Mercury Computer Systems Reports Fourth Quarter 2003 EPS of $0.20; 2003 Earnings per share of $1.03; 2003 Cash Flow From Operations of $50.5 Million.Business Editors CHELMSFORD, Mass.--(BUSINESS WIRE)--July 31, 2003 Mercury Computer Systems Mercury Computer Systems, Inc. NASDAQ: MRCY provides high-performance embedded, real-time digital signal and image processing solutions. Mercury designs and builds embedded multicomputers, which may be considered to be either loosely coupled , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : MRCY), today reported results for its fourth quarter and fiscal year ended June 30, 2003. The Company posted its 50th consecutive quarter of profitable performance. -- Fourth quarter revenues were $44.5 million, an increase of 3.5% over the prior year's fourth quarter. -- Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $5.8 million, representing 13.1% of revenues; included in operating income was a $1.4 million charge related to a workforce reduction. -- Fourth quarter net income was $4.2 million, or 9.5% of revenues. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were $0.20 for the fourth quarter. -- Cash flows from operating activities generated $7.6 million in the fourth quarter and $50.5 million for the fiscal year. For the 2003 fiscal year, revenues were $180.2 million, up 20% over the 2002 fiscal year. Full year operating income was $25.8 million, or 14.3% of revenues, an increase of $11.3 million over 2002. Net income was $22.7 million or 12.6% of revenues, versus $15.8 million and 10.5% in the prior year. Fiscal 2003 diluted earnings per share were $1.03. "We are pleased with the results for the fourth quarter and the 2003 fiscal year," said Jay Bertelli, president and chief executive officer of Mercury Computer Systems. "Revenue grew 20% for the year, and operating income expanded by $11 million. Our working capital initiatives demonstrated good progress as we generated more than $7 million in cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses during the fourth quarter and more than $50 million in cash flow from operations for the year. Strong operational results allow us to continue to invest for the success of our customers." Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. The Company's total backlog position at the end of the quarter was $57.3 million, down from $78.4 million at the beginning of the fiscal year. Of the current total backlog, $50.2 million represents shipments scheduled over the next 12 months. Defense Electronics Revenues for the quarter from defense electronics were $32.5 million, representing 73% of total revenues. For the fiscal year, defense electronics revenues were $124.1 million, representing 69% of the Company's total revenues, compared to $98.2 million, or 65% of revenues for the same period of fiscal 2002, a year-over-year increase of 26%. The full year increase in defense electronics revenues occurred within each of the three primary application markets within the segment, including radar, signals intelligence, and emerging applications markets. Medical Imaging Revenues for the quarter from medical imaging were $7.4 million, representing 17% of total revenues. For the fiscal year, medical imaging revenues were $35.7 million, representing 20% of the Company's total revenues, compared to $41.4 million, or 28% of total revenues for fiscal 2002. The full year 14% year-over-year decrease was driven by reductions in CT-related revenue, partially offset by a 7% increase in revenues in other modalities Modalities The factors and circumstances that cause a patient's symptoms to improve or worsen, including weather, time of day, effects of food, and similar factors. , including MRI 1. (application) MRI - Magnetic Resonance Imaging. 2. MRI - Measurement Requirements and Interface. and digital X-ray X-ray Electromagnetic radiation of extremely short wavelength (100 nanometres to 0.001 nanometre) produced by the deceleration of charged particles or the transitions of electrons in atoms. . OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and Solutions Revenues for the quarter from OEM solutions were $4.6 million, representing 10% of the Company's total revenues. For the fiscal year, OEM solutions revenues were $20.4 million, representing 11% of the Company's total revenues, compared to $10.5 million, or 7% of revenues for the same period of fiscal 2002, a year-over-year increase of 94%. The full year revenue growth is due primarily to increased shipments to semiconductor capital equipment OEMs for developing and testing new semiconductor inspection and mask-generation systems. Recent Highlights -- July 31 - In a separate release today, Mercury unveiled the Diamond Series(TM) scalable open-system multicomputers based on Intel(R) processors and a Linux operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. . The Diamond Series multicomputers combine Mercury's deep knowledge and industry leadership in signal and image processing image processing Set of computational techniques for analyzing, enhancing, compressing, and reconstructing images. Its main components are importing, in which an image is captured through scanning or digital photography; analysis and manipulation of the image, accomplished libraries and customized subsystem A unit or device that is part of a larger system. For example, a