Mercury Computer Systems Reports Second Quarter Fiscal 2009 Revenues of $50.7 Million

Operating cash flow of $2.7 million

GAAP losses per share of $(0.77) include goodwill and long-lived asset impairment charges of $(0.66) per share

Non-GAAP earnings per share of $0.03

CHELMSFORD, Mass. , Jan. 27 /PRNewswire-FirstCall/ -- Mercury Computer Systems, Inc. (NASDAQ: MRCY) reported results for its second quarter of fiscal 2009, which ended December 31, 2008 .

The results of Mercury's Visage Imaging business, which Mercury announced today has been sold to Pro Medicus Limited, are included in continuing operations as of December 31, 2008 , but will be reflected as discontinued operations in subsequent periods, including the reclassification of prior period results for comparison.

Second quarter revenues were $50.7 million, an increase of $1.6 million over the first quarter of fiscal 2009, and a decrease of $0.6 million from the prior year's second quarter.

Second quarter GAAP net losses were $(17.1) million, or $(0.77) per share. The second quarter GAAP net losses included $14.6 million, or $(0.66) per share, in goodwill and other long-lived asset impairment charges relating to Mercury's Visage Imaging business.

Second quarter GAAP operating losses were $(16.6) million and include $18.1 million in charges, consisting of $14.6 million in goodwill and long-lived asset impairment charges, $2.6 million in stock-based compensation costs, $0.8 million in amortization of acquired intangible assets, and $0.3 million in restructuring expenses. Excluding the impact of these charges, second quarter non-GAAP operating income was $1.5 million, as compared to $0.1 million in the second quarter of the prior year. Second quarter non-GAAP net income was $0.7 million. Non-GAAP diluted earnings per share were $0.03 for the second quarter.

Cash flows from operating activities were a net inflow of $2.7 million in the second quarter. Cash, cash equivalents, and marketable securities as of December 31, 2008 were $197.9 million, an increase of $30.9 million from September 30, 2008 . During the quarter ended December 31, 2008 , Mercury received proceeds from borrowings under its line of credit with UBS in the amount of $31.4 million. This line of credit was made available to Mercury, on a "no net cost" basis, during the second quarter as part of a settlement related to Mercury's auction-rate securities investments held by UBS.

"Mercury performed well in the second quarter," said Mark Aslett , President and CEO of Mercury Computer Systems, Inc. "We continued to execute on a plan to focus the business, improve Mercury's profitability, increase our cash flow, and position the Company for renewed growth in fiscal 2010 and beyond. As expected, this was another strong quarter for our ACS defense business, and Mercury Federal made further progress in expanding the Company's total addressable defense market."

"We also made progress toward our goal of divesting our unprofitable and non-core businesses by the end of this fiscal year," Aslett said. "As announced earlier this afternoon, today we signed and closed on the sale of Mercury's Visage Imaging business to Pro Medicus Limited, an Australian company in the healthcare and life sciences space. This removes the business that has been generating Mercury's most significant operating losses and advances us toward completing our portfolio rationalization activities. Looking forward, we are confident that Mercury will conclude the fiscal year as a more focused and profitable enterprise with a strong and growing defense business."


The Company's total backlog at the end of the second quarter was $82.6 million, a $5.2 million sequential decrease from the first quarter of the fiscal year, and a $7.0 million decrease from the same quarter last year as reported. Of the current total backlog, $71.8 million represents shipments scheduled over the next 12 months. The book-to-bill ratio was 0.90 for the second quarter and 0.95 for the six months ended December 31, 2008 .

Revenues by Operating Unit

Advanced Computing Solutions (ACS) -- Revenues for the quarter from ACS were $44.0 million, representing 87% of the Company's total revenues. Approximately 75% of ACS revenue for the quarter related to defense business as compared to approximately 67% in the same quarter last year.

Visage Imaging (Visage) -- Revenues for the quarter from Visage were $2.5 million, an increase of $0.5 million as compared to the first quarter of the current fiscal year.

Visualization Sciences Group (VSG) -- Revenues for the quarter from VSG were $3.6 million, an increase of $1.3 million as compared to the first quarter of the current fiscal year.

Emerging Businesses -- The results for this segment primarily consist of Mercury's wholly-owned subsidiary Mercury Federal Systems, Inc. (MFS). During the second quarter, MFS secured $1.2 million in bookings and recorded $1.1 million in revenues.

The revenues by operating unit do not include adjustments to eliminate any inter-segment revenues.

Business Outlook

This section presents our current expectations and estimates, given current visibility, on our business outlook for the upcoming fiscal quarter. It is possible that actual performance will differ materially from the estimates given â