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 7, 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 Mercury’s business on Monday, November 7, 2005 at the 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 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, 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 6-9, 2005. | |
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: November 7, 2005 | By: |
/s/ ALEX N. BRAVERMAN | ||||||
| Name: |
Alex N. Braverman | |||||||
| Title: |
Vice President, Controller and Chief Accounting Officer | |||||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| Exhibit 99.1 | Presentation Materials dated November 6-9, 2005. | |
 © 2005 Mercury Computer Systems, Inc. Jay Bertelli, President, CEO & Chairman
Bob Hult, SVP, Operations & Finance, CFO Marcelo Lima, VP & GM, Commercial Imaging & Visualization AeA Classic Financial Conference November 6-9, 2005 Exhibit 99.1 |
 © 2005 Mercury Computer Systems, Inc. 2 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 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, and 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 fiscal year
ended June 30, 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. 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 non-cash and other 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 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 First Quarter Fiscal 2006 earnings release, which can be found on our website at www.mc.com/mediacenter/pr/. |
 © 2005 Mercury Computer Systems, Inc. 3 Company Overview • 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 • 880 employees worldwide; 320 engineers • Investment in knowledge of customer applications *Approximate FY05 revenue composition FY05 Revenues: $250 M June Fiscal Year End 20%* 20%* Defense Business Commercial Imaging & Visualization Advanced Solutions 60%* |
 © 2005 Mercury Computer Systems, Inc. 4 Today’s Mercury • Customers are attracted to Mercury based on our common interest in making a difference through technology • We help our customers to make a positive impact on critical issues that affect our lives Improving international security Advancing health care Increasing the world’s oil supply ….And more • We deliver a comprehensive portfolio of computing products, services, and expertise that solve the toughest computing challenges |
 © 2005 Mercury Computer Systems, Inc. 5 Sample Application Areas Enabled by Mercury J-STARS Aircraft RADAR Mobile C-Arm (Digital X-Ray) Wafer Inspection Image Processing Special-Purpose Computing & I/O Visualization & Rendering Signal Processing Wireless Communications Base Stations Image Storage & Retrieval RF & A/D Echotek Series 3000T and 5000T Seismic Ray Tracing |
 © 2005 Mercury Computer Systems, Inc. 6 Key Elements of Mercury’s Strategy • Committed to driving innovation Average R&D y/y is approximately 20% of revenues • Focused on continually enhancing our expertise to maintain our leading edge Internal development • Cross-pollinating commercial technologies/expertise with defense applications to provide cost-effective solutions • Extending our offerings from hardware to software to services External innovation • IBM partnership/Cell processor, strategic alliances with NVIDIA Corporation, Ziehm Imaging, Massachusetts General Hospital (MGH) Select acquisitions to complement and strengthen our organic growth • Echotek, SoHard AG, Momentum Computer, TGS, ARC • Dedicated to helping customers solve problems and win business Broader offerings – Defense Professional Services Innovative business arrangements – JCM |
 © 2005 Mercury Computer Systems, Inc. 7 Mercury, IBM & Cell: A Landmark Agreement • The Cell Broadband Engine processor is 5-100x faster than conventional microprocessors • Mercury is the 1st non-gaming company to integrate Cell into its products High-volume gaming market is transforming the technology industry • Targeting applications in existing and new markets with optimized Cell-based products Medical imaging, inspection, defense, geosciences, telecommunications, etc. • Mercury is uniquely capable Cell is designed to solve the same types of problems Mercury has been solving for many years |
 © 2005 Mercury Computer Systems, Inc. Defense Business |
