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Mercury Systems Reports Fourth Quarter And Fiscal 2013 Results

Mercury Systems, Inc., Innovation That Matters, Air Flow-By, and Application-Ready Subsystems are trademarks of Mercury Systems, Inc. Other product and company names mentioned may be trademarks and/or registered trademarks of their respective holders.  

MERCURY SYSTEMS, INC.  
UNAUDITED CONSOLIDATED BALANCE SHEETS 
(In thousands) June 30, June 30,
  2013 2012
     
Assets    
Current assets:    
 Cash and cash equivalents  $ 39,126  $ 115,964
 Accounts receivable, net   30,498  38,532
 Unbilled receivables and costs in excess of billings  17,743  10,918
 Inventory  37,432  25,845
 Deferred income taxes  12,222  7,653
 Prepaid income taxes  1,819  2,585
 Prepaid expenses and other current assets  7,461  6,206
 Total current assets  146,301  207,703
     
Restricted cash  546  3,281
Property and equipment, net  15,019  15,929
Goodwill   176,521  132,621
Intangible assets, net  34,866  25,083
Other non-current assets  1,178  989
 Total assets  $ 374,431  $ 385,606
     
Liabilities and Shareholders' Equity    
Current liabilities:    
 Accounts payable  $ 4,813  $ 9,002
 Accrued expenses  7,999  9,895
 Accrued compensation  12,218  13,190
 Deferred revenues and customer advances  5,788  4,855
 Total current liabilities  30,818  36,942
     
Deferred gain on sale-leaseback  3,242  4,399
Deferred income taxes  7,721  7,197
Income taxes payable  2,880  2,597
Other non-current liabilities  1,269  1,367
 Total liabilities  45,930  52,502
     
Shareholders' equity:    
 Common stock  304  297
 Additional paid-in capital  231,711  222,769
 Retained earnings  95,524  108,732
 Accumulated other comprehensive income   962  1,306
 Total shareholders' equity  328,501  333,104
     
 Total liabilities and shareholders' equity  $ 374,431  $ 385,606
 
MERCURY SYSTEMS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)  
         
  Three Months Ended Twelve Months Ended
  June 30, June 30,
  2013 2012 2013 2012
Net revenues  $ 55,436  $ 60,859  $ 208,791  $ 244,929
Cost of revenues (1)   33,304  30,595  126,123  108,773
 Gross margin  22,132  30,264  82,668  136,156
         
Operating expenses:        
 Selling, general and administrative (1)   14,554  13,878  57,579  57,159
 Research and development (1)  7,557  10,943  32,687  45,984
 Amortization of intangible assets  2,343  1,148  8,717  3,799
 Restructuring and other charges  1,627  2,821  7,056  2,821
 Acquisition costs and other related expenses  14  456  318  1,219
 Change in the fair value of the liability related to the LNX earn-out  --   (4,938)  --   (4,938)
 Total operating expenses  26,095  24,308  106,357  106,044
         
(Loss) income from operations  (3,963)  5,956  (23,689)  30,112
         
Interest income  1  1  7  13
Interest expense  (8)  (14)  (38)  (40)
Other income, net  79  363  558  1,686
         
(Loss) income from operations before income taxes  (3,891)  6,306  (23,162)  31,771
         
Tax (benefit) provision  (1,879)  630  (9,954)  9,152
         
Net (loss) income  $ (2,012)  $ 5,676  $ (13,208)  $ 22,619
         
         
Basic net (loss) earnings per share:  $ (0.07)  $ 0.19  $ (0.44)  $ 0.77
         
Diluted net (loss) earnings per share:  $ (0.07)  $ 0.19  $ (0.44)  $ 0.75
         
Weighted-average shares outstanding:        
 Basic 30,287 29,611 30,128 29,477
 Diluted  30,287 30,168 30,128 30,085
         
         
(1) Includes stock-based compensation expense, allocated as follows:        
 Cost of revenues  $ 98  $ 108  $ 433  $ 349
 Selling, general and administrative   $ 1,365  $ 1,048  $ 6,460  $ 5,309
 Research and development   $ 212  $ 266  $ 1,047  $ 958
 
MERCURY SYSTEMS, INC. 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
  Three Months Ended Twelve Months Ended
  June 30, June 30,
  2013 2012 2013 2012
Cash flows from operating activities:        
 Net (loss) income   $ (2,012)  $ 5,676  $ (13,208)  $ 22,619
 Depreciation and amortization  4,365  3,277  17,209  11,658
 Change in the fair value of the liability related to the LNX earn-out  --  (4,938)  --  (4,938)
 Other non-cash items, net  (229)  (3,001)  (921)  2,446
 Changes in operating assets and liabilities, net of effect of businesses acquired  2,698  3,168  (4,951)  84
         
 Net cash provided by (used in) operating activities  4,822  4,182  (1,871)  31,869
         
Cash flows from investing activities:        
 Acquisition of businesses, net of cash acquired  --  (674)  (67,721)  (71,044)
 Purchases of property and equipment  (1,621)  (2,989)  (3,880)  (9,427)
 Proceeds from sales of building  775  --  775  --
 Increase in other investing activities  --  --  (265)  (331)
         
 Net cash used in investing activities  (846)  (3,663)  (71,091)  (80,802)
         
Cash flows from financing activities:        
 Proceeds from employee stock plans  508  600  1,251  1,631
 Payments of deferred financing and offering costs  --  --  (771)  (30)
 Payment of acquired debt  --  --  (6,575)  --
 Payments of capital lease obligations  (228)  (48)  (593)  (185)
 Decrease in restricted cash  --  --  3,000  --
 Excess tax benefits from stock-based compensation  1  72  19  559
         
 Net cash provided by (used in) financing activities  281  624  (3,669)  1,975
         
Effect of exchange rate changes on cash and cash equivalents  (276)  (24)  (207)  47
         
Net increase (decrease) in cash and cash equivalents  3,981  1,119  (76,838)  (46,911)
         
Cash and cash equivalents at beginning of period  35,145  114,845  115,964  162,875
         
Cash and cash equivalents at end of period  $ 39,126  $ 115,964  $ 39,126  $ 115,964

UNAUDITED SUPPLEMENTAL INFORMATION RECONCILIATION OF GAAP TO NON-GAAP MEASURES (In thousands)

Adjusted EBITDA, a non-GAAP measure for reporting financial performance, excludes the impact of certain items and, therefore, has not been calculated in accordance with GAAP. Management believes that exclusion of these items assists in providing a more complete understanding of the Company's underlying operational results and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company's business, to evaluate its performance compared to prior periods and the marketplace, and to establish operational goals. The adjustments to calculate this non-GAAP financial measure, and the basis for such adjustments, are outlined below:

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