs, beginning of period 170,100 $11.17 138,925 $21.46 203,841 $20.65 PSU’s Granted 86,000 12.67 207,000 10.77 103,000 22.15 PSU’s Vested (7,600) 19.58 (27,671) 19.40 (87,648) 13.88 PSU’s Forfeited/Cancelled (181,500) 10.99 (148,154) 18.72 (80,268) 28.57 Unvested shares available for issue underoutstanding PSUs, end of period 67,000 $12.65 170,100 $11.17 138,925 $21.46 As of April 1, 2018, there was $0.3 million unrecognized compensation cost, related to fiscal year 2018 PSUsearned. Total fair value of shares vested during fiscal years 2018, 2017 and 2016 was $277,600, $628,200 and $2,543,000,respectively. The PSUs canceled during fiscal year 2018 primarily related to the fiscal year 2017 grant of PSUs which had a one-year measurement period (fiscal 2017). The PSUs were canceled because the minimum applicable fiscal 2017 performancetargets were not fully satisfied. Per the provisions of the 1994 Plan, the shares related to these forfeited and canceled PSUswere added back to the 1994 Plan and became available for future issuance under the 1994 Plan. Of the PSUs outstanding at the end of fiscal year 2018 covering 67,000 non-vested shares, PSUs covering 16,750shares were subsequently canceled in May 2018, based on fiscal year 2018 performance. These PSUs were canceled becausefiscal year 2018 earnings per share did not fully reach the target performance set forth in the PSU award agreements. Theremaining 50,250 shares covered by PSUs outstanding at the end of fiscal year 2018 were earned based on fiscal year 2018performance, but were not yet vested as of April 1, 2018. Assuming the respective participants remain65 Table of Contentsemployed by, or affiliated with the Company, these shares will vest ratably on or about May 1 of 2018, 2019, 2020, and2021. Subsequent to the Company’s 2018 fiscal year end, on May 10, 2018, the Compensation Committee, with theconcurrence of the full Board of Directors, granted additional PSUs to selected key employees, providing them with theopportunity to earn up to 71,000 additional shares of the Company’s common stock in the aggregate, depending uponwhether certain threshold or goal earnings per share targets are met and individual performance metrics are satisfied in fiscalyear 2019. These PSUs have only one measurement year (fiscal year 2019), with any shares earned at the end of fiscal year2019 to vest 25% on or about each of May 1 of 2019, 2020, 2021, and 2022. Pursuant to the typical PSU award agreement,however, performance metrics are deemed met upon the occurrence of a change in control, and shares earned are issued earlierupon the occurrence of a change in control, or death or disability of the participant, or upon termination of the participant’semployment without cause or by the participant for good reason, as those terms are defined in the agreement. Restricted Stock/Restricted Stock Units: During the second quarter of fiscal year 2007, the Company granted225,000 shares of the Company’s common stock to its then Chairman and Chief Executive Officer as a restricted stock awardunder the 1994 Plan. These shares vested ratably over ten fiscal years based on service, beginning on the last day of fiscalyear 2007 and ending on the last day of fiscal year 2016. The weighted average fair value for these shares at the grant datewas $10.56. On March 27, 2016, 22,500 shares of restricted stock were released and vested. As of April 1, 2018, there were noremaining unvested shares related to restricted stock. On May 11, 2015, the Compensation Committee, with the concurrence of the full Board of Directors, granted anaggregate of 10,000 RSU awards to non-employee directors of the Company. These awards provide for the issuance of sharesof the Company’s common stock in accordance with a vesting schedule. These awards have vested or will vest, and shareshave been or will be issued 25% on or about each of May 1 of 2016, 2017, 2018 and 2019, provided that the participantremains associated with the Company (or meets other criteria as prescribed in the agreement) on each such date. As of April 1,2018, there was approximately $0.1 million of total unrecognized compensation costs related to these awards. Unrecognizedcompensation costs related to these awards are expected to be recognized ratably over a period of approximately one year. On May 11, 2016, the Compensation Committee, with the concurrence of the full Board of Directors, granted anaggregate of 10,000 RSU awards to non-employee directors of the Company. These awards provide for the issuance of theshares of the Company’s common stock in accordance with a vesting schedule. These awards have vested or will vest, andshares have been or will be issued 25% on or about each of May 1 of 2017, 2018, 2019 and 2020, provided that theparticipant remains associated with the Company (or meets other criteria as prescribed in the agreement) on each such date.As of April 1, 2018, there was approximately $0.1 million of total unrecognized compensation costs related to these awards.Unrecognized compensation costs related to these awards are expected to be recognized ratably over a period ofapproximately two years. On May 10, 2017, the Compensation Committee, with the concurrence of the full Board of Directors, granted anaggregate of 18,000 RSU awards to non-employee directors of the Company and to the Executive Chairman. These awardsprovide for the issuance of shares of the Company’s common stock in accordance with a vesting schedule. These awardshave vested or will vest, and shares have been or will be issued, 25% on or about each of May 1 of 2018, 2019, 2020 and2021, provided that the participant remains associated with the Company (or meets other criteria as prescribed in theagreement) on each such date. On August 8, 2017, the Compensation Committee, with the concurrence of the full Board of Directors, awarded anaggregate of up to 56,000 RSUs to several senior executives. The number of shares earned by a recipient will be determinedby multiplying the number of RSUs covered by the award by a fraction, the numerator of which is the cumulative amount ofdividends (regular, ordinary and special) declared and paid, per share, on the common stock, over an earnings period of up tofour years, and the denominator of which is $3.20. Subject to earlier issuance upon the occurrence of certain events (asdescribed in the applicable award agreement), any earned shares are issued and distributed to the recipient upon the fourthanniversary of the award date. As of April 1, 2018, 8,000 of these 56,000 RSUs have been canceled due to employeedepartures, leaving 48,000 of these RSUs outstanding.66 Table of Contents As of April 1, 2018, there was approximately $0.6 million of total unrecognized compensation cost related to alloutstanding RSUs issued in fiscal year 2018, assuming all shares are earned. Unrecognized compensation costs are expectedto be recognized ratably over a weighted average period of approximately three years. Subsequent to the Company’s 2018 fiscal year end, on May 10, 2018, the Compensation Committee, with theconcurrence of the full Board of Directors, granted an aggregate of 18,000 RSU awards to non-employee directors and theExecutive Chairman of the Company. These awards provide for the issuance of shares of the Company’s common stock inaccordance with a vesting schedule. These awards will vest and shares will be issued 25% on or about each of May 1 of2019, 2020, 2021 and 2022, provided that the participant remains associated with the Company (or meets other criteria asprescribed in the agreement) on each such date. PSUs and RSUs are expensed based on the grant date fair value, calculated as the closing price of TESSCO commonstock as reported by NASDAQ on the date of grant minus the present value of dividends expected to be paid on the commonstock before the award vests, because dividends or dividend-equivalent amounts do not accrue and are not paid on unvestedPSUs and RSUs. The Company now accounts for forfeitures as they occur rather than estimate expected forfeitures. To the extent thatforfeitures occur, stock based compensation related to the restricted awards may be different from the Company’sexpectations. Stock Options: The grant date value of the Company’s stock options has been determined using the Black-Scholes-Merton pricing model, based upon facts and assumptions existing at the date of grant. Stock options granted have exerciseprices equal to the market price of the Company’s stock on the grant date. The stock options vest 25% after one year and then1/36 per month for the following three years. During fiscal 2018, stock options for 110,000 shares were forfeited due toemployee departure. The value of each option at the date of grant is amortized as compensation expense over the service period. Thisoccurs without regard to subsequent changes in stock price, volatility or interest rates over time, provided the option remainsoutstanding. The following tables summarize the pertinent information for outstanding options. 2018 2017 Weighted Weighted Average Fair Average Fair Shares Value at Grant Shares Value at GrantUnvested options, beginning of period 395,000 $1.96 100,000 3.43Options Granted 230,000 2.57 410,000 1.85Options Vested (122,500) 1.87 (25,000) 3.55Options Forfeited/Cancelled (110,000) 2.42 (90,000) 2.64Unvested options, end of period 392,500 $2.21 395,000 $1.96 April 1, 2018GrantFiscalYear OptionsGranted OptionExercisePrice OptionsOutstanding OptionsExercisable2018 230,000 $15.12 170,000 -2017 410,000 $12.57 330,000 120,8332016 100,000 $22.42 40,000 26,667Total 540,000 147,500 67 Table of Contents Grant FiscalYear Expected StockPrice Volatility Risk-Free Interestrate ExpectedDividend Yield AverageExpectedTerm Resulting BlackScholes Value2018 32.63% 1.96 % 5.34% 4.0 $2.572017 32.85% 1.32 % 6.30% 4.0 $1.852016 26.40% 1.67 % 3.50% 4.0 $3.43 As of April 1, 2018, there was approximately $0.8 million of total unrecognized compensation costs related to theseawards. Unrecognized compensation costs related to these awards are expected to be recognized ratably over a period ofapproximately three years. No options were exercised during fiscal 2018, 2017, or 2016. Team Member Stock Purchase Plan: The Company has a Team Member Stock Purchase Plan that permits eligibleemployees to purchase up to an aggregate of 450,000 shares of the Company's common stock at 85% of the lower of themarket price on the first day of a six-month period or the market price on the last day of that same six-month period.Expenses incurred for the Team Member Stock Purchase Plan during the fiscal years ended April 1, 2018, March 26, 2017,and March 27, 2016 were $148,700, $137,800, and $48,900, respectively. During the fiscal years ended April 1, 2018, March26, 2017, and March 27, 2016, 13,423, 12,901, and 9,113 shares were sold to employees under this plan, having a weightedaverage market value of $11.08, $10.68, and $16.86, respectively. Note 17. 