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 6, 2007
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 Mercury’s business on November 6 and 7, 2007 at the American Electronics Association (AeA) Classic Financial 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 6-7, 2007. |
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 hereunto duly authorized.
| MERCURY COMPUTER SYSTEMS, INC. | ||||
| (Registrant) | ||||
| Date: November 6, 2007 | By: | /s/ Alex N. Braverman | ||
| Alex N. Braverman | ||||
| Vice President, Controller and | ||||
| Chief Accounting Officer | ||||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Presentation materials dated November 6-7, 2007. |
 © 2007 Mercury Computer Systems, Inc. Jay Bertelli, President, Chief Executive Officer & Chairman Marcelo Lima, President, Visage Imaging Bob Hult, SVP, Chief Financial Officer The AeA Classic Financial Conference November 6-7, 2007 Exhibit 99.1 |
 2 © 2007 Mercury Computer Systems, Inc. www.mc.com 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 2008 business performance and beyond. 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 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, the
inability to fully realize the expected benefits from acquisitions or delays
in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, and difficulties in retaining key customers. 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 Annual Report on Form 10-K for the year ended
June 30, 2007. 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 non-GAAP financial
measures adjusted to exclude certain specified charges, which the Company believes are useful to help investors better understand its past financial performance and prospects for the future. However, the presentation of non-GAAP financial measures is not meant to be
considered in isolation or as a substitute for financial information
provided in accordance with GAAP. Management believes these non-GAAP 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 their 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 measures discussed
in this presentation is contained in the company’s First Quarter Fiscal
Year 2008 earnings release, which can be found on our website at www.mc.com/mediacenter/pressreleaseslist.aspx. |
 © 2007 Mercury Computer Systems, Inc. www.mc.com 3 Mercury offers more than 20 years’ experience in designing and delivering high-performance computing systems and software, for a broad range of image- and data-intensive applications, to
customers around the world. Energy Telecommunications Life Sciences Embedded Computing Defense Semi Industry |
 4 © 2007 Mercury Computer Systems, Inc. www.mc.com Mercury Overview Q1 FY08 Revenue Mix: $49.2 million ACS, 42.2M Visage, 3.9M VSG, 2.6M Emerging, 0.5M |
 5 © 2007 Mercury Computer Systems, Inc. www.mc.com Investment Highlights • Data explosion across multiple markets • Mercury uniquely positioned to implement multi-core processing systems • Strategic acquisitions starting to produce • Developing applications for PACS / Radiology market using advanced visualization technology • New alignment of internal competencies will drive new business opportunities in Core • Recent cost-reduction initiatives will improve margins |
 © 2007 Mercury Computer Systems, Inc. www.mc.com 6 We combine our deep technical expertise and extensive knowledge of the science behind our customers’ applications, to deliver reliable performance and sustained value. Medical imaging and biotechnology Radar and signals intelligence System Architecture Expertise Computation and Acceleration Expertise GPU CELL FPGA Domain Expertise Parallel Processing Excellence Deep Algorithm Expertise Multicore Programming Expertise Data exploitation, smart weapons, imagery and sonar Engineering and simulation Oil and gas exploration Wafer inspection Telecommunications High-end baggage scanning Mask generation UAV command & control |
 © 2007 Mercury Computer Systems, Inc. www.mc.com 7 Sensor Example: acquiring sensor data from a defense application Acquire Process Transmit Mathematical Transformations Visualize Image Display Complex signal returns • Sensor streaming • Scalable within the application • Real-time signal processing • Embedded (real estate, environmental, cooling constraints) Our domain expertise spans the entire data stream |
 © 2007 Mercury Computer Systems, Inc. www.mc.com 8 Acquire Detect Image Correction & Defect Detection Analyze Offline Classification & Analysis Sensor Data- Scanned Wafers or Reticles Classify • Searching for defects on silicon wafers or reticles • Scalable compute, streaming I/O, and interconnect bandwidth • Enabling customer algorithm performance enhancements • Software-programmable solutions Example: accelerating image processing in semiconductor wafer inspection Our acceleration expertise spans diverse applications – all of which require faster, more reliable results |
 © 2007 Mercury Computer Systems, Inc. www.mc.com 9 • Modular boards and integrated systems • Robust software and tools • From open-standard COTS to custom • Ruggedization • Scalable architectures • Comprehensive services • Visualization From RF to Visualization. Air to Conduction-Cooled. Boards to
Systems. From RF to Visualization. Air to Conduction-Cooled.
