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): February 5, 2008
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 February 5, 2008 at the Cowen and Company 29th Annual Aerospace/Defense 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 February 5, 2008. |
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: February 5, 2008 | By: | /s/ Robert E. Hult | ||||
| Robert E. Hult | ||||||
| Senior Vice President, Chief Financial Officer and Treasurer | ||||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Presentation materials dated February 5, 2008. |
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2008 Mercury Computer Systems, Inc. Mark Aslett, President & Chief Executive Officer Bob Hult, SVP & Chief Financial Officer Cowen and Company 29th Annual Aerospace/Defense Conference February 5, 2008 Exhibit 99.1 |
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2008 Mercury Computer Systems, Inc. www.mc.com 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 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 Second Quarter Fiscal Year 2008 earnings release, which can be found on our website at www.mc.com/mediacenter/pressreleaseslist.aspx. |
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2008 Mercury Computer Systems, Inc. www.mc.com 3 Oil and Gas Telecommunications Embedded Computing Aerospace and Defense Semi Industry Life Sciences Mercury at a Glance 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. |
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2008 Mercury Computer Systems, Inc. www.mc.com 4 4 Mercury spans the entire signal processing chain • Modular boards and integrated systems • Scalable multi core architectures • Robust software and tools • Open-standard COTS to custom solutions • Ruggedized systems • Comprehensive services • Visualization software From RF to Visualization |
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2008 Mercury Computer Systems, Inc. www.mc.com 5 5 Why customers choose Mercury • Significant and pioneering investments in specialized FPGA and multi core computing architectures and software We maintain ongoing relationships with silicon providers that are unique Significant multi computing R&D expenditures The breadth and depth of our product line for specialized computing are unrivalled • Our approach to technical problem-solving in the specialized computing arena is proven Assessment of best silicon choices available Thermal/Power evaluation System-level architectural design Application and algorithm performance optimization • Our work on specialized computing-related problems typically results in significant business value for our customers: Making their products better Reducing their risk Lowering their cost Speeding time to market |
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2008 Mercury Computer Systems, Inc. www.mc.com 6 6 Advanced Computing Solutions 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 |
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2008 Mercury Computer Systems, Inc. www.mc.com 7 7 Visage Imaging, Inc. Mercury’s wholly owned subsidiary focuses on the development and distribution of 3D visualization and PACS (picture archiving and communications system) solutions, and other 3D software solutions in the life sciences segment. |
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2008 Mercury Computer Systems, Inc. www.mc.com 8 8 Visualization Sciences Group VSG focuses on the development and distribution of software developer toolkits and 3D application software for very-high volume-rendering applications. Example Segments • Geosciences – Oil and Gas • Engineering and manufacturing • Material sciences • Other industrial and scientific domains |
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2008 Mercury Computer Systems, Inc. www.mc.com 9 9 Partial customer and partner list |
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2008 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 |
