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): June 9, 2009
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.) |
201 Riverneck Road, Chelmsford, Massachusetts 01824
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (978) 256-1300
Not Applicable
(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 June 9, 2009 at Noble Financial’s Fifth Annual Equity 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 June 9, 2009 (filed herewith). |
2
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.
| Dated: June 9, 2009 | MERCURY COMPUTER SYSTEMS, INC. | |||
| By: | /s/ Alex A. Van Adzin | |||
| Alex A. Van Adzin | ||||
| Vice President, General Counsel, and Corporation Secretary | ||||
3
Exhibit Index
| Exhibit No. |
Description | |
| 99.1 | Presentation materials dated June 9, 2009 (filed herewith). |
4
 www.mc.com Noble Financial Equity Conference Mark Aslett – President & CEO Bob Hult – SVP, CFO June 9, 2009 © 2009 Mercury Computer Systems, Inc. www.mc.com Exhibit 99.1 |
 © 2009 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 2009 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, 2008. 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 Third Quarter of Fiscal Year 2009 earnings release, which can be found on our website at
www.mc.com/mediacenter/pressreleaseslist.aspx. 1 |
 © 2009 Mercury Computer Systems, Inc. www.mc.com Become the government’s trusted partner for next-generation ISR signal processing and computing solutions Introduction • New strategy and management team well established • Improved FY08 financials – restored profitability Q3FY09 • Strong core defense business – stabilizing commercial • Defense provides long-term profitable growth potential • Evolve beyond COTS boards to complementary Services and Systems Integration – Converged Sensor Network™ (CSN™) Architecture • Mercury Federal Systems a means to evolve Mercury's business model and expand our total addressable market 2 |
 © 2009 Mercury Computer Systems, Inc. www.mc.com Significant company dynamics (#’s
GAAP FY08) • Revenue and profitability strength in ACS business • Non-core businesses eroding operating profits 3 Notes: 1) FY08 Operating Profit Total excludes stock-based compensation expense Includes $7.3M amortization expense, $5.2M restructuring, $18M goodwill impairment, $3.2M gain for sale of long-lived asset, and $0.8M inventory write-down |
 © 2009 Mercury Computer Systems, Inc. www.mc.com Major ACS business dynamics • Focus on strengthening and growing the defense business 4 |
 © 2009 Mercury Computer Systems, Inc. www.mc.com 5 key business growth drivers 5 -Product Portfolio Refresh -Application Expansion -Platform Penetration -Customer Expansion -Expand Total Addressable Market to $3.5B -Increased System Content -Platform Penetration -Application Expansion -Expand Total Addressable Market to $30B Defense Electronics Market -Focus on Persistent ISR -Growth in Federal Services -Filed $100M Universal Shelf -Complementary ISR Businesses -Semiconductor Market Rebound |
 © 2009 Mercury Computer Systems, Inc. www.mc.com Strength in ACS defense markets • 17% revenue growth and 33% bookings growth in FY08 • Strong revenue growth in Radar, C4I and EW • Focused on the C4ISR market going forward 6 “C4ISR” |
 © 2009 Mercury Computer Systems, Inc. www.mc.com Growing and evolving our COTS defense core • Highly penetrated across many programs and platforms – presents good upgrade opportunities and lower risk • Design win-led – refresh product portfolio • Tactically penetrate more programs on new and existing platforms on land, air, and sea • Expand presence in additional defense application segments, such as Electronic Warfare (EW) and EO/IR (Electro Optical/Infra-Red) • Growth in complementary Services and Systems Integration • Revolutionize embedded sensor processing with the Converged
Sensor Network™ Architecture 7 |