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, andquoted 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 aboutthe inputs used in pricing the asset or liability. As of April 1, 2018 and March 26, 2017, the Company has no assets or liabilities recorded at fair value. The carrying amounts of cash and cash equivalents, trade accounts receivable, product inventory, trade accountspayable, accrued expenses, our term loan, life insurance policies and other current liabilities approximate their fair values asof April 1, 2018 and March 26, 2017 due to their short-term nature. Fair value of long term debt is calculated using current market interest rates, which we consider to be a Level 2 inputas described in the fair value accounting guidance on fair value measurements, and future principle payments, as of April 1,2018 and March 26, 2017 is estimated as follows: April 1, 2018 March 26, 2017 Carrying Fair Carrying Fair Amount Value Amount Value Note payable to Baltimore County $29,600 $28,827 $56,300 $54,229 Note 18. Supplemental Cash Flow Information Cash paid for income taxes net of refunds, for fiscal years 2018, 2017, and 2016 totaled $2,440,000, $55,600, and$1,979,800, respectively. Cash paid for interest during fiscal years 2018, 2017, and 2016 totaled $406,200, $60,600, and$180,300, respectively. No interest was capitalized during fiscal years 2018, 2017 and 2016. 68 Table of ContentsNote 19. Concentration of Risk Sales to customers and purchases from vendors are largely governed by individual sales or purchase orders, so thereis no guarantee of future business. In some cases, the Company has more formal agreements with significant customers orvendors, but they are largely administrative in nature and are terminable by either party upon several months or otherwiseshort notice and they typically contain no obligation to make purchases from TESSCO. In the event a significant customerdecides to make its purchases from another source, experiences a significant change in demand internally or from its owncustomer base, becomes financially unstable, or is acquired by another company, the Company’s ability to generate revenuesfrom these customers may be significantly affected, resulting in an adverse effect on its financial position and results ofoperations. The Company is dependent on third-party equipment manufacturers, distributors and dealers for all of its supply ofwireless communications equipment. For fiscal years 2018, 2017, and 2016, sales of products purchased from the Company'stop ten vendors accounted for 43%, 41%, and 42% of total revenues, respectively. Products purchased from the Company’slargest commercial vendor accounted for approximately 11%, 10%, and 11% of total revenues in fiscal years 2018, 2017, and2016, respectively. Products purchased from the Company’s largest retail vendor accounted for approximately 10%, 11%,and 15% of total revenues in fiscal years 2018, 2017, and 2016, respectively. The Company is dependent on the ability of itsvendors to provide products on a timely basis and on favorable pricing terms. The Company believes that alternative sourcesof supply are available for many of the product types it carries, but not for all products offered by the Company. The loss ofcertain principal suppliers, including the suppliers referenced above, or of other suppliers whose products may be difficult tosource on comparable terms elsewhere, or the loss of one or more of certain ongoing affinity relationships, would have amaterial adverse effect on the Company. As noted, the Company's future results could also be negatively impacted by the loss of certain customers, and/orvendor relationships. For fiscal years 2018, 2017, and 2016, sales of products to the Company's top ten customerrelationships accounted for 28%, 26%, and 22% of total revenues, respectively. No customer accounted for more than 10% oftotal revenues in fiscal year 2018, 2017, and 2016. 69 Table of ContentsNote 20. Quarterly Results of Operations (Unaudited) Summarized quarterly financial data for the fiscal years ended April 1, 2018 and March 26, 2017 is presented in thetable below. For comparison purposes, fiscal quarter ended April 1, 2018 has fourteen weeks, all other quarters have thirteenweeks. Fiscal Year 2018 Quarters Ended Fiscal Year 2017 Quarters Ended April 1, December 24, September 24, June 25, March 26, December 25, September 25, June 26, 2018 2017 2017 2017 2017 2016 2016 2016 Revenues $148,920,100 $146,260,300 $145,083,500 $140,010,800 $122,602,900 $147,198,400 $134,633,800 $128,860,000 Cost of goodssold 117,381,400 116,660,500 115,160,400 110,844,000 96,665,300 117,229,800 105,878,200 101,754,000 Gross profit 31,538,700 29,599,800 29,923,100 29,166,800 25,937,600 29,968,600 28,755,600 27,106,000 Selling,general andadministrativeexpenses 30,357,600 27,413,200 26,674,400 27,881,500 26,890,400 27,860,700 26,709,500 26,955,700 Restructuringcharges — — — — 806,600 — — — Operatingexpenses 30,357,600 27,413,200 26,674,400 27,881,500 27,697,000 27,860,700 26,709,500 26,955,700 Income (loss)fromoperations 1,181,100 2,186,600 3,248,700 1,285,300 (1,759,400) 2,107,900 2,046,100 150,300 Interest, net 89,500 114,500 156,500 68,600 (7,100) 37,100 17,200 11,400 Income (loss)beforeprovision forincome taxes 1,091,600 2,072,100 3,092,200 1,216,700 (1,752,300) 2,070,800 2,028,900 138,900 Provision forincome taxes (76,800) 501,900 1,318,300 533,800 (895,000) 843,100 1,034,700 58,400 Net income(loss) $1,168,400 $1,570,200 $1,773,900 $682,900 $(857,300) $1,227,700 $994,200 $80,500 Dilutedearnings(loss) pershare $0.14 $0.19 $0.21 $0.08 $(0.10) $0.15 $0.12 $0.01 Cashdividendsdeclared percommonshare $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 $0.20 70 Table of ContentsReport of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of TESSCO Technologies IncorporatedOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of TESSCO Technologies Incorporated and subsidiaries (theCompany) as of April 1, 2018 and March 26, 2017, and the related consolidated statements of income, changes inshareholders' equity and cash flows for each of the three fiscal years in the period ended April 1, 2018, and the related notes(collectively referred to as the “consolidated financial statements”) and financial statement schedule listed in the Index atItem 15(a)2. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial positionof the Company at April 1, 2018 and March 26, 2017, and the results of its operations and its cash flows for each of the threeyears in the period ended April 1, 2018, in conformity with U.S generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)(PCAOB), the Company's internal control over financial reporting as of April 1, 2018, based on criteria established in InternalControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013framework) and our report dated June 1, 2018 expressed an unqualified opinion thereon.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinionon the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB andare required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether dueto error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financialstatements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures includedexamining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits alsoincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating theoverall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ ERNST & YOUNG LLPWe have served as the Company’s auditor since 2002.Baltimore, MarylandJune 1, 2018 71 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. Item 9A. Controls and Procedures. Disclosure Controls and Procedures We maintain a system of disclosure controls and procedures that is designed to provide reasonable assurance thatinformation, which is required to be disclosed by the Company in the reports that it files or submits under the Securities andExchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in therules and forms of the Securities and Exchange Commission, and is accumulated and communicated to management in atimely manner. Our chief executive officer and chief financial officer have evaluated our disclosure controls and proceduresas of the end of the period covered by this annual report, and have concluded that our disclosure controls and procedures areeffective at the reasonable assurance level. Internal Control over Financial Reporting Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reportingas defined in Rule 13(a)-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our system of internalcontrol is designed to provide reasonable assurance to management and the Board of Directors regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations andmay not prevent or detect misstatements. Therefore, internal control systems determined to be effective can only providereasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may be inadequate because of changes in conditions, or thedegree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our President and Chief ExecutiveOfficer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on theframework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of