MERCURY COMPUTER SYSTEMS REPORTS SECOND QUARTER FISCAL 2012 RESULTS
CHELMSFORD, Mass.–(BUSINESS WIRE)– Mercury Computer Systems, Inc. (NASDAQ: MRCY, www.mc.com), a devoted provider of commercially grown ISR and EW subsystems, reported handling results for the second quarter of mercantile 2012 finished Dec 31, 2011. All formula are presented and compared on a stability operations basis.
Second Quarter Fiscal 2012 Results
Second entertain mercantile 2012 revenues were $68.0 million, an enlarge of $12.4 million from the second entertain of the prior to to to mercantile year. Revenues from invulnerability blurb operation augmenting by $20.0 million, whilst revenues from blurb blurb operation decreased by $7.6 million, from the prior to to to year’s second quarter. No revenues were famous for KOR Electronics in the second entertain mercantile 2012 results. The partnership of KOR Electronics sealed on Dec 30, 2011.
GAAP net income from stability operations for the second entertain of mercantile 2012 was $9.0 million, or $0.30 per widely separated share, compared to $5.2 million, or $0.22 per widely separated share, for the prior to to to year’s second quarter. GAAP net income from stability operations per widely separated share includes $0.02 compared with the amortization of acquired unsubstantial resources for the second entertain of mercantile 2012 and $0.01 for the prior to to to year’s second quarter.
Second entertain mercantile 2012 GAAP net income from stability operations includes we estimate $4.8 million in taxation expense, $1.9 million in debasement expense, $1.8 million in stock-based remuneration costs, $0.7 million in amortization of acquired unsubstantial assets, and $0.6 million of partnership costs and other compared expenses. Second entertain mercantile 2012 practiced EBITDA (net benefit from stability operations prior to to to seductiveness income and expense, income taxes, depreciation, amortization of acquired unsubstantial assets, restructuring, spoil of permanent assets, partnership costs and other compared expenses, satisfactory worth adjustments from squeeze accounting, and stock-based remuneration costs) was $18.8 million, compared to $10.7 million for the prior to to to year’s second quarter.
Cash flows from handling activities were a net influx of $11.0 million in the second entertain of mercantile 2012, compared to a net influx of $8.1 million in the second entertain of mercantile 2011. Free money flow, tangible as money upsurge from handling activities reduction collateral expenditures, in the second entertain of mercantile 2012 was a net influx of $9.1 million, compared to a net influx of $6.1 million in the second entertain of mercantile 2011. Cash and money equivalents as of Dec 31, 2011 were $105.0 million, a diminution of $60.9 million from Sep 30, 2011, mostly due to the use of money for the partnership of KOR Electronics during the quarter, to some extent equivalent by money generated by handling activities.
Management Comments
“We a single after an one more to deliver plain formula during an one more severe entertain for the invulnerability industry,” pronounced Mark Aslett, President and CEO, Mercury Computer Systems. “Mercury’s sum income came in at the median of our superintendence range, augmenting 22% from the second entertain final year. Gross margin, GAAP benefit per share and practiced EBITDA exceeded the tall end of guidance, and handling money upsurge was significantly stronger than in the second entertain final year.”
“These formula denote the a single after an one more success of our plan to concentration Mercury on well-funded areas in the invulnerability marketplace – essentially ISR, electronic crusade and barb invulnerability – whilst positioning the association as the premier blurb subsystem outsourcing partner to the primes as they find more open and affordable ISR and EW solutions,” Aslett said. “Mercury’s invulnerability revenues for the second quarter, together with ACS and Mercury Federal Systems, augmenting 46% year-over-year. Defense bookings, nonetheless weaker than approaching due to the government’s stability resolution, were up 27% from the same duration in mercantile 2011. Through the initial half of mercantile 2012, Mercury’s sum invulnerability bookings and income grew 37% and 34%, respectively, from the same duration final year.”
“Looking brazen to the second half of mercantile 2012, we pattern the supervision buying sourroundings to sojourn challenging,” pronounced Aslett. “As a result, whilst we right away pattern our invulnerability revenues to grow we estimate 20% organically for the year, this is slower expansion than we had formerly planned. In addition, our blurb blurb operation is experiencing neatly reduce revenues year over year and we pattern that blurb income will be closer to $15 million for mercantile year 2012 as a whole. We pattern the incremental income approaching from our not long ago acquired KOR Electronics and Paragon Dynamics blurb operation to mostly equivalent both of these income headwinds ensuing in sum association revenues flourishing we estimate 10% compared with mercantile year 2011. However, the approaching stroke on GAAP benefit per share of these factors is not approaching to entirely equivalent a single another, and thus we are obscure our prior to to GAAP EPS superintendence for the full mercantile year 2012.”
“In a meridian of domestic and bill doubt and with the Defense Department’s re-alignment around new vital missions and purposes for the U.S. Armed Forces, we hold the invulnerability attention is entering an eighteen month passing from one to another duration that will augur a new epoch for defense,” Aslett said. “Overall we hold that Mercury is well-prepared to navigate this new environment. Our vital ongoing programs, such as Aegis, Global Hawk, Gorgon Stare and Patriot, as well as our new programs such as SEWIP and JCREW, appear to be well-funded and in the right areas. Our opening in winning new designs and expanding our new blurb operation tube stays strong. In addition, our capabilities are aligned with the U.S. military’s new vital citation – quite the concentration on raised energy and handling effectively notwithstanding the elaborating anti access and area rejection capabilities of our adversaries.”
“In this invulnerability attention passing from one to another duration and beyond, our capability to go on to make strategic, intelligent acquisitions will sojourn an critical means in our a single after an one more success,” pronounced Aslett. “We are formulation for M&A to yield Mercury with new proven technology and capabilities, lengthened module access and a equates to to assistance well-spoken intensity income sensitivity compared with module timing, as well as accelerating our expansion rate overall. Our shift piece stays strong, and we see glorious intensity for capturing opportunities along the sensor estimate sequence identical to the LNX and KOR acquisitions we finished during the past twelve months. As a result, together with both organic and acquisition-driven revenues at the sum association level, we are right away targeting mid-teens commission income growth, on average, over time. We hold that achieving this aim will on all sides Mercury to go on to significantly outperform the invulnerability attention expansion rate starting forward.”
Backlog
Mercury’s sum reserve at Dec 31, 2011 was $122.5 million, a $20.7 million consecutive enlarge from Sep 30, 2011, and a $25.7 million enlarge from Dec 31, 2010. Of the Dec 31, 2011 sum backlog, $108.6 million represents orders scheduled to be shipped over the successive twelve months. Total reserve at Dec 31, 2011 includes $31.9 million of reserve from KOR Electronics. The invulnerability reserve at Dec 31, 2011 was $118.7 million, a $20.9 million consecutive enlarge from Sep 30, 2011, and a $39.8 million enlarge from Dec 31, 2010. The sum book-to-bill analogous measure was 0.84-to-1 for the second entertain of mercantile 2012 compared to 0.87-to-1 for the second entertain of mercantile 2011 and 1.3-to-1 for the initial entertain of mercantile 2012.
Revenues by Operating Segment
Advanced Computing Solutions (ACS) — Revenues for the second entertain of mercantile 2012 from ACS were $66.1 million, representing an enlarge of $12.8 million from the second entertain of mercantile 2011, as a outcome of an enlarge of $20.4 million in ACS invulnerability equivalent by a diminution of $7.6 million in commercial. Approximately 94% of ACS revenues for the second entertain of mercantile 2012 compared to invulnerability business, as compared to we estimate 78% in the second entertain of mercantile 2011.
Mercury Federal Systems (MFS) — Revenues for the second entertain of mercantile 2012 from MFS were $5.2 million, representing an enlarge of $1.6 million from the second entertain of mercantile 2011.
The revenues by handling shred do not include adjustments to discharge $3.3 million of inter-company revenues enclosed in those handling segments in the second entertain of mercantile 2012.
