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Mercury Computer Systems Reports Operating Results (10-Q)

May 03, 2012 | About:
10qk

10qk

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Mercury Computer Systems (MRCY) filed Quarterly Report for the period ended 2012-03-31.

Mercury Computr has a market cap of $400.2 million; its shares were traded at around $12.96 with a P/E ratio of 16.6 and P/S ratio of 1.8.

Highlight of Business Operations:

Selling, general and administrative expenses increased $0.8 million, or 5%, to $15.2 million during the three months ended March 31, 2012 compared to $14.4 million during the same period in fiscal 2011. The increase was primarily due to a $0.7 million increase in employee compensation expense driven by higher headcount as a result of the KOR acquisition. Selling, general and administrative expenses decreased as a percentage of revenues to 22.7% during the three months ended March 31, 2012 from 24.1% during the same period in fiscal 2011 due to higher revenue and increased operating leverage.

Research and development expenses increased $0.8 million, or 7%, to $11.5 million during the three months ended March 31, 2012 compared to $10.7 million during the same period in fiscal 2011. The increase was primarily due to a $0.5 million increase in employee compensation expense driven by higher headcount as a result of the KOR acquisition, and a $0.2 million increase in higher supplies and depreciation expenses. Research and development continues to be a focus of our business with 17.1% of our revenues dedicated to research and development activities during the three months ended March 31, 2012 and 17.8% of our revenues dedicated to such activities during the same period in fiscal 2011.

Net ACS revenues increased $7.1 million, or 4%, to $165.9 million during the nine months ended March 31, 2012 as compared to the same period in fiscal 2011. The increase was driven by higher defense revenues of $36.5 million, including additional revenues contributed by KOR and LNX, which were offset by a $29.4 million decrease in revenues from commercial customers. Defense revenues accounted for 93% of net ACS revenues during the nine months ended March 31, 2012, as compared to 74% in the same period in fiscal 2011.

Selling, general and administrative expenses increased $0.6 million, or 1%, to $43.3 million during the nine months ended March 31, 2012 compared to $42.7 million during the same period in fiscal 2011. The increase was primarily due to a $0.8 million increase in employee compensation expense as a result of the KOR and LNX acquisitions. Selling, general and administrative expenses decreased as a percentage of revenues to 23.5% during the nine months ended March 31, 2012 from 25.5% during the same period in fiscal 2011 due to higher revenues and increased operating leverage.

During the nine months ended March 31, 2012, we generated $27.7 million in cash from operations compared to $22.8 million generated from operating activities during the same period in fiscal 2011. The $4.9 million increase in cash generated from operations was largely driven by $2.8 million of higher net income, a $2.5 million increase in depreciation and amortization expenses, a $1.1 million increase in stock-based compensation expense and its related excess tax benefit, and a $0.5 million increase in deferred income tax provision. These increases in cash were offset by a $2.0 million decrease in changes in working capital. The decrease primarily consist of a $5.1 million increase in cash used for inventory, a $3.0 million increase in cash used for other non-current liabilities, accounts payable and accrued expenses, a $1.5 million increase in cash used for prepaid income taxes, a $0.4 million decrease in cash generated by deferred revenue and customer advances, and a $0.2 million increase in cash used for income taxes payable. These uses of cash were offset by a $5.1 million increase in cash received from accounts receivables and a $3.1 million decrease in cash used for prepaid expenses and other assets. Our ability to generate cash from operations in future periods will depend in large part on profitability, the rate of collection of accounts receivable, our inventory turns and our ability to manage other areas of working capital.

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