theTreadway Commission. This evaluation included review of the documentation of controls, evaluation of the designeffectiveness of controls, testing of the operating effectiveness of controls, and the conclusion of this evaluation. Based onthis evaluation, management concluded that our internal control over financial reporting was effective as of April 1, 2018. The effectiveness of our internal control over financial reporting as of April 1, 2018 has been audited by Ernst &Young LLP, an independent registered public accounting firm, as stated in their report which is included within this Item 9Aof Part II of this Annual Report on Form 10-K. Changes in Internal Control over Financial Reporting There has not been any change in our internal control over financial reporting during the fourth quarter of fiscal year2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 72 Table of ContentsReport of Independent Registered Public Accounting FirmTo the Shareholders and the Board of Directors of TESSCO Technologies IncorporatedOpinion on Internal Control over Financial ReportingWe have audited TESSCO Technologies Incorporated and subsidiaries’ internal control over financial reporting as of April 1,2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, TESSCO TechnologiesIncorporated and subsidiaries (the Company) maintained, in all material respects, effective internal control over financialreporting as of April 1, 2018, based on the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)(PCAOB), the consolidated balance sheets of TESSCO Technologies Incorporated and subsidiaries as of April 1, 2018 andMarch 26, 2017, the related consolidated statements of income, shareholders’ equity and cash flows for each of the threeyears in the period ended April 1, 2018, and the related notes and financial statement schedule listed in the Index at Item15(a)2 and our report dated June 1, 2018 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for itsassessment of the effectiveness of internal control over financial reporting included in Management’s Annual Report onInternal Control Over Financial Reporting, appearing in Item 9A. Our responsibility is to express an opinion on theCompany’s internal control over financial reporting based on our audit. We are a public accounting firm registered with thePCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities lawsand the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained inall material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a materialweakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides areasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal control over financial reporting includes those policies andprocedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and thatreceipts and expenditures of the company are being made only in accordance with authorizations of management anddirectors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate./s/ ERNST & YOUNG LLPBaltimore, MarylandJune 1, 2018 73 Table of Contents Item 9B. Other Information. None. Part III Items 10, 11, 12, 13 and 14. The information with respect to the identity and business experience of executive officers of the Company asrequired to be included in Item 10 to this Form 10-K is set forth in Part I of this Form 10-K. The information otherwiserequired by Items 10 through 14 will be contained in a definitive proxy statement for our Annual Meeting of Shareholders,which we anticipate will be filed no later than 120 days after the end of our fiscal year pursuant to Regulation 14A, andaccordingly, these items have been omitted in accordance with General Instruction G (3) to Form 10-K. Part IV Item 15. Exhibits and Financial Statement Schedules. (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: Consolidated Balance Sheets as of April 1, 2018 and March 26, 2017Consolidated Statements of Income for the fiscal years ended April 1, 2018, March 26, 2017 and March 27, 2016Consolidated Statements of Changes in Shareholders' Equity for the fiscal years ended April 1, 2018, March 26,2017 and March 27, 2016Consolidated Statements of Cash Flows for the fiscal years ended April 1, 2018, March 26, 2017 and March 27,2016Notes to Consolidated Financial StatementsReport of Independent Registered Public Accounting Firm 2.The following financial statement schedules are required to be filed by Item 8 and paragraph (b) of this Item 15included herewith: Schedule IIValuation and Qualifying Accounts Schedules not listed above have been omitted because the information required to be set forth therein is notapplicable.74 Table of Contents 3.Exhibits 3.1.1Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delawareon September 29, 1993 (incorporated by reference to Exhibit 3.1.1 to the Company's Registration Statement onForm S‑1 (No. 33‑81834)).3.1.2Certificate of Retirement of the Company 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)).3.1.3Certificate of Amendment to Certificate of Incorporation of the Company filed with the Secretary of State ofDelaware on July 20, 1994 (incorporated by reference to Exhibit 3.1.3 to the Company's Registration Statementon Form S‑1 (No. 33‑81834)).3.1.4Certificate of Amendment to Certificate of Incorporation of the Company filed with the Secretary of State ofDelaware on September 6, 1996 (incorporated by reference to Exhibit 3.1.4 to the Company's Annual Report onForm 10‑K filed for the fiscal year ended March 28, 1997).3.1.5Certificate of Correction filed with the Secretary of State of Delaware on February 7, 2007 to Certificate ofAmendment to Certificate of Incorporation of the Company filed with the Secretary of State of Delaware onSeptember 6, 1996 (incorporated by reference to Exhibit 3.1.5 to the Company’s Quarterly Report on Form 10-Qfiled for the fiscal quarter ended December 24, 2006).3.2.1Sixth Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to theCompany’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 28,2011).3.2.2First Amendment to Sixth Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit3.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission onJuly 22, 2011).3.2.3Second Amendment to Sixth Amended and Restated Bylaws of the Company (incorporated by reference toExhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commissionon March 29, 2016).10.1.1Amended and Restated Employment Agreement, dated March 26, 2016, with Robert B. Barnhill, Jr.(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with theSecurities and Exchange Commission on March 31, 2016).10.2.1Team Member Stock Purchase Plan (incorporated by reference to Appendix No. 2 to the Company's DefinitiveProxy Statement filed with the Securities and Exchange Commission on July 15, 1999).10.2.2Form of Restricted Stock Award (incorporated herein by reference to Exhibit 10.3 to the Company’s QuarterlyReport on Form 10-Q filed for the fiscal quarter ended June 26, 2011).10.2.3Form of Restricted Stock Unit Award (incorporated herein by reference to Exhibit 10.1 to the Company’sCurrent Report on Form 8-K, filed with the Securities and Exchange Commission on July 30, 2013).10.2.4Form of Stock Option (incorporated herein by reference to Exhibit 10.1.1 to the Company’s Quarterly Report onForm 10-Q filed for the fiscal quarter ended September 27, 2015).10.3.1Form of TESSCO Technologies Incorporated Performance Share Unit Agreement – Officers and Employees(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed for the fiscalquarter ended June 27, 2004).10.3.2Form of TESSCO Technologies Incorporated Performance Share Unit Agreement – Non-Employee Directors(incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed for the fiscalquarter ended June 27, 2004).10.3.3TESSCO Technologies Incorporated Third Amended and Restated 1994 Stock and Incentive Plan (incorporatedby reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities andExchange Commission on June 27, 2016).10.4.1Agreement of Lease by and between Atrium Building, LLC and TESSCO Technologies Incorporated(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed for the fiscalquarter ended September 28, 2003).75 Table of Contents10.4.2Third Amendment to Agreement of Lease by and between Atrium Building, LLC and TESSCO TechnologiesIncorporated (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filedwith the Securities and Exchange Commission on February 18, 2011).10.5.1Credit Agreement dated as of June 24, 2016, among TESSCO Technologies Incorporated, the additionalborrowers party thereto, the Lenders party thereto, and SunTrust Bank, as administrative agent, swingline lenderand an issuing bank (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 24, 2016).10.5.2Guaranty and Security Agreement dated as of June 24, 2016, among TESSCO Technologies Incorporated and itssubsidiaries, the Lenders party thereto, and SunTrust Bank, as administrative agent (incorporated by reference toExhibit 10.2 to the Company’s Current report on Form 8-K, filed with the Securities and Exchange Commissionon June 24, 2016).10.5.3First Amendment to Credit Agreement, dated as of July 13, 2017, by and among the Company and certainsubsidiaries, as co-borrowers, and SunTrust Bank, as administrative agent and lender, and Wells Fargo Bank NA,as lender (incorporated by reference to Exhibit 10.1 to the Company’s Current report on Form 8-K filed with theSecurities and Exchange Commission on July 18, 2017).10.5.4Amended and Restated Credit Agreement dated as of October 19, 2017, among TESSCO TechnologiesIncorporated, the additional borrowers party thereto, the Lenders party thereto, and SunTrust Bank, asadministrative agent, swingline lender and an issuing bank, together with exhibits and schedules thereto(incorporated by reference to exhibit 10.1 to the Company’s Current report on Form 8-K filed with the Securitiesand Exchange Commission on October 23, 2017).10.5.5Reaffirmation Agreement dated as of October 19, 2017, among TESSCO Technologies Incorporated, itssubsidiaries, the Lenders party thereto, and SunTrust Bank, as administrative agent (incorporated