Business Outlook
This territory presents our stream expectations and estimates, since stream visibility, on our blurb operation opinion for the arriving mercantile quarter. It is probable that tangible opening will talk about materially from the estimates given, possibly on the upside or on the downside. Investors should cruise all of the risks, together with those listed in the Safe Harbor Statement below, with respect to these estimates, and make themselves wakeful of the risk factors that may stroke our tangible performance.
For the full year mercantile 2012 we right away pattern a sum association income expansion rate of we estimate 10% year-over-year. This expansion includes reduce year-over-year blurb revenues and slower organic invulnerability income growth, equivalent by income approaching for the second half of mercantile 2012 from the not long ago sealed KOR Electronics acquisition. We pattern GAAP net income from stability operations per widely separated share for mercantile 2012 to be in the operation of $0.59 to $0.61. GAAP net income from stability operations per widely separated share includes $0.09 compared with the amortization of acquired unsubstantial assets. Adjusted EBITDA as a commission of income is approaching to be in line with our aim handling model’s tall end of we estimate 18%.
For the third entertain of mercantile 2012, revenues, which include the handling activities of KOR Electronics, are approaching to be in the operation of we estimate $65 million to $68 million. At this range, GAAP net income from stability operations per widely separated share is approaching to be in the operation of $0.09 to $0.11. GAAP net income from stability operations per widely separated share includes $0.03 compared with the amortization of acquired unsubstantial assets.
Adjusted EBITDA for the third entertain of mercantile 2012 is approaching to be in the operation of $9.1 million to $10.1 million.
Recent Highlights
December – Mercury voiced that it had finished the partnership of KOR Electronics and the unconditionally owned subsidiary, Paragon Dynamics. KOR Electronics, based in Cypress, California, designs and develops digital air wave magnitude mental recall (DRFM) units for a accumulation of complicated Electronic Warfare (EW) applications, as well as radio detector sourroundings make-believe and exam systems for invulnerability applications. Paragon Dynamics, based in Aurora, Colorado, provides worldly analytic services and customized multi-INT understand alloy and exploitation solutions for the Intelligence Community. Under the conditions of a partnership agreement, KOR Electronics became a wholly-owned auxiliary of Mercury for an all-cash squeeze cost of $70 million. Funded with money on hand, the contract sealed on Dec 30, 2011, and is approaching to be rught away accretive to earnings.
November – Mercury voiced that the Mercury Federal Systems auxiliary is part of the Sierra Nevada Corporation (SNC)-led organisation that was declared the 2011 C4ISR Journal Big twenty-five Awards Top Sensor endowment winner. The endowment was presented at the 11th Annual C4ISR Journal Conference in Washington D.C.
November – Mercury voiced the new FM021814 digital magnitude discriminator (DFD) with proviso modulation on beat (PMOP) showing at the 48th Annual AOC International Symposium and Convention Nov thirteen – sixteen in Washington, DC. This detector singly blends the capability to beget proviso and magnitude information understand streams, on condition that rarely arguable and correct information instantaneously. Mercury’s Microwave and Digital Solutions organisation is a personality in Application Ready Subsystems™ (ARS™) used to detect, mistreat and better antagonistic signals on land, at sea and in the air.
November – Mercury voiced new thing capabilities for digital storage in embedded mobile applications. Working closely with customers, Mercury’s Services and Systems Integration (SSI) organisation combined an innovative Digital Storage Unit that leverages customary solid-state storage disks (SSDs) and designs customized to encounter any application’s specific capacity, size, weight and energy (SWaP), additional and confidence requirements.
October – Mercury voiced that the Mercury Federal Systems auxiliary is part of the Sierra Nevada Corporation (SNC)-led organisation that received the United States Geospatial Intelligence (GEOINT) Foundation’s 2011 Industry Achievement Award. This prestigious annual award, presented Oct 18, recognizes superb accomplishments in GEOINT tradecraft by an individual or organisation from industry. Mercury supposing SNC with onboard real-time picture estimate and storage subsystems, which are pass components of the U.S. Air Force’s Gorgon Stare determined notice system, right away deployed in Operation Enduring Freedom.
October – Mercury Computer Systems voiced the Imaging Toolkit, which delivers new thing capabilities for electro-optical/infrared (EO/IR), hyperspectral and radio detector imaging focus expansion for the invulnerability and blurb markets. The initial to precedence the opening energy of commercially accessible ubiquitous role graphics estimate units (GPGPUs), the Imaging Toolkit helps developers speed time-to-market and reduce the altogether sum cost of focus development.
Conference Call Information
Mercury will horde a discussion call on Tuesday, Jan 24, 2012, at 5:00 p.m. EST to plead the second entertain mercantile year 2012 formula and examination the monetary and blurb operation opinion starting forward.
To attend to the discussion call, dial (888) 262-8943 in the U.S.A. and Canada, and (913) 312-1484 in all other countries. The discussion formula number is 5317497. Please call 5 to ten mins prior to to to to the scheduled begin time. This call will also be promote live over the web at www.mc.com/investor underneath “Financial Events.”
A replay of the call by write will be accessible from we estimate 9:00 p.m. EST on Tuesday, Jan 24, 2012, through 9:00 p.m. EST on Sunday, Feb 5, 2012. To access the replay, dial (888) 203-1112 in the U.S.A. and Canada, and (719) 457-0820 in all other countries. Enter access formula 5317497. A replay of the webcast of the call will be accessible for an lengthened duration of time on the Financial Events page of the Company’s website at www.mc.com/investor.
Use of Non-GAAP (Generally Accepted Accounting Principles) Financial Measures
In further to stating monetary formula in suitability with in all supposed accounting principles, or GAAP, the Company provides practiced EBITDA and free money flow, which are non-GAAP monetary measures. Adjusted EBITDA excludes certain non-cash and other specified charges. Free money upsurge is tangible as money upsurge from handling activities reduction collateral expenditures. The Company believes these non-GAAP monetary measures yield a more finish bargain of the past monetary opening and prospects for the future. However, the display of practiced EBITDA and free money upsurge is not meant to be deliberate in siege or as a surrogate for monetary information supposing in suitability with GAAP. Management believes the practiced EBITDA and free money upsurge monetary measures await in on condition that a more finish bargain of the Company’s underlying operational formula and trends, and management uses these measures along with the analogous GAAP monetary measures to manage the Company’s business, to weigh the opening compared to prior to to to durations and the marketplace, and to settle operational goals. A settlement of GAAP to non-GAAP monetary formula discussed in this press recover is contained in the trustworthy exhibits.
Mercury Computer Systems, Inc. – Where Challenges Drive Innovation®
Mercury Computer Systems (www.mc.com, NASDAQ: MRCY) is a many appropriate of multiply provider of open, commercially developed, application-ready, multi-INT subsystems for invulnerability budding contractors. With over thirty years of knowledge in embedded computing, higher domain imagination in radar, EW, EO/IR, C4I, and sonar applications, and more than 300 successful module deployments together with Aegis, Global Hawk, and Predator, Mercury’s Services and Systems Integration organisation leads the attention in partnering with blurb operation to pattern and confederate system-level solutions that minimize module risk, show off focus portability, and accelerate customers’ time to market.
Mercury is based in Chelmsford, Massachusetts, and serves blurb operation worldwide through a extended network of direct sales offices, subsidiaries, and distributors.
