UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 10, 2010
Mercury Computer Systems, Inc.
(Exact Name of Registrant as Specified in Charter)
| Massachusetts | 000-23599 | 04-2741391 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
201 Riverneck Road, Chelmsford, Massachusetts 01824
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (978) 256-1300
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01 | Regulation FD Disclosure. |
The management of Mercury Computer Systems, Inc. (“Mercury”) will present an overview of Mercury’s business on November 10, 2010, at Mercury’s Eleventh Annual Investor Conference. Attached as Exhibit 99.1 to this Current Report on Form 8-K (the “Report”) is a copy of the slide presentation to be made by Mercury at the conference.
This information is being furnished pursuant to Item 7.01 of this Report and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and will not be incorporated by reference into any registration statement filed by Mercury under the Securities Act of 1933, as amended, unless specifically identified as being incorporated therein by reference. This Report will not be deemed an admission as to the materiality of any information in this Report that is being disclosed pursuant to Regulation FD.
Please refer to page 2 of Exhibit 99.1 for a discussion of certain forward-looking statements included therein and the risks and uncertainties related thereto, as well as the use of non-GAAP financial measures included therein.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit No. |
Description | |
| 99.1 | Presentation materials dated November 10, 2010. | |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Dated: November 10, 2010 | MERCURY COMPUTER SYSTEMS, INC. | |||
| By: | /S/ ROBERT E. HULT | |||
| Robert E. Hult | ||||
| Senior Vice President, Chief Financial Officer, and Treasurer | ||||
3
Exhibit Index
| Exhibit No. |
Description | |
| 99.1 | Presentation materials dated November 10, 2010. | |
4
 ©
2010 Mercury Computer Systems, Inc.
Eleventh Annual
Investor Conference
November 10, 2010
New York, NY
Exhibit 99.1 |
 ©
2010 Mercury Computer Systems, Inc.
This presentation contains certain forward-looking statements, as that term is
defined in the Private Securities Litigation Reform Act of 1995, including those
relating to fiscal 2011 business performance and beyond and the Company’s plans for
growth and improvement in profitability and cash flow. You can identify these statements by
the use of the words “may,” “will,”
“should,”
“plans,”
“expects,”
“anticipates,”
“continue,”
“estimate,”
“project,”
“intend,”
and similar expressions.
These forward-looking statements involve risks and uncertainties that could cause actual
results to differ materially from those projected or anticipated. Such risks and
uncertainties include, but are not limited to, general economic and business
conditions, including unforeseen weakness in the Company’s markets, effects of continued
geopolitical unrest and regional conflicts, competition, changes in technology and
methods of marketing, delays in completing engineering and manufacturing programs,
changes in customer order patterns, changes in product mix, continued success in technological
advances and delivering technological innovations, continued funding of defense programs, the
timing of such funding, changes in the U.S. Government’s interpretation of
federal procurement rules and regulations, market acceptance of the Company's
products, shortages in components, production delays due to performance quality issues with outsourced
components, inability to fully realize the expected benefits from acquisitions and
divestitures or delays in realizing such benefits, challenges in integrating acquired
businesses and achieving anticipated synergies, changes to export regulations,
increases in tax rates, changes to generally accepted accounting
principles, difficulties in retaining key employees and
customers, unanticipated costs under fixed-price service and system integration
engagements, and various other factors beyond our control. These risks and
uncertainties also include such additional risk factors as are discussed in the
Company's filings with the U.S. Securities and Exchange Commission, including its Annual
Report on Form 10-K for the fiscal year ended June 30, 2010. The Company cautions
readers not to place undue reliance upon any such forward-looking statements,
which speak only as of the date made. The Company undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date on which such statement is
made. Use of Non-GAAP (Generally Accepted Accounting Principles) Financial
Measures In addition to reporting financial results in accordance with generally
accepted accounting principles, or GAAP, the Company provides adjusted EBITDA and free
cash flow, which are non-GAAP financial measures. Adjusted EBITDA excludes
certain non-cash and other specified charges. Free cash flow is defined as cash flow from operating activities less
capital expenditures. The Company believes these non-GAAP financial measures are
useful to help investors better understand its past financial performance and
prospects for the future. However, the presentation of adjusted EBITDA and free cash
flow is not meant to be considered in isolation or as a substitute for financial information provided in accordance
with GAAP. Management believes the adjusted EBITDA and free cash
flow financial measures assist in providing a more
complete understanding of the Company’s underlying operational results and trends, and
management uses these
measures along with the corresponding GAAP financial measures to
manage the Company’s business, to evaluate its
performance compared to prior periods and the marketplace, and to establish operational
goals. A reconciliation of GAAP to non-GAAP financial results discussed in this
presentation is contained in the Company’s most recent earnings release, which
can be found on our website at www.mc.com/mediacenter/pressreleaseslist.aspx.
Forward-Looking Safe Harbor Statement
2 |
 ©
2010 Mercury Computer Systems, Inc.
•
Corporate Overview
–
Mark Aslett, President & CEO
•
Keynote: ADM Edmund P. Giambastiani
(USN Ret)
Former Vice Chair, US Joint Chiefs of Staff
•
Coffee Break (20 min)
•
Mercury Federal Systems (MFS)
•
Advanced Computing Solutions (ACS)
•
Financial Review
•
Closing Remarks / Q&A
Agenda
3 |
 4
©
2010 Mercury Computer Systems, Inc.
•
MRCY on NASDAQ
•
500+ employees worldwide
•
FY10 revenues of $200M,
15% Adj. EBITDA
•
Defense revenue ~80% and
42% growth (12% CAGR) FY07–10
•
Real-time digital image, signal
and sensor processing solutions
•
Advanced Computing Solutions
(ACS), Mercury Federal Systems
(MFS) divisions
Best-of-breed provider of commercially developed, open
application ready and multi-INT subsystems for the ISR market
Introducing Mercury Computer Systems |
 ©
2010 Mercury Computer Systems, Inc.
The Mercury executive team
Gerald M. Haines II
SVP Corporate Development
5
David R. Martinez
President, MFS
Mark Aslett
President & CEO
Robert E. Hult
CFO & Treasurer
Didier M.C. Thibaud
SVP & GM, ACS
Craig A. Saline
SVP Human Resources
Dr. Ian Dunn
CTO, ACS
Stephen G. Anderson
VP Product Management
& Operations, ACS
Leon K. Woo
VP Engineering, ACS
Brian Hoerl
VP Sales, ACS
Charles A. Speicher
VP, Controller and Chief
Accounting Officer |
 ©
2010 Mercury Computer Systems, Inc.
The Mercury board of directors
6
George W. Chamillard
Retired Chairman & CEO, Teradyne Inc.
