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Mercury Computer Systems Reports Operating Results (10-Q)

May 05, 2011 | About:
10qk

10qk

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Mercury Computer Systems (MRCY) filed Quarterly Report for the period ended 2011-03-31.

Mercury Computer Systems has a market cap of $533.3 million; its shares were traded at around $18.99 with a P/E ratio of 18.8 and P/S ratio of 2.7.

Highlight of Business Operations:

As of March 31, 2011, we had 612 employees and, for the three and nine months ended March 31, 2011, we had revenues of $59.9 million and $167.5 million and income from continuing operations of $5.4 million and $14.2 million, respectively.

Net MFS revenues increased $1.1 million, or 49%, to $3.5 million during the three months ended March 31, 2011 as compared to the same period in fiscal 2010. This change was primarily driven by a $1.2 million increase in revenue relating to a persistent ISR development program.

Selling, general and administrative expenses increased $1.9 million, or 15%, to $14.4 million during the three months ended March 31, 2011 compared to $12.5 million during the same period in fiscal 2010. The increase was primarily due to a $1.7 million increase in employee compensation expense, including stock-based compensation expense, driven by a 51 person increase in headcount, company-wide pay increases and variable compensation increases. Additionally, there was a $0.2 million increase in business meeting and travel expenses. Selling, general and administrative expenses decreased as a percentage of revenues to 24.1% during the three months ended March 31, 2011 from 28.8% during the same period in fiscal 2010. We seek to continue improving our operating leverage by maintaining our selling, general and administrative expenses growth rate well below our revenue growth rate.

Research and development expenses increased $0.1 million, or 1%, to $10.7 million during the three months ended March 31, 2011 compared to $10.6 million during the same period in fiscal 2010. The increase was primarily the result of a $0.7 million increase in employee compensation expense driven by a 21 person increase in headcount, company-wide pay increases and variable compensation increases. This increase was primarily offset by fewer purchases of prototype materials to support long-term construction contracts nearing the end of their development stage. Research and development continues to be a focus of our business with approximately 17.8% of our revenues dedicated to research and development activities during the three months ended March 31, 2011 and approximately 24.4% of our revenues dedicated to such activities during the same period in fiscal 2010. We have continued to improve the leverage of our research and development investments.

Operating profit for ACS increased $5.4 million during the three months ended March 31, 2011 to $8.0 million as compared to $2.6 million for the same period in fiscal 2010. The increase in operating profit was primarily driven by increased revenues of $15.2 million, which drove an improvement in gross margin. This improvement was partially offset by increases in operating expenses necessary to grow the business. However, operating expenses declined as a percent of revenue as we continued to improve our operating leverage.

Results from operations of the MFS segment increased $0.7 million during the three months ended March 31, 2011 to an operating profit of $0.4 million as compared to an operating loss of $0.3 million for the same period in fiscal 2010. This increase was related to an increase in revenue relating to an ISR development program. See Note O to our consolidated financial statements included in this report for more information regarding our operating segments and geographic information.

Read the The complete Report

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