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) June 22, 2005
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.) |
| 199 Riverneck Road, Chelmsford, Massachusetts | 01824 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code (978) 256-1300
N/A
(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 the Company’s business on Wednesday, June 22, 2005 at the William Blair & Co. 25th Annual Growth Stock 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 and 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.
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.
| MERCURY COMPUTER SYSTEMS, INC. | ||||||
| Date: June 22, 2005 |
By: | /S/ JOSEPH HARTNETT | ||||
| Name: |
Joseph M. Hartnett | |||||
| Title: |
Vice President, Controller and Chief Accounting Officer | |||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| Exhibit 99.1 | Presentation Materials dated June 22, 2005 * | |
| * | Filed herewith. |
Exhibit 99.1
William Blair & Co. 25th Annual Growth Stock Conference
Exhibit 99.1
June 22, 2005
Jay Bertelli, Chief Executive Officer Bob Hult, Chief Financial Officer
Forward-Looking Safe Harbor Statement
Mercury management will present an overview and outlook for the Company. In addition, Company representatives will answer questions concerning business and financial developments, trends, and other matters affecting the Company, some of the responses to which may contain information that has not been previously disclosed. 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 anticipated fiscal 2005 business performance. You can identify these statements by our 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 economic weakness in the Company's markets, effects of continued geo-political unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing various engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, the failure to locate favorable acquisition and partnership opportunities, risks associated with the integration of acquisitions, failure of the acquisition to achieve desired or projected results, continued funding of defense programs, timing of such fundings, market acceptance of the Company's products, shortages in components, production delays due to performance quality issues with outsourced components, and various other factors beyond the Company's control. These risks and uncertainties also include such additional risk factors as are discussed in the Company's recent filings with the U.S. Securities and Exchange Commission. The Company cautions audience members 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.
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
2
Company Overview
FY05 Revenues Projection: $245 M*
60%*
Defense Electronics
20%*
Imaging & Visualization Solutions
20%*
OEM Solutions
June Fiscal Year End
Founded in 1981
Leading provider of innovative, engineered computing solutions for compute-intensive applications Office locations in U.S., UK, France, Germany and Japan; R&D centers in U.S., France, and Germany 733 employees worldwide; 300 engineers Investment in knowledge of customer applications
*Per company guidance, April 21, 2005 conference call
3
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
Mercury Technology in Action
Sensor data- scanned wafers
J-STARS Aircraft
Mobile C-Arm (Digital X-Ray)
Image and Signal Processing
MERCURY TECHNOLOGY
Wafer Inspection
Radar Image Display
3-D Image Reconstruction
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
4
Defense Electronics Group (DEG)
© Mercury Computer Systems, Inc.
Defense Electronics Group
Deployed across all environments
Air, land, and sea platforms
Commercial, rugged, and conduction- and spray-cooled configurations
Provide full life-cycle support
From R&D through deployment
Positioned for growth
Driving innovation for the next-generation applications
Representative
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
6
DEG Value Proposition
Real-time signal and image processing applications
Mathematical Transformations
Pulse Compression
Doppler / Clutter Filtering
Azimuth Compression
Adaptive Beam Forming
Complex Pulse Returns
Sensor
J-STARS Aircraft
Sensor streaming Scalable Real time Embedded (real estate, environmental, cooling constraints)
Radar Image Display
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
7
DEG Growth Drivers $3 Billion Market Opportunity
DoD transformation agenda/ISR initiative
Expansion to lower echelons
Network Centric Warfare
Available Market $3 B
Served Market $380 M
Smart Weapons Data Exploitation Imagery Software Radio In-theater procurement
Today 5 Years
*Fiscal 2004 revenues were $126M
*
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
8
Imaging & Visualization Solutions (IVS)
© Mercury Computer Systems, Inc.
Value Proposition
Increase Data Throughput,
Dramatically Accelerating Imaging Workflow
Acquire
Process
Visualize Distribute Archive (PACS)
Data Acquisition & Sensor Correction
Reconstruction
Volume Rendering 3D Visualization
2D (RADIN) & 3D
(ExamineRT™ Server/Thin Client)
RADIN Software
Image reconstruction, processing, and visualization All steps from scanner output to end user Embedded components and integrated solutions Broad end-to-end medical systems OEM Solution portfolio
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
10
Market Opportunities
Diagnostic medical imaging including molecular imaging
Interventional imaging and image-guided procedures
Biotechnology including drug discovery and molecular dynamics
Picture archives and communication system (PACS)
Geosciences (oil and gas) Simulation
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005
© Mercury Computer Systems, Inc.
