Cash flow from operating activities was a net outflow of $9.9 million in the first quarter of fiscal 2013, compared to a net inflow of $4.2 million in the first quarter of fiscal 2012. Free cash flow, defined as cash flow from operating activities less capital expenditures, was a net outflow of $10.9 million in the first quarter of fiscal 2013, compared to a net inflow of $2.6 million in the first quarter of fiscal 2012. Cash and cash equivalents as of September 30, 2012 were $30.6 million, a decrease of $85.4 million from June 30, 2012, largely due to $74.3 million of cash used to purchase Micronetics, Inc. (net of cash acquired and including the payoff of assumed debt from Micronetics, Inc.), and cash used in operating activities.
"Mercury's financial results for the first quarter reflected the increasingly challenging conditions in the defense industry," said Mark Aslett, President and CEO, Mercury Computer Systems. "Current constraints on U.S. defense spending and uncertainties surrounding the future defense budget have led the industry to operate in what appears to be a soft sequestration environment. The resulting slowdowns in funding and contracting activity had a more significant impact on our first-quarter business than we initially anticipated – primarily due to delayed orders associated with the Navy's Surface Electronic Warfare Improvement Program (SEWIP) Block 2."
"During the first quarter we proactively responded to this difficult industry environment by implementing aggressive expense reduction actions that included reducing the size of our workforce by 142 positions," Aslett said. "We expect this restructuring and other cost control measures completed during the quarter to result in approximately $20 million of annualized savings beginning in the current second quarter of fiscal 2013. This is in addition to the $5 million of estimated annualized savings associated with the restructuring that took place in the fourth quarter of fiscal 2012."
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