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Mercury Computer Systems Reports Operating Results (10-Q)

February 09, 2010 | About:
10qk

10qk

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Mercury Computer Systems (MRCY) filed Quarterly Report for the period ended 2009-12-31.

Mercury Computer Systems has a market cap of $249.4 million; its shares were traded at around $10.61 with a P/E ratio of 18.6 and P/S ratio of 1.3. MRCY is in the portfolios of George Soros of Soros Fund Management LLC, Chuck Royce of ROYCE & ASSOCIATES.

Highlight of Business Operations:

In January 2009, we signed a definitive agreement and closed on the sale of our former VI operating segment for gross consideration of $3.0 million in cash. Of the proceeds, a total of $1.1 million was held back for general indemnification purposes and employee termination payments incurred by the buyer. Of the total held back, $0.3 million was used for termination payments, $0.4 million was used for general indemnification purposes and $0.3 million was remitted back to the Company.

Selling, general and administrative expenses decreased $0.4 million, or 3%, to $13.5 million during the three months ended December 31, 2009 compared to $13.9 million during the same period in fiscal 2009. The decrease was primarily due to a $0.5 million decrease in employee compensation expense, including stock-based compensation expense, driven by the restructuring and cost saving measures that resulted from our fiscal 2009 restructuring plan (ACS Plan), which was enacted to reduce payroll and overhead costs to realign costs with our revenue base. Additionally, there was a $0.2 million decrease in legal expense, offset by a $0.2 million increase in recruiting expense.

Selling, general and administrative expenses decreased $1.2 million, or 5%, to $24.8 million during the six months ended December 31, 2009 compared to $26.0 million during the same period in fiscal 2009. The decrease was primarily due to a $0.7 million decrease in employee compensation expense, including stock-based compensation expense, driven by the restructuring and cost saving measures that resulted from our ACS Plan. Additionally, there was a $0.4 million decrease in audit expense and a $0.4 million decrease in legal expense, offset by a $0.3 million increase in recruiting expense.

Research and development expenses decreased $1.7 million, or 15%, to $9.9 million during the three months ended December 31, 2009 compared to $11.6 million during the same period in fiscal 2009. The decrease was primarily the result of a $1.8 million increase in the time spent by our engineers on billable projects. This decrease was partially offset by a $0.4 million increase in employee compensation expense, driven by an increase in headcount during the three months ended December 31, 2009. Research and development continues to be a focus of our business with approximately 21.9% of our revenues dedicated to research and development activities during the three months ended December 31, 2009 and approximately 25.8% of our revenues dedicated to such activities during the same period in fiscal 2009.

Research and development expenses decreased $1.8 million, or 8%, to $20.1 million during the six months ended December 31, 2009 compared to $21.9 million during the same period in fiscal 2009. The decrease was primarily the result of a $2.5 million increase in the time spent by our engineers on billable projects and a $0.3 million decrease in depreciation expense due to assets becoming fully depreciated. This decrease was partially offset by a $0.6 million increase in employee compensation expense, driven by an increase in headcount, and a $0.5 million increase in outside development expenses related to new product development initiatives. Research and development continues to be a focus of our business with approximately 21.7% of our revenues dedicated to research and development activities during the six months ended December 31, 2009 and approximately 24.4% of our revenues dedicated to such activities during the same period in fiscal 2009. It is our priority to continue to improve the leverage of our research and development investments in order to realize a more near-term return.

Interest income for the three months ended December 31, 2009 decreased by $0.5 million to $0.2 million compared to the same period in fiscal 2009. Interest income for the six months ended December 31, 2009 decreased by $1.4 million to $0.2 million compared to the same period in fiscal 2009. The decreases during both periods were primarily attributable to decreased rates of return on our marketable securities, as well as a decrease in the amount of cash invested in marketable securities as a result of the February 2009 and May 2009 repurchase of an aggregate of $125.0 million of our Convertible Senior Notes (the Notes).

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