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2008 Mercury Computer Systems, Inc. www.mc.com 11 Strategy for Sustainable Growth • Short Term: Improve operations and cash flow Improve supply chain, manufacturing operations and shipment linearity Increase turns Simplify operations, cross-functional coordination • Medium Term: Strengthen and grow core defense business Focus and align organization and resources Accelerate new product development Reduce time to market Improve market penetration Expand opportunities with existing customer base • Long Term: Improve strategic position Increase software and services Explore adjacencies around the Core – Mercury Federal Target larger profit pools Optimize the return from the company’s portfolio of businesses |
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2008 Mercury Computer Systems, Inc. www.mc.com 12 Favorable Trends Driving Opportunities • Data explosion in all markets Driving need for new application-specific computing and solutions • Industry rapidly shifting to multi core processing Broader set of applications needing multicomputer solutions • Move towards programmable solutions Driving need for smaller and lower-power solutions that meet demanding environmental requirements • Simulation replacing experimentation Massive computing being deployed to replace trial and error • Enterprise wide 3D and 4D visualization Need for scalable thin client visualization solutions • Rapidly changing technology landscape Unique expertise required to keep an application on the leading edge |
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2008 Mercury Computer Systems, Inc. www.mc.com 13 Why Mercury Wins • Strong brand, people and relationships • We solve problems others can’t • We make our customers’ products work better • We do it faster and at lower cost |
 Financial
Overview |
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2008 Mercury Computer Systems, Inc. www.mc.com 15 • HQ in Chelmsford, MA • Sales, support and R&D centers in U.S., Europe and Japan • 737 employees worldwide • Founded in 1981 • FY2007 revenues of $224 million • NASDAQ: MRCY FY07 (Ended June) Revenue Mix* *FY07 business unit revenue re-cast is un-audited Mercury Overview |
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2008 Mercury Computer Systems, Inc. www.mc.com 16 Revenue ($M) $86 $107 $141 $181 $150 $180 $186 $250 $236 $209-214* $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 PowerPC RACE++ MP-510 Cell BE Processor DSP/GPU / FPGA Processors “Northstar” Ensemble PowerStream 7000 TGS – 3D Momentum - SBC SoHard – PACS ARC - RF RapidIO ~ 10% CAGR FY98 – FY08E Nav3D - Avionics Biotech VXS/VPX Microwave
- Tuner PA Semi * Per Company guidance range, January 23, 2008 earnings conference call
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2008 Mercury Computer Systems, Inc. www.mc.com 17 $23 $23 $30 $(16) $(2) $14 - $17 $(38) $(21) - $(18) $15 $57 $41 $42 (60) (40) (20) - 20 40 60 80 2003 2004 2005 2006 2007 2008E* EBITDAS Net Income (GAAP) EBITDAS Follows Revenue * Per Company guidance range, January 23, 2008 earnings conference call EBITDAS excludes the following charges from Net Income: Interest Expense, Taxes, Depreciation and Amortization, and Stock- Based Compensation June Fiscal Year End $(M) |
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2008 Mercury Computer Systems, Inc. www.mc.com 18 Strong Balance Sheet Historically strong balance sheet Net cash positive: $31M Projected FY08 capex of $6 million Positive free cash flow in FY08 * 2% convertible senior notes offering due 2024 Quarter ended December 31, 2007 Cash and Equivalents $156 Total Current Assets $224 Total Assets $359 Total Debt $125 Total Liabilities $189 Stockholders’ Equity $170 * |
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2008 Mercury Computer Systems, Inc. www.mc.com 19 Focus on Working Capital • Supply chain transformation Operational efficiencies Manufacturing lead times Cost of quality Competitive advantage for Mercury and customers • Customer satisfaction End-of-quarter shipment skew DSO target 50 days Inventory Turns 4.9 6.9 5.4 4.6 4.1 3.8 7.5 2003 2004 2005 2006 2007 2008E Model Days Sales Outstanding 43 51 53 59 61 63 50 2003 2004 2005 2006 2007 2008E Model |
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2008 Mercury Computer Systems, Inc. www.mc.com 20 Non-GAAP FY05 FY06 FY07 Guidance FY08* Timeless Business Model Revenue 100% 100% 100% 100% 100% Gross Margin 66% 62% 56% 60% 60+% SG&A 29% 34% 36% 37% - 36% Mid 20% R&D 20% 25% 26% 25% - 24% High Teens Income from Operations 17% 3% (6%) (2)% - 0% 16-18% Commitment to Timeless Business Model * Per Company guidance range, January 23, 2008 earnings conference call Approaching model! Costs Reduced |
