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FORM 8-K

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): September 6, 2006

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 Wednesday, September 6, 2006 at the Kaufman Brothers 9th 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 September 6, 2006.

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: September 6, 2006     By:   /s/ Robert E. Hult
        Robert E. Hult
       

Senior Vice President,

Chief Financial Officer

EXHIBIT INDEX

 

Exhibit No.   

Description

99.1    Presentation materials dated September 6, 2006.
PRESENTATION MATERIALS
©
2005  Mercury Computer Systems, Inc.
Kaufman Bros. 9th Annual
Investor Conference
September 6, 2006
Jay Bertelli, President, Chief Executive Officer & Chairman
Bob Hult, SVP, Chief Financial Officer
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,
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
Quarterly
Report
on
Form
10-Q
for
the
quarter
ended
March
31,
2006.
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,
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
results
discussed
in
this
presentation
is
contained
in
the
company’s
Fourth
Quarter
and
Fiscal
Year
2006
earnings
release,
which
can
be
found
on
our
website
at
www.mc.com/mediacenter/pr/.

©
2005 Mercury Computer Systems, Inc.
3
Company Overview
•
Leading provider of
embedded computing
solutions for specialized
applications
•
FY06 revenues: $236 million
•
836 employees
•
HQ in Chelmsford, MA
Sales, support, and R&D centers in
U.S., Europe, and Japan
•
Industry focus areas:
Aerospace & Defense
Life Sciences
Semiconductor Equipment
Geosciences
Communications

©
2005 Mercury Computer Systems, Inc.
4
Revenue Follows Technology Cycles
Revenue ($M)
$186
$250
$150
$181
$141
$107
$86
$180
$235-245*
$236
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007E
June Fiscal Year End
*Per Company guidance, July 27, 2006 earnings conference call
PowerPC
RACE++
MP-510
Cell BE
Processor
GPU / FPGA Processors
Northstar
Ensemble
PowerStream 7000
TGS
Echotek
Momentum
SoHard
ARC

©
2005 Mercury Computer Systems, Inc.
5
Strong New Business Pipeline
24
35
13
9
24
11
4
15
Q105
Q205
Q305
Q405
Q106
Q206
Q306
Q406
Total Design Wins
•
DBU –
63
•
CIV -
53
•
ASBU -
21

©
2005 Mercury Computer Systems, Inc.
6
Market Growth Drivers
•
Data explosion across multiple markets,
driving need for increased use of 3D
visualization
•
Continued need for real-time processing in
demanding applications
•
Introduction of multi-core processors across
markets to increase performance
IBM Cell BE
•
Trend to embed specialized computers into
products across industries

©
2005 Mercury Computer Systems, Inc.
7
Our Unique Competitive Advantages
•
Unique skill set and software for processing
and visualizing data
•
Mercury’s heterogeneous architectures
enable systems to perform optimally in
demanding applications
•
Libraries and tools for multi-core, multi-
processor computing to economically solve
the most challenging compute problems
Helping our Customers to Compete

©
2005 Mercury Computer Systems, Inc.
8
Growth Strategy
•
Leverage technology investments across
multiple high-performance computing
applications in diverse markets
•
Develop and acquire application software for
select markets
PACS, Biotechnology, VistaNav™, etc.
•
Deliver more of the overall solution
TGS, Echotek, SoHard, Momentum

©
2005 Mercury Computer Systems, Inc.
9
Leveraging Expertise Across End Markets
•
Diversified revenue base
Defense
•
Radar
•
Sonar
•
SIGINT
•
Communications
Commercial
•
Medical Imaging
•
Wafer Inspection
•
Mask Generation
•
Oil & Gas Exploration
•
Semiconductor Design for Manufacturing
•
Communications
DEFENSE
COMMERCIAL
•
New market opportunities
Synthetic Vision
Biotechnology
FY06 Revenue Mix

©
2005 Mercury Computer Systems, Inc.
10
Mercury, IBM & Cell: A Landmark Agreement
•
5-100x faster than
conventional microprocessors
•
Designed to solve the same
types of problems Mercury has
been solving for many years
•
Mercury is 1
st
non-gaming
company to integrate Cell
•
Applicable across multiple
markets
Cell Broadband Engine is
a trademark of Sony
Computer Entertainment
Inc.