 © 2005 Mercury Computer Systems, Inc. 9 Defense Business Overview • 60% of FY05 revenues • Market focus Radar Signals intelligence (SIGINT) Defense technologies • Technology leadership Strong COTS model Aboard demanding platforms in air, on land, under sea Full life-cycle support • Growth Transformation • CISR Smart weapons Cell-based technology Representative |
 © 2005 Mercury Computer Systems, Inc. 10 Sensor Value Proposition Real-time signal and image processing applications • Sensor streaming • Scalable • Real time • Embedded (real estate, environmental, cooling constraints) Acquire Process Transmit Mathematical Transformations Visualize Image Display Complex signal returns |
 © 2005 Mercury Computer Systems, Inc. 11 Customer Success Enabling our customers to win by providing commercial off-the-shelf technology for new applications |
 © 2005 Mercury Computer Systems, Inc. 12 Growth Drivers • DoD transformation/ISR initiative Signals intelligence (SIGINT) Image & data exploitation • ISR becoming CISR • Expansion to lower echelons, smaller platforms • Network-centric warfare • Software radio/data links • Smart weapons Today 5 Years Available Market $3 B Served Market $380 M * • Smart Weapons • Image & Data Exploitation • Data links *Fiscal 2005 revenues were $148 M |
 © 2005 Mercury Computer Systems, Inc. Advanced Solutions Business |
 © 2005 Mercury Computer Systems, Inc. 14 Advanced Solutions Markets 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 Delivering specialized processing solutions for demanding commercial OEM applications |
 © 2005 Mercury Computer Systems, Inc. 15 Communications Market Applications Wireless base stations Radio network controllers Video gateways Satellite data links Software defined radio Technology High-availability middleware Component deployment middleware RapidIO ® DSP and FPGA compute nodes Interconnect and reconfigurable computing cores Analog and digital I/O Signal and video processing algorithms |
 © 2005 Mercury Computer Systems, Inc. 16 Acquire Detect Image Correction & Defect Detection Value Proposition • Searching for defects on silicon wafers or reticles • Scalable compute, streaming I/O, and interconnect bandwidth • Enabling customer algorithm performance enhancements • Software-programmable solutions Accelerating customers’ advanced algorithms to market Analyze Offline Classification & Analysis Sensor Data- Scanned Wafers or Reticles Classify |
 © 2005 Mercury Computer Systems, Inc. 17 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 Today 3 Years 5 years Telecommunication Semiconductor Available Market $1.5 B Served Market $170 M *Fiscal 2005 revenues were $48 M * |
 © 2005 Mercury Computer Systems, Inc. Commercial Imaging and Visualization Business |
 © 2005 Mercury Computer Systems, Inc. 19 CIV Overview • 20% of FY05 revenues • Market focus Medical imaging Biotechnology Oil and gas exploration • Technology leadership Scalable systems High-performance 3D Large data sets • Growth Organic: New product intros – VisageRT, ExamineRT, Thin Client/Server, Amira 4.0, OpenRT, Open Inventor LDM, XBi series Inorganic: Acquisitions of the TGS Group and SoHard AG |
 © 2005 Mercury Computer Systems, Inc. 20 CIV Customers & Targets (not all-inclusive) Geosciences (Oil & Gas) |
 © 2005 Mercury Computer Systems, Inc. 21 Growing Served Markets • Life Sciences Diagnostic medical imaging modalities Picture Archiving & Communications System (PACS) • Biotechnology Microscopy Structured drug design • Geosciences Oil & gas • Other Computer-aided design, navigation/simulation OEM Available Markets US$M Source: IDC , Frost & Sullivan, MCS data 0 500 1000 1500 2000 2500 2006 2008 2010 Navigation / Simulation & CAD Geoscience Biotech (Microscopy & Drug Disc.) Medical Imaging and PACS |
 © 2005 Mercury Computer Systems, Inc. 22 Strategy & Core Competencies • Strategy: Lead in end-to-end OEM solutions • Data acquisition, reconstruction, computation, visualization, distribution Innovate • Scalable systems, large data set computing, 3D visualization Leverage • Research alliances (ZIB, MGH) • Partners and sourcing (NVIDIA, HP) Integrate • New products from TGS and SoHard acquisitions Focus • Customer success, performance and time to market • Core competencies Algorithm optimization Acceleration technologies Image reconstruction 3D and visualization Multiprocessing and system architecture Applications know-how |