by reference toexhibit 10.2 to the Company’s Current report on Form 8-K filed with the Securities and Exchange Commissionon October 23, 2017).10.6.1Supplemental Executive Retirement Plan, between the Company and Robert B. Barnhill, Jr., (originally filed asExhibit C to Exhibit 10.2 to the Company’s Registration Statement on Form S-1 (No. 33-81834)) (incorporatedby reference to Exhibit 10.9.1 to the Company’s Annual Report on Form 10-K filed for the fiscal year endedMarch 29, 2009).10.6.2Amendment No. 1 to Supplemental Executive Retirement Plan, dated as of December 31, 2008 (incorporated byreference to Exhibit 10.9.2 to the Company’s Annual Report on Form 10-K filed for the fiscal year ended March29, 2009).10.7.1Form of Severance and Restrictive Covenant Agreement entered into between the Company and Douglas A.Rein (incorporated by reference to Exhibit 10.10.1 to the Company's Annual Report on Form 10-K filed for thefiscal year ended March 29, 2009).10.7.2Severance and Restrictive Covenant Agreement, dated May 27, 2014, and entered into between the Companyand Aric Spitulnik (incorporated by reference to Exhibit 10.8.2 to the Company’s Annual Report on Form 10-Kfiled for the fiscal year ended March 30, 2014).10.7.3*Form of Severance and Restrictive Covenant Agreement entered into between the Company and Elizabeth S.Robinson.10.7.4Form of Performance Stock Unit Agreement – Officers and Employees (incorporated by reference to exhibit10.4.1 to the Company’s Quarterly Report on Form 10-Q filed for the fiscal quarter ended June 26, 2016).10.7.5Employment Agreement, dated as of August 29, 2016, by and between the Company and Murray Wright(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with theSecurities and Exchange Commission on September 1, 2016).10.7.6Form of Stock Option to Murray Wright (incorporated by reference to Exhibit 10.1 to the Company’s CurrentReport on Form 8-K, filed with the Securities and Exchange Commission on September 1, 2016).11.1.1*Statement re: Computation of Per Share Earnings.21.1.1*Subsidiaries of the Company.23.1.1*Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.31.1.1*Rule 15d-14(a) Certification of Murray Wright, Chief Executive Officer.31.2.1*Rule 15d-14(a) Certification of Aric Spitulnik, Chief Financial Officer.32.1.1*Section 1350 Certification of Murray Wright, Chief Executive Officer.32.2.1*Section 1350 Certification of Aric Spitulnik, Chief Financial Officer.76 Table of Contents101.1*The following financial information from TESSCO Technologies Incorporated’s Annual Report on Form 10-Kfor the year ended April 1, 2018 formatted in XBRL: (i) Consolidated Statement of Income for the years endedApril 1, 2018, March 26, 2017 and March 27, 2016; (ii) Consolidated Balance Sheet at April 1, 2018 and March26, 2017; (iii) Consolidated Statement of Cash Flows for the years April 1, 2018 and March 26, 2017; and(iv) Notes to Consolidated Financial Statements. *Filed herewith 77 Table of ContentsSchedule II: Valuation and Qualifying Accounts For the fiscal years ended: 2018 2017 2016 Allowance for doubtful accounts: Balance, beginning of period $782,200 $841,400 $661,900 Provision for bad debts 797,100 674,200 637,100 Write-offs and other adjustments (484,400) (733,400) (457,600) Balance, end of period $1,094,900 $782,200 $841,400 2018 2017 2016 Inventory Reserve: Balance, beginning of period $6,360,600 $6,071,100 $5,780,600 Inventory reserve expense 4,361,400 3,193,200 3,412,000 Write-offs and other adjustments (4,982,300) (2,903,700) (3,121,500) Balance, end of period $5,739,700 $6,360,600 $6,071,100 78 Table of Contents Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TESSCO Technologies Incorporated By: /s/ Murray Wright Murray Wright, President and Chief Executive Officer June 1, 2018 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by thefollowing persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Murray Wright President and Chief Executive Officer (principal executive officer) June 1, 2018Murray Wright /s/ Aric Spitulnik Senior Vice President, Chief Financial Officer, and CorporateSecretary (principal financial and accounting officer) June 1, 2018Aric Spitulnik /s/ Robert B. Barnhill, Jr. Chairman of the Board June 1, 2018Robert B. Barnhill, Jr. /s/ Jay G. Baitler Director June 1, 2018Jay G. Baitler /s/ John D. Beletic Director June 1, 2018John D. Beletic /s/ Benn R. Konsynski Director June 1, 2018Benn R. Konsynski /s/ Dennis J. Shaughnessy Director June 1, 2018Dennis J. Shaughnessy /s/ Morton F. Zifferer Director June 1, 2018Morton F. Zifferer 79Exhibit 10.7.3SEVERANCE AND RESTRICTIVE COVENANT AGREEMENTTHIS SEVERANCE AND RESTRICTIVE COVENANT AGREEMENT (this “Agreement”) is dated as ofJuly ___, 2017 (the “Effective Date”), between TESSCO TECHNOLOGIES INCORPORATED, a Delawarecorporation (the “Company”), and ELIZABETH S. ROBINSON (“Executive”).Section 1. TERM OF AGREEMENTThe term of this Agreement shall commence on and as of the Effective Date and continue until Executive’semployment has terminated and the obligations of the parties hereunder have terminated or expired or have beensatisfied in accordance with their terms.Section 2. DEFINITIONSFor purposes of this Agreement, the following terms have the meanings set forth in this Section:2.1. “Board” means the Board of Directors of the Company.2.2. “Cause” means:(a) Executive’s willful violation of a Company policy (excluding any act or omission thatExecutive reasonably believed in good faith to have been in the best interest of the Company), commission of an act offraud or dishonesty, or willful engagement in illegal conduct or gross misconduct, which in each case is materially anddemonstrably injurious to the Company;(b) Executive’s continued failure to substantially perform Executive’s duties with theCompany or to substantially comply with a specific and lawful directive of the Company’s President and ChiefExecutive Officer or the Board (other than a continued failure caused by or attributable to physical or mental illness orinfirmity), in each case after a written demand for substantial performance or substantial compliance is delivered toExecutive by or on behalf of the Company’s President and Chief Executive Officer or the Board, which demand isbased on a good-faith determination by the Company’s President and Chief Executive Officer or the Board, afterreasonable inquiry, specifically identifying the manner in which the Company’s President and Chief Executive Officeror the Board believes Executive has not substantially performed Executive’s duties or substantially complied with alawful directive;(c) Executive’s conviction of (including a plea of nolo contendere to) a crime constituting afelony;(d) Executive’s embezzlement or criminal diversion of funds; or(e) Executive’s failure (other than by reason of physical or mental illness or infirmity) toperform or to comply with any material term or condition of this Agreement, which failure:(i) is of such a nature that it is reasonably capable of being cured, but only if(x) Executive does not cure such failure within thirty (30) days after written notice of such failure or (y) if such failurecannot be cured in such period and the continuation of such failure will not be materially and demonstrably injurious to the Company, Executive does not commence anddiligently seek to cure such failure within such period and thereafter continue to seek to cure such failure until cured; or(ii) is of such a nature that it is not reasonably capable of being cured, in which caseExecutive shall be given written notice thereof but shall not be entitled to any opportunity to cure such failure.2.3. “Change in Control” means the occurrence of any of the following:(a) any “person” (as that term is used in Section 13(d) and 14(d) of the Securities ExchangeAct of 1934, as amended (the “Exchange Act”) (other than Robert B. Barnhill, Jr., his affiliates, and members of hisfamily) becomes the beneficial owner, directly or indirectly, of securities of the Company representing fifty percent(50%) or more of the combined voting power of the then-outstanding securities of the Company; or(b) there is a change in the composition of a majority of the Board of Directors of theCompany within twelve (12) months after any “person” (as defined above) (other than Robert B. Barnhill, Jr., hisaffiliates, and members of his family) becomes the beneficial owner, directly or indirectly, of securities of the Companyrepresenting thirty percent (30%) or more of the combined voting power of the then-outstanding securities of theCompany; or(c) there is consummated any consolidation or merger or share exchange involving theCompany in which the Company is not the continuing or surviving corporation or pursuant to which shares of theCompany’s common stock would be converted into cash, securities, or other property, other than a merger of theCompany in which the holders of the Company’s common stock immediately before the merger have substantially thesame proportionate ownership of common stock of the surviving entity immediately after the merger; or(d) there is consummated any sale, lease, exchange, or other transfer (in one transaction or aseries of related transactions) of all or a substantial portion of the assets of the Company other than to one or more of itswholly-owned subsidiaries; or(e) the stockholders of the Company approve a plan or proposal for the complete or partialliquidation, dissolution, or divisive reorganization of the Company.2.4. “Code” means the Internal Revenue Code of 1986, as amended.2.5. “Date of Termination” means: (i) if Executive’s employment terminates by virtue of Executive’sdeath, the date of death and (ii) in all other cases, the date as of which a termination of Executive’s employmentbecomes effective in accordance with the provisions of Section 3.1(d).2.6. “Disability” means any physical or mental illness or infirmity of Executive (expressly excludinghabitual use of alcohol or drugs) that causes Executive to be substantially unable to perform Executive’s dutieshereunder for any period of one