disk subsystem is a part of a computer system. A bus is a part of the computer. A subsystem usually refers to hardware, but it may be used to describe software. integration with the latest Intel Xeon(TM) processors in an industrial-grade, scalable, rack-mount server. The systems are designed for a broad set of applications across a range of commercial and industrial environments such as medical imaging, sonar signal processing See DSP. , and inspection systems. -- June 18 - Mercury elected two new directors to the board: Dr. Richard P. Wishner and Mr. Lee C. Steele. Dr. Wishner is a senior consultant to private industry and government specializing in technology and business development, and management. Mr. Steele is a partner with Tatum Ta·tum , Edward Lawrie 1909-1975. American biochemist. Through his genetic research with bacteria, he showed how genes transmit hereditary characteristics and shared a 1958 Nobel Prize for his discoveries. CFO See Chief Financial Officer. Partners LLP LLP - Lower Layer Protocol in its Boston office and has more than 25 years of financial experience. Mr. Steele will serve as a member of the audit committee of the board of directors. -- June 4 - Mercury announced it shipped RACE Series(TM) systems to General Atomics General Atomics is a nuclear physics and defense contractor headquartered in San Diego, California. Among other things, it is the manufacturer of the Predator unmanned aerial vehicle (UAV). for use in development and production orders of the company's LYNX lynx, name given to several related small, ferocious members of the cat family. All have small heads, tufted ears, and heavy bodies with long legs and short tails. All are primarily terrestrial, although they are able to climb trees. Synthetic Aperture Radar Synthetic aperture radar (SAR) Radar, airborne or satellite-borne, that uses special signal processing to produce high-resolution images of the surface of the Earth (or another object) while traversing a considerable flight path. (SAR (Segmentation And Reassembly) The protocol that converts data to cells for transmission over an ATM network. It is the lower part of the ATM Adaption Layer (AAL), which is responsible for the entire operation. See AAL. SAR - segmentation and reassembly ) system. The LYNX SAR reconnaissance  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. and surveillance system gathers radar data used in creating high-resolution images in adverse weather conditions. The system may be deployed on various airborne airborne /air·borne/ (ar´born) suspended in, transported by, or spread by air. airborne, adj carried through the air. In health care settings, viruses or bacteria may become airborne, e.g. platforms, is compact and lightweight, and is designed to fit on unmanned aerial vehicles
Predator predator an animal that derives its life support by predation. . -- April 8 - Mercury announced that its RACE++(R) Series conduction-cooled multicomputers have been designed into the digital reconnaissance camera component of the Navy's SHAred Reconnaissance Pod (SHARP) system by Recon/Optical, a principal supplier of sophisticated reconnaissance imaging systems for industrial and military applications. The SHARP system, which has entered a new round of low-rate initial production, is an all-weather medium- and high-altitude electro-optical and infrared An invisible band of radiation at the lower end of the visible light spectrum. With wavelengths from 750 nm to 1 mm, infrared starts at the end of the microwave spectrum and ends at the beginning of visible light. digital reconnaissance capability currently utilized by the F/A-18F Super Hornet hornet: see wasp. fighter jets. -- April 7 - Mercury announced that SOSTAR SOSTAR Standoff Surveillance and Target Acquisition Radar (NATO program) GmbH of Immenstaad, Germany will use RACE++ multicomputer systems in the development of the Stand-Off Surveillance and Target Acquisition Radar (SOSTAR-X) system. The SOSTAR-X system is a European radar development including a two-dimensional Active Electronically Scanned Array An electronically scanned array (ESA), or a phased array, offers many advantages over mechanically-scanned antennas such as instantaneous beam scanning, the availability of multiple concurrent agile beams and concurrently operating radar modes. (AESA AESA Active Electronically Scanned Array AESA ATM End System Address AESA Agence Européenne de la Sécurité Aérienne (French: European Aviation Safety Agency) AESA Association of Educational Service Agencies ) antenna, operations and control, data link and groundstation. The SOSTAR system is a comprehensive ground surveillance and target tracking system that combines advanced radar technologies such as ground moving target identification (GMTI GMTI Ground Moving Target Indicator GMTI Greenman Technologies, Inc. (stock symbol) GMTI Gannett Media Technologies International GMTI Gus Matonek Trucking, Inc. ), swath and spotlight synthetic aperture radar (SAR), classification and data exploitation technologies. Business Outlook This section presents our current expectations and estimates, given current visibility, on our business outlook. It is possible that actual performance will differ materially from the ranges and estimates given - either on the upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside or on the downside