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2008 Mercury Computer Systems, Inc. www.mc.com 21 1H Fiscal Year 2008 Summary • First half revenue and EPS exceeded guidance • Strong book-to-bill both quarters, 1.1 ending Q208 • Operating cash flow generation of $1.9 million for 1H08 • DSO: 74 days; Inventory Turns: 3.5 • Capital expenditures of $1.7 million for 1H08 Q1 Q2 Reported Guidance Reported Guidance Revenue ($M) 49.2 $ 48.0 $ 52.6 $ 51.0 $ EPS 0.09 $ (0.08) $ 0.04 $ (0.05) $ |
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2008 Mercury Computer Systems, Inc. www.mc.com 22 Q3 Fiscal Year 2008 Guidance • Impact of equity-based compensation costs related to FAS 123(R) of approximately $3.1M excluded from non-GAAP • Acquisition-related amortization of approximately $1.8M excluded from non-GAAP Notes: 1) Figures in millions, except percent and per share data 2) Company guidance, January 23, 2008 earnings conference call Quarter Ending March 31, 2008 Revenues ($M) $53 - $55 GAAP Non-GAAP Gross Margin 58% 58% EPS $(0.28) - $(0.22) $(0.04) - $0.00 |
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2008 Mercury Computer Systems, Inc. www.mc.com 23 Fiscal Year 2008 Guidance Fiscal Year Ending June 30, 2008 Revenues ($M) $209 - $214 GAAP Non-GAAP Gross Margin 60% 60% EPS $(0.96) - $(0.83) $0.08 - $0.17 Notes: 1) Figures in millions, except percent and per share data 2) Company guidance, January 23, 2008 earnings conference call • Impact of equity-based compensation costs related to FAS 123(R) of approximately $12.3M excluded from non-GAAP • Acquisition-related amortization of approximately $7.2M excluded from non-GAAP • Restructuring related costs of approximately $0.2M excluded from non-GAAP |
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2008 Mercury Computer Systems, Inc. www.mc.com 24 Investment Highlights • Mercury uniquely positioned to implement multi core, multicomputer processing systems • Strategic acquisitions starting to produce • Recent cost reduction initiatives and a better alignment of internal resources will drive improved margins and new business opportunities in the Core (Advanced Computing Solutions) • Developing applications for PACS / Radiology market using advanced 3D imaging technology |
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2008 Mercury Computer Systems, Inc. www.mc.com 25 www.mc.com NASDAQ: MRCY |
 APPENDIX
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2008 Mercury Computer Systems, Inc. www.mc.com 27 GAAP to Non-GAAP Reconciliation Q308 and FY08 Guidance Reconciliation* Note: figures are rounded * Per Company guidance range, January 23, 2008 earnings conference call RECONCILIATION OF FORWARD-LOOKING GUIDANCE RANGE Year ending June 30, 2008 RANGE (Loss) Income Per Share - Diluted (Loss) Income Per Share - Diluted GAAP expectation (0.96) $
(0.83) $
Adjustment to exclude stock-based compensation 0.57 0.57 Adjustment to exclude amortization of acquired intangible assets 0.33 0.33 Adjustment to exclude restructuring 0.01 0.01 Adjustment for tax impact 0.13 0.09 Non-GAAP expectation 0.08 $
0.17 $
RECONCILIATION OF FORWARD-LOOKING GUIDANCE Quarter ending March 31, 2008 Loss Per Share - Diluted (Loss) Income Per Share - Diluted GAAP expectation (0.28) $
(0.22) $
Adjustment to exclude stock-based compensation 0.14 0.14 Adjustment to exclude amortization of acquired intangible assets 0.08 0.08 Adjustment for tax impact 0.02 - Non-GAAP expectation (0.04) $
0.00 $
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2008 Mercury Computer Systems, Inc. www.mc.com 28 EBITDAS Reconciliation Note: figures are rounded * Per Company guidance range, January 23, 2008 earnings conference call Range $M
Fiscal Year 2003 2004 2005 2006 2007 2008E* 2008E* EBITDAS 42.0 $ 40.9 $ 57.0 $ 14.7 $ (2.5) $ 13.9 $ 16.9 $ Stock Compensation - - - 10.1 10.6 12.3 12.3 Interest Expense 0.9 1.4 4.2 4.1 4.2 3.4 3.4 Taxes 10.2 9.3 12.9 (0.9) 2.6 3.5 3.5 Depreciation & Amortization 8.2 7.3 9.7 17.6 18.0 15.5 15.5 Net Income 22.7 $ 22.9 $ 30.2 $ (16.2) $ (37.8) $ (20.8) $ (17.8) $ |