hundred eighty (180) consecutive days or two hundred seventy (270) days, whether ornot consecutive, in any period of three hundred sixty five (365) days, despite provision by the Company of reasonable accommodations as required by law. The determination of whether a Disability exists shall be made by a licensedphysician who is board certified in the specialty mutually determined by the Company and Executive to be applicableand who is mutually selected by the Company and Executive. If the parties cannot agree on such a physician orspecialty, each party shall select a physician and the two physicians so selected shall select a third physician boardcertified in the specialty determined appropriate by the two physicians, and such board-certified physician shall makethe determination of whether a Disability exists. Absent certification by the physician so selected that the circumstancesof Executive’s condition have changed materially since the time of the then most recent determination, neither partyshall be able to initiate a determination as to Disability for a period of nine months after the completion of the then mostrecent determination.2.7. “Good Reason” means the occurrence, without Executive’s express prior written consent, ofany of the following:(a) Any substantial reduction in the scope of Executive’s authority, duties, orresponsibilities, other than a reduction attributable to Executive’s continued failure to substantially perform Executive’sduties with the Company or to accommodate Executive’s physical or mental illness or infirmity;(b) Any substantial reduction in Executive’s base compensation or total compensationopportunity for any fiscal year (taking into account base compensation, bonus or other incentive compensationopportunities, and noncash compensation); or(c) Any relocation by the Company of Executive’s primary office work location to a pointthat is more than fifty (50) miles from 11126 McCormick Road, Hunt Valley, MD 21031 resulting from or inconnection with a Change in Control;but only if (i) Executive delivers a written notice to the Company specifically identifying the occurrence anddemanding that it be remedied within ninety (90) days of the initial existence of such occurrence and (ii) if the same iscapable of being rectified, the Company fails to rectify the same within thirty (30) days after receiving such writtennotice or, if the same is not capable of being rectified within such period of time, the Company fails to commencediligently to seek to rectify the same within such period and thereafter to continue to seek to rectify such failure untilrectified.For the avoidance of doubt: (x) neither the relocation of Executive’s place of employment to another location nor theoccurrence of a Change in Control shall, of itself, constitute “Good Reason” and (y) any prospective action that would,if actually taken or implemented, constitute Good Reason through the application of (a) or (b) above (after theexpiration without cure of the applicable notice and cure period provided for above) shall not in any event be deemedto have occurred unless and until such action is actually taken or implemented.2.8. “Separation from Service” means a termination of Executive’s employment that constitutes aseparation from service under Section 409A(a)(2)(A)(i) of the Code.Section 3. TERMINATION AND COMPENSATION UPON TERMINATION3.1. In General. (a) Termination by Company. The Company (acting through the President and ChiefExecutive Officer or the Board) may at any time elect to terminate Executive’s employment by delivery of a notice oftermination to Executive for any reason (including on account of Disability) or no reason, with or without Cause.(b) Termination by Executive. Executive may elect to terminate Executive’s employmentby delivery of a notice of termination for any reason (including on account of Disability) or no reason, with or withoutGood Reason at any time.(c) Notice of Termination. Any termination of Executive’s employment, whether by theCompany or by Executive, shall be communicated by written notice of termination to the other party in accordancewith the terms of Section 5.5. The notice of termination shall state the specific termination provision in this Agreementrelied upon and set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination ofExecutive’s employment under the provision so indicated and shall state an effective date of termination that complieswith the requirements of subsection (d).(d) Effective Date of Termination. Unless otherwise agreed upon in writing by theCompany and Executive:(i) The effective date of termination of Executive’s employment in the case of atermination of Executive’s employment by the Company for any or no reason shall not be more than ninety (90) daysafter the date the notice of termination is given by the Company; and(ii) The effective date of termination in the case of a termination of Executive’semployment by Executive for any reason shall not be less than thirty (30) nor more than thirty-five (35) days after thedate the notice of termination is given by Executive.The foregoing, however, shall not preclude the Company from requiring that Executive take a leave of absence withpay until the expiration of the period between the date the notice of termination is given and the effective date oftermination.(e) Section 409A.(i) All payments made to or in respect of Executive pursuant to this Section 3 shallbe made in a cash lump sum within thirty (30) days following the Date of Termination, except where this Agreement(or the plan pursuant to which such payment is to be made) provides otherwise. No amounts that are “deferredcompensation” within the meaning of Section 409A of the Code and that are payable under this Agreement as a resultof Executive’s termination of employment shall be payable to Executive unless Executive’s termination of employmentalso constitutes a Separation from Service.(ii) In the event that any payments due under Section 3.3(c) constitute “deferredcompensation” within the meaning of Section 409A of the Code, Executive’s right to receive a series of installmentpayments shall be treated as a right to a series of separate payments.3.2. Death, Disability, Cause, or Resignation Without Good Reason. Executive’s employment shallbe terminated automatically on the date of Executive’s death or Disability. Upon such a termination of employment, orupon a termination of employment by the Company for Cause, or upon a termination of employment by Executive without Good Reason, the Company shallpay to Executive (or, in the event of Executive’s death, to Executive’s beneficiary or estate), when the same wouldotherwise have been due, (i) Executive’s base compensation through the Date of Termination and (ii) any AccruedBonus as of the Date of Termination (determined in accordance with Section 3.4) and shall have no further obligationsunder this Agreement.3.3. Termination Without Cause or With Good Reason. If Executive’s employment is terminated bythe Company without Cause or by Executive for Good Reason, the Company shall pay to Executive:(a) When the same would otherwise have become due and payable, Executive’s basecompensation through the Date of Termination (without regard to any reduction therein constituting Good Reasonwithin the meaning of Section 2.7(b)); plus(b) When the same would otherwise have become due and payable, any Accrued Bonus asof the Date of Termination (determined in accordance with Section 3.4 and without regard to any reduction thereinconstituting Good Reason within the meaning of Section 2.7(b)); plus(c) An amount of severance pay equal to one hundred percent (100%) of Executive’sannual base compensation as in effect on the Date of Termination (without regard to any reduction therein constitutingGood Reason within the meaning of Section 2.7(b)), which amount shall be paid in twelve (12) consecutive equalmonthly installments (A) commencing on the later of (x) the first day of second calendar month following the Date ofTermination and (y) the tenth (10) day after Executive has executed and delivered to the Company the general releaseagreement required by Section 3.6 (and provided that Executive has not thereafter revoked or rescinded such release)and (B) continuing thereafter monthly until paid in full.3.4. Determination of Accrued Bonus. For purposes of Section 3.2 and Section 3.3(b), “AccruedBonus” determined as of Executive’s Date of Termination means any bonus or other cash incentive compensationearned or accrued on the Company’s books as of or through the Date of Termination in accordance with thisSection 3.4. In making this calculation, to the extent applicable: (i) Executive’s based compensation or other earningswill be based on actual earnings through the Date of Termination (determined without regard to any reduction thereinconstituting Good Reason within the meaning of Section 2.7(b)), (ii) any individual contribution percentage orindividual performance factor will be set at 100%, and (iii) any Company performance factors will be based on thoseused to calculate bonus accruals for the most recently completed fiscal quarter of the fiscal year in which the Date ofTermination falls, unless the Date of Termination falls within the Company’s first fiscal quarter of the fiscal year, inwhich case any Company performance factors will be calculated as reasonably determined by the Company in goodfaith.3.5. Cost of COBRA Continuation Coverage. If and to the extent that Executive, following atermination of Executive’s employment described in Section 3.3, properly and timely elects (on behalf of Executiveand Executive’s qualified beneficiaries) continuation coverage under the Consolidated Omnibus Budget ReconciliationAct of 1985, as amended (“COBRA”) with respect to the Company’s group health plan, Executive shall pay from timeto time the then-current portion of the cost of such coverage that would be payable by the Company’s similarly situatedactive employees and the Company shall pay the balance of such then-current costs as long as and for