 © 2009 Mercury Computer Systems, Inc. www.mc.com 8 Partial list of well-known programs relying on Mercury technology 8 Global Hawk Predator Rivet Joint JSTARS F-35 JSF BAMS MESA F-16 MP-RTIP Guardrail JCREW PAR-2000 Commander LRR HML SIGINT Ground System Aegis SQQ-89 Sampson Empar International Combat System Naval SIGINT Platform Design wins driving growth in Defense |
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2009 Mercury Computer Systems, Inc. www.mc.com ACS 5-year design win value increased 63% YTD 9 Defense Highlights • Aegis – Naval BMD, C4I • Missile Defense – Ground Radar • Argon – Naval SIGINT • Predator – Airborne Radar • JCREW – Ground SIGINT • Rivet Joint – Airborne SIGINT • WAAS – Airborne ISR • NASP – Airborne Sonar • Guardrail – Airborne SIGINT Commercial Highlights • KLA Tencor – Semiconductor • Hughes – Satellite Comms • Rapiscan – Baggage Scanning • L3 – Baggage Scanning • ASML – Semiconductor FY08: Defense $60M, Commercial $37M FY09: Defense $107M, Commercial $51M 78% Increase 38% Increase |
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2009 Mercury Computer Systems, Inc. www.mc.com The Federal market: continuously evolving 10 DoD 1993 2008 2013e Budget ($B) 258 490 511 Supplemental ($B) None +190 GWOT None planned R&D ($B) 44 78 63 Procurement ($B) 56 101 113 C4ISR Budget ($B) 13 18 24 UAS Platforms (#) 25 2,100 3,300 Ships/Subs (#) 600 340 313 Fed Svcs ($B) 95 250 310 Embedded S/W ($B) 0.4 3 4.2 Growth trend will be in ISR systems, systems integration and related engineering services Source: DoD Budget Request FY93 and FY2008 |
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2009 Mercury Computer Systems, Inc. www.mc.com "Today's" ISR architecture is fundamentally flawed • Retrofit and upgrades remain strong for legacy programs • Increased need for EW – Intelligence, Surveillance, Reconnaissance assets • Networked nodal platforms, virtualized sensors • Next-gen onboard processing, exploitation and dissemination architecture critical 11 Must develop new architectures that heal, instead of add to, the old ones! |
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2009 Mercury Computer Systems, Inc. www.mc.com 12 Airborne ISR R&D costs Signal Processing / Systems Integration Platform Sensor Datalink Ground Station 10% 40% 30% 5% 15% 45% 10% 15% 10% 10% 5% 5% Datalink Platform Sensor Ground Station Application Acceleration/ Systems Integration Warfighter Terminals Warfighter Terminals Broadcast Provision Broadcast Provision Budget priorities being realigned to maintain technology edge Source: DoD Budget Request FY93 and FY2008 1993 2008 Mercury’s Opportunity |
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2009 Mercury Computer Systems, Inc. www.mc.com Mercury's new Converged Sensor Network TM (CSN TM ) Architecture for ISR persistent surveillance A revolutionary open architecture that combines 13 Information Dissemination Global Information Grid SAN Signal Processing Image Processing Signal Processing Radar Video SIGINT Multi-Sensor Signal Processing Information Management Technologies Transformational Access to Information in the Tactical Edge Data Exploitation Become the government’s trusted partner for next-generation ISR platform signal processing and computing |
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2009 Mercury Computer Systems, Inc. www.mc.com Defense procurement reform leads to transition Today’s Model • Government frustrated with current prime model • Platform-centric approach • Proprietary closed systems architectures – little incentives to reuse • Significant cost overruns – pay multiple times for similar capabilities • Significant schedule slips – slow time to deployment Emerging Model • Open platform-independent architecture • Best of breed model – proven on sensor side eg FLIR • Likely to occur for signal processing and computing • Lower cost – pay once for common architecture across multiple platforms eg MPRTIP • Fast time to deployment and lower risk 14 Budget pressure and significant schedule slippage is leading to Defense procurement reforms that could benefit Mercury |