 © 2005 Mercury Computer Systems, Inc. 23 Data Explosion Drives 3D Everywhere • Improving sensors • Large data sets • Growing need for intensive computing • Enhanced image accuracy • Real-time 3D • Time to market Multi-slice CT (32/64) 4 Gbytes typical OIV/VolumeViz large data set module 100 Gbytes typical |
 © 2005 Mercury Computer Systems, Inc. 24 Acquire Visualize Archive Distribute Value Proposition Reconstruct • Broad end-to-end medical systems OEM solution portfolio • All steps from scanner output to end-user applications • Image reconstruction, processing, and visualization • Embedded components and integrated solutions • VisageRT Volume Rendering • ExamineRT Workstation • Clinical packages • VisageRT™ Reconstruction • GPU Acceleration • CELL Technology Acceleration • SoHard Gantry Controllers • Echotek Multi- channel MRI Receiver • SoHard (2D+3D) • ExamineRT™ (3D) Thin Client/Server • SoHard Failsafe SW |
 © 2005 Mercury Computer Systems, Inc. 25 Oil & Gas Value Creation • Competitive advantages Power/cubic inch Scalable systems Extremely large data sets • Computing solutions Seismic acquisition Seismic processing • Visualization solutions Seismic QC and interpretation Horizons, faults, well bores, etc. Core analysis Drilling planning Reservoir models |
 © 2005 Mercury Computer Systems, Inc. 26 CIV Summary • Growing markets • Product innovation • Acquisitions • Aligned with trends • Solving real problems • 2D + 3D + systems = competitive advantage • Quality and time to market • Extending customer base • Growing business -> 35% |
 © 2005 Mercury Computer Systems, Inc. Financial Overview |
   © 2005 Mercury Computer Systems, Inc. 28 FY06 projected growth rates Value Creation: Growth Revenue ($M) $275-285* $180 $150 $180 $186 $250 2001A 2002A 2003A 2004A 2005A 2006E *Per Company guidance, Oct. 20, 2005 earnings press release June Fiscal Year End DBU >10% ASB ~(15)% CIV ~35% 2005: Record revenues 2006: Projected revenue growth 12% (at midpoint of guidance range) |
 © 2005 Mercury Computer Systems, Inc. 29 Fiscal Year 2006 Guidance Notes: 1) Figures in millions, except percent and per share data which includes adjustment for contingent convertibles, in accordance with GAAP 2) Company guidance, October 20, 2005 Q1 earnings press release • Impact of equity-based compensation costs related to FAS 123(R), amortization of purchased intangibles, and in-process R&D charges excluded from Non-GAAP Fiscal Year Ending June 30, 2006 Revenues ($M) $275-285 Gross Margin 64-65% GAAP Non-GAAP Operating Income 6% 12% EPS $0.50-0.55 $1.00-1.05 |
 © 2005 Mercury Computer Systems, Inc. 30 Q2 Fiscal 2006 Guidance • Impact of equity-based compensation costs related to FAS 123(R), amortization of purchased intangibles, and in- process R&D charges excluded from Non-GAAP Notes: 1) Figures in millions, except percent and per share data which includes adjustment for contingent convertibles, in accordance with GAAP 2) Company guidance, October 20, 2005 Q1 earnings press release Quarter Ending December 31, 2005 Revenues ($M) $61-64 GAAP Non-GAAP Operating Income --- 4% EPS $(0.02)-0.00 $0.08-0.10 |
 © 2005 Mercury Computer Systems, Inc. 31 FY04 FY05 Guidance FY06 Timeless Business Model Revenue 100% 100% 100% 100% Gross Margin 67% 66% 64-65% 66-67% SG&A 30% 29% 29-30% R&D 21% 20% 20-21% Income from Operations 17% 17% 12% 16-18% Timeless Business Model Notes: • Acquisition-related amortization of intangibles ~ 1%, ~1%, ~2% FY04, FY05, FY06, resp. • FY06 Non-GAAP guidance per October 20, 2005 Q1 earnings call. FY06 GAAP income from operations 6% |
 © 2005 Mercury Computer Systems, Inc. 32 $M $50.5 $25.9 $38.0 $26.6 $44.3 $20.3 2003 2004 2005 Operating Cash Flow Free Cash Flow Cash Generation |
 © 2005 Mercury Computer Systems, Inc. 33 Strong Balance Sheet Historically strong balance sheet Supports open innovation growth agenda (Quarter ended September 30, 2005) Cash and Equivalents $171 Total Current Assets $182 Total Assets $393 Total Debt $139 Total Liabilities $190 Stockholders’ Equity $203 * * Includes $125 million convertible senior notes offering |
 © 2005 Mercury Computer Systems, Inc. 34 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 enhances capability to deliver solutions across target markets Sustain a 25% or better long-term revenue growth rate |
 © 2005 Mercury Computer Systems, Inc. 35 www.mc.com NASDAQ: MRCY |