Boards to Systems. Our products span the entire signal processing chain
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   © 2007 Mercury Computer Systems, Inc. www.mc.com 10 FY07 MODULAR PRODS & SERVICES Computing ADVANCED SOLUTIONS Computing DEFENSE Computing COMMERCIAL IMAGING & VIZ Computing Software ADVANCED COMPUTING SOLUTIONS VISAGE IMAGING VISUALIZATION SCIENCES GROUP FY08 |
 © 2007 Mercury Computer Systems, Inc. www.mc.com 11 ACS focuses on specialized, high-performance computing solutions that leverage Mercury’s capabilities in sensor computing, computational acceleration, and delivery of complex system-level solutions. EXAMPLE SEGMENTS •Aerospace and defense •Semiconductor •Telecommunications •Medical imaging 1QFY08 •Revenue: $42.2 million •Non-GAAP Operating Income: ~$4.2 million •No. of employees: ~460 •GM: ~high 50s Advanced Computing Solutions |
 12 © 2007 Mercury Computer Systems, Inc. www.mc.com Mercury Well-Positioned in Defense •Strong customer base 20 years of experience COTS model •Technology leadership Broadest range of products • RF, Data Acq, Processing, Visualization Deployed on: • Ships, UAVs, Fighters, Ground Vehicles, Airborne ISR Platforms • Broadening market portfolio Signals intelligence Net-centric warfare • Wideband Data Links UAVs • Synthetic Vision Sonar Smart weapons Ground based radar |
 13 © 2007 Mercury Computer Systems, Inc. www.mc.com Semiconductor Market • Supplying application- enabling solutions to leading OEMs • Growth driven by production design wins Mask generation Wafer inspection Reticle inspection EDA market Strong Organic Growth 36% CAGR FY 2002-2007 Mercury Semiconductor Segment Revenue FY 2002 – FY 2007 $7 M FY 2002 $32 M FY 2007 |
 14 © 2007 Mercury Computer Systems, Inc. www.mc.com Communications • AdvancedTCA DSP and FPGA compute solutions Satellite ground stations for Ancillary Terrestrial Component (ATC) Wideband Data Link Modems for Net-centric Warfare (HDR-RF modem) System development platforms for wireless infrastructure applications |
 © 2007 Mercury Computer Systems, Inc. www.mc.com 15 VSG focuses on the development and distribution of software developer toolkits and 3D application software for volume rendering of very large data sets. EXAMPLE SEGMENTS •Geosciences •Engineering and manufacturing •Material sciences •Other industrial and scientific domains 1QFY08 •Revenue: $2.6 million •Non-GAAP Operating Income: ~$0.6 million •No. of employees: ~49 •GM: ~high 80s Visualization Sciences Group |
 © 2007 Mercury Computer Systems, Inc. www.mc.com 16 Mercury’s emerging businesses are focused on cultivating new opportunities that can benefit from Mercury’s deep optimization expertise and services. EXAMPLE SEGMENTS High-performance computing and visualization in biotech, aircraft navigation, intelligence and homeland security Emerging Businesses |
 17 © 2007 Mercury Computer Systems, Inc. www.mc.com Merc Federal Strategy • Embrace and expand existing federal COTS business by repositioning ourselves in the critical path of our prime vendors and achieve new levels of COTS leverage. • Initiate new business opportunities throughout the national security community using existing competencies and solutions and strategic partnering. • Establish a new solutions-based services model that sells directly to government customers. |
 © 2007 Mercury Computer Systems, Inc. www.mc.com 18 Mercury’s wholly owned subsidiary focuses on the development and distribution of advanced visualization and PACS (picture archival and communications system) solutions, and other 3D software solutions in the life sciences segment. 1QFY08 •Revenue: $3.9 million •Non-GAAP Operating Income: ~($1.9 million) •No. of employees: ~109 •GM: ~mid 60s Visage Imaging, Inc. |
 Marcelo Lima, President |