Forward-Looking Safe Harbor Statement
This press recover contains certain forward-looking statements, as that tenure is tangible in the Private Securities Litigation Reform Act of 1995, together with those relating to mercantile 2012 blurb operation opening and over and the Company’s skeleton for expansion and alleviation in profitability and money flow. You can brand these statements by the use of the difference “may,” “will,” “could,” “should,” “plans,” “expects,” “anticipates,” “continue,” “estimate,” “project,” “intend,” “likely,” “probable, ”and identical expressions. These forward-looking statements engage risks and uncertainties that could means tangible formula to talk about materially from those projected or anticipated. Such risks and uncertainties include, though are not singular to, ubiquitous mercantile and blurb operation conditions, together with variable debility in the Company’s markets, goods of a single after an one more geopolitical disturbance and informal conflicts, competition, changes in technology and methods of marketing, delays in completing engineering and prolongation programs, changes in patron sequence patterns, changes in product mix, a single after an one more success in technological advances and delivering technological innovations, a single after an one more appropriation of invulnerability programs, the timing of such funding, changes in the U.S. Government’s understand of sovereign buying manners and regulations, marketplace acceptance of the Company’s products, shortages in components, prolongation delays due to opening peculiarity issues with outsourced components, incapacity to entirely comprehend the approaching benefits from acquisitions and divestitures or delays in realizing such benefits, hurdles in integrating acquired businesses and achieving approaching synergies, changes to trade regulations, increases in taxation rates, changes to in all supposed accounting principles, difficulties in maintaining pass employees and customers, amazing costs underneath fixed-price use and complement formation engagements, and assorted other factors over our control. These risks and uncertainties also include such one more risk factors as are discussed in the Company’s filings with the U.S. Securities and Exchange Commission, together with the Annual Report on Form 10-K for the mercantile year finished Jun 30, 2011. The Company cautions readers not to place unjustified faith on any such forward-looking statements, which verbalise usually as of the date made. The Company undertakes no requisite to refurbish any forward-looking matter to simulate events or resources after the date on which such matter is made.
Challenges Drive Innovation, Echotek and Ensemble are purebred trademarks and Application Ready Subsystem and ARS are trademarks of Mercury Computer Systems, Inc. Other product and association names referred to may be trademarks and/or purebred trademarks of their respective holders.
MERCURY COMPUTER SYSTEMS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31,
June 30,
2011 (A)
2011
Assets
Current assets:
Cash and money equivalents
$
104,955
$
162,875
Accounts receivable, net
46,807
44,786
Unbilled receivables and costs in additional of billings
8,495
1,059
Inventory
22,760
18,540
Deferred income taxes
8,745
7,678
Prepaid income taxes
1,955
1,075
Prepaid losses and other stream assets
5,262
4,171
Total stream assets
198,979
240,184
Restricted cash
3,281
3,000
Property and equipment, net
14,452
14,520
Goodwill
132,471
79,558
Acquired unsubstantial assets, net
27,545
16,702
Other non-current assets
928
1,598
Total assets
$
377,656
$
355,562
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable
$
7,168
$
7,972
Accrued expenses
8,883
5,607
Accrued compensation
11,996
16,288
Income taxes payable
1,574
201
Deferred revenues and patron advances
9,595
6,138
Total stream liabilities
39,216
36,206
Deferred benefit on sale-leaseback
4,978
5,556
Deferred income taxes
7,978
3,877
Income taxes payable
1,777
1,777
Other non-current liabilities
5,496
6,710
Total liabilities
59,445
54,126
Shareholders’ equity:
Common stock
295
291
Additional paid-in capital
218,812
213,777
Retained earnings
97,811
86,113
Accumulated other extensive income
1,293
1,255
Total shareholders’ equity
318,211
301,436
Total liabilities and shareholders’ equity
$
377,656
$
355,562
(A) Includes the combined shift piece of KOR Electronics and subsidiaries and rough grant of squeeze price
MERCURY COMPUTER SYSTEMS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, solely per share data)
Three Months Ended
Six Months Ended
December 31,
December 31,
2011
2010
2011
2010
Net revenues
$
67,959
$
55,513
$
117,081
$
107,621
Cost of revenues (1)
27,046
23,873
46,252
45,321
Gross margin
40,913
31,640
70,829
62,300
Operating expenses:
Selling, ubiquitous and senior manager (1)
14,419
14,019
28,064
28,216
Research and expansion (1)
11,724
10,479
23,589
21,378
Amortization of acquired unsubstantial assets
692
317
1,508
636
Acquisition costs and other compared expenses
593
307
618
307
Total handling expenses
27,428
25,122
53,779
50,537
Income from operations
13,485
6,518
17,050
11,763
Interest income
3
6
9
13
Interest expense
(9
)
(49
)
(18
)
(58
)
Other income, net
394
404
799
920
Income from stability operations prior to to to income taxes
13,873
6,879
17,840
12,638
Income taxes
4,828
1,696
6,142
3,773
Income from stability operations
9,045
5,183
11,698
8,865
Income (loss) from dropped operations, net of tax
-
-
-
(52
)
Net income
$
9,045
$
5,183
$
11,698
$
8,813
Basic net benefit (loss) per share:
Continuing operations
$
0.31
$
0.22
$
0.40
$
0.39
Income (loss) from dropped operations
-
-
-
(0.01
)
Net income
$
0.31
$
0.22
$
0.40
$
0.38
Diluted net benefit (loss) per share:
Continuing operations
$
0.30
$
0.22
$
0.39
$
0.37
Income (loss) from dropped operations
-
-
-
-
Net income
$
0.30
$
0.22
$
0.39
$
0.37
Weighted-average shares outstanding:
Basic
29,457
23,099
29,367
23,021
Diluted
29,969
23,998
30,001
23,704
(1) Includes stock-based remuneration expense, allocated as follows:
Cost of revenues
$
70
$
64
$
158
$
107
Selling, ubiquitous and administrative
$
1,573
$
1,414
$
3,248
$
2,554
Research and development
$
169
$
155
$
446
$
262
MERCURY COMPUTER SYSTEMS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
Six Months Ended
December 31,
December 31,
2011
2010
2011
2010
Cash flows from handling activities:
Net income
$
9,045
$
5,183
$
11,698
$
8,813
Depreciation and amortization
2,597
1,869
5,268
3,616
Other non-cash items, net
348
1,813
2,366
2,514
Changes in handling resources and liabilities
(959
)
(762
)
(4,085
)
2,510
Net money supposing by handling activities
11,031
8,103
15,247
17,453
Cash flows from investing activities:
Acquisition of business, net of money acquired
(70,373
)
-
(70,373
)
-
Sales of commercial securities
-
-
-
18,025
Purchases of skill and equipment
(1,925
)
(2,003
)
(3,571
)
(3,598
)
Payments for acquired unsubstantial assets
-
(1,617
)
(20
)
(2,175
)
Net money (used in) supposing by investing activities
(72,298
)
(3,620
)
(73,964
)
12,252
Cash flows from financing activities:
Proceeds from worker batch squeeze plans
695
1,291
785
1,585
Change in limited cash
(281
)
-
(281
)
-
Payments of paid in instalments charity costs
-
-
(30
)
-
Payment of collateral lease obligations
(43
)
(58
)
(102
)
(136
)
Excess taxation benefits from stock-based compensation
7
463
412
1,017
Net money supposing by financing activities
378
1,696
784
2,466
Effect of sell rate changes on money and money equivalents
(18
)
19
13
25
Net (decrease) enlarge in money and money equivalents
(60,907
)
6,198
(57,920
)
32,196
Cash and money equivalents at commencement of period
165,862
82,239
162,875
56,241
Cash and money equivalents at end of period
$
104,955
$
88,437
$
104,955
$
88,437
UNAUDITED SUPPLEMENTAL INFORMATIONRECONCILIATION OF GAAP TO NON-GAAP MEASURES(In thousands)
Adjusted EBITDA, a non-GAAP measure for stating monetary performance, excludes the stroke of certain equipment and, therefore, has not been distributed in suitability with GAAP. Management believes that ostracism of these equipment await in on condition that a more finish bargain of the Company’s underlying operational formula and trends, and management uses these measures along with the analogous GAAP monetary measures to manage the Company’s business, to weigh the opening compared to prior to to to durations and the marketplace, and to settle operational goals. The adjustments to work out this non-GAAP monetary measure, and the basement for such adjustments, are summarized below:
Interest income and expense. The Company receives seductiveness income on investments and incurs seductiveness responsibility on loans, collateral leases and other financing arrangements. These amounts may shift from duration to duration due to changes in money and debt balances and seductiveness rates driven by ubiquitous marketplace conditions or other resources outward of the normal march of Mercury’s operations.