Vincent Vitto
Chairman of the Board
Retired President & CEO, Draper Labs
George K. Muellner
Retired President, Advanced Systems for
Integrated Defense Systems, Boeing;
Former Principal Deputy, Office of the Assistant
Secretary of the Air Force for Acquisition
William K. O’Brien
Former Global Managing Partner,
PricewaterhouseCoopers (PwC)
Lee C. Steele
Partner, Tatum, LLC
Michael A. Daniels
Retired Sector Vice President, SAIC
Former Chairman & CEO, Network Solutions
James K. Bass
Retired President & CEO, Piper Aircraft
Mark Aslett
President & CEO |
 ©
2010 Mercury Computer Systems, Inc.
7
Mercury continues to transform and grow
First two phases complete. Focused on growth and acquisitions |
 ©
2010 Mercury Computer Systems, Inc.
8
FY07 –
FY10: Restored profitability and growth
Defense 42% growth (12% CAGR) since FY07. FY10 Adjusted EBITDA 15%
Not
Reported
Notes:
•
FY07 figures are as reported in the Company’s fiscal 2007 form 10K and have not been
restated for discontinued operations. •
FY08 –
FY10 figures are as reported in the Company’s fiscal 2010 form 10K.
•
FY10 Earnings per Share were positively influenced by the partial reversal of the valuation
allowance against deferred tax assets and an effective FY10 tax rate benefit of
approximately 5% |
 ©
2010 Mercury Computer Systems, Inc.
Mercury’s vision
9
Transform Mercury’s profile and market
position from a commercial item (“COTS”)
vendor to the Primes to a “National Asset”
and critical component of the Prime, DoD
and Intelligence Community industrial base
for affordable Intelligence, Surveillance and
Reconaissance subsystems and capabilities
Best-of-breed provider of commercially developed, open
application ready and multi-INT subsystems for the ISR market
|
          10
Deployed on 300+ programs with 26 Primes
We’ve been making customers successful for 30 years
Global Hawk
BAMS
Global Hawk
BAMS
F-35
F-35
SEWIP
SEWIP
AEGIS
AEGIS Ashore
AEGIS
AEGIS Ashore
Guardrail
Guardrail
Sampson
Sampson
Patriot
Patriot
Predator
Predator
Reaper
WAAS
Reaper
WAAS
Ocean Eye
Ocean Eye
P8
P8
THAAD
THAAD
F-16
F-16
JCREW 3.3
JCREW 3.3
SSEE (E)
SSEE (F)
SSEE (E)
SSEE (F)
©
2010 Mercury Computer Systems, Inc. |
                    •
State-of-the-art, mixed
silicon, real-time embedded
signal processing and multi-
computing solutions
•
Advanced Size, Weight and
Power design and packaging
•
Ruggedized for deployment;
production volume ready
•
Application middleware:
portability, scalability, high-
availability, virtualization
•
Best performance available
using open standards
By delivering superior solutions
We solve problems that can’t be solved with commercial computing
©
2010 Mercury Computer Systems, Inc.
A proud heritage of innovation and technology
leadership
11 |
          C4I
C4I
EW
EW
Radar
Radar
EO/IR
EO/IR
•
Explosion in sensors and
overwhelming data
•
EW: new and rapidly
evolving threats
•
Radar: smaller, faster
targets. New technologies
•
EO/IR: leap in imaging
detail, onboard exploitation
and real-time tactical access
•
C4: Net-centric command,
control and collaboration
•
Time to relevant
information is critical
Causing greater demand for Mercury’s solutions and capabilities
However, today’s threats are more challenging
©
2010 Mercury Computer Systems, Inc.
12 |
 •
DoD
budget projections are:
–
$667B in 2009
–
$693B in 2010
–
$708B in 2011
•
Frost & Sullivan DoD
C4ISR spending:
–
$41.2B in 2009
–
$42.7B in 2010
–
$43.3B in 2011
C4ISR spending is approx 6% of total DoD
spending annually
DoD
budget request and C4ISR forecast
Source: US DoD
C4ISR Market, Frost & Sullivan, June 2010
13
©
2010 Mercury Computer Systems, Inc. |
 •
Topline
DoD
budget pressure
•
2-3% budget growth in real terms
•
Save $100B in overhead over 5 years
•
Provide the war fighting capability our
Nation needs with the dollars we have
•
Obtain greater efficiency, affordability
and productivity in Defense spending
•
Avoid program turbulence and maintain
a vibrant and healthy Defense industry
DoD
focused on better buying power through government
and industry productivity growth
Defense procurement reform: Restoring
affordability to Defense goods and services
14
©
2010 Mercury Computer Systems, Inc. |
 1.
Target affordability and control
cost growth
2.
Incent productivity and
industry innovation
3.
Promote real competition
4.
Improve tradecraft in
services acquisition
5.
Reduce non-productive processes
and bureaucracy
©
2010 Mercury Computer Systems, Inc.
DoD
focused on better buying power through government
and industry productivity growth
Secretary Gates and Undersecretary Carter have
issued 23 principal actions in five major areas:
15 |
 ©
2010 Mercury Computer Systems, Inc.
Mandate affordability
Drive productivity
growth will cost
/should cost
Eliminate
portfolio
redundancy
Economical
production runs
Shorter program
timelines
Reward contractors for
supply chain and indirect
expense management
Increase use of fixed
priced incentive firm
target contracts
Adjust progress payment to
incent performance
Preferred supplier
program
Reinvigorate industry’s
independent R&D
Require open systems
architectures
Increase dynamic small
business role in Defense
16
1.
Target affordability and
control cost growth
2.
Incent productivity and
industry innovation
3.
Promote real
competition
4.
Improve tradecraft in
services acquisition
5.