 20 US Corporate US Corporate Chelmsford, MA Chelmsford, MA Germany Germany Berlin, Fuerth Berlin, Fuerth US VI HQ US VI HQ San Diego, CA San Diego, CA Visage Imaging at a Glance Provider of Advanced Visualization Software and Systems to Medical Imaging Markets 0 5 10 15 20 FY05 FY06 FY07 FY Revenues ($MM) Excludes Legacy Medical Products • Wholly owned subsidiary of Mercury Computer Systems • 110 associates, in four centers (U.S. and EU) • Sell through OEM, dealers, and direct |
 21 Why Visage Imaging? • Vertical market focus • Operational efficiency • Shareholder value creation 2D/3D Anywhere, Anytime Acceptance of advanced visualization makes 3D a catalyst of change in the imaging technology market |
 22 Visage Imaging Products |
 23 A Selection of Our Customers per Market Segment Medical Imaging Surgical & Dental Microscopy & Pharma |
 24 U.S. Medical Imaging Market • 5,000 Hospitals • 5,000 Diagnostic Imaging Centers • 50,000 Radiologists • 750,000 Physicians • 50,000,000 Imaging Examinations per Year |
 25 Data Explosion Driving New Imaging Technology • Data sets of up to 1GB+/study • Enormous retrieval and loading times • 1000+ slice studies cannot be read off film or by scrolling through 2D slice viewers • Techniques such as MPR, slabs, or volume rendering increase imaging efficiency and accuracy Typical CT Exam 1995 – 20 Images 2000 – 100 Images 2007 – 2,000 Images 0 200 400 600 800 1000 1200 1400 1600 1800 2000 |
 26 Take Advantage of the 3D Nature of Data • Improved diagnostics • Better, faster reading • 3D additional revenue source |
 27 Visage Imaging’s Strategy • Focus on: – PACS appliance for advanced visualization (thin-client) – PACS appliance for image distribution (Web) • Multi-channel approach: – Leverage large PACS OEMs at top end of U.S. market – Enter direct sales in U.S., focus on small hospitals and clinics • Build COTS-based scalable thin client server for enterprise imaging • Learn from amira applications • Partner/license from leading clinical sites |
 28 What is PACS ? Picture Archival & Communications Systems Radiology Modalities Reading Room Physician‘s Office LAN On-Site Archive Remote Offices Image Distribution WEB PACS WAN VPN |
 29 U.S. PACS Market • Revenues – $1.10 billion in 2005 – $1.77 in 2012 – CAGR 7% • Replacements expected to represent 36.7% of PACS contracts and 56.7% of total market revenues in 2012 • Visage addresses faster-growing Web and Advanced Imaging applications within this market • Web PACS image distribution is estimated at $100M in 2007 Source: Frost & Sullivan study, 2006 – “ U.S. Turnkey Radiology Picture Archiving and Communications (PACS) Markets “
|
 30 Opportunity in Advanced Visualization PACS Appliances • Turnkey U.S. radiology PACS market approaching maturity • Growth now focused on replacement sales, community- based healthcare facilities, and the imaging center market • Synergy between markets for PACS, RIS, advanced visualization, reporting, and clinical software tools • Opportunity to provide advanced visualization solutions that will help OEMs drive replacements in the PACS and RIS installed base 0% 20% 40% 60% 80% PACS Advanced Visualization |
 31 What is Advanced Visualization? • Image processing algorithms and clinical applications packages • Performing 3D image reformations (MIPs, MPRs), various rendering methods, measurements and calculations on volumes, time and flow representations (4D) • Historically packaged into an individual workstation since PACS reading stations cannot offer the horsepower required |