On the Downside is an EP by the San Diego, California band Counterfit, released by Alphabet Records in 2000. It was the band's first EP, recorded shortly after the members had relocated to San Diego from Fairfield County, Connecticut. . Investors should consider all of the risks, including those listed in the Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement below, with respect to these estimates and make themselves aware of the risk factors that may impact the Company's actual performance. Recognizing the current limited visibility to timing of defense orders, the Company is projecting flat to modest revenue growth in fiscal 2004, with total revenue in the range of $180 to $190 million, and earnings per share of between $0.85 and $0.95. This compares to fiscal 2003 earnings per share of $1.03. The fiscal 2003 earnings included the final payments totaling $5.8 million booked for the sale of its Shared Storage Business Unit (SSBU). In the first quarter of fiscal year 2004, revenues are expected to be in the range of $39 to $42 million. At these revenue levels, the Company projects a range of $0.13 to $0.17 for earnings per share for the first quarter ended September 30, 2003. Forward-Looking Safe Harbor Statement This press release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , as that term is defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc anticipated fiscal 2004 business performance. You can identify these statements by our use of the words "may," "will," "should," "plans," "expects," "anticipates," "continue," "estimate," "project," "intend," and similar expressions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to, general economic and business conditions, including continuing economic weakness in the Company's markets, effects of continued geo-political unrest Unrest is a sociological phenomenon, for instance:
See 10-Q. for the quarter ended March 31, 2003. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date on which such statement is made. The Company may, in its discretion, provide information in future public announcements regarding its outlook that may be of interest to the investment community. The format and extent of future outlooks may be different from the format and extent of the information contained in this release. Conference Call Information Mercury Computer Systems will host a conference call at 11:00 a.m. ET to discuss the 2003 Fourth Quarter and Fiscal Year results and review the financial and business outlook for fiscal year 2004. To listen to the conference call, dial (800) 967-7134 in the USA and Canada, and for international, dial (719) 457-2625. The conference code number is 668540. Please call five to ten minutes prior to the scheduled start time. This call will also be broadcast live over the web at www.mc.com/investor under Financial Events. A replay of the call by telephone will be available from approximately 2:00 p.m. ET on Thursday, July 31 through midnight ET on Monday, August 4. To access the replay, dial (888) 203-1112 in the USA and Canada, and for international, dial (719) 457-0820. Enter access code 668540. A replay of the webcast of the call will be available for an extended period of time on the Financial Events page of the Company's website at www.mc.com/investor. About Mercury Computer Systems, Inc. Mercury Computer Systems, Inc. (NASDAQ: MRCY) is the leading supplier of high-performance embedded Inserted into. See embedded system. , real-time digital signal and image processing computer systems. Mercury's products play a critical role in a wide range of applications, transforming sensor A device that measures or detects a real-world condition, such as motion, heat or light and converts the condition into an analog or digital representation. An optical sensor detects the intensity or brightness of light, or the intensity of red, green and blue for color systems. data to information for analysis and interpretation. In military reconnaissance and surveillance platforms, the company's systems process real-time radar, sonar, and signals intelligence data. Mercury's systems are also used in state-of-the-art medical diagnostic imaging devices including MRI, CT, PET, and digital X-ray, and in semiconductor imaging applications including photomask An opaque image on a translucent plate that is used as a light filter to transfer an image from one device to another. See chip. generation and wafer (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. inspection. Based in Chelmsford, Massachusetts Chelmsford is a town in Middlesex County, Massachusetts in the Greater Boston area. It is located 24 miles from Boston and, bordering on the City of Lowell, it is part of the Greater Lowell metropolitan area. , Mercury serves customers in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Europe and Asia through its direct sales force and a network of subsidiaries and distributors. Contact: Diane Basile Joseph Hartnett Vice President, Investor Relations & VP, Controller & Corporate Communications Acting Chief Financial Officer 978-256-1300 978-256-1300 Visit Mercury on the Web: www.mc.com RACE++ is a registered trademark, and RACE Series and Diamond Series are trademarks of Mercury Computer Systems, Inc. Product and company names mentioned may be trademarks and/or registered trademarks of their respective holders.