Reduce non-productive
processes and
bureaucracy
Mercury fully supports the DoD
initiatives and has
an important role in achieving the desired goals
DoD
focused on better buying power through government
and industry productivity growth |
 ©
2010 Mercury Computer Systems, Inc.
In addition, and as a direct result of procurement
reform, our customers are seeking ways to:
•
Reduce risk (technical –
programmatic –
business)
•
Increase P-Win on must win
new programs and upgrades
•
Maintain or improve
margins under firm fixed
contract awards
•
Compress development and
deployment cycles
•
Differentiate from
competition with less IRAD
•
Turn fixed operating costs to
variable period expenses
©
2010 Mercury Computer Systems, Inc.
Primes moving to outsourcing with best-of-breed partners
17 |
 ©
2010 Mercury Computer Systems, Inc.
Over the years Primes have utilized different
approaches to these challenges …
©
2010 Mercury Computer Systems, Inc.
Let’s look at these in more detail …
Best-of-breed
Open and extensible
subsystem solution -
choices
from best among eco-system
Best-of-breed
Best-of-breed
Open and extensible
Open and extensible
subsystem solution -
subsystem solution -
choices
choices
from best among eco-system
from best among eco-system
Catalog / COTS boards
Integrate commodity solution
Catalog / COTS boards
Catalog / COTS boards
Integrate commodity solution
Integrate commodity solution
In-house make vs. buy
In-house make vs. buy
Internal development
Internal development
18 |
 ©
2010 Mercury Computer Systems, Inc.
Evaluation of alternative approaches from
Prime’s viewpoint
©
2010 Mercury Computer Systems, Inc.
Lowest
Risk
Least
Cost
Reduced
Time
Improved
P-Win
Catalog / COTS boards
Catalog / COTS boards
Catalog / COTS boards
Best-of-breed
subsystem
Best-of-breed
Best-of-breed
subsystem
subsystem
In-house make vs. buy
In-house make vs. buy
= Best
= Poor
= Fair
Mercury is helping the Primes succeed in this new environment
19 |
 ©
2010 Mercury Computer Systems, Inc.
Our business model evolved significantly in FY08
in anticipation of the issues the Primes now face
•
Forward looking business
model established FY08
–
ACS Services and Systems
Integration
–
Mercury Federal Systems
•
Focused on application
ready and ISR subsystems
•
ACS application ready
‘White Box’
subsystems
to Primes
•
MFS classified, platform
ready ISR ‘Black Box’
subsystems to Primes
Capability and flexibility give Primes a competitive advantage
20 |
 EO/IR
EO/IR
C4I
C4I
EW
EW
Radar
Radar
EO/IR
EO/IR
21
•
Customizable configurations:
–
Open, best-of-breed
building blocks from
Mercury and 3
parties
–
From RF to visualization
–
SWaP
and performance
optimized
–
Application middleware:
portability, scalability, high
availability, virtualization
–
Prime ISR application ready
–
Pre-established TRL, MRL
Mercury is responding with a family of application ready subsystem solutions
What is an application ready ISR subsystem?
What it’s not is simply “Packaged COTS”
©
2010 Mercury Computer Systems, Inc.
rd |
 ©
2010 Mercury Computer Systems, Inc.
Mercury’s application middleware and systems expertise
differentiate us from the competition
22
If you want a system you need to buy it from a systems vendor
ACS SSI
ACS SSI
Primes
Primes
Primes
Primes
Primes
Primes
Traditional /
Competition
Traditional /
Competition
COTS Modular
Horizontally-integrated,
Standards-based,
“Plug-n-Pray”
platform APIs
36 months Time to Market
OS
Platform-focused,
Standards-based,
Rapid deployment &
refresh
12 months Time to Market
ISR Subsystem
Application-focused,
Standards-based,
Open platform APIs
12 months Time to Market
ARS
MFS
MFS
Prime, MFS or Gov’t
Application or IP
Open, Best-of-breed,
Platform Ready,
ISR Subsystem
‘Black Box’
Open, Best-of-breed,
Application Ready
Subsystem from ACS
‘White Box’
Prime Application
Prime Application
Middleware
COTS
COTS
COTS |
 ©
2010 Mercury Computer Systems, Inc.
‘White Box’
success story –
Ground Missile Defense
ACS SSI services-led sale leads to production subsystem annuity stream
23
PROGRAM BACKGROUND:
•
Prime embraced outsourcing. 80%
external vs
20% last time around
•
Desired best-of-breed partners
•
Rapidly needed open ‘COTS’
radar
application ready subsystem
•
Prime provides application, sensor
and platform integration
RADAR APPLICATION READY SUBSYSTEM:
•
OpenVPX
processing subsystem
•
Conduction-cooled chassis
•
Multi-plane backplane
•
Modified power supplies
•
Systems management capabilities
•
Delivered as configured subsystem
MERCURY BUSINESS MODEL:
•
ACS SSI services-led sale
•
Leveraged existing product portfolio
•
Paid $6m engineering development
services, $6m systems integration, $6m
1
production system
•
17-20 country ‘White Box’
production
susbsystem annuity stream
st |
 ©
2010 Mercury Computer Systems, Inc.
‘Black Box’
success story –
Wide Area Persistent ISR
MFS services-led sale leads to production subsystem annuity stream
24
PROGRAM BACKGROUND:
•
Real-time full motion video direct to
troops at tactical edge day and night
•
QRC phase 1 deployment ~12 months
QRC phase 2 expected
•
Open plug and play sensor architecture
•
Best-of-breed
model
–
EO/IR
sensors,
processing, algorithms, comm’s
•
Leverage Gov’t
IP where possible
MERCURY BUSINESS MODEL:
•
MFS won program –
DCAA terms
•
Subcontracted design, development,
integration, production of ‘White Box’
to
ACS SSI –
commercial terms
•
‘Black Box’
production subsystem
annuity stream
EO/IR APPLICATION READY SUBSYSTEM:
•FPGA/Intel/GPU
processing system •Solid state storage subsystem
•Sensor & GPS
integration
•Algorithm
integration
•Onboard exploitation,
dissemination |
 •
Commercial item business model
•
Outsourcing partner to the primes
•
Best-of-breed, open, application
ready ‘White Box’
subsystems
•
Primes can influence and leverage
$40M Mercury IRAD through SSI
•
Leverage R&D investments and
expertise across multiple programs
•
Services led engagement leads to
production subsystem annuities
•
Variable vs. Prime fixed cost model
•
DCAA contracting business model
•
Top secret / SCI personnel
•
Leverages $40M ACS product and
subsystem IRAD investments
•
Enhances ACS application ready
‘White Box’
with classified IP
•
Platform ready, affordable ISR
‘Black Box’
subsystems
•
Uniquely positioned to transition IP
from Government labs to subsystems
•
Variable vs. Prime fixed cost model
•
DCAA contracting business model
•
Top secret / SCI personnel
•
Leverages $40M ACS product and
subsystem IRAD investments
•
Enhances ACS application ready
‘White Box’
with classified IP
•
Platform ready, affordable ISR
‘Black Box’
subsystems
•
Uniquely positioned to transition IP
from Government labs to subsystems
•
Variable vs. Prime fixed cost model
MFS
MFS
Our hybrid business model provides a flexible program
response capability with better value
25
Capability and flexibility provide affordable value added solutions
ACS
ACS
©
2010 Mercury Computer Systems, Inc. |
 ©
2010 Mercury Computer Systems, Inc.
Acquisition strategy
26
1.
