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) August 2, 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 Tuesday, August 2, 2005 at the Adams Harkness 25th Annual Summer Seminar. 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: August 2, 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 August 2, 2005 * |
| * | Filed herewith. |
EXHIBIT 99.1
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
Adams Harkness 25th Annual Summer Seminar
August 2, 2005
Jay Bertelli, Chief Executive Officer
Bob Hult, Chief Financial Officer
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
Forward-Looking Safe Harbor Statement
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 2006 business performance and the result of acquisitions. 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, continued funding of defense programs, timing of such funding, market acceptance of the Company’s products, shortages in components, production delays due to performance quality issues with outsourced components, failure of the parties to satisfy the closing conditions related to the Echotek Corp. acquisition, inability to fully realize the expected benefits from acquisitions or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, difficulties in retaining key employees and customers, 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, including its Quarterly Report on Form 10-Q for the quarter ended March 31, 2005. 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. The Company may, in its discretion, provide information in future public announcements regarding its outlook that may be of interest to the investment community. The format and extent of future outlooks may be different from the format and extent of the information contained in this release.
References by the Company to non-GAAP operating income and non-GAAP earnings per share refer to costs and expenses or earnings per share excluding equity-based compensation cost. GAAP requires that this cost be included in costs and expenses and accordingly used to determine operating income and earnings per share. The Company’s management uses non-GAAP operating income, and associated non-GAAP net income (which is the basis for non-GAAP earnings per share) to make operational and investment decisions, and the Company believes that they are among several useful measures for an enhanced understanding of its operating results. Excluding the equity compensation cost from GAAP operating income will enable investors to perform a meaningful comparison of the Company’s operating results to prior periods. In these prior periods, the Company’s GAAP financial results were not required to include expenses associated with stock option compensation, and now these expenses will be included within operating expenses in the GAAP presentation. The Company also believes that providing non-GAAP earnings per share affords investors a view of earnings that may be more easily compared to peer companies. The Company believes these non-GAAP measures will aid investors’ overall understanding of its financial results by providing a higher degree of transparency for certain expenses, particularly those related to equity-based compensation costs, as well as providing a level of disclosure that will help investors understand how the Company plans and measures its own business. However, non-GAAP net income should be construed neither as an alternative to GAAP net income or earnings per share as an indicator of its operating performance, nor as a substitute for cash flow from operations as a measure of liquidity, because the items excluded from the non-GAAP measures often have a material impact on the Company’s results of operations. Therefore, management does, and investors should, use non-GAAP measures in conjunction with the Company’s reported GAAP results.
2 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
Company Overview
FY05 Revenues: $250 M
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
830 employees worldwide;
350 engineers
Investment in knowledge of customer applications
60%* Defense Electronics
20%* Imaging & Visualization Solutions
20%* OEM Solutions
June Fiscal Year End
*Approximate FY05 revenue composition
3 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
Mercury Technology in Action
Image and Signal Processing
Wafer Inspection
Sensor data- scanned wafers
J-STARS Aircraft
Radar Image Display
3-D Image
Reconstruction
Mobile C-Arm
(Digital X-Ray)
MERCURY TECHNOLOGY
4 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
Defense Electronics Group (DEG)
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
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
Erieye
ABL
JSF
SH-60
SQS-56
Wedgetail
Gripen
P-3
EMPAR
AEGIS
Sampson
ASTOR
JSTARS
F/A-22
Global Hawk
Tornado
Predator
Commandar
NSSN
U-2
F-16
ASR-9
Rivet Joint
GCA-PAR-2000
TPS-59(V)3
Gotland SSK
JCM
HALO
FA-18 SHARP
Jindalee
6 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
DEG Value Proposition
Real-time signal and image processing applications
Process
Acquire
Visualize
Transmit
Mathematical Transformations
Sensor
Complex signal returns
Image Display
Sensor streaming
Scalable
Real time
Embedded (real estate, environmental, cooling constraints)
7 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
DEG Growth Drivers
DoD transformation agenda/ISR initiative
Expansion to lower echelons
Network Centric Warfare
$3 Billion Market Opportunity
Available Market $3 B
Smart Weapons
Image & Data Exploitation
Software Radio
In-theater procurement
Served Market $380 M
*
Today 5 Years
*Fiscal 2005 revenues were $148 M
8 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
Imaging & Visualization
Solutions (IVS)
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
IVS Value Proposition
Increase data throughput, dramatically accelerating imaging workflow
Visualize