the periodduring which the Company remains obligated for continuing payments under Section 3.3(c) (without regard to anyacceleration by the Company of such payments). The Company shall be authorized to deduct from the installments tobe paid under Section 3.3 Executive’s then-current share of the cost of such coverage. The Company’s subsidy of suchgroup health plan coverage shall terminate upon the earlier of (1) the date of termination of COBRA continuationcoverage and (2) the payment in full by the Company of its obligations under thSection 3.3(c) (without regard to any acceleration by the Company of such payments), whereupon Executive shall befully responsible for the cost of continuing coverage and benefits, if any.3.6. General Release Agreement. The obligations of the Company to make the payments andprovide the benefits described in Sections 3.3 and 3.5 are expressly conditioned upon Executive’s signing anddelivering to the Company, not later than forty-five (45) days after the Date of Termination, and thereafter not revokinga valid general release agreement in form and substance reasonably acceptable to the Company, which release shallwill include a general release of all claims against the Company, its directors, officers, and affiliates (other than claimsin respect of future Company obligations under this Agreement). Any breach of Executive’s nondisclosure,nonsolicitation, or noncompetition obligations to the Company that has or is reasonably likely to have a material andadverse effect on the Company shall, in addition to all other remedies available to Company, result in the immediaterelease of the Company from any obligation it would otherwise have to make further payments or provide furtherbenefits under this Agreement. Executive expressly acknowledges that the Company is prepared to vigorously enforcethese promises and that violation of Executive’s obligations could result in an award of damages or other legalremedies against Executive and Executive’s subsequent employers.3.7. Limitation.(a) The foregoing notwithstanding, the total of the payments made to Executive pursuant toSections 3.3 and 3.5 shall be reduced to the extent that the payment of such amount would cause Executive’s totaltermination benefits (as determined by the Company’s tax advisor) to constitute an “excess” parachute payment underSection 280G of the Code and thereby subject Executive to an excise tax under Section 4999(a) of the Code, but onlyif Executive determines that the after-tax value of the termination benefits calculated with the foregoing reductionexceeds the value of the termination benefits calculated without the such reduction. Any such reduction shall be reducethe cash payments otherwise to be made to Executive in reverse chronological order.(b) To the extent that any cash payments due under Section 3.3 or Section 3.5: (i) constitute“deferred compensation” subject to the requirements of Section 409A of the Code, (ii) are payable to an Executivewho is a “specified employee” (as defined in Section 409A) as a result of Executive’s Separation from Service, and(iii) would be payable during the six (6) month period following Executive’s Separation from Service, such paymentsshall be suspended and accumulated by the Company and paid out to Executive on the first business day following thedate that is six (6) months after Executive’s Separation from Service. In determining whether any cash payments dueunder Section 3.3 or Section 3.5 are deferred compensation within the meaning of Section 409A, the parties agree, tothe greatest extent possible under the Treasury Regulations promulgated under Section 409A, to make use of anyexemptions available under Section 409A, including the short-term deferral exemption (which may require theacceleration of certain cash termination benefits), the separation pay exemption, and the limited payment exemption. 3.8. Termination Obligations.(a) Executive hereby acknowledges and agrees that all Company Property and Materialsfurnished or made available to or acquired by Executive in the course of or incident to Executive’s employment,belong to the Company and shall be promptly returned to the Company upon termination of Executive’s employmentfor whatever reason. “Company Property and Materials” for such purpose includes (i) all electronic devices owned,leased, or made available by the Company for Executive’s use, including personal computers, fax machines, cellulartelephones, pagers, and tape recorders, and (ii) all books, manuals, records, reports, notes, contracts, lists, blueprints,maps and other documents, or materials, or copies thereof (including computer files) belonging to, and all otherproprietary information relating to the business of, the Company. Following termination, Executive will not retain anywritten or other tangible material containing any proprietary information of the Company and, upon request, willconfirm Executive’s compliance with this subsection in writing.(b) Executive’s obligations under this Section 3.8 and Section 4 shall survive termination ofExecutive’s employment and the expiration of this Agreement.(c) Upon termination of Executive’s employment, Executive will be deemed to haveresigned from all offices and directorships then held with the Company or any of its affiliates.3.9. Right of Offset. Executive expressly agrees that the Company shall be entitled to offset againstany amounts otherwise payable to Executive under Section 3.3 any amount that Executive may then be obligated topay to the Company, pursuant to this Agreement or any other agreement or arrangement between Executive and theCompany, and Executive consents to the Company’s withholding of such amounts from any amount otherwisepayable pursuant to Section 3.3.3.10. No Duty to Mitigate. No amount due to Executive under this Agreement by virtue of thetermination of Executive’s employment (other than payments to be provided in respect of health benefits to the extentthat Executive is entitled to similar benefits by virtue of new employment) shall be reduced by or on account of anycompensation received by Executive as the result of employment by another employer.Section 4. RESTRICTIVE COVENANTS4.1. Confidentiality. In the performance of Executive’s duties hereunder Executive shall abide byand be bound by the Company’s Code of Conduct, including the confidentiality and nonsolicitation restrictions setforth therein. In addition and not in lieu or in substitution therefor, Executive shall not, during Executive’s employmentor at any time thereafter, directly or indirectly, disclose or make available to any person for any reason or purposewhatsoever, any Confidential Information (as defined below). Executive agrees that, upon termination of Executive’semployment with the Company, all Confidential Information in Executive’s possession that is in written or othertangible form (together with all copies or duplicates thereof, including computer files), whether or not otherwiseincluded among the Company Property and Materials required to be returned pursuant to Section 3.8(a), shall be returned to the Company and shall not be retained by Executive or furnished or disclosed to any third party in any formexcept as provided herein; provided, however, that Executive shall not be obligated to treat as confidential anyinformation that (i) was publicly known at the time of disclosure to Executive, (ii) becomes publicly known oravailable thereafter other than by virtue of a violation of this Agreement or any other duty owed to the Company byExecutive, or (iii) is lawfully disclosed to Executive by a third party. As used in this Agreement the term “ConfidentialInformation” means otherwise nonpublic information disclosed to Executive or known by Executive as a consequenceof or through Executive’s relationship with the Company, including information about the customers, vendors,employees, consultants, business methods, public relations methods, organization, procedures, business plans, orfinances, of the Company or its affiliates, whether or not such information constitutes a “trade secret” under applicablelaw.4.2. Noncompetition.(a) Competitive Activity. In addition to the restrictions contained in the Company’s Code ofConduct, Executive agrees that Executive shall not, without the prior written consent of the Company (as may becommunicated through the Company’s President and Chief Executive Officer):(i) During the period Executive is employed by the Company (the “EmploymentPeriod”) and after termination of Executive’s employment during the Restriction Period (as defined in subsection (d)),directly or indirectly, engage or participate in (as an owner, partner, stockholder, employee, director, officer, agent,consultant or otherwise), with or without compensation, any business that is competitive with the business of theCompany or any of its affiliates (x) during the Employment Period, as it is being conducted while Executive isemployed by the Company or (y) during the Restriction Period, as it was being conducted at the time of the terminationof Executive’s employment (each a “Competitive Business”);(ii) After termination of Executive’s employment and during the Restriction Period,directly or indirectly, solicit or attempt to persuade any person who was, at any time within the two (2) year periodbefore such termination an employee or independent contractor of the Company, to terminate his, her, or itsrelationship with the Company; or(iii) After termination of Executive’s employment and during the Restriction Period,directly or indirectly, employ, hire, or retain any person who was an employee of the Company at any time within theone (1) year period before such termination.For the avoidance of doubt and without limitation, subsection (i) above is intended, among other things, to prohibit,during the Employment Period and Restriction Period, the solicitation by Executive of any customer, client, or vendorof the Company for the benefit of or in furtherance of a Competitive Business and the engagement or participation ofExecutive by or with any business that solicits or engages in business with any customer, client, or vendor of theCompany in furtherance of a Competitive Business.