Income taxes. The Company’s GAAP taxation responsibility can vacillate materially from duration to duration due to taxation adjustments that are not directly compared to underlying handling opening or to the stream duration of operations.
Depreciation. The Company incurs debasement responsibility compared to collateral resources purchased to await the ongoing operations of the business. These resources are accessible at cost or satisfactory worth and are unheeded regulating the straight-line process over the utilitarian hold up of the asset. Purchases of such resources may shift significantly from duration to duration and but any association to underlying handling performance.
Amortization of acquired unsubstantial assets. The Company incurs amortization of intangibles compared to assorted acquisitions it has done and permit agreements. These unsubstantial resources are valued at the time of acquisition, are amortized over a duration of multiform years after partnership and in all cannot be altered or shabby by management after acquisition.
Restructuring. The Company incurs restructuring charges in tie with management’s decisions to commence certain actions to realign handling losses through workforce reductions and the closure of certain Company facilities, businesses and product lines. Management believes this object is outward the normal operations of the Company’s blurb operation and is not demonstrative of ongoing handling results.
Impairment of permanent assets. The Company incurs spoil charges of permanent resources based on events that may or may not be inside of the control of management. Management believes these equipment are outward the normal operations of the Company’s blurb operation and are not demonstrative of ongoing handling results.
Acquisition costs and other compared expenses. The Company incurs costs compared with third-party veteran services compared to partnership and intensity partnership opportunities, such as authorised and accounting fees. Although we may catch such costs and other compared charges and adjustments, it is not demonstrative that any contract will be consummated. Management believes the ostracism of these equipment eliminates fluctuations in our selling, general, and senior manager losses compared to partnership activities which are separate to ongoing operations.
Fair worth adjustments from squeeze accounting. As a outcome of requesting squeeze accounting manners to acquired resources and liabilities, certain satisfactory worth adjustments are accessible in the opening shift piece of acquired companies. These adjustments are afterwards reflected in the Company’s income statements in durations successive to the acquisition. In addition, the stroke of any changes to creatively accessible fortuitous care amounts are reflected in the income statements in the duration of the change. Management believes these equipment are outward the normal operations of the Company and are not demonstrative of ongoing handling results.
Stock-based remuneration expense. The Company incurs responsibility compared to stock-based remuneration enclosed in the GAAP display of cost of revenues, selling, ubiquitous and senior manager responsibility and investigate and expansion expense. Although stock-based remuneration is an responsibility of the Company and noticed as a form of compensation, these losses shift in volume from duration to period, and are influenced by marketplace forces that are formidable to envision and are not inside of the control of management, such as the marketplace cost and sensitivity of the Company’s shares, risk-free seductiveness rates and the approaching tenure and damage rates of the awards. Management believes that ostracism of these losses allows comparisons of handling formula that are unchanging with durations prior to to to to the Company’s embracing a cause of FASB ASC 718, and allows comparisons of the Company’s handling formula to those of other companies, both public, in siege or foreign, that divulge non-GAAP monetary measures that bar stock-based compensation.
Mercury uses practiced EBITDA as an critical indicator of the handling opening of the business. Management excludes the above-described equipment from the inner forecasts and models when substantiating inner handling budgets, supplementing the monetary formula and forecasts reported to the Company’s house of directors, last the apportionment of reward remuneration for senior manager officers and other pass employees based on handling performance, evaluating short-term and long-term handling trends in the Company’s operations, and allocating resources to assorted initiatives and operational requirements. The Company believes that practiced EBITDA permits a analogous comment of the handling performance, relations to the opening based on the GAAP results, whilst isolating the goods of charges that may shift from duration to duration but any association to underlying handling performance. The Company believes that these non-GAAP monetary adjustments are utilitarian to investors since they concede investors to weigh the effectiveness of the methodology and information used by management in the monetary and operational decision-making. The Company believes that trends in the practiced EBITDA are profitable indicators of the handling performance.
Adjusted EBITDA is a non-GAAP monetary measure and should not be deliberate in siege or as a surrogate for monetary information supposing in suitability with GAAP. This non-GAAP monetary measure may not be computed in the same demeanour as likewise patrician measures used by other companies. The Company expects to go on to catch losses identical to the practiced EBITDA monetary adjustments described above, and investors should not infer from the Company’s display of this non-GAAP monetary measure that these costs are unusual, sparse or non-recurring.
The following list reconciles the many directly allied GAAP monetary measure to the non-GAAP monetary measure.
Three Months Ended
Six Months Ended
December 31,
December 31,
2011
2010
2011
2010
Income from stability operations
$
9,045
$
5,183
$
11,698
$
8,865
Interest expense, net
6
43
9
45
Income taxes
4,828
1,696
6,142
3,773
Depreciation
1,905
1,552
3,760
2,980
Amortization of acquired unsubstantial assets
692
317
1,508
636
Acquisition costs and other compared expenses
593
307
618
307
Fair worth adjustments from squeeze accounting
(44
)
-
(22
)
-
Stock-based remuneration expense
1,812
1,633
3,852
2,923
Adjusted EBITDA
$
18,837
$
10,731
$
27,565
$
19,529
Free money flow, a non-GAAP measure for stating money flow, is tangible as money supposing by handling activities reduction collateral expenditures and, therefore, has not been distributed in suitability with GAAP. Management believes free money upsurge provides investors with an critical viewpoint on money accessible for investment and acquisitions after origination collateral investments compulsory to await ongoing blurb operation operations and long-term worth creation. The Company believes that trends in the free money upsurge are profitable indicators of the handling opening and liquidity.
Free money upsurge is a non-GAAP monetary measure and should not be deliberate in siege or as a surrogate for monetary information supposing in suitability with GAAP. This non-GAAP monetary measure may not be computed in the same demeanour as likewise patrician measures used by other companies. The Company expects to go on to catch expenditures identical to the free money upsurge monetary composition described above, and investors should not infer from the Company’s display of this non-GAAP monetary measure that these expenditures simulate all of the Company’s obligations which require cash.
The following list reconciles the many directly allied GAAP monetary measure to the non-GAAP monetary measure.
Three Months Ended
Six Months Ended
December 31,
December 31,
2011
2010
2011
2010
Cash flows from operations
$
11,031
$
8,103
$
15,247
$
17,453
Capital expenditures
(1,925
)
(2,003
)
(3,571
)
(3,598
)
Free money flow
$
9,106
$
6,100
$
11,676
$
13,855
MERCURY COMPUTER SYSTEMS, INC.RECONCILIATION OF FORWARD-LOOKING GUIDANCE RANGEQuarter Ending Mar 31, 2012(In thousands, solely per share data)
The Company defines practiced EBITDA as income from stability operations prior to to to interest, income taxes, depreciation, amortization of acquired unsubstantial assets, restructuring, spoil of permanent assets, partnership costs and other compared expenses, satisfactory worth adjustments from squeeze accounting, and stock-based remuneration costs.
The following list reconciles the practiced EBITDA monetary measure to the many directly allied GAAP measure:
Range
Low
High
GAAP expectancy — Income from stability operations per widely separated share
$
0.09
$
0.11
GAAP expectancy — Income from stability operations
$
2,751
$
3,402
Adjust for:
Interest expense, net
8
8
Income taxes
1,462
1,808
Depreciation
2,220
2,220
Amortization of acquired unsubstantial assets
1,300
1,300
Acquisition costs and other compared expenses
50
50
Fair worth adjustments from squeeze accounting
(17
)
(17
)
Stock-based remuneration expense
1,374
1,374
Adjusted EBITDA expectation
$
9,148
$
10,145
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CHELMSFORD, Mass.–(BUSINESS WIRE)– Mercury Computer Systems, Inc. (NASDAQ: MRCY, www.mc.com), a devoted provider of commercially grown ISR and EW subsystems, reported handling results for the second quarter of mercantile 2012 finished Dec 31, 2011. All formula are presented and compared on a stability operations basis.