11
Grow through Technology
June 9, 2005—“Mercury Computer Systems to Acquire SOHARD AG”
19M € $10M revenue run rate
85 employees based in Fuerth, Germany Expected to close in 3Q CY05
Software competence
Image understanding (algorithm)
Visualization solution: 2D and 3D
Immediate applications
Strengthen presence in Medical Diagnostic Imaging (MDI)
Open new market in geosciences
Open opportunities in biotechnology, simulation, geosciences
Technology leadership
Extend current expertise
From 2D to 4D
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
12
IVS Growth Drivers
Growing need for intensive computing capabilities
Increased volume of data
Enhanced image accuracy
Real-time 3D: interventional
Market opportunities
Diagnostic Medical Imaging
Biotechnology
Geosciences
Picture Archiving and Communication System (PACS) $1.7 Billion Market Opportunity
Available Market $1.7B
Served Market $250 M
BioTechnology 3D Diagnostic Imaging PACS
3D Visualization Modality
Today 3 Years 5 years
*Fiscal 2004 revenues were $33M
*
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
13
OEM Solutions Group (OSG)
Wafer Inspection Example
Mercury enables wafer inspection systems that search for defects on silicon wafers
Image Correction & Defect Detection
Sensor data-scanned wafers
Small Pixel Image Processing
Digitized Image
Advanced Algorithms
Die 1 Die 2
Difference
Extract features
Defect Information
Mercury solutions solve the hardest problems
Gigabytes per second of streaming I/O and interconnect bandwidth Software-programmable solutions scalable to Teraflops
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
15
OSG Markets
Delivering specialized processing solutions for demanding commercial OEM applications
Semiconductor capital equipment market
Wafer and reticle inspection
Systems that process streaming data to find defects
Mask writing
Systems that generate patterns to write to semiconductor and flat-panel masks
Communications computing market
Wireless infrastructure
Next-generation packet and signal processing solutions
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
16
OSG Growth Drivers
Semiconductor capital equipment solutions
Processing needs outpace mainstream computing as data rates and algorithm complexity increase
Strong market demand for process control equipment
Design wins moving into production
New market opportunities in telecommunications
Industry emerging from downturn
Equipment makers rely more on external innovation
New standards will replace proprietary implementations in data and user plane, e.g., RapidIO®
Available Market $1.5 B
Served Market $170 M
*
Today 3 Years 5 years
*Fiscal 2004 revenues were $27M
Telecommunications
Semiconductor $1.5 Billion Market Opportunity
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
17
Value Creation: Growth
Revenue ($M)
June Fiscal Year End
Revenue growth has begun
Q3 FY05 record revenue, $64.3M
Backlog increased to $110.4M
Projected 2005 revenue growth 32%
Growth projected in all three business units
Objective: sustained 25%+ long-term revenue growth rate $180 $150 $180 $186 $245*
2001 2002 2003 2004 2005E
*Per Company guidance, April 21, 2005 conference call
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
18
2005 Guidance
Fiscal Year Ending June 30, 2005*
Revenues $245 M Gross Margin Percent ~66% Operating Income ~17% EPS $1.21
Figures in millions, except percent and per share data which includes adjustment for contingent convertibles
*Per Company guidance, April 21, 2005 conference call
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
19
Strong Balance Sheet
Historically strong balance sheet
Assets augmented by $125 million convertible debt financing
Supports open innovation growth agenda
(Quarter ended March 31, 2005)
Cash and Equivalents $226 Total Current Assets $247 Total Assets $367
Total Debt $137 Total Liabilities $180
Stockholders’ Equity $187
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
20
Growth through Open Innovation
Extend Mercury’s capabilities with partnerships, alliances, and acquisitions
Focused on Intellectual Property (IP), technology “fit”
Accretive within first year
Consider the size of the deal
Integrate into the company
Four recent acquisitions
TGS Group, Advanced Radio Corporation,
Momentum Computer, Inc., SOHARD AG (pending)
Expanding list of alliances/partners
NVIDIA Corporation, RADIN Group, Ziehm Imaging, Massachusetts General Hospital (MGH)
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
21
Timeless Business Model
FY03 FY04
Guidance FY05
Timeless Business Model
Revenue 100% 100% 100% 100% Gross Margin 66% 67% ~66% 66-67% SG&A 30% 30% 29-30% R&D 21% 21% 20-21%
Income from Operations 14% 17% ~17% 16-18%
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
22
MRCY Summary
Strong competitive position in attractive and growing markets Diversified revenue base – defense and commercial Straightforward operating model and financial structure Strong balance sheet, operating cash flow with significant financing flexibility Open innovation strategy through partnerships and acquisitions to enhance capability to deliver solutions across target markets
Sustain a 25% or better long-term revenue growth rate
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
23
www.mc.com
NASDAQ: MRCY
William Blair & Co. 25th Annual Growth Stock Conference 6/22/2005 © Mercury Computer Systems, Inc.
24