Strengthen and grow the core ACS Defense business:
–
Extend / enhance current product portfolio to include RF, mission
computing and communications to increase platform production content
–
Develop and scale an outsourced engineering services and systems
integration model leading to production application ready subsystems
as the Primes outsource more and divest non-core assets
2.
Expand our total addressable market through MFS and increase
our ISR domain expertise and capabilities:
–
Transform Mercury’s business model to become a services-led, best-of-
breed ISR subsystems and technology-enabled software and services
partner to the Primes
–
Strengthen ISR domain expertise and capabilities: personnel, know-how,
clearances, contract vehicles and customer access
Best-of-breed provider of commercially developed, open
application ready and multi-INT subsystems for the ISR market
|
 ©
2010 Mercury Computer Systems, Inc.
27
Acquisition candidate likely characteristics:
•
Focused on ACS product line extensions and
ISR business platform for MFS
•
Businesses that are profitable and growing
•
In the low tens of millions revenue to start
•
Privately held
•
Can be executed with assets on hand or available
•
Accretive within 12 months or less
Best-of-breed provider of commercially developed, open
application ready and multi-INT subsystems for the ISR market
|
 ©
2010 Mercury Computer Systems, Inc.
Positioned for growth in a changing industry
•
Focused
on
growing
ISR
market
–
strong
position on important, well funded programs
•
Outsourcing
partner
to
the
Primes
–
best-of-
breed application ready and ISR subsystems
•
Government amenable business model well
aligned with defense procurement reform
•
Delivering strong organic growth in defense with
robust proforma target business model
•
Pursuing complementary ISR acquisitions to
transition business model and scale
©
2010 Mercury Computer Systems, Inc.
Continuing to build a pure-play, best-of-breed ISR subsystems
and technology-enabled software and services company
28 |
 ©
2010 Mercury Computer Systems, Inc.
•
Corporate Overview
•
Keynote: ADM Edmund P. Giambastiani
(USN Ret)
Former Vice Chair, US Joint Chiefs of Staff
•
Coffee Break (20 min)
•
Mercury Federal Systems (MFS)
•
Advanced Computing Solutions (ACS)
•
Financial Review
•
Closing Remarks / Q&A
Agenda
29 |
 ©
2010 Mercury Computer Systems, Inc.
•
Opening remarks
•
DoD
efficiency initiatives, acquisition reform and
affordability
•
DoD
budget outlook
•
Addressing today’s wars and tomorrow’s
potential conflicts
•
Program implications for ISR –
and Mercury
•
Summary
Outline
30 |
 •
Corporate Overview
•
Keynote: ADM Edmund P. Giambastiani
(USN Ret)
Former Vice Chair, US Joint Chiefs of Staff
•
Coffee Break (20 min)
•
Mercury Federal Systems (MFS)
–
David Martinez, President
•
Advanced Computing Solutions (ACS)
•
Financial Review
•
Closing Remarks / Q&A
Agenda
31
©
2010 Mercury Computer Systems, Inc. |
 ©
2010 Mercury Computer Systems, Inc.
©
2010 Mercury Computer Systems, Inc.
32
•
UAV EO/IR QRC &
production
•
SIGINT QRC &
production
•
ISR government labs
IP transfer
•
Best-of-breed
solution provider
•
Classified ISR
subsystems
MFS in the context of Mercury’s five defense
growth drivers
Growth based organically and through acquisitions |
 ©
2010 Mercury Computer Systems, Inc.
US DoD
C4ISR: Technology roadmap and trends
2010-2030
©
2010 Mercury Computer Systems, Inc.
Mercury well positioned given its capabilities and programs
Source: US DoD
C4ISR Market, Frost & Sullivan, June 2010; Mercury analysis
Intelligence
Surveillance and
Reconnaissance
Electronic
Warfare
Information
Operations
Focus on COMINT, MTI
and FMV. Cross cueing
and interoperability for
geolocation
Tactical and strategic
computing supporting
all source intelligence
with multi-level access
Robust human and
cultural collection
and reporting. Fused
all-source data
Limited capacity to
process, exploit,
disseminate FMV.
Weak multi-INT fusion
Modular payloads.
Smart, autonomous
collection, analysis,
dissemination
Everything and
everybody is a sensor
and a relay
Emphasis on ground
based EW systems.
Advancements in
electronic attack and
counter-measure
technologies
Earnest work to
counter potential peer
threats: anti-ship
missiles, torpedoes and
anti-aircraft missiles
Smart, agile
waveform, frequency
management
2010
2015
2025
2030
2020
33
= in market today
= possible new market |
 ©
2010 Mercury Computer Systems, Inc.
US DoD
C4ISR: Technology roadmap and trends
2010-2030
©
2010 Mercury Computer Systems, Inc.
Mercury well positioned given its capabilities and programs
Source: US DoD
C4ISR Market, Frost & Sullivan, June 2010; Mercury analysis
Computers
Command and
Control
Tactical
Communications
Embedded COTS for
tactical users. Intel,
GPUs, FPGAs. Shift to
more open integrated
subsystems
New architectures and
onboard for
exploitation on smaller
form factors
Wearable,
networked cognitive
computers with light
weight long lasting
batteries
Resource management
controlled from
distributed common
ground / surface
systems
Interoperable global
intranet. Merging of
onboard processors
with mission
computers
Platform-to-platform
interoperability with
more machine
intervention
Various RF radios and
networks, most with
inadequate bandwidth.
Interim software
defined radio, wireless
IP networks
Seamless COTS-based
software defined radio.