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2009 Mercury Computer Systems, Inc. www.mc.com ACS Defense and MFS – a hybrid business model ACS COTS Defense • Total addressable market COTS defense electronics ($3B annually) • Be told what board to develop by a prime • Board-level design wins • Develop everything on our own nickel • Long payback period – high risk with Mercury Federal • Total addressable military electronics market ($30B annually) • Consult on overall signal processing architecture with the government • Platform design wins • Paid to develop elements that do not exist • Lower risk, faster returns 15 |
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2009 Mercury Computer Systems, Inc. www.mc.com • Rationalize portfolio of non-core businesses by end FY09 • Strengthen ACS defense business – stabilize commercial • Grow ACS defense business by targeting upgrades, new platforms and application segments • Market focus on Persistent ISR • Evolve beyond COTS boards to complementary Services and Systems Integration – Converged Sensor Network™ Architecture • Mercury Federal a means to evolve Mercury's business model and expand our total addressable market Become the government’s trusted partner for next-generation ISR signal processing and computing solutions Summary 16 |
 © 2009 Mercury Computer Systems, Inc. www.mc.com Financial Overview |
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2009 Mercury Computer Systems, Inc. www.mc.com 18 FY07 vs FY08: Improved Performance 18 Notes: 1)All historical income statement figures are as reported in the Company’s earnings press
release at the end of the applicable fiscal year and have not been restated for
operations that have been discontinued subsequent to that time. |
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2009 Mercury Computer Systems, Inc. www.mc.com 19 Strategic Direction – Sell, fix or grow VSG - Disco Ops AUSG - Sold VI ES/PS - Sold Biotech – Sold VI - Sold Government Defense Commercial Mercury Federal Sell or Shut Down Fix Grow 19 |
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2009 Mercury Computer Systems, Inc. www.mc.com Q3 FY09 Restored Profitability 20 Notes: 1)FY 09 income statement figures are adjusted for the discontinued operation of Embedded Systems & Professional Services, SolMap, VI and VSG. 2)FY 08 income statement figures are as reported in the Company’s earnings press release at the
end of the applicable fiscal year and have not been restated for discontinued operations
of SolMap, VI and VSG. |
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2009 Mercury Computer Systems, Inc. www.mc.com 21 Closing gap to current target business model Target Business Model Notes: 1)FY09 income statement figures are adjusted for the discontinued operation of Embedded Systems
& Professional Services, SolMap, VI and VSG. 2)FY08 income statement figures are as reported in the Company’s earnings press release
|
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2009 Mercury Computer Systems, Inc. www.mc.com 22 Revenue growth: Driven by Defense 22 Notes: 1)All historical figures adjusted for the discontinued operation of Embedded Systems &
Professional Services, SolMap, VI and VSG 2)2009 comprised of Q3 YTD Actuals plus mid-point of Q4 guidance June Fiscal Year End ~ 8% CAGR FY98 – FY08 Revenue ($M) Commercial Defense |
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2009 Mercury Computer Systems, Inc. www.mc.com 23 Focus on Working Capital • Supply chain transformation Operational efficiencies Manufacturing lead times Cost of quality Competitive advantage for Mercury and customers Inventory reduced approx. $10M since Q3 FY08 • Customer satisfaction DSO below model End-of-quarter shipment skew 23 6.9 5.4 4.6 4.1 3.3 3.9 3.8 4.5 7.5 2004 2005 2006 2007 2008 Q109 Q209 Q309 Model Inventory Turns 51 53 59 61 63 49 46 60 50 2004 2005 2006 2007 2008 Q109 Q209 Q309 Model Days Sales Outstanding |