Second Quarter Fiscal 2012 Results
Second entertain mercantile 2012 revenues were $68.0 million, an enlarge of $12.4 million from the second entertain of the prior to to to mercantile year. Revenues from invulnerability blurb operation augmenting by $20.0 million, whilst revenues from blurb blurb operation decreased by $7.6 million, from the prior to to to year’s second quarter. No revenues were famous for KOR Electronics in the second entertain mercantile 2012 results. The partnership of KOR Electronics sealed on Dec 30, 2011.
GAAP net income from stability operations for the second entertain of mercantile 2012 was $9.0 million, or $0.30 per widely separated share, compared to $5.2 million, or $0.22 per widely separated share, for the prior to to to year’s second quarter. GAAP net income from stability operations per widely separated share includes $0.02 compared with the amortization of acquired unsubstantial resources for the second entertain of mercantile 2012 and $0.01 for the prior to to to year’s second quarter.
Second entertain mercantile 2012 GAAP net income from stability operations includes we estimate $4.8 million in taxation expense, $1.9 million in debasement expense, $1.8 million in stock-based remuneration costs, $0.7 million in amortization of acquired unsubstantial assets, and $0.6 million of partnership costs and other compared expenses. Second entertain mercantile 2012 practiced EBITDA (net benefit from stability operations prior to to to seductiveness income and expense, income taxes, depreciation, amortization of acquired unsubstantial assets, restructuring, spoil of permanent assets, partnership costs and other compared expenses, satisfactory worth adjustments from squeeze accounting, and stock-based remuneration costs) was $18.8 million, compared to $10.7 million for the prior to to to year’s second quarter.
Cash flows from handling activities were a net influx of $11.0 million in the second entertain of mercantile 2012, compared to a net influx of $8.1 million in the second entertain of mercantile 2011. Free money flow, tangible as money upsurge from handling activities reduction collateral expenditures, in the second entertain of mercantile 2012 was a net influx of $9.1 million, compared to a net influx of $6.1 million in the second entertain of mercantile 2011. Cash and money equivalents as of Dec 31, 2011 were $105.0 million, a diminution of $60.9 million from Sep 30, 2011, mostly due to the use of money for the partnership of KOR Electronics during the quarter, to some extent equivalent by money generated by handling activities.
Management Comments
“We a single after an one more to deliver plain formula during an one more severe entertain for the invulnerability industry,” pronounced Mark Aslett, President and CEO, Mercury Computer Systems. “Mercury’s sum income came in at the median of our superintendence range, augmenting 22% from the second entertain final year. Gross margin, GAAP benefit per share and practiced EBITDA exceeded the tall end of guidance, and handling money upsurge was significantly stronger than in the second entertain final year.”
“These formula denote the a single after an one more success of our plan to concentration Mercury on well-funded areas in the invulnerability marketplace – essentially ISR, electronic crusade and barb invulnerability – whilst positioning the association as the premier blurb subsystem outsourcing partner to the primes as they find more open and affordable ISR and EW solutions,” Aslett said. “Mercury’s invulnerability revenues for the second quarter, together with ACS and Mercury Federal Systems, augmenting 46% year-over-year. Defense bookings, nonetheless weaker than approaching due to the government’s stability resolution, were up 27% from the same duration in mercantile 2011. Through the initial half of mercantile 2012, Mercury’s sum invulnerability bookings and income grew 37% and 34%, respectively, from the same duration final year.”
“Looking brazen to the second half of mercantile 2012, we pattern the supervision buying sourroundings to sojourn challenging,” pronounced Aslett. “As a result, whilst we right away pattern our invulnerability revenues to grow we estimate 20% organically for the year, this is slower expansion than we had formerly planned. In addition, our blurb blurb operation is experiencing neatly reduce revenues year over year and we pattern that blurb income will be closer to $15 million for mercantile year 2012 as a whole. We pattern the incremental income approaching from our not long ago acquired KOR Electronics and Paragon Dynamics blurb operation to mostly equivalent both of these income headwinds ensuing in sum association revenues flourishing we estimate 10% compared with mercantile year 2011. However, the approaching stroke on GAAP benefit per share of these factors is not approaching to entirely equivalent a single another, and thus we are obscure our prior to to GAAP EPS superintendence for the full mercantile year 2012.”
“In a meridian of domestic and bill doubt and with the Defense Department’s re-alignment around new vital missions and purposes for the U.S. Armed Forces, we hold the invulnerability attention is entering an eighteen month passing from one to another duration that will augur a new epoch for defense,” Aslett said. “Overall we hold that Mercury is well-prepared to navigate this new environment. Our vital ongoing programs, such as Aegis, Global Hawk, Gorgon Stare and Patriot, as well as our new programs such as SEWIP and JCREW, appear to be well-funded and in the right areas. Our opening in winning new designs and expanding our new blurb operation tube stays strong. In addition, our capabilities are aligned with the U.S. military’s new vital citation – quite the concentration on raised energy and handling effectively notwithstanding the elaborating anti access and area rejection capabilities of our adversaries.”
“In this invulnerability attention passing from one to another duration and beyond, our capability to go on to make strategic, intelligent acquisitions will sojourn an critical means in our a single after an one more success,” pronounced Aslett. “We are formulation for M&A to yield Mercury with new proven technology and capabilities, lengthened module access and a equates to to assistance well-spoken intensity income sensitivity compared with module timing, as well as accelerating our expansion rate overall. Our shift piece stays strong, and we see glorious intensity for capturing opportunities along the sensor estimate sequence identical to the LNX and KOR acquisitions we finished during the past twelve months. As a result, together with both organic and acquisition-driven revenues at the sum association level, we are right away targeting mid-teens commission income growth, on average, over time. We hold that achieving this aim will on all sides Mercury to go on to significantly outperform the invulnerability attention expansion rate starting forward.”
Backlog
Mercury’s sum reserve at Dec 31, 2011 was $122.5 million, a $20.7 million consecutive enlarge from Sep 30, 2011, and a $25.7 million enlarge from Dec 31, 2010. Of the Dec 31, 2011 sum backlog, $108.6 million represents orders scheduled to be shipped over the successive twelve months. Total reserve at Dec 31, 2011 includes $31.9 million of reserve from KOR Electronics. The invulnerability reserve at Dec 31, 2011 was $118.7 million, a $20.9 million consecutive enlarge from Sep 30, 2011, and a $39.8 million enlarge from Dec 31, 2010. The sum book-to-bill analogous measure was 0.84-to-1 for the second entertain of mercantile 2012 compared to 0.87-to-1 for the second entertain of mercantile 2011 and 1.3-to-1 for the initial entertain of mercantile 2012.
Revenues by Operating Segment
Advanced Computing Solutions (ACS) — Revenues for the second entertain of mercantile 2012 from ACS were $66.1 million, representing an enlarge of $12.8 million from the second entertain of mercantile 2011, as a outcome of an enlarge of $20.4 million in ACS invulnerability equivalent by a diminution of $7.6 million in commercial. Approximately 94% of ACS revenues for the second entertain of mercantile 2012 compared to invulnerability business, as compared to we estimate 78% in the second entertain of mercantile 2011.
Mercury Federal Systems (MFS) — Revenues for the second entertain of mercantile 2012 from MFS were $5.2 million, representing an enlarge of $1.6 million from the second entertain of mercantile 2011.
The revenues by handling shred do not include adjustments to discharge $3.3 million of inter-company revenues enclosed in those handling segments in the second entertain of mercantile 2012.