Apps to “pull’
information as needed
Ubiquitous cognitive
radios, multi-level
access and security
2010
2015
2025
2030
2020
34
= in market today
= possible new market |
 35
•
Acquire companies with
strong ISR capabilities
•
Team to force-multiply
Mercury’s expertise
•
Transition gov’t
IP: Labs,
FFRDCs, UARCs, academia
•
Best-of-breed solutions
across ISR spectrum
•
Emphasis on application
ready subsystems critical
to ISR market
•
Rapid and modular
implementation of
classified applications
Mercury Federal Systems: vision and approach
The ISR systems and
technology services arm of
Mercury Computer Systems
based on affordable, innovative
best of breed open solutions
The ISR systems and
technology services arm of
Mercury Computer Systems
based on affordable, innovative
best of breed open solutions
©
2010 Mercury Computer Systems, Inc. |
 36
•
Wide area multi-INT
persistent ISR
•
Find and precisely target
enemy intents and
activities
•
Monitor activity in
difficult environments
•
Cross-platform cueing
•
Rapid capabilities at low
cost: 80% solution OK
Layered ISR architecture
Best-of-breed provider of commercially developed, open
application ready and multi-INT subsystems for the ISR market
©
2010 Mercury Computer Systems, Inc. |
 ©
2010 Mercury Computer Systems, Inc.
MFS business value-add evolving towards
onboard exploitation
•
Leveraging ACS
building blocks
•
Deployed applications
for onboard exploitation
•
Affordable and open
architectures enabling
rapid spiral
development
•
Future growth driven by
multi-INT net centric
systems, software
and services
©
2010 Mercury Computer Systems, Inc.
The MFS and ACS business model offers more affordable capabilities
37 |
 ©
2010 Mercury Computer Systems, Inc.
38
Value of Timely Results:
•
Reduces amount of data
processed on the ground
•
“Heavy lifting”
onboard
platform to address comm’s
bottlenecks
•
Focuses analysts on
transforming knowledge
into action
Migrating ground multi-INT to onboard platforms
“
Analysts at the AF 480th
ISRW review approximately
820 hours of full-motion video
daily and exploit more than
1,000 targets per day”
ASD News: March 19, 2010 |
 ©
2010 Mercury Computer Systems, Inc.
39
Validation of ACS & MFS leadership and agility
MFS major program: Persistent ISR airborne surveillance
•
Quick reaction capability
with MFS as the payload
provider
•
Partnered with other
agile companies
(Sierra Nevada Corp, ITT,
BAE, L3, Adam Works)
•
Rapid prototyping and
demonstration of
best-of-breed
•
Real-time tailored feeds
directly to the forces
•
Near real-time “TIVO®”
capability |
 ©
2010 Mercury Computer Systems, Inc.
40
•
Interoperable COMINT
systems
•
Modular ISR planning
and collection
•
Scalable solutions to
include different manned
and unmanned platforms
•
Rapid integration at
affordable costs
–
Prototypes
–
Low rate initial production
–
Full production
Acquisition is focused on expanding into COMINT area
Growth into SIGINT market to address present
and future DoD
needs |
 •
95% revenue growth FY10
•
Beginning FY11 backlog
$2.7M
•
Next-generation persistent
ISR program driving growth
•
Best-of-breed, ISR
subsystem architect,
developer & integrator
•
Leverages ACS application
ready ISR subsystem
solutions
•
Open platform-independent
architectures
Delivered strong revenue growth since FY08 startup
©
2010 Mercury Computer Systems, Inc. |
 42
Growth opportunities for MFS
•
Multi-INT onboard processing
•
Initial focus is on EO/IR and COMINT
•
Leverage ACS investments
•
Transition government IP from lab
to deployment
•
Deliver ‘blackbox’
by enhancing
‘whitebox’
ARS with classified IP
•
Center of excellence for rapid and
modular development
Innovative solutions at an affordable price
Broad range of customers
and government sponsors
©
2010 Mercury Computer Systems, Inc. |
 •
Corporate Overview
•
Keynote: ADM Edmund P. Giambastiani
(USN Ret)
Former Vice Chair, US Joint Chiefs of Staff
•
Coffee Break (20 min)
•
Mercury Federal Systems (MFS)
•
Advanced Computing Solutions (ACS)
–
Didier Thibaud, SVP and GM, ACS business unit
•
Financial Review
•
Closing Remarks / Q&A
Agenda
©
2010 Mercury Computer Systems, Inc. |
 44
•
Focus on providing application
ready subsystems for C4ISR
•
Leverage technologies and
product between commercial
and defense markets
•
Optimized performance
for SWaP
•
Quick Response Capabilities
(QRC) through service offerings
•
Defense continues its growth
11% CAGR; Radar (32% CAGR)
and EO (29% CAGR) FY07-10
•
Commercial revenues stabilized
Advanced Computing Solutions (ACS)
Defense 36% growth (11% CAGR) since FY07
Commercial stabilized and double digit CAGR in Defense
©
2010 Mercury Computer Systems, Inc.
Note: ACS revenues include intercompany revenue of $.1M in FY08, $2.1M in FY09 and $5.0M in
FY10 |
 ©
2010 Mercury Computer Systems, Inc.
45
•
Semiconductor
–
Market rebounding
–
ASML in production
–
KT at end of cycle
•
Communication
–
Entering new area:
4G test equipment
–
New satellite
communication systems
in deployment
•
Homeland Security
–
Design wins still in
development
–
New opportunities
Commercial revenue stabilized
Commercial segment dynamics |
 ©
2010 Mercury Computer Systems, Inc.
46
•
Design wins:
–
New products & tech refresh
–
New customers
–
New segments
•
Services and Systems
Integration:
–
Outsourcing by Primes
–
Application ready subsystems
•
Program production:
–
Missile defense
–
UAV radar/EW/EO/IR
–
Fighter radar
–
Airborne EW
Well positioned to sustain double-digit defense growth
Go-To-Market strategy driving growth |
 Open
architecture solutions driving design wins 47
Unique
Value
Driver
Unique
Value
Driver
RF Tuner
Fastest tuning
speed
RF Tuner
Fastest tuning
speed
Best Signal to
Noise Ratio
Best Signal to
Noise Ratio
Leader in DSP
Leader in DSP
First
OpenVPX
architecture
for Intel and
GPU
First
OpenVPX
architecture
for Intel and
GPU
Highest
density in
storage
Highest
density in
storage
Market
Impact
Market
Impact
Meet next
generation
EW
requirements
Meet next
generation
EW
requirements
Best
detection in
SIGINT
Best
detection in
SIGINT
Lead Radar,
EW and
WAAS
markets
Lead Radar,
EW and
WAAS
markets
First deployed
system for
UAVs
First deployed
system for
UAVs
Meet next
generation
WAMI system
requirements
Meet next
generation
WAMI system
requirements
Technology leadership aligned to battlefield requirements
provides superior capabilities to our customers
ACQUIRE
DIGITIZE
PROCESS
EXPLOIT
DISSEMINATE
©
2010 Mercury Computer Systems, Inc. |
 ©
2010 Mercury Computer Systems, Inc.
48
Defense Highlights
•
Aegis –
Naval BMD, C4I
•
Patriot –
Missile Defense
•
BAMS –
SIGINT, Radar
•
Predator
/
Reaper
–
Radar
•
ASIP –
Airborne SIGINT
•
JCREW –
Ground SIGINT
•
SEWIP –
Naval SIGINT
•
Cobra Ball –
EO/IR
•
SSEE(F) –
Naval SIGINT
Commercial Highlights
•
ASML –
Semiconductor
•
Artiza –
4G test
•
Hughes –
Satellite comms
•
Rapiscan –
Baggage scanning
ACS design win value CAGR 15%
Defense CAGR 38%
Note: Potential is 5 year probable value based on customer-supplied information
at time design win awarded. Actual program value may be higher or lower.
|
 ©
2010 Mercury Computer Systems, Inc.
49
•
Next generation EW
upgrade for NAVY
•
Deployment met
compressed schedule
for field test
•
Leveraged Mercury
application expertise
•
Delivered best-of-breed
application ready subsystem
•
EW performance-optimized
Strong partnership with Prime driving content expansion
which could double the program value to Mercury
SEWIP Block 2 –
another $100M+ program
Lockheed Martin displaced incumbent |
 50
•
85% revenue growth FY10
•
Expands addressable
market
•
Outsourcing partner to
Defense Primes given
acquisition reform
•
Best-of-breed application
ready ISR subsystem
solutions
•
Services-led engagement
leading to long-term
platform production
annuity streams
Services and Systems Integration delivered
119% CAGR FY08-FY10
©
2010 Mercury Computer Systems, Inc. |
 |
 •
12 month development
cycle:
–
Services and Systems
Integration engagement
–
OpenVPX
application ready
building blocks
–
SWaP
processing optimized
•
Previous generations high
volume ground mobile
–
JCREW 2.1 25,000 systems
–
JCREW 3.2 5,000 systems
•
DoD
to begin acquiring
JCREW 3.3 systems in FY13
–
# systems TBD
JCREW 3.3: Next generation Counter IED
Note: Mercury not involved in JCREW 2.1 and 3.2
52
Program potential could drive significant growth
©
2010 Mercury Computer Systems, Inc. |
 53
Global Hawk
BAMS
Global Hawk
BAMS
F-35
F-35
SEWIP
SEWIP
AEGIS
AEGIS
Guardrail
Guardrail
Sampson
Sampson
Patriot
Patriot
Predator
Predator
Reaper
Reaper
Ocean Eye
Ocean Eye
P8
P8
THAAD
THAAD
F-16
F-16
JCREW 3.3
JCREW 3.3
SSEE (E)
SSEE (F)
SSEE (E)
SSEE (F)
Positioned in major programs aligned to defense budget
On key programs which are the foundation for growth
©
2010 Mercury Computer Systems, Inc. |
 ©
2010 Mercury Computer Systems, Inc.
©
2010 Mercury Computer Systems, Inc.
54
•
Program in production
•
$35M booked in FY10
•
First systems installed on
Aegis ships
•
30+ ship upgrade
scheduled over 5 years
•
Upside opportunities:
–
New data recorder design
win in FY10
–
Lockheed Martin awarded
Aegis Ashore development
Aegis ballistic missile defense: SPY-1 BMD Radar
$100M+ of expected upgrades for BMD over next 5 years
$100M+ of expected upgrades for BMD over next 5 years |
 ©
2010 Mercury Computer Systems, Inc.
©
2010 Mercury Computer Systems, Inc.
$50M-$80M expected additional business over next 5 years
$50M-$80M expected additional business over next 5 years
55
•
First award $18M
–
Development
–
UAE
–
Entering production
•
Second award received
–
Taiwan
•
Future awards:
–
< 12 months: Saudi
Arabia, Turkey
–
> 12 months: Others
•
Major potential with US
Army upgrade
Patriot missile defense: Next generation ground radar |
 ©
2010 Mercury Computer Systems, Inc.
56
•
Focused on growing ISR market
•
Strategically positioned on important,
well funded defense programs
•
Business model aligned with expected
defense procurement reform
•
Outsourcing partner to the primes
•
Best-of-breed application ready ISR
subsystem provider
Well positioned for growth
Commercial stabilized; strong growth in defense |
 ©
2010 Mercury Computer Systems, Inc.
•
Corporate Overview
•
Keynote: ADM Edmund P. Giambastiani
(USN Ret)
Former Vice Chair, US Joint Chiefs of Staff
•
Coffee Break (20 min)
•
Mercury Federal Systems (MFS)
•
Advanced Computing Solutions (ACS)
•
Financial Review
–
Bob Hult, CFO
•
Closing Remarks / Q&A
Agenda
57 |
 ©
2010 Mercury Computer Systems, Inc.
58
FY07 –
FY10: Restored profitability & growth
GAAP
FY07
FY08
FY09
FY10
Revenue ($M)
224
190
189
200
Gross Margin
% Revenue
55.6%
57.8%
55.8%
56.3%
Operating
Expenses ($M)
165
115
98
95
Op Income ($M)
% Revenue
(41)
(18.1%)
(5)
(2.8%)
8
4.1%
17
8.7%
EPS (Continuing)
($1.78)
($0.21)
$0.35
$1.22
Adj
EBITDA ($M)
% Revenue
Not Reported
23
11.8%
23
12.1%
30
14.9%
Operating
Cash Flow ($M)
($10)
$14
$11
$16
# Employees EOY
729
530
517
523
Note:
FY07 figures are as reported in the Company’s fiscal 2007 form 10K and have not been
restated for discontinued operations. FY08 –
FY10 figures are as reported in the Company’s fiscal 2010 form 10K.
|
 ©
2010 Mercury Computer Systems, Inc.
Major business dynamics
Focus on strengthening and growing the defense business
Note:
Excludes
$5M
interco
eliminations
Note:
Excludes
$2M
interco
eliminations
59
Note: FY07-10 figures adjusted for discontinued operations |
 ©
2010 Mercury Computer Systems, Inc.
60
Growth in bookings and backlog
FY07-FY10 Defense CAGR: Bookings 10%, Backlog 10%, 12-month Backlog 18%
Note: FY07-FY10 Total CAGR: Bookings 7%, Backlog 14%, 12-month Backlog 21%.