MERCURY COMPUTER SYSTEMS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands)
June June
30, 30,
2003 2002
------------------
Assets
Current assets:
Cash and cash equivalents $ 27,158 $ 17,513
Marketable securities 40,892 37,997
Accounts receivable, net 22,975 31,797
Inventory 10,735 14,540
Deferred tax assets, net 4,778 5,621
Prepaid income taxes --- 3,120
Prepaid expenses and other current assets 3,513 3,950
-------- --------
Total current assets 110,051 114,538
Marketable securities 45,211 15,870
Property and equipment, net 26,349 27,961
Goodwill 4,225 4,225
Acquired intangible assets, net 2,339 3,188
Deferred tax assets, net 1,321 435
Other assets 1,059 894
-------- --------
Total assets $190,555 $167,111
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 5,235 $ 4,673
Accrued expenses 4,354 5,291
Accrued compensation 10,053 6,277
Capital lease obligations --- 92
Notes payable 718 667
Income taxes payable 2,440 ---
Deferred revenues and customer advances 2,741 1,487
-------- --------
Total current liabilities 25,541 18,487
Notes payable 11,599 12,318
Deferred compensation 759 581
-------- --------
Total liabilities 37,899 31,386
Stockholders' equity:
Common stock 223 222
Additional paid-in capital 52,174 49,863
Treasury stock, at cost (40,197) (34,993)
Retained earnings 140,142 120,353
Accumulated other comprehensive income 314 280
-------- --------
Total stockholders' equity 152,656 135,725
-------- --------
Total liabilities and stockholders' equity$190,555 $167,111
======== ========
MERCURY COMPUTER SYSTEMS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months Twelve months
ended ended
June 30, June 30,
2003 2002 2003 2002
------- ------- -------- --------
Net revenues $44,473 $42,955 $180,242 $150,115
Cost of revenues 14,925 15,307 62,048 52,244
------- ------- -------- --------
Gross profit 29,548 27,648 118,194 97,871
Operating expenses:
Selling, general and
administrative 14,100 12,912 53,981 48,939
Research and development 9,614 9,285 38,383 34,354
------- ------- -------- --------
Total operating expenses 23,714 22,197 92,364 83,293
Income from operations 5,834 5,451 25,830 14,578
Interest income 438 588 1,855 3,752
Interest expense (226) (242) (923) (987)
Equity loss in joint venture --- --- --- (1,752)
Gain on sale of division, net --- 1,600 5,800 6,478
Other income (expense), net 112 90 308 (86)
------- ------- -------- --------
Income before income taxes 6,158 7,487 32,870 21,983
Income tax provision 1,912 2,096 10,193 6,155
------- ------- -------- --------
Net income $ 4,246 $ 5,391 $ 22,677 $ 15,828
======= ======= ======== ========
Net income per share:
Basic $ 0.20 $ 0.25 $ 1.07 $ 0.73
======= ======= ======== ========
Diluted $ 0.20 $ 0.24 $ 1.03 $ 0.69
======= ======= ======== ========
Weighted average shares outstanding:
Basic 21,030 21,271 21,131 21,731
======= ======= ======== ========
Diluted 21,656 22,099 21,948 22,918
======= ======= ======== ========
MERCURY COMPUTER SYSTEMS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three months Twelve months
ended ended
June 30, June 30,
2003 2002 2003 2002
-------- -------- -------- --------
Cash flows from operating
activities:
Net income $4,246 $5,391 $22,677 $15,828
Depreciation and amortization 2,341 2,335 8,212 7,086
Other non-cash items, net 132 (2,471) (3,870) (3,564)
Changes in operating assets and
liabilities 832 (5,194) 23,481 (3,408)
-------- -------- -------- --------
Net cash provided by operating
activities 7,551 61 50,500 15,942
Cash flows from investing
activities:
(Purchases) sales of marketable
securities, net (5,406) 25,910 (32,236) 28,050
Purchases of property and equipment (1,748) (1,841) (6,165) (5,786)
Other - (6,348) 5,800 (2,548)
-------- -------- -------- --------
Net cash (used in) provided by
investing activities (7,154) 17,721 (32,601) 19,716
Cash flows from financing
activities:
Proceeds from stock issuances 737 1,052 2,855 4,429
Purchases of treasury stock (4,393) (17,448) (10,139) (34,993)
Principal payments of debt (172) (208) (760) (929)
-------- -------- -------- --------
Net cash used in financing
activities (3,828) (16,604) (8,044) (31,493)
Effect of exchange rate changes on
cash and cash equivalents 78 62 (210) 41
-------- -------- -------- --------
Net increase (decrease) in cash and
cash equivalents (3,353) 1,240 9,645 4,206
Cash and cash equivalents at
beginning of period 30,511 16,273 17,513 13,307
Cash and cash equivalents at end of
period $27,158 $17,513 $27,158 $17,513
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