Business Outlook
This territory presents our stream expectations and estimates, since stream visibility, on our blurb operation opinion for the arriving mercantile quarter. It is probable that tangible opening will talk about materially from the estimates given, possibly on the upside or on the downside. Investors should cruise all of the risks, together with those listed in the Safe Harbor Statement below, with respect to these estimates, and make themselves wakeful of the risk factors that may stroke our tangible performance.
For the full year mercantile 2012 we right away pattern a sum association income expansion rate of we estimate 10% year-over-year. This expansion includes reduce year-over-year blurb revenues and slower organic invulnerability income growth, equivalent by income approaching for the second half of mercantile 2012 from the not long ago sealed KOR Electronics acquisition. We pattern GAAP net income from stability operations per widely separated share for mercantile 2012 to be in the operation of $0.59 to $0.61. GAAP net income from stability operations per widely separated share includes $0.09 compared with the amortization of acquired unsubstantial assets. Adjusted EBITDA as a commission of income is approaching to be in line with our aim handling model’s tall end of we estimate 18%.
For the third entertain of mercantile 2012, revenues, which include the handling activities of KOR Electronics, are approaching to be in the operation of we estimate $65 million to $68 million. At this range, GAAP net income from stability operations per widely separated share is approaching to be in the operation of $0.09 to $0.11. GAAP net income from stability operations per widely separated share includes $0.03 compared with the amortization of acquired unsubstantial assets.
Adjusted EBITDA for the third entertain of mercantile 2012 is approaching to be in the operation of $9.1 million to $10.1 million.
Recent Highlights
December – Mercury voiced that it had finished the partnership of KOR Electronics and the unconditionally owned subsidiary, Paragon Dynamics. KOR Electronics, based in Cypress, California, designs and develops digital air wave magnitude mental recall (DRFM) units for a accumulation of complicated Electronic Warfare (EW) applications, as well as radio detector sourroundings make-believe and exam systems for invulnerability applications. Paragon Dynamics, based in Aurora, Colorado, provides worldly analytic services and customized multi-INT understand alloy and exploitation solutions for the Intelligence Community. Under the conditions of a partnership agreement, KOR Electronics became a wholly-owned auxiliary of Mercury for an all-cash squeeze cost of $70 million. Funded with money on hand, the contract sealed on Dec 30, 2011, and is approaching to be rught away accretive to earnings.
November – Mercury voiced that the Mercury Federal Systems auxiliary is part of the Sierra Nevada Corporation (SNC)-led organisation that was declared the 2011 C4ISR Journal Big twenty-five Awards Top Sensor endowment winner. The endowment was presented at the 11th Annual C4ISR Journal Conference in Washington D.C.
November – Mercury voiced the new FM021814 digital magnitude discriminator (DFD) with proviso modulation on beat (PMOP) showing at the 48th Annual AOC International Symposium and Convention Nov thirteen – sixteen in Washington, DC. This detector singly blends the capability to beget proviso and magnitude information understand streams, on condition that rarely arguable and correct information instantaneously. Mercury’s Microwave and Digital Solutions organisation is a personality in Application Ready Subsystems™ (ARS™) used to detect, mistreat and better antagonistic signals on land, at sea and in the air.
November – Mercury voiced new thing capabilities for digital storage in embedded mobile applications. Working closely with customers, Mercury’s Services and Systems Integration (SSI) organisation combined an innovative Digital Storage Unit that leverages customary solid-state storage disks (SSDs) and designs customized to encounter any application’s specific capacity, size, weight and energy (SWaP), additional and confidence requirements.
October – Mercury voiced that the Mercury Federal Systems auxiliary is part of the Sierra Nevada Corporation (SNC)-led organisation that received the United States Geospatial Intelligence (GEOINT) Foundation’s 2011 Industry Achievement Award. This prestigious annual award, presented Oct 18, recognizes superb accomplishments in GEOINT tradecraft by an individual or organisation from industry. Mercury supposing SNC with onboard real-time picture estimate and storage subsystems, which are pass components of the U.S. Air Force’s Gorgon Stare determined notice system, right away deployed in Operation Enduring Freedom.
October – Mercury Computer Systems voiced the Imaging Toolkit, which delivers new thing capabilities for electro-optical/infrared (EO/IR), hyperspectral and radio detector imaging focus expansion for the invulnerability and blurb markets. The initial to precedence the opening energy of commercially accessible ubiquitous role graphics estimate units (GPGPUs), the Imaging Toolkit helps developers speed time-to-market and reduce the altogether sum cost of focus development.
Conference Call Information
Mercury will horde a discussion call on Tuesday, Jan 24, 2012, at 5:00 p.m. EST to plead the second entertain mercantile year 2012 formula and examination the monetary and blurb operation opinion starting forward.
To attend to the discussion call, dial (888) 262-8943 in the U.S.A. and Canada, and (913) 312-1484 in all other countries. The discussion formula number is 5317497. Please call 5 to ten mins prior to to to to the scheduled begin time. This call will also be promote live over the web at www.mc.com/investor underneath “Financial Events.”
A replay of the call by write will be accessible from we estimate 9:00 p.m. EST on Tuesday, Jan 24, 2012, through 9:00 p.m. EST on Sunday, Feb 5, 2012. To access the replay, dial (888) 203-1112 in the U.S.A. and Canada, and (719) 457-0820 in all other countries. Enter access formula 5317497. A replay of the webcast of the call will be accessible for an lengthened duration of time on the Financial Events page of the Company’s website at www.mc.com/investor.
Use of Non-GAAP (Generally Accepted Accounting Principles) Financial Measures
In further to stating monetary formula in suitability with in all supposed accounting principles, or GAAP, the Company provides practiced EBITDA and free money flow, which are non-GAAP monetary measures. Adjusted EBITDA excludes certain non-cash and other specified charges. Free money upsurge is tangible as money upsurge from handling activities reduction collateral expenditures. The Company believes these non-GAAP monetary measures yield a more finish bargain of the past monetary opening and prospects for the future. However, the display of practiced EBITDA and free money upsurge is not meant to be deliberate in siege or as a surrogate for monetary information supposing in suitability with GAAP. Management believes the practiced EBITDA and free money upsurge monetary measures await in on condition that a more finish bargain of the Company’s underlying operational formula and trends, and management uses these measures along with the analogous GAAP monetary measures to manage the Company’s business, to weigh the opening compared to prior to to to durations and the marketplace, and to settle operational goals. A settlement of GAAP to non-GAAP monetary formula discussed in this press recover is contained in the trustworthy exhibits.
Mercury Computer Systems, Inc. – Where Challenges Drive Innovation®
Mercury Computer Systems (www.mc.com, NASDAQ: MRCY) is a many appropriate of multiply provider of open, commercially developed, application-ready, multi-INT subsystems for invulnerability budding contractors. With over thirty years of knowledge in embedded computing, higher domain imagination in radar, EW, EO/IR, C4I, and sonar applications, and more than 300 successful module deployments together with Aegis, Global Hawk, and Predator, Mercury’s Services and Systems Integration organisation leads the attention in partnering with blurb operation to pattern and confederate system-level solutions that minimize module risk, show off focus portability, and accelerate customers’ time to market.
Mercury is based in Chelmsford, Massachusetts, and serves blurb operation worldwide through a extended network of direct sales offices, subsidiaries, and distributors.