Acquire
Archive (PACS)
Distribute
Process
Volume Rendering 3D Visualization
Reconstruction
2D (RADIN) & 3D
(ExamineRT™ Server/Thin Client)
RADIN Software
Data Acquisition & Sensor Correction
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
10 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
Market Opportunities
Diagnostic medical imaging including molecular imaging
Interventional imaging and image-guided procedures
Biotechnology including drug discovery and molecular dynamics
Picture archive and communication systems (PACS)
PHILIPS
GE
SIEMENS
Medtronic When Life Depends on Medical Technology
BrainLAB
pfizer
FEI COMPANY
TOOLS FOR NANOTECH
ZEISS
FUJIFILM FUJIFILM Medical Systems USA
AGFA Agfa
Schlumberger
Landmark
A Halliburton Company
Geosciences (oil & gas)
Simulation
11 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
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 Communications Systems (PACS)
$1.7 Billion Market Opportunity
Available Market $1.7 B
Served Market $250 M
*
Today 3 Years 5 Years
Bio Technology
3D Diagnostic Imaging
PACS
3D Visualization
Modality
*Fiscal 2005 revenues were $49 M
12 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
OEM Solutions Group (OSG)
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
OSG Value Proposition
Accelerating customers’ advanced algorithms to market
Detect
Analyze
Acquire
Classify
Sensor Data- Scanned Wafers or Reticles
Image Correction & Defect Detection
Offline Classification & Analysis
Searching for defects on silicon wafers or reticles
Scalable compute, streaming I/O, and interconnect bandwidth
Enabling customer algorithm performance enhancements
Software-programmable solutions
2 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
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
3 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
OSG Growth Drivers
Semiconductor capital equipment solutions
Processing needs continue to outpace mainstream computing
Data rates and algorithm complexity increase
New applications on the horizon
Subject to market cyclicality
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®
$1.5 Billion Market Opportunity
Available Market $1.5 B
Telecommunications
Semiconductor
Served Market $170 M
*
5 years
3 Years
Today
*Fiscal 2005 revenues were $48 M
4 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
Financial
Overview
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
Value Creation: Growth
Revenue ($M)
June Fiscal Year End
$180
$150
$180
$186
$250
$295-305*
2001A
2002A
2003A
2004A
2005A
2006E
2005: Record revenues
2006: Projected revenue growth 20% (at midpoint of guidance range)
DEG ~20%+
IVS ~35%+
OSG ~Flat
FY06 projected growth rates
*Per Company guidance, July 28, 2005 earnings press release
6 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
Fiscal 2005 Strong Performance
FY Ended June 30
($M) 2005 2004
Revenues $250.2 $185.6
Gross Margin % 66.5% 66.2%
Op.Income 42.5 31.6
Net Income $30.2 $22.9
EPS (diluted) $1.25 $1.03
Fiscal 2005 record revenues, 35% YOY growth
Fiscal 2005 record operating profit, 32% YOY growth
7 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
Fiscal Year 2006 Guidance
Fiscal Year Ending June 30, 2006
GAAP Non-GAAP
Revenues $295-305 $295-305
Gross Margin Percent 66-67% 66-67%
Operating Income 12% 16%
EPS $0.97-1.02 $1.35-1.40
Impact of equity-based compensation costs related to FAS 123(R) excluded from Non-GAAP
Acquisition-related amortization included in GAAP and Non-GAAP of approximately $6M
Notes:
1) Figures in millions, except percent and per share data which includes adjustment for contingent convertibles
2) Company guidance, July 28, 2005 Q4 earnings press release
8 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
Q1 Fiscal 2006 Guidance
Impact of equity-based compensation costs related to FAS 123(R) excluded from NON-GAAP
Acquisition-related amortization included in GAAP and Non-GAAP of approximately $1M
Quarter Ending September 30, 2005
GAAP Non-GAAP
Revenues $60-63 $60-63
Operating Income 6% 10%
EPS $0.11-0.13 $0.18-0.20
Notes:
1) Figures in millions, except percent and per share data which includes adjustment for contingent convertibles
2) Company guidance, July 28, 2005 Q4 earnings press release
9 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Timeless Business Model
Guidance Timeless FY04 FY05 FY06* Business Model
Revenue 100% 100% 100% 100% Gross Margin 67% 66% 66-67% 66-67% SG&A 30% 29% 29-30% R&D 21% 20% 20-21%
Income from Operations 17% 17% 16% 16-18%
Notes:
1) Acquisition-related amortization of intangibles ~ 1%, ~1%, ~2% FY04, FY05, FY06, resp.
2) FY06 Non-GAAP guidance per July 28, 2005 earnings call. FY06 GAAP Income from operations 12%
Adams Harkness 25th Annual Summer Seminar 8/2/05 © Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
Strong Balance Sheet
Historically strong balance sheet
Supports open innovation growth agenda
(Quarter ended June 30, 2005)
Cash and Equivalents $228
Total Current Assets $242
Total Assets $377
Total Debt $136
Total Liabilities $179
Stockholders’ Equity $198
10 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
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
Five recent acquisitions
TGS Group, Advanced Radio Corporation, Momentum Computer, Inc., SoHard AG,
Echotek Corp. (pending)
Expanding list of alliances/partners
IBM, NVIDIA Corporation, Ziehm Imaging, Massachusetts General Hospital (MGH)
ECHOTEK CORP.
TGS visual concepts
SOHARD
momentum COMPUTER
ziehm imaging
MASSACHUSETTS GENERAL HOSPITAL MGH 1811
11 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
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
12 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.
Computer Systems, Inc.
MERCURY
The Ultimate Performance Machine
www.mc.com
NASDAQ: MRCY
13 Adams Harkness 25th Annual Summer Seminar 8/2/05
© Mercury Computer Systems, Inc.