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, 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 Thursday, September 6, 2007 at the Kaufman Brothers 10th 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, 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: September 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 September 6, 2007. |
 © 2005 Mercury Computer Systems, Inc. Jay Bertelli, President, Chief Executive Officer & Chairman Bob Hult,
SVP, Chief Financial Officer Kaufman Bros. 10th Annual Investor Conference September 6, 2007 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 2007 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, 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 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 Fourth Quarter and
Fiscal Year 2007 earnings release, which can be found on our website at www.mc.com/mediacenter/pr/. |
 © 2005 Mercury Computer Systems, Inc. 3 What We Do • Solve problems too complex for standard computing • Architect optimal solutions for compute and data intensive applications • Unique skill set for advanced, real-time, 3D visualization • Provide cost-effective hardware and software products and system-level solutions Customer Specific Application Specific High Performance Computing Commodity Computing Specialized Computing Platforms Outsourced Solution Services |
 © 2005 Mercury Computer Systems, Inc. 4 Mercury Overview • Founded in 1983 • FY2007 revenues of $224 million • End markets: Aerospace & Defense Life Sciences Semiconductor Equipment Geosciences Communications FY07 (Ended June) Revenue Mix Defense CIV ABSU MPS |
 © 2005 Mercury Computer Systems, Inc. 5 Investment Highlights • Data explosion across multiple markets • Mercury uniquely positioned to implement multi-core processing systems • Strategic acquisitions starting to produce • Large opportunity in 3D medical imaging • New alignment of internal competencies should drive new business opportunities • Recent cost-reduction initiatives should improve margins |
   © 2005 Mercury Computer Systems, Inc. 6 Unique Set of Technology Capabilities Solutions for Complex Computing Problems Aerospace & Defense Life Sciences Communications Video Semiconductor Geosciences Cell BE, FPGA, GPU, Multicore, Pentium DSP Processor Platforms Compute-intensive applications software, systems Mercury engineering, and domain expertise |
 © 2005 Mercury Computer Systems, Inc. 7 Emerging Markets Organizing the Company Around our Core Business Model AUSG Biotech Visage Imaging (Life Sciences, amira- medical) Advanced Computing Solutions Market Investments Leveraged Core Product Investments Stream Computing Application Acceleration Radar SIGINT Def Comms Semi MEDICAL Comms Solution Architecture SEISMIC Sonar Specialized Computing Business Federal VSG Visualization |
 © 2005 Mercury Computer Systems, Inc. 8 New Business Unit: Advanced Computing Solutions Leveraging Mercury technology across: • Defense • Semiconductor • Communications • Intelligence • Homeland Security • Research |
 © 2005 Mercury Computer Systems, Inc. 9 Mercury Well-Positioned in Defense •Strong customer base 20 years of experience COTS model •Technology leadership Strong position in large, complex radar systems Programmable solutions moving closer to the war fighter •Broadening market portfolio
Signals intelligence Net-centric warfare • Wideband Data Links UAVs • Synthetic Vision Sonar Smart weapons Ground based radar |
 © 2005 Mercury Computer Systems, Inc. 10 Mercury Federal GOAL: Extend Mercury’s capabilities directly into: • Intelligence Agencies • Homeland Security To solve their unique problems • Massive amounts of sensor data into intelligent information actionable by the recipient New business model for Mercury • Government contracting vehicle • Consulting services • Systems engineering • Products and services |
 © 2005 Mercury Computer Systems, Inc. 11 Semiconductor Creation Market • Supplying application- enabling solutions to leading OEMs • Growth driven by production design wins Mask generation Wafer inspection Reticle inspection • Positioned for the next wave Mercury Cell BE-based solutions uniquely meet market needs Emerging new applications for Mercury solutions Strong Organic Growth 36% CAGR FY 2002-2007 Mercury Semiconductor Segment Revenue FY 2002 – FY 2007 $7 M FY 2002 $32 M FY 2007 |