Forward-Looking Safe Harbor Statement
This press recover contains certain forward-looking statements, as that tenure is tangible in the Private Securities Litigation Reform Act of 1995, together with those relating to mercantile 2012 blurb operation opening and over and the Company’s skeleton for expansion and alleviation in profitability and money flow. You can brand these statements by the use of the difference “may,” “will,” “could,” “should,” “plans,” “expects,” “anticipates,” “continue,” “estimate,” “project,” “intend,” “likely,” “probable, ”and identical expressions. These forward-looking statements engage risks and uncertainties that could means tangible formula to talk about materially from those projected or anticipated. Such risks and uncertainties include, though are not singular to, ubiquitous mercantile and blurb operation conditions, together with variable debility in the Company’s markets, goods of a single after an one more geopolitical disturbance and informal conflicts, competition, changes in technology and methods of marketing, delays in completing engineering and prolongation programs, changes in patron sequence patterns, changes in product mix, a single after an one more success in technological advances and delivering technological innovations, a single after an one more appropriation of invulnerability programs, the timing of such funding, changes in the U.S. Government’s understand of sovereign buying manners and regulations, marketplace acceptance of the Company’s products, shortages in components, prolongation delays due to opening peculiarity issues with outsourced components, incapacity to entirely comprehend the approaching benefits from acquisitions and divestitures or delays in realizing such benefits, hurdles in integrating acquired businesses and achieving approaching synergies, changes to trade regulations, increases in taxation rates, changes to in all supposed accounting principles, difficulties in maintaining pass employees and customers, amazing costs underneath fixed-price use and complement formation engagements, and assorted other factors over our control. These risks and uncertainties also include such one more risk factors as are discussed in the Company’s filings with the U.S. Securities and Exchange Commission, together with the Annual Report on Form 10-K for the mercantile year finished Jun 30, 2011. The Company cautions readers not to place unjustified faith on any such forward-looking statements, which verbalise usually as of the date made. The Company undertakes no requisite to refurbish any forward-looking matter to simulate events or resources after the date on which such matter is made.
Challenges Drive Innovation, Echotek and Ensemble are purebred trademarks and Application Ready Subsystem and ARS are trademarks of Mercury Computer Systems, Inc. Other product and association names referred to may be trademarks and/or purebred trademarks of their respective holders.
MERCURY COMPUTER SYSTEMS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31,
June 30,
2011 (A)
2011
Assets
Current assets:
Cash and money equivalents
$
104,955
$
162,875
Accounts receivable, net
46,807
44,786
Unbilled receivables and costs in additional of billings
8,495
1,059
Inventory
22,760
18,540
Deferred income taxes
8,745
7,678
Prepaid income taxes
1,955
1,075
Prepaid losses and other stream assets
5,262
4,171
Total stream assets
198,979
240,184
Restricted cash
3,281
3,000
Property and equipment, net
14,452
14,520
Goodwill
132,471
79,558
Acquired unsubstantial assets, net
27,545
16,702
Other non-current assets
928
1,598
Total assets
$
377,656
$
355,562
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable
$
7,168
$
7,972
Accrued expenses
8,883
5,607
Accrued compensation
11,996
16,288
Income taxes payable
1,574
201
Deferred revenues and patron advances
9,595
6,138
Total stream liabilities
39,216
36,206
Deferred benefit on sale-leaseback
4,978
5,556
Deferred income taxes
7,978
3,877
Income taxes payable
1,777
1,777
Other non-current liabilities
5,496
6,710
Total liabilities
59,445
54,126
Shareholders’ equity:
Common stock
295
291
Additional paid-in capital
218,812
213,777
Retained earnings
97,811
86,113
Accumulated other extensive income
1,293
1,255
Total shareholders’ equity
318,211
301,436
Total liabilities and shareholders’ equity
$
377,656
$
355,562
(A) Includes the combined shift piece of KOR Electronics and subsidiaries and rough grant of squeeze price
MERCURY COMPUTER SYSTEMS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, solely per share data)
Three Months Ended
Six Months Ended
December 31,
December 31,
2011
2010
2011
2010
Net revenues
$
67,959
$
55,513
$
117,081
$
107,621
Cost of revenues (1)
27,046
23,873
46,252
45,321
Gross margin
40,913
31,640
70,829
62,300
Operating expenses:
Selling, ubiquitous and senior manager (1)
14,419
14,019
28,064
28,216
Research and expansion (1)
11,724
10,479
23,589
21,378
Amortization of acquired unsubstantial assets
692
317
1,508
636
Acquisition costs and other compared expenses
593
307
618
307
Total handling expenses
27,428
25,122
53,779
50,537
Income from operations
13,485
6,518
17,050
11,763
Interest income
3
6
9
13
Interest expense
(9
)
(49
)
(18
)
(58
)
Other income, net
394
404
799
920
Income from stability operations prior to to to income taxes
13,873
6,879
17,840
12,638
Income taxes
4,828
1,696
6,142
3,773
Income from stability operations
9,045
5,183
11,698
8,865
Income (loss) from dropped operations, net of tax
-
-
-
(52
)
Net income
$
9,045
$
5,183
$
11,698
$
8,813
Basic net benefit (loss) per share:
Continuing operations
$
0.31
$
0.22
$
0.40
$
0.39
Income (loss) from dropped operations
-
-
-
(0.01
)
Net income
$
0.31
$
0.22
$
0.40
$
0.38
Diluted net benefit (loss) per share:
Continuing operations
$
0.30
$
0.22
$
0.39
$
0.37
Income (loss) from dropped operations
-
-
-
-
Net income
$
0.30
$
0.22
$
0.39
$
0.37
Weighted-average shares outstanding:
Basic
29,457
23,099
29,367
23,021
Diluted
29,969
23,998
30,001
23,704
(1) Includes stock-based remuneration expense, allocated as follows:
Cost of revenues
$
70
$
64
$
158
$
107
Selling, ubiquitous and administrative
$
1,573
$
1,414
$
3,248
$
2,554
Research and development
$
169
$
155
$
446
$
262
MERCURY COMPUTER SYSTEMS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
Six Months Ended
December 31,
December 31,
2011
2010
2011
2010
Cash flows from handling activities:
Net income
$
9,045
$
5,183
$
11,698
$
8,813
Depreciation and amortization
2,597
1,869
5,268
3,616
Other non-cash items, net
348
1,813
2,366
2,514
Changes in handling resources and liabilities
(959
)
(762
)
(4,085
)
2,510
Net money supposing by handling activities
11,031
8,103
15,247
17,453
Cash flows from investing activities:
Acquisition of business, net of money acquired
(70,373
)
-
(70,373
)
-
Sales of commercial securities
-
-
-
18,025
Purchases of skill and equipment
(1,925
)
(2,003
)
(3,571
)
(3,598
)
Payments for acquired unsubstantial assets
-
(1,617
)
(20
)
(2,175
)
Net money (used in) supposing by investing activities
(72,298
)
(3,620
)
(73,964
)
12,252
Cash flows from financing activities:
Proceeds from worker batch squeeze plans
695
1,291
785
1,585
Change in limited cash
(281
)
-
(281
)
-
Payments of paid in instalments charity costs
-
-
(30
)
-
Payment of collateral lease obligations
(43
)
(58
)
(102
)
(136
)
Excess taxation benefits from stock-based compensation
7
463
412
1,017
Net money supposing by financing activities
378
1,696
784
2,466
Effect of sell rate changes on money and money equivalents
(18
)
19
13
25
Net (decrease) enlarge in money and money equivalents
(60,907
)
6,198
(57,920
)
32,196
Cash and money equivalents at commencement of period
165,862
82,239
162,875
56,241
Cash and money equivalents at end of period
$
104,955
$
88,437
$
104,955
$
88,437
UNAUDITED SUPPLEMENTAL INFORMATIONRECONCILIATION OF GAAP TO NON-GAAP MEASURES(In thousands)
Adjusted EBITDA, a non-GAAP measure for stating monetary performance, excludes the stroke of certain equipment and, therefore, has not been distributed in suitability with GAAP. Management believes that ostracism of these equipment await in on condition that a more finish bargain of the Company’s underlying operational formula and trends, and management uses these measures along with the analogous GAAP monetary measures to manage the Company’s business, to weigh the opening compared to prior to to to durations and the marketplace, and to settle operational goals. The adjustments to work out this non-GAAP monetary measure, and the basement for such adjustments, are summarized below:
Interest income and expense. The Company receives seductiveness income on investments and incurs seductiveness responsibility on loans, collateral leases and other financing arrangements. These amounts may shift from duration to duration due to changes in money and debt balances and seductiveness rates driven by ubiquitous marketplace conditions or other resources outward of the normal march of Mercury’s operations.