©
2005  Mercury Computer Systems, Inc.
Commercial Imaging and
Visualization (CIV)

©
2005 Mercury Computer Systems, Inc.
12
CIV Customers & Targets  (not all-inclusive)
Oil and Gas

©
2005 Mercury Computer Systems, Inc.
13
Acquire
Visualize
Archive
Distribute
Life Sciences Value Delivery
•
Large data set    
volume rendering
•
Workstation
•
Clinical packages
Reconstruct
•
Reconstruction
algorithms
•
GPU acceleration
•
Cell Broadband
Engine technology
acceleration
•
SoHard Gantry
Controllers
•
Echotek RF
receivers
•
SoHard
WebPACS
(2D+3D)
•
MCS Thin
Client/Server
•
SoHard
Failsafe
SW
•
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

©
2005  Mercury Computer Systems, Inc.
Advanced Solutions
Business Unit (ASBU)

©
2005 Mercury Computer Systems, Inc.
15
ASBU Customers & Targets (not all-inclusive)
Satellite Data Links and Software Radio
Wireless Infrastructure
Base Stations and Radio Network
Controllers
Silicon IP and Component Solutions
Semiconductor Capital Equipment:
Wafer Inspection, Reticle Inspection,
Mask Generation

©
2005 Mercury Computer Systems, Inc.
16
Semiconductor Equipment Growth Drivers
Consumer demand for faster, lower power, lower-cost electronics
Drives the need for higher-performance chip equipment
Hard problems that are getting harder
More complex algorithms, higher data rates
New applications that require massive compute power
Example:  Reticle design rule verification and direct write lithography
Subject to market cyclicality
Processing needs outpace mainstream
computing as data rates and algorithm
complexity increase
Year 1
Year 2
Year 3
Moore’s
Law
Processing
Requirements
12X
4X

©
2005  Mercury Computer Systems, Inc.
Defense Business Unit (DBU)

©
2005 Mercury Computer Systems, Inc.
18
Defense Business
•
Market focus
Radar
Signals Intelligence
(SIGINT)
Other defense
technologies
•
Technology
leadership
Strong COTS model
Aboard demanding
platforms in air, on land,
under sea
Full life-cycle support
Representative

©
2005 Mercury Computer Systems, Inc.
19
Customer Success
Enabling our customers to win by providing
commercial off-the-shelf technology for new
applications

©
2005 Mercury Computer Systems, Inc.
20
Radar –
Leading through Innovation
•
Radar Processing Leadership
Tactical fighters: JSF, F-22, F-16
Airborne surveillance: MP-RTIP
•
Global Hawk
•
E10-A, JSTARS, AWACS
Shipboard missile defense: Aegis
UAV SAR: Predator LYNX
•
Radar Market Opportunities
Upgrades to existing radars
Land-based/mobile radar
Passive radars
•
Cell Broadband Engine
Aegis (BMD)
JSF (F-35)

©
2005 Mercury Computer Systems, Inc.
21
Signals Intelligence (SIGINT)
•
Communications Intelligence (COMINT) and
Electronic (ELINT) Intelligence
•
Fastest growing defense segment
19% 5-Year CAGR
•
Comprehensive product offering
•
Investments for defense communications
RF
Processing
Data Conversion

©
2005 Mercury Computer Systems, Inc.
22
Revolutionizing the Industry
Widespread deployment of battlefield visualization and
decision aids previously found only in research
laboratories
Multi-sensor visualization for ALL warfighters on the move
Comprehensive battlefield pictures for all warfighters
Super-smart compression for limited capacity, wide-band data links
Detection and acquisition of previously intractable targets
PowerBlock™
200
What You Could Only Dream About Before

