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Mercury Computer Systems Reports Operating Results (10-K)

August 18, 2011 | About:

Mercury Computer Systems (NASDAQ:MRCY) filed Annual Report for the period ended 2011-06-30.

Mercury Computer Systems has a market cap of $459 million; its shares were traded at around $15.13 with a P/E ratio of 20.6 and P/S ratio of 2.

Highlight of Business Operations:

Our revenue, income from continuing operations and adjusted EBITDA for fiscal 2011 were $228.7 million, $18.5 million and $40.9 million, respectively. Our revenue, income from continuing operations and adjusted EBITDA for fiscal 2010 were $199.8 million, $28.1 million and $29.9 million, respectively. Our revenue, income from continuing operations and adjusted EBITDA for fiscal 2009 were $188.9 million, $7.9 million and $22.9 million, respectively. See page 27 of this annual report for a reconciliation of our adjusted EBITDA to income from continuing operations.

On January 12, 2011, we completed the acquisition of LNX Corporation, or LNX, a designer and manufacturer of next generation radio frequency receivers for signals intelligence, communications intelligence and electronic attack applications. Under the terms of the stock purchase agreement, we acquired LNX for an all-cash purchase price of $31.0 million plus an earn-out of up to $5.0 million payable upon the achievement of financial targets in calendar years 2011 and 2012. We believe the successful acquisition of LNX represents a significant step in our growth strategy and strongly augments our existing capabilities within our core markets. LNX enables us to capitalize on our existing program presence while providing new capabilities that will allow us to target additional opportunities. LNXs position as a key supplier to the prime contractor under the JCREW 3.3 program significantly increases our content on that platform. We believe that LNXs technology and market presence could also strengthen our MFS business.

On February 16, 2011, we completed a follow-on public stock offering of 5,577,500 shares of common stock, which were sold at a price to the public of $17.75. The follow-on public stock offering resulted in $93.6 million of net proceeds to us.

The U.S. defense electronics market is large and modestly growing. We have expanded our target market and are well-positioned from a DoD budget, program and platform perspective. Despite expected DoD defense budget cuts, the portion most relevant to our business is projected to remain strong. DoD defense electronics spending was approximately $38.2 billion in government fiscal year 2010, and is projected to increase to $39.5 billion in government fiscal year 2011. Defense electronic spending represents approximately 6% of the total DoD spending annually. We believe ISR, EW and ballistic missile defense have a high priority for future DoD spending. We have positioned ourselves well in these important areas and have won a position on many programs and platforms. We are a best-of-breed provider in the design and development of performance optimized electronic sub-systems for the ISR market. As a leader in this market, we often contract with multiple prime defense contractors as they bid for a particular project, thereby increasing our chance of a successful outcome.

Read the The complete Report

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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