Income taxes. The Company’s GAAP taxation responsibility can vacillate materially from duration to duration due to taxation adjustments that are not directly compared to underlying handling opening or to the stream duration of operations.
Depreciation. The Company incurs debasement responsibility compared to collateral resources purchased to await the ongoing operations of the business. These resources are accessible at cost or satisfactory worth and are unheeded regulating the straight-line process over the utilitarian hold up of the asset. Purchases of such resources may shift significantly from duration to duration and but any association to underlying handling performance.
Amortization of acquired unsubstantial assets. The Company incurs amortization of intangibles compared to assorted acquisitions it has done and permit agreements. These unsubstantial resources are valued at the time of acquisition, are amortized over a duration of multiform years after partnership and in all cannot be altered or shabby by management after acquisition.
Restructuring. The Company incurs restructuring charges in tie with management’s decisions to commence certain actions to realign handling losses through workforce reductions and the closure of certain Company facilities, businesses and product lines. Management believes this object is outward the normal operations of the Company’s blurb operation and is not demonstrative of ongoing handling results.
Impairment of permanent assets. The Company incurs spoil charges of permanent resources based on events that may or may not be inside of the control of management. Management believes these equipment are outward the normal operations of the Company’s blurb operation and are not demonstrative of ongoing handling results.
Acquisition costs and other compared expenses. The Company incurs costs compared with third-party veteran services compared to partnership and intensity partnership opportunities, such as authorised and accounting fees. Although we may catch such costs and other compared charges and adjustments, it is not demonstrative that any contract will be consummated. Management believes the ostracism of these equipment eliminates fluctuations in our selling, general, and senior manager losses compared to partnership activities which are separate to ongoing operations.
Fair worth adjustments from squeeze accounting. As a outcome of requesting squeeze accounting manners to acquired resources and liabilities, certain satisfactory worth adjustments are accessible in the opening shift piece of acquired companies. These adjustments are afterwards reflected in the Company’s income statements in durations successive to the acquisition. In addition, the stroke of any changes to creatively accessible fortuitous care amounts are reflected in the income statements in the duration of the change. Management believes these equipment are outward the normal operations of the Company and are not demonstrative of ongoing handling results.
Stock-based remuneration expense. The Company incurs responsibility compared to stock-based remuneration enclosed in the GAAP display of cost of revenues, selling, ubiquitous and senior manager responsibility and investigate and expansion expense. Although stock-based remuneration is an responsibility of the Company and noticed as a form of compensation, these losses shift in volume from duration to period, and are influenced by marketplace forces that are formidable to envision and are not inside of the control of management, such as the marketplace cost and sensitivity of the Company’s shares, risk-free seductiveness rates and the approaching tenure and damage rates of the awards. Management believes that ostracism of these losses allows comparisons of handling formula that are unchanging with durations prior to to to to the Company’s embracing a cause of FASB ASC 718, and allows comparisons of the Company’s handling formula to those of other companies, both public, in siege or foreign, that divulge non-GAAP monetary measures that bar stock-based compensation.
Mercury uses practiced EBITDA as an critical indicator of the handling opening of the business. Management excludes the above-described equipment from the inner forecasts and models when substantiating inner handling budgets, supplementing the monetary formula and forecasts reported to the Company’s house of directors, last the apportionment of reward remuneration for senior manager officers and other pass employees based on handling performance, evaluating short-term and long-term handling trends in the Company’s operations, and allocating resources to assorted initiatives and operational requirements. The Company believes that practiced EBITDA permits a analogous comment of the handling performance, relations to the opening based on the GAAP results, whilst isolating the goods of charges that may shift from duration to duration but any association to underlying handling performance. The Company believes that these non-GAAP monetary adjustments are utilitarian to investors since they concede investors to weigh the effectiveness of the methodology and information used by management in the monetary and operational decision-making. The Company believes that trends in the practiced EBITDA are profitable indicators of the handling performance.
Adjusted EBITDA is a non-GAAP monetary measure and should not be deliberate in siege or as a surrogate for monetary information supposing in suitability with GAAP. This non-GAAP monetary measure may not be computed in the same demeanour as likewise patrician measures used by other companies. The Company expects to go on to catch losses identical to the practiced EBITDA monetary adjustments described above, and investors should not infer from the Company’s display of this non-GAAP monetary measure that these costs are unusual, sparse or non-recurring.
The following list reconciles the many directly allied GAAP monetary measure to the non-GAAP monetary measure.
Three Months Ended
Six Months Ended
December 31,
December 31,
2011
2010
2011
2010
Income from stability operations
$
9,045
$
5,183
$
11,698
$
8,865
Interest expense, net
6
43
9
45
Income taxes
4,828
1,696
6,142
3,773
Depreciation
1,905
1,552
3,760
2,980
Amortization of acquired unsubstantial assets
692
317
1,508
636
Acquisition costs and other compared expenses
593
307
618
307
Fair worth adjustments from squeeze accounting
(44
)
-
(22
)
-
Stock-based remuneration expense
1,812
1,633
3,852
2,923
Adjusted EBITDA
$
18,837
$
10,731
$
27,565
$
19,529
Free money flow, a non-GAAP measure for stating money flow, is tangible as money supposing by handling activities reduction collateral expenditures and, therefore, has not been distributed in suitability with GAAP. Management believes free money upsurge provides investors with an critical viewpoint on money accessible for investment and acquisitions after origination collateral investments compulsory to await ongoing blurb operation operations and long-term worth creation. The Company believes that trends in the free money upsurge are profitable indicators of the handling opening and liquidity.
Free money upsurge is a non-GAAP monetary measure and should not be deliberate in siege or as a surrogate for monetary information supposing in suitability with GAAP. This non-GAAP monetary measure may not be computed in the same demeanour as likewise patrician measures used by other companies. The Company expects to go on to catch expenditures identical to the free money upsurge monetary composition described above, and investors should not infer from the Company’s display of this non-GAAP monetary measure that these expenditures simulate all of the Company’s obligations which require cash.
The following list reconciles the many directly allied GAAP monetary measure to the non-GAAP monetary measure.
Three Months Ended
Six Months Ended
December 31,
December 31,
2011
2010
2011
2010
Cash flows from operations
$
11,031
$
8,103
$
15,247
$
17,453
Capital expenditures
(1,925
)
(2,003
)
(3,571
)
(3,598
)
Free money flow
$
9,106
$
6,100
$
11,676
$
13,855
MERCURY COMPUTER SYSTEMS, INC.RECONCILIATION OF FORWARD-LOOKING GUIDANCE RANGEQuarter Ending Mar 31, 2012(In thousands, solely per share data)
The Company defines practiced EBITDA as income from stability operations prior to to to interest, income taxes, depreciation, amortization of acquired unsubstantial assets, restructuring, spoil of permanent assets, partnership costs and other compared expenses, satisfactory worth adjustments from squeeze accounting, and stock-based remuneration costs.
The following list reconciles the practiced EBITDA monetary measure to the many directly allied GAAP measure:
Range
Low
High
GAAP expectancy — Income from stability operations per widely separated share
$
0.09
$
0.11
GAAP expectancy — Income from stability operations
$
2,751
$
3,402
Adjust for:
Interest expense, net
8
8
Income taxes
1,462
1,808
Depreciation
2,220
2,220
Amortization of acquired unsubstantial assets
1,300
1,300
Acquisition costs and other compared expenses
50
50
Fair worth adjustments from squeeze accounting
(17
)
(17
)
Stock-based remuneration expense
1,374
1,374
Adjusted EBITDA expectation
$
9,148
$
10,145