©
2005  Mercury Computer Systems, Inc.
Financial Overview

©
2005 Mercury Computer Systems, Inc.
24
Historical Revenue Pattern
Revenue ($M)
$186
$250
$150
$181
$141
$107
$86
$180
$235-245*
$236
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007E
June Fiscal Year End
Revenue Follows Technology Cycles
*Per Company guidance, July 27, 2006 earnings conference call

©
2005 Mercury Computer Systems, Inc.
25
Earnings per Share
$1.05
$1.25
$0.29
~$0.29*
$1.03
$0.47
$0.62
$1.10
$1.33
$0.69
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007E
*Per Company guidance, July 27, 2006 earnings conference call
Note: Non-GAAP EPS shown from 2006 onward

©
2005 Mercury Computer Systems, Inc.
26
Focus on Working Capital
Inventory Turns
4.9
6.9
5.4
4.6
8.0
2003
2004
2005
2006
Model
•
Supply chain investment
Competitive advantage
for Mercury and
customers
•
Customer satisfaction
DSO target 45 days
Days Sales Outstanding
45
59
50
51
43
2003
2004
2005
2006
Model

©
2005 Mercury Computer Systems, Inc.
27
$M
$22
$26
$51
$16
$26
$31
$38
$27
$11
$20
$19
$24
$10
$44
2000
2001
2002
2003
2004
2005
2006
Operating Cash Flow
Free Cash Flow
Cash Generation

©
2005 Mercury Computer Systems, Inc.
28
Strong Balance Sheet
Historically strong
balance sheet
Supports open
innovation growth
agenda
* Includes $125 million convertible senior notes offering
*
Quarter ended June 30, 2006
Cash and Equivalents
$162
Total Current Assets
$200
Total Assets
$379
Total Debt
$136
Total Liabilities
$187
Stockholders’
Equity
$192

©
2005 Mercury Computer Systems, Inc.
29
Q1 Fiscal Year 2007 Guidance
•
Impact of equity-based compensation costs related to
FAS 123(R) excluded from Non-GAAP
•
Acquisition-related amortization of approximately $1.7 M
excluded from Non-GAAP
Notes:
1)
Figures in millions, except percent and per share data which includes
adjustment for contingent convertibles, in accordance with GAAP
2)
Company guidance, July 27, 2006 earnings conference call
Quarter Ending September 30, 2006
Revenues ($M)
$50-53
      GAAP 
Non-GAAP
Gross Margin
57%
EPS
$(0.35)-(0.29)
$(0.17)-(0.11)

©
2005 Mercury Computer Systems, Inc.
30
Fiscal Year 2007 Guidance
Fiscal Year Ending June 30, 2007
Revenues ($M)
$235-245
      GAAP 
Non-GAAP
Gross Margin
57%
EPS
~$(0.37)
~$0.29
Notes:
1)
Figures in millions, except percent and per share data which includes
adjustment for contingent convertibles, in accordance with GAAP
2)
Company guidance, July 27, 2006 earnings conference call
•
Impact of equity-based compensation costs related to
FAS 123(R) excluded from Non-GAAP
•
Acquisition-related amortization of approximately $6.8M
excluded from Non-GAAP

©
2005 Mercury Computer Systems, Inc.
31
Timeless Business Model
Non-GAAP 
FY04
FY05
FY06
Guidance
FY07*
Timeless
Business Model
Revenue
100%
100%
100%
100%
100%
Gross Margin
67%
66%
62%
57%
60+%
SG&A
30%
29%
34%
R&D
21%
20%
25%
Income from Operations
17%
17%
3%
~2%
16-18%
*Per Company guidance, July 27, 2006 earnings conference call

©
2005 Mercury Computer Systems, Inc.
32
www.mc.com
NASDAQ: MRCY