 32 Advanced Visualization Market Drivers • Advances in imaging technologies are making advanced visualization a necessity – CT – MR • Client/server technology enabling 3D – More powerful servers for immense processing requirements of 3D – Thin-clients enable enterprise-wide deployment and Web-based access to advanced technology • New applications and paradigms, driven by 3D, enhancing and expanding the benefits of radiology – PACS integration key to enhancing the workflow for 3D imaging – Clinical applications are evolving into highly specialized modules Source: Frost & Sullivan study, 2007 - “North American 3D/4D Visualization for Medical Imaging Markets”
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 33 3D/4D Growth North American 3D/4D Visualization for Medical Imaging Market expected to grow at a CAGR of over 15% and to over $1 billion by 2011 Source: Frost & Sullivan study, 2007 - “North American 3D/4D Visualization for Medical Imaging Markets”
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 34 Visage Has Most Complete Solution of Major Independent Vendors X X Barco-Voxar 19% X X X TeraRecon 28% X X Vital Images 32% X X X X Visage Imaging 5% Archive Distribute Visualize Reconstruct Market Share* Source: Frost & Sullivan study, 2007 - “North American 3D/4D Visualization for Medical Imaging Markets”
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 35 Visage Imaging’s Advantages • Scalable software & COTS platforms – Fast time-to-market, ease of upgrades • PACS and RIS integration – Diagnostic workflow • Image quality & speed – Algorithms and GPU know-how • amira research installed base – >3500 universities worldwide • Web PACS installed base – >1300 sites worldwide |
 36 The Pain Points in the Imaging Chain “the studies take forever to load” “I can’t find the data on this workstation” “have I sent my results to everyone?” “this machine is too slow for 3D” “our network is too slow” “I wish I could review this in my office or from home” Ask the doctor… “why isn’t this software available everywhere?” Ask the IT people… “how can we keep pace with all the new 3D technology?” “the same reading software must be available everywhere throughout the hospital” “we need easy, web-based deployment” “cannot ensure integrity of all the distributed pieces of data” “the DICOM traffic kills our network” “we cannot replace all our existing PCs” “the 3D images prepared by the tech are not sufficient to judge this case” |
 37 Isolated Workstations Aggravate the Problem • Data inconsistencies • Sending data over the network multiple times • Missing interfaces with RIS/HIS • Workstation hardware quickly outdated • Workplace becomes the bottleneck PACS Server |
 38 Visage CS: Thin, Fast, and Fully Integrated PACS Server Visage CS PCs and Workstations Hospital LAN/VPN Plug-and-Play Add-On to existing PACS • Process data sets on scalable server built with standard components • Integrate with PACS and RIS on front end and back end – One consistent central data storage • Local and remote access for multiple users on any client PC, anytime, anywhere
• Blazingly fast 2D, 3D, and 4D viewing, post-processing, and primary interpretation for all modalities saves time – “Instant” access - initial display of 2,000 slice series in < 2 seconds • Physician can use all the tools he/she wants when needed and where needed • Additional technical and professional reimbursement |
 39 Usage Example: Hospital PACS Modalities Emergency Room Intensive Care Unit Reading Room Radiologist‘s Office Radiologist‘s Home PACS LAN Visage CS Thin Client / Server VPN |
 40 CT Scan of heart in 36 seconds! From CT Scan to diagnosis of coronary artery disease in less then 10 minutes More than 3,000 slices to read! Let the Thin 3D Client help! Why look at 3,000 slices when you could look at the entire heart in 3D! With the CS Server, the radiologist or cardiologist can view, evaluate and diagnose rapidly from anywhere in the hospital or office. Functional assessment of multi-phase Cardiac CT • Automatic segmentation of left ventricle • Volumetric analysis • Ejection fraction, stroke volume, cardiac output, etc. • Wall motion analysis • AHA-style bull’s eye representation Cardiac CT Analysis on Thin Clients |