FY07-10 figures adjusted for discontinued operations |
 ©
2010 Mercury Computer Systems, Inc.
FY07-FY10 profitability improves
61
Notes:
•
FY07 figures are as reported in the Company’s fiscal 2007 form 10K and have not been
restated for discontinued operations. •
FY08 –
FY10 figures are as reported in the Company’s fiscal 2010 form 10K.
•
FY10 Earnings per Share were positively influenced by the partial reversal of the valuation
allowance against deferred tax assets and an effective FY10 tax rate benefit of
approximately 5% |
 ©
2010 Mercury Computer Systems, Inc.
62
•
Supply chain
transformation
–
Engineering methods
–
Investments in DFM
–
Operational efficiencies
–
Reduced lead times
–
Improved cost of quality
–
Inventory reduced $10M
from Q3 FY08 to Q1 FY11
•
Customer satisfaction
–
Blue chip customers
–
End-of-quarter shipment
skew remains an issue
Efficient working capital platform to support
growth
Note: Inventory figures are as reported in the Company’s form 10K in the year
reported. |
 ©
2010 Mercury Computer Systems, Inc.
Much improved cash conversion cycle
63
Note: Cash conversion calculation = DSO’s + Inventory Days – A/P Days
|
 ©
2010 Mercury Computer Systems, Inc.
Mercury’s balance sheet poised for investment
Acquisition financing available
64
Generating positive free cash flow from operations; zero debt
Q1’11 ($M)
Cash and marketable securities
82
Other financing sources:
•
Operating line of credit
15
•
Acquisition line of credit
20
•
Universal shelf registration
100 |
 ©
2010 Mercury Computer Systems, Inc.
65
•
Target business model
organic growth only
•
ACS / MFS approx
90% / 10% revenue split
•
High mix, low volume
•
R&D investments
delivering significant
added value
•
Increased services and
systems integration
•
Services-led design wins
lead to production
subsystem annuity stream
Robust target business model
GAAP
MFS
Proforma
ACS
Proforma
Target
Business
Model
Revenue
100%
100%
100%
Gross
Margin
20%
55%
54+%
SG&A
12%
23%
Low-mid
20’s
R&D
0%
19%
High Teens
Income from
Operations
~8%
~13%
12-13%
Adj
EBITDA
~11%
~18%
17-18% |
 ©
2010 Mercury Computer Systems, Inc.
66
Results approaching the target business model
Operating leverage with growth
GAAP
FY08
FY09
FY10
Target Business
Model
Revenue
100%
100%
100%
100%
Gross Margin
58%
56%
56%
54+%
SG&A
37%
29%
27%
Low-mid 20’s
R&D
24%
22%
21%
High Teens
Operating
Income
(3%)
4%
9%
12-13%
Adj
EBITDA
12%
12%
15%
17-18%
Note: FY08 – FY10 figures are as reported in the Company’s fiscal 2010 form
10K. |
 Q1 FY11 year
over year comparison (GAAP) GAAP
Q1 FY10
Q1 FY11
Delta
Revenue ($M)
47
52
10%
Gross Margin
% Revenue
57.6%
58.8%
120 bps
Operating Expenses ($M)
22
25
(3)
Operating Income ($M)
% Revenue
5
10.7%
5
10.1%
0
(.6) pts
Adj
EBITDA
8
9
1
EPS
$0.19
$0.16
($0.03)
Op Cash Flow ($M)
3
9
6
Total Backlog ($M)
12-mo Backlog($M)
99
62
104
91
5%
45%
Notes:
•All
historical income statement figures have been restated for operations that have been discontinued subsequent to that time.
•Q1
FY10 tax rate 17%, Q1 FY11 tax rate 36% ©
2010 Mercury Computer Systems, Inc.
67 |
 ©
2010 Mercury Computer Systems, Inc.
Q2 FY10
Actual
Quarter
Ending
Dec
31,
2010
Low
High
Revenues ($M)
$45
$54
$55
GAAP
EPS
$0.08
$0.10
$0.12
Adj
EBITDA ($M)
$5.5
$7.1
$7.7
Note
-
Adj
EBITDA
Adjustments:
($M)
Net Income (Continuing)
1.9
2.4
2.8
Stock compensation
1.5
1.3
1.3
Impairment
0.2
0.0
0.0
Interest Expense
0.1
0.0
0.0
Interest Income
(0.2)
(0.0)
(0.0)
Taxes
0.3
1.4
1.6
Amortization
0.4
0.4
0.4
Depreciation
1.2
1.6
1.6
Adj
EBITDA
($M)
5.5
7.1
7.7
Q2 FY11 guidance
68
Note: Q2 FY10 tax rate 15%, Q2 FY11 tax rate 36% |
 69
Last 13 quarter’s revenues and EPS exceeded
or met the top end of guidance
2008
Q1
Q2
Q3
Q4
Reported
Guidance
Reported
Guidance
Reported
Guidance
Reported
Guidance
Revenue ($M)
49.2
48.0
52.6
51.0
56.5
53.0-55.0
55.2
53.0-56.0
EPS ($)
0.09
(0.08)
0.04
(0.05)
0.04
(0.04)-0.00
0.01
(0.05)-0.01
2009
Q1
Q2
Q3
Q4
Revenue ($M)
49.1
47.0-49.0
50.7
47.0-49.0
50.6
48.0-50.0
48.4
46.0-48.0
EPS ($)
0.07
(0.07)-(0.03)
0.03
(0.05)-0.00
0.20
0.05-0.09
0.13
0.05-0.08
2010
Q1
Q2
Q3
Q4
Revenue ($M)
47.4
43.0-45.0
45.2
40.0-42.0
43.6
41.0-43.0
63.6
58.0-60.0
EPS ($)
0.19
0.03-0.08
0.08
(0.08)-(0.04)
0.16
(0.15)-(0.11)
0.77
0.25-0.28
2011
Q1
Q2
Q3
Q4
Revenue ($M)
52.1
48.0-50.0
54.0-55.0
EPS ($)
0.16
0.03-0.06
0.10-0.12
Note:
Non-GAAP
GAAP
©
2010 Mercury Computer Systems, Inc. |
 70
•
Restored profitability and growth
•
Improved working capital efficiencies
•
Healthy cash flows from operations
•
Strong balance sheet with zero debt
•
Capital available for acquisitions
•
Closing on robust target business
model 17-18% adj. EBITDA
Poised for growth and investment
©
2010 Mercury Computer Systems, Inc. |
 •
Corporate Overview
•
Keynote: ADM Edmund P. Giambastiani
(USN Ret)
Former Vice Chair, US Joint Chiefs of Staff
•
Coffee Break (20 min)
•
Mercury Federal Systems (MFS)
–
David Martinez, President
•
Advanced Computing Solutions (ACS)
•
Financial Review
•