(b) Notwithstanding the foregoing, and with due recognition of the considerable breadthand scope of the products sold by the Company, the Company agrees that it will not unreasonably withhold its consentto allowing Executive to be employed during the Restriction Period by a Competing Business, provided that (and foras long as) the Competing Business competes with, or is likely to continue to compete with, the Company, asdetermined in the reasonable discretion of the Company, only in a manner having not more than an immaterial effecton the business, financial condition, or financial results of the Company as a whole or any business segment of theCompany. Any such request shall be accompanied by a detailed statement of the then-current and anticipated businessactivities of the Competing Business, certified to be true, complete, and correct on behalf of such Competing Business,together with or followed by any other or additional information as may reasonably be requested by the Company tofully and properly evaluate Executive’s request. (c) Notwithstanding the foregoing, Executive may own up to a five percent (5%) interest ina publicly traded corporation or other person engaged in a Competitive Business.(d) For purposes hereof, “Restriction Period” means the period beginning upon the Date ofTermination and ending on the first anniversary thereof.4.3. Remedies for Breach. Executive acknowledges that the provisions of Sections 4.1 and 4.2 arereasonable and necessary for the protection of the Company and that the Company may be irrevocably damaged ifthese provisions are not specifically enforced. Accordingly, Executive agrees that, in addition to any other legal orequitable relief or remedy available to the Company, the Company shall be entitled to seek and may obtain anappropriate injunction or other equitable remedy for the purposes of restraining Executive from any actual or threatenedbreach of or otherwise enforcing these provisions (and that no bond or security shall be required in connectiontherewith), together with an equitable accounting of all earnings, profits, and other benefits arising from such violation,which rights shall be cumulative.4.4. Modification. If a court determines that any of the restrictions contained in Section 4.1 orSection 4.2 is unreasonable in terms of scope, duration, geographic area, or otherwise, or any provision in Section 4.1or Section 4.2 is otherwise illegal, invalid, or unenforceable, then such restriction or provision, as applicable, shall bereformed to the extent necessary so that the same shall be rendered enforceable to the fullest extent otherwisepermissible under applicable law, and the parties hereto do hereby expressly authorize any such court to so provide.Section 5. GENERAL PROVISIONS5.1. Termination of Employment Agreements. The parties hereby agree that any and all prioremployment agreements between Executive and the Company are hereby terminated as of the date hereof, and any andall such agreements shall be of no further force and effect from and after the date hereof and the parties shall bereleased from any further obligations thereunder. The foregoing, however, shall not be deemed to abrogate orotherwise affect any of Executive’s obligations under the Company’s Code of Conduct as heretofore or hereafter ineffect or any other restrictive covenant binding upon Executive.5.2. Certain Rules of Construction.(a) Number. The definitions contained in Section 2 and elsewhere in this Agreement shallbe equally applicable to both the singular and plural forms.(b) “Including”; “Or.” The word “including” means and shall be read as “including but notlimited to” and the word “or” means “or” in the nonexclusive sense, i.e., either “and” or “or.”(c) Section and Subsection References. Except as otherwise specified herein, references inthis Agreement to Sections, subsections, and paragraphs are references to the Sections, subsections, and paragraphs ofthis Agreement. (d) Headings. The headings of the Sections, subsections, and paragraphs of this Agreementare inserted for convenience only and shall not be deemed to constitute part of this Agreement or affect the constructionhereof.(e) “Herein.” Words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to thisAgreement as a whole and not merely to a subdivision in which such words appear unless the context otherwiserequires.(f) “Person.” Except as may be expressly provided otherwise herein, the word “person”includes an individual, corporation, general or limited partnership, joint venture, limited liability company, businesstrust, firm, association, or other form of business entity.(g) Joint Drafting. The parties have participated jointly in the negotiation and drafting of thisAgreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed asif drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring either party byvirtue of the authorship of any of the provisions of this Agreement.5.3. Successors; Binding Agreement.(a) The Company shall require any successor (whether direct or indirect, by purchase,merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company to expresslyassume and agree to perform this Agreement in the same manner and to the same extent that the Company would berequired to perform it if no such succession had taken place. Failure of the Company to obtain such assumption andagreement before the effectiveness of any such succession shall be a breach of this Agreement. Unless expresslyprovided otherwise, “Company” as used herein means the Company as defined in this Agreement and any successor toits business or assets as aforesaid.(b) This Agreement may not be assigned by Executive but shall inure to the benefit of andbe enforceable by Executive and Executive’s personal or legal representatives, executors, administrators, heirs,distributees, devisees and legatees. If Executive dies while any amounts remains payable to Executive hereunder, allsuch amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement toExecutive’s devisee, legatee, or other designee or, if there is no such designee, to Executive’s estate.5.4. No Contract of Employment. Executive acknowledges that Executive’s employment with theCompany is “at will.” This Agreement does not and is not intended to confer upon Executive any right of continued orfuture employment by the Company or any right to compensation or benefits from the Company except the rightsspecifically stated herein, and shall not limit the right of the Company to terminate Executive’s employment at any timewith or without Cause.5.5. Notices. All notices, demands, and other communications required or permitted by thisAgreement shall be in writing and shall be deemed to have been duly given (i) when personally delivered, (ii) whentransmitted by fax, email, or other electronic or digital transmission, in each case with receipt confirmed, (iii) onebusiness day after delivery to an overnight courier for next day delivery, or (iv) upon receipt if sent by certified or registered mail. In each case, noticeshall be addressed as follows:If to Executive:As set forth below Executive’s signature to this Agreement If to the Company:TESSCO Technologies Incorporated 11126 McCormick Road Hunt Valley, MD 21031 Attention: President and CEO Fax: (410) 229-1669 or to such other address as either party may have furnished to the other in writing in accordance herewith, except thatnotices of change of address shall be effective only upon actual receipt.5.6. Counterparts. This Agreement may be executed in several counterparts, each of which shall bedeemed to be an original but all of which together will constitute one and the same instrument. A counterpart signaturepage delivered by fax or other electronic means shall be as effective as the original thereof.5.7. Governing Law. This Agreement shall be construed, interpreted, and enforced in accordancewith the laws of the State of Maryland (without regard to any provision that would result in the application of the lawsof any other state or jurisdiction).5.8. Indemnification. To the fullest extent permitted under applicable law, the Company shallindemnify, defend, and hold Executive harmless from and against any and all causes of action, claims, demands,liabilities, damages, costs, and expenses of any nature whatsoever directly or indirectly arising out of or relating toExecutive’s discharge of Executive’s duties on behalf of the Company or its subsidiaries and affiliates, as long asExecutive acted in good faith and within the course and scope of Executive’s duties with respect to the matter givingrise thereto.5.9. Nondisparagement. The Company and Executive agree that neither will knowingly make anyfalse statement intended or reasonably likely to disparage or defame the other to any person not a party to thisAgreement relating to the employment relationship between the Company and Executive, the Company's business, orExecutive’s performance.5.10. ARBITRATION OF DISPUTES; WAIVER OF JURY TRIAL.(a) Any claims (including counterclaims and cross-claims) and disputes between theparties arising out of or in any way relating to this Agreement or Executive’s employment with the Companyshall (except as permitted by subsection (b)) be resolved by submission to binding arbitration before a singleneutral arbitrator, who shall be a member of the Bar of the State of Maryland, in accordance with theCommercial Arbitration Rules and Procedures of the American Arbitration Association (AAA) then in effect.Such arbitration shall be held in Baltimore, Maryland. (b) Notwithstanding subsection (a) or any other provision of this Agreement, either partyshall have the right to apply to a court having appropriate jurisdiction to seek injunctive or other equitable ornonmonetary relief, on either an interim or permanent basis, in respect of any claim arising out of or in connection withthis Agreement or Executive’s employment with the Company.