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2009 Mercury Computer Systems, Inc. www.mc.com 24 FY09 Mercury Cash Balance Analysis 24 Notes: (1) Repurchased $120M and $5M (face value) of convertible debenture on Feb. 4,
2009, and May 1, 2009, respectively, equal to the principle amount of the Notes, plus
accrued interest (2) Includes $33.4M UBS Loan and $45.0M Auction Rate Securities 198 (120) 1 3 2 2 86 (5) 81 0 50 100 150 200 250 Q2FY09 Convert Debt Repayment VI Sale Proceeds ARS Write-up UBS Loan Q3 FCF/Other Q3FY09 Convert Debt Repayment Cash & Sec Bal Q3FY09 Cash Changes Summary (1) (1) (2) |
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2009 Mercury Computer Systems, Inc. www.mc.com 25 Guidance Summary (Non-GAAP) Q108 Q208 Q308 Q408 Q109 Q209 Q309 Reported Guidance Reported Guidance Reported Guidance Reported Guidance Reported Guidance Reported Guidance Reported Guidance Revenue ($M) 49.2 48.0 52.6 51.0 56.5 53.0- 55.0 55.2 53.0- 56.0 49.1 47.0- 49.0 50.7 47.0- 49.0 50.6 48.0- 50.0 EPS ($) 0.09 (0.08) 0.04 (0.05) 0.04 (0.04)- 0.00 0.01 (0.05)- 0.01 0.07 (0.07)- (0.03) 0.03 (0.05)- 0.00 0.20 0.05- 0.09 25 Last 7 quarter’s revenues and EPS exceeded or met the top end of guidance |
  © 2009 Mercury Computer Systems, Inc. www.mc.com 26 Q4 Fiscal Year 2009 Guidance • Impact of equity-based compensation costs related to FAS 123R of approximately $0.2M excluded from non-GAAP • Acquisition-related amortization of approximately $0.5M excluded from non-GAAP • Non-GAAP tax rate 34% Notes: 1) Figures in millions, except percent and per share data GAAP Non-GAAP Gross Margin Approx. 52% - 53% Approx. 52% - 53% EPS $0.04 - $0.08 $0.05 - $0.08 Quarter Ending June 30, 2009 $46 - $48 Revenues ($M) |
 © 2009 Mercury Computer Systems, Inc. www.mc.com Appendix |
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2009 Mercury Computer Systems, Inc. www.mc.com 28 GAAP to Non-GAAP Reconciliation Q409 Guidance Reconciliation* * Per Company guidance range, April 28, 2009 earnings conference call RANGE Earnings From Continuing Operations Per Share - Diluted Earnings From Continuing Operations Per Share - Diluted GAAP expectation 0.04 $
0.08 $
Adjustment to exclude stock-based compensation 0.01 0.01 Adjustment to exclude amortization of acquired intangible assets 0.02 0.02 Adjustment for tax impact (0.02) (0.03) Non-GAAP expectation 0.05 $
0.08 $
|
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2009 Mercury Computer Systems, Inc. www.mc.com 29 GAAP to Non-GAAP Reconciliation Notes: 1) All historical income statement figures are as reported in the Company’s earnings press
release at the end of the applicable fiscal period Year Year Three Months Nine Months Ended Ended Ended Ended June 30, 2007 June 30, 2008 March 31, 2009 March 31, 2009 GAAP net income (loss) from continuing operations (37.8) $ (35.4) $ 4.7 $
4.8 $
Adjustment to exclude stock-based compensation
10.6 10.4 1.2 4.7 Adjustment to exclude inventory
write-down - 0.8 - - Adjustment to exclude in-process research and
development 3.1 - - - Adjustment to exclude amortization of acquired
intangible assets 7.2 7.3 0.5 2.0 Adjustment to exclude impairment of goodwill
and long-lived assets 0.1 18.0 - - Adjustment to exclude restructuring 5.5 5.2 0.2 0.7 Adjustment to exclude gain on sale of
long-lived assets - (3.2) - - Adjustment for tax impact 5.2 0.2 (2.2) (4.1) Non-GAAP net income (loss) from continuing operations (6.1) $
3.3 $
4.4 $
8.1 $
Net income (loss) per share from continuing operations
-- Diluted GAAP (1.78) $ (1.64) $ 0.21 $
0.22 $
Non-GAAP (0.29) $ 0.15 $ 0.20 $
0.36 $
Weighted average shares -- Diluted: GAAP 21.2 21.6 22.5 22.4 Non-GAAP 21.2 22.0 22.5 22.4 |
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2009 Mercury Computer Systems, Inc. www.mc.com www.mc.com NASDAQ: MRCY |