Closing Remarks / Q&A
Agenda
71
©
2010 Mercury Computer Systems, Inc. |
 MRCY
positioned for growth in a changing industry •
Focused
on
growing
ISR
market
–
strong
position on important, well funded programs
•
Outsourcing partner
to
the
Primes
–
best-of-
breed application ready and ISR subsystems
•
Government amenable business model well
aligned with defense procurement reform
•
Delivering strong organic growth in defense with
robust proforma target business model
•
Pursuing complementary acquisitions to
transition business model and scale
Continuing to build a pure-play, best-of-breed ISR subsystems
and technology-enabled software and services company
72
©
2010 Mercury Computer Systems, Inc. |
 Appendix
©
2010 Mercury Computer Systems, Inc. |
 Glossary
74
ACS
Advanced Computing Solutions Group
JCREW
AEGIS
Aegis Ballistic Missile Defense System
JSTARS
Joint Surveillance and Target Attack Radar System
API
Application Programming Interface
KT
KLA Tencor
ASIP
Airborne Signals Intelligence Payload
LSRS
Littoral Surveillance Radar System
ASML
Advanced Semiconductor Materials Lithography
MFS
Mercury Federal Systems
BAMS
Broad Area Maritime Surveillance
MRL
Manufacturing Readiness Level
BMD
Ballistic Missile Defense
MTI
Moving Target Indicator
C4
Command, Control, Communications, Computers
NFOV
Narrow Field of View
C4ISR
Command, Control, Communications, Computers,
Intelligence, Surveillance, Reconnaissance
NTM
National Technical Means
COMINT
Communications Intelligence
OpenVPX
System-level specification for VPX, initiated by Mercury
COTS
Commercial off-the Shelf
OS
Operating System
DCAA
Defense Contract Audit Agency
P-Win
Probability of Win
DFM
Design for Manufacturing
QRC
Quick Reaction Capability
DoD
Department of Defense
RF
Radio Frequency
DSP
Digital Signal Processing
SAR
Synthetic Aperture Radar
EO
Electro-optical
SEWIP
Surface Electronic Warfare Improvement Program
EW
Electronic Warfare
SIGINT
Signals Intelligence
FFRDC
Federally Funded Research &Development Center
SSEE
Ships Signal Exploitation Equipment
FMV
Full Motion Video
SSI
Services & Systems Integration Group
FPGA
Field Programmable Gate Array
SWaP
Size Weight and Power
GMTI
Ground Moving Target Indicator
TCPED
Tasking, Collecting, Processing, Exploitation, and Dissemination
GPU
Graphics Processing Unit
THAAD
Theatre High-Altitude Area Defense Missile System
HUMINT
Human Intelligence
TRL
Technology Readiness Level
IMINT
Imagery Intelligence
UAE
United Arab Emirates
INT
Intelligence
UARC
University Affiliated Research Center
IP
Intellectual Property
UAV
Unmanned Airborne Vehicle
IR
Infrared
VADER
Vehicle and Dismount Exploitation Radar
IRAD
Internal Research & Development
WAAS
Wide area airborne surveillance
ISR
Intelligence, Surveillance, and Reconnaissance
WAMI
Wide area motion imagery
©
2010 Mercury Computer Systems, Inc.
Joint Counter Radio Controlled Improvised Explosive Device Electronic Warfare
|
 ©
2010 Mercury Computer Systems, Inc.
75
Adjusted EBITDA Reconciliation ($M)
Year Ended
Year Ended
Year Ended
Year Ended
June 30, 2007
June 30, 2008
June 30, 2009
June 30, 2010
Operating Income (loss)
$ (40.5)
$
(5.4)
$ 7.7
$ 17.3
Adjustment to include interest income/(expense)
2.6
3.1
(0.5)
0.2
Adjustment to include other income/(expense)
2.7
1.5
0.8
1.2
Adjustment to include income tax provision/(benefit)
2.6
3.7
0.1
(9.4)
Income (loss) from continuing operations as reported
(37.8)
(4.4)
7.9
28.1
Adjustment to include income/(loss) from disco ops, net of income taxes
(30.0)
(20.3)
0.2
Adjustment to include gain/(loss) on sale of disco ops, net of income taxes
(1.0)
11.2
0.1
Net Income (loss)
(37.8)
(35.4)
(1.3)
28.4
Income (loss) from continuing operations as reported
(4.4)
7.9
28.1
Interest (income) expense, net
(3.1)
0.5
(0.2)
Income tax (benefit) expense
3.7
0.1
(9.4)
Depreciation
7.4
5.6
5.1
Amortization of acquired intangible assets
5.1
2.4
1.7
Restructuring
4.5
1.7
0.2
Impairment of long-lived assets
0.6
0.0
0.2
Stock-based compensation expense
8.8
4.6
4.0
Adjusted EBITDA
$
-
$
22.5
$
22.9
$
29.9 |
 ©
2010 Mercury Computer Systems, Inc.
Adjusted EBITDA Reconciliation ($M)
76
Quarter Ended
Quarter Ended
September 30, 2009
September 30, 2010
Operating Income (loss)
$
5.1
$
5.2
Adjustment to include interest income/(expense)
0.0
(0.0)
Adjustment to include other income/(expense)
0.3
0.5
Adjustment to include income tax provision/(benefit)
0.9
2.1
Income (loss) from continuing operations
4.4
3.7
Adjustment to include income/(loss) from disco ops, net of income taxes
0.0
(0.1)
Adjustment to include gain/(loss) on sale of disco ops, net of income taxes
(0.1)
0.0
Net Income (loss)
4.4
3.6
Income (loss) from continuing operations
4.4
3.7
Interest (income) expense, net
(0.0)
0.0
Income tax (benefit) expense
0.9
2.1
Depreciation
1.3
1.4
Amortization of acquired intangible assets
0.4
0.3
Restructuring
0.3
(0.0)
Impairment of long-lived assets
0.0
0.0
Stock-based compensation expense
0.5
1.3
Adjusted EBITDA
$
7.8
$
8.8 |