 41 3D Viewing of Aneurysm and Vessels • Application example: – Cerebral aneurism – Have a closer look at the base of the aneurism to plan coiling • Features: – Quick navigation and flexible reformatting – Quick 3D viewing of volumes of interest (crop box) – Flexible Maximum Intensity Projection (MIP) • Benefits: – Quick and accurate treatment planning |
 42 Example: Aneurysm (3D MIP) |
 43 Importance of 3D in Many Areas of Medicine Increasing Preclinical Imaging Drug Design Treatment Planning Cell biology Surgical Simulation Molecular Imaging |
 44 Thank you... • ... for your time and attention! • Questions… • Learn more: |
 © 2007 Mercury Computer Systems, Inc. Financial Overview |
 46 © 2007 Mercury Computer Systems, Inc. www.mc.com Revenue ($M) $86 $107 $141 $181 $150 $180 $186 $250 $236 $225* $224 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E Revenue Follows Technology Cycles Echotek – A/D-D/A June Fiscal Year End *Per Company guidance, October 24, 2007 earnings conference call PowerPC RACE++ MP-510 Cell BE Processor DSP/GPU / FPGA Processors Northstar Ensemble PowerStream 7000 TGS – 3D Momentum - SBC SoHard – PACS ARC - RF Rapid IO 10% CAGR FY98 – FY08E |
 47 © 2007 Mercury Computer Systems, Inc. www.mc.com Focus on Working Capital • Supply chain transformation Competitive advantage for Mercury and customers • Customer satisfaction DSO target 50 days Days Sales Outstanding 43 51 53 59 61 56 50 2003 2004 2005 2006 2007 2008E Model Inventory Turns 4.9 6.9 5.4 4.6 4.1 4.2 7.5 2003 2004 2005 2006 2007 2008E Model |
 48 © 2007 Mercury Computer Systems, Inc. www.mc.com Strong Balance Sheet Historically strong balance sheet Net cash positive: $34M Projected FY08 capex of $7 million Positive free cash flow in FY08 • 2% convertible senior notes offering due 2024 Quarter ended September 30, 2007 Cash and Equivalents $159 Total Current Assets $206 Total Assets $356 Total Debt $125 Total Liabilities $185 Stockholders’ Equity $171 * |
 49 © 2007 Mercury Computer Systems, Inc. www.mc.com Commitment to Timeless Business Model Non-GAAP FY05 FY06 FY07 Guidance FY08* Timeless Business Model Revenue 100% 100% 100% 100% 100% Gross Margin 66% 62% 56% 59% 60+% SG&A 29% 34% 36% 33% Mid 20% R&D 20% 25% 26% 24% High Teens Income from Operations 17% 3% (6%) 2% 16-18% *Per Company guidance, October 24, 2007 earnings conference call Approaching model! Costs Reduced |
 50 © 2007 Mercury Computer Systems, Inc. www.mc.com Q2 Fiscal Year 2008 Guidance • Impact of equity-based compensation costs related to FAS 123(R) of approximately $3.0M excluded from non-GAAP • Acquisition-related amortization of approximately $1.8M excluded from non-GAAP Notes: 1) Figures in millions, except percent and per share data which includes adjustment for contingent convertibles, in accordance with GAAP 2) Company guidance, October 24, 2007 earnings conference call Quarter Ending December 31, 2007 Revenues ($M) $51 GAAP Non-GAAP Gross Margin 58% 58% EPS $(0.37) $(0.05) |
 51 © 2007 Mercury Computer Systems, Inc. www.mc.com Fiscal Year 2008 Guidance Fiscal Year Ending June 30, 2008 Revenues ($M) $225 GAAP Non-GAAP Gross Margin 59% 59% EPS $(0.54) $0.33 Notes: 1) Figures in millions, except percent and per share data which includes adjustment for contingent convertibles, in accordance with GAAP 2) Company guidance, October 24, 2007 earnings conference call • Impact of equity-based compensation costs related to FAS 123(R) of approximately $11M excluded from non-GAAP • Acquisition-related amortization of approximately $7M excluded from non-GAAP |
 52 © 2007 Mercury Computer Systems, Inc. www.mc.com www.mc.com NASDAQ: MRCY |