(c) Without implying any limitation on the requirement of subsection (a) that disputesbe submitted to and resolved by arbitration, each party hereby irrevocably waives any right to a trial by juryin any action or proceeding arising under or relating to this Agreement or to the terms or conditions ofExecutive’s employment with the Company.5.11. Attorneys’ Fees. If any legal action, arbitration, or other proceeding is brought for theenforcement of this Agreement, or because of an alleged dispute, breach, or default in connection with any of theprovisions of this Agreement, the prevailing party (as determined by the court or arbitrator) shall be entitled to recoverreasonable attorneys’ fees and other costs incurred in such action, arbitration, or other proceeding, including any appealthereof, in addition to any other relief to which such party may be entitled. Any award of attorneys’ fees or costs toExecutive shall not affect the award of any attorneys’ fees or costs eligible for reimbursement in any other calendaryear, and all such reimbursements must be made on or before the last day of the calendar year following the calendaryear in which the expense was incurred.5.12. Entire Agreement; Amendments. This Agreement contains the entire agreement andunderstanding between the Company and Executive with respect to the subject matter hereof, and no representations,promises, agreements, or understandings, written or oral, not herein contained shall be of any force or effect. ThisAgreement shall not be changed unless in writing and signed by both Executive and the Company.5.13. Executive’s Acknowledgment. Executive acknowledges (i) that Executive has had theopportunity to consult with independent counsel of Executive’s own choice concerning this Agreement, and (ii) thatExecutive has read and understands the Agreement, is fully aware of its legal effect, and has entered into it freely basedon Executive’s own judgment.[Balance of this page intentionally blank] IN WITNESS WHEREOF, the parties have executed this Severance and Restrictive Covenant Agreement asof the date and year first above written. TESSCO TECHNOLOGIES INCORPORATED By: Murray Wright President and CEO EXECUTIVE: ELIZABETH S. ROBINSON Address: Fax: Email: Exhibit 11.1.1 Statement re: Computation of Per Share Earnings The information required by this Exhibit is set forth in Note 15 to the Consolidated Financial Statements of theCompany contained in Item 8 of this Report. Exhibit 21.1.1 Subsidiaries of the Registrant Subsidiary State of IncorporationTESSCO Incorporated DelawareWireless Solutions Incorporated MarylandTESSCO Service Solutions, Inc. DelawareTESSCO Communications Incorporated DelawareTESSCO Financial Corporation DelawareTESSCO Business Services, LLC DelawareTESSCO Integrated Solutions, LLC DelawareGW Service Solutions, Inc. DelawareTCPM, Inc. Delaware Exhibit 23.1.1 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the following Registration Statements of TESSCOTechnologies Incorporated of our reports dated June 1, 2018, with respect to the consolidated financialstatements and schedule of TESSCO Technologies Incorporated, and the effectiveness of internal controlover financial reporting of TESSCO Technologies Incorporated, included in this Annual Report (Form 10-K) of TESSCO Technologies Incorporated for the year ended April 1, 2018: Registration Statements on Form S-8: Name RegistrationNumber Date Filed1994 Stock and Incentive Plan 33-87178 December 7,1994Team Member Stock Purchase Plan 333-95249 January 24, 2000Amended and Restated 1994 Stock and Incentive Plan 333-118177 August 12, 2004Second Amended and Restated 1994 Stock and IncentivePlan 333-158758 April 24, 2009Second Amended and Restated 1994 Stock and IncentivePlan 333-179819 February 29, 2012Third Amended and Restated 1994 Stock and IncentivePlan 333-214457 November 4,2016 /s/ ERNST & YOUNG LLP Baltimore, MarylandJune 1, 2018 1Exhibit 31.1.1 CERTIFICATION I, Murray Wright, certify that:1. I have reviewed this annual report on Form 10-K for the period ended April 1,2018 of TESSCO Technologies Incorporated;2. Based on my knowledge, this report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading with respect to the periodcovered by this report;3. Based on my knowledge, the financial statements, and other financial informationincluded in this report, fairly present in all material respects the financial condition, results of operationsand cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing andmaintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the registrant and have:a) Designed such disclosure controls and procedures, or caused suchdisclosure controls and procedures to be designed under our supervision, to ensure that materialinformation relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused suchinternal control over financial reporting to be designed under our supervision, to provide reasonableassurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c) Evaluated the effectiveness of the registrant’s disclosure controls andprocedures and presented in this report our conclusions about the effectiveness of the disclosurecontrols and procedures, as of the end of the period covered by this report based on such evaluation;andd) Disclosed in this report any change in the registrant’s internal control overfinancial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourthfiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our mostrecent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalentfunctions):a) All significant deficiencies and material weaknesses in the design oroperation of internal control over financial reporting which are reasonably likely to adversely affect theregistrant’s ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or otheremployees who have a significant role in the registrant’s internal control over financial reporting. Date:June 1, 2018By:/s/ Murray Wright Murray Wright President and Chief Executive Officer Exhibit 31.2.1 CERTIFICATION I, Aric Spitulnik, certify that:1. I have reviewed this annual report on Form 10-K for the period ended April 1,2018 of TESSCO Technologies Incorporated;2. Based on my knowledge, this report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading with respect to the periodcovered by this report;3. Based on my knowledge, the financial statements, and other financial informationincluded in this report, fairly present in all material respects the financial condition, results of operationsand cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing andmaintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the registrant and have:a) Designed such disclosure controls and procedures, or caused suchdisclosure controls and procedures to be designed under our supervision, to ensure that materialinformation relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused suchinternal control over financial reporting to be designed under our supervision, to provide reasonableassurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c) Evaluated the effectiveness of the registrant’s disclosure controls andprocedures and presented in this report our conclusions about the effectiveness of the disclosurecontrols and procedures, as of the end of the period covered by this report based on such evaluation;andd) Disclosed in this report any change in the registrant’s internal control overfinancial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourthfiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our mostrecent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalentfunctions):a) All significant deficiencies and material weaknesses in the design oroperation of internal control over financial reporting which are reasonably likely to adversely affect theregistrant’s ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or otheremployees who have a significant role in the registrant’s internal control over financial reporting. Date:June 1, 2018By:/s/ Aric Spitulnik Aric Spitulnik Senior Vice President, Corporate Secretary and Chief Financial Officer Exhibit 32.1.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906 OF THESARBANES-OXLEY ACT OF 2002 I, Murray Wright, Chief Executive Officer of TESSCO Technologies Incorporated (the“Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section1350, that:1. The Annual Report on Form 10-K of the Company for the year ended April 1,2018 (the “Report”), fully complies with the requirements of Section 13(a) of the Securities ExchangeAct of 1934 (15 U.S.C. 78m); and2. The information contained in the Report fairly presents, in all material respects, thefinancial condition and results of operations of the Company. Date:June 1, 2018By:/s/ Murray Wright Murray Wright The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. §1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, asamended, and is not to be incorporated by reference into any filing of the Company, whether madebefore or after the date hereof, regardless of any general incorporation language in such filing. Exhibit 32.2.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906 OF THESARBANES-OXLEY ACT OF 2002 I, Aric Spitulnik, Chief Financial Officer of TESSCO Technologies Incorporated (the“Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section1350, that:1. The Annual Report on Form 10-K of the Company for the year ended April 1,2018 (the “Report”), fully complies with the requirements of Section 13(a) of the Securities ExchangeAct of 1934 (15 U.S.C. 78m); and2. The information contained in the Report fairly presents, in all material respects, thefinancial condition and results of operations of the Company. Date:June 1, 2018By:/s/ Aric Spitulnik Aric Spitulnik The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. §1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, asamended, and is not to be incorporated by reference into any filing of the Company, whether madebefore or after the date hereof, regardless of any general incorporation language in such filing.

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