 © 2005 Mercury Computer Systems, Inc. 12 EDA: New Market Leveraging Mercury Technology • Compute-intensive processing required to prepare designs for mask creation Resolution Enhancement Technology (RET) Design For Manufacturing (DFM) • Mercury Cell BE-based solutions to provide over 10 Teraflops to speed application by 10x to 100x • Partnership with Mentor Graphics to deploy first Cell BE- based platform for EDA market |
 © 2005 Mercury Computer Systems, Inc. 13 Communications • Communications market potential System development platforms for wireless infrastructure applications • Growth Opportunity AdvancedTCA DSP and FPGA compute solutions • Example: Satellite ground stations for Ancillary Terrestrial Component (ATC) • Wideband Data Link Modems for Net-centric Warfare |
 © 2005 Mercury Computer Systems, Inc. 14 Visage Imaging • Wholly owned subsidiary • Focused on software-based medical imaging solutions • Web based PACS • Client / server model for 3D visualization • Distribution Strategy • OEMs • Direct • Distributors • Market Segments • Clinical DMI • Microscopy • Biomedical Research • Pharma |
 © 2005 Mercury Computer Systems, Inc. 15 Broad Set of Capabilities Acquire Visualize Manage Distribute • Visage VR volume rendering • Visage WS workstation • Visage CS thin client server Reconstruct • Visage RT image reconstruction • GPU acceleration • CELL technology acceleration • Multi-channel MRI receiver • CT gantry dose controller • Visage PACS • Visage CS thin client server • Visage CS Cardiac analysis • Visage PACS • |
 © 2005 Mercury Computer Systems, Inc. 16 Visage Has Most Complete Solution X X X X X Visage Imaging (Mercury) X X Analogic X X X Merge/Cedara X X Vital Images + Innovation X X X TeraRecon X Barco/Voxar X X X X X X X Analogic X X X Merge/Cedara X X Vital Images + X X X TeraRecon X Barco/Voxar Control Recon Visualize Distribute Archive Medical Imaging – Signal Processing and Workflow Hardware & Software Solutions Gantry Data Explosion Competition |
 © 2005 Mercury Computer Systems, Inc. 17 Emerging Businesses • Emerging markets where Mercury can leverage its technology Visualization Sciences Group (incubator) • Oil and Gas Exploration • Industrial Design • Corp and Univ Research Labs • Non-destructive Testing Synthetic Vision for UAVs • Border Patrol • Forest Fire Detection • Utility and Pipeline Monitoring Biotech • Drug discovery – computer simulation • Very early stage • Potentially large niche markets • Focus on selling applications and services • FY08 Investment Year |
 © 2005 Mercury Computer Systems, Inc. Financial Overview |
 © 2005 Mercury Computer Systems, Inc. 19 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, July 26, 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 |
 © 2005 Mercury Computer Systems, Inc. 20 Focus on Working Capital • Supply chain transformation Competitive advantage for Mercury and customers • Customer satisfaction DSO target 50 days Inventory Turns 4.9 6.9 5.4 4.6 4.1 4.6 7.5 2003 2004 2005 2006 2007 2008E Model Days Sales Outstanding 43 51 53 59 61 56 50 2003 2004 2005 2006 2007 2008E Model |
 © 2005 Mercury Computer Systems, Inc. 21 Strong Balance Sheet Historically strong balance sheet Net cash positive Projected FY08 capex of $7 million Positive free cash flow in FY08 • 2% convertible senior notes offering due 2024 Quarter ended June 30, 2007 Cash and Equivalents $157 Total Current Assets $196 Total Assets $360 Total Debt $125 Total Liabilities $191 Stockholders’ Equity $169 * |
 © 2005 Mercury Computer Systems, Inc. 22 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% 57% 60+% SG&A 29% 34% 36% R&D 20% 25% 26% Income from Operations 17% 3% (6%) 0% 16-18% *Per Company guidance, July 26, 2007 earnings conference call
|
 © 2005 Mercury Computer Systems, Inc. 23 Q1 Fiscal Year 2008 Guidance • Impact of equity-based compensation costs related to FAS 123(R) of approximately $2.6M excluded from non-GAAP • Acquisition-related amortization of approximately $1.8M excluded from non-GAAP Notes: 1) Figures in millions, except percent and per share data which includes adjustment for contingent convertibles, in accordance with GAAP 2) Company guidance, July 26, 2007 earnings conference call Quarter Ending September 30, 2007 Revenues ($M) $48 GAAP Non-GAAP Gross Margin 57% 57% EPS $(0.33) $(0.08) |
 © 2005 Mercury Computer Systems, Inc. 24 Fiscal Year 2008 Guidance Fiscal Year Ending June 30, 2008 Revenues ($M) $225 GAAP Non-GAAP Gross Margin 57% 57% EPS $(0.63) $0.17 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 26, 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 |
 © 2005 Mercury Computer Systems, Inc. 25 www.mc.com NASDAQ: MRCY |