Cash flows from operating activities were a net inflow of $1.6 million in the second quarter of fiscal 2013, compared to a net inflow of $11.0 million in the second quarter of fiscal 2012. Free cash flow, defined as cash flow from operating activities less capital expenditures, in the second quarter of fiscal 2013 was a net inflow of $0.8 million, compared to a net inflow of $9.1 million in the second quarter of fiscal 2012. Cash and cash equivalents as of December 31, 2012 were $33.9 million, an increase of $3.3 million from September 30, 2012, largely due to a release of $3.0 million of restricted cash and cash generated by operating activities.Management Comments "Mercury performed well during the second quarter, making good progress on bookings in a very challenging defense industry environment," said Mark Aslett, President and CEO, Mercury Systems. "Budgetary constraints on U.S. defense spending, coupled with the impending expiration of the current Congressional continuing resolution and the potential for sequestration, have resulted in an ongoing industry slowdown, that in turn has affected our financial results and revenue visibility. Nonetheless, our ACS core compute business posted a strong bookings quarter, as did our recently acquired Micronetics business. Our second-quarter bookings included major orders related to the Air Force's B-1 Bomber as well as the Navy's Aegis Ballistic Missile Defense System and Surface Electronic Warfare Improvement Program (SEWIP) Block 2." "Given the unpredictability of deal timing and revenues in the current environment, we are managing Mercury's business differently than in the past," Aslett said. "We are focusing on things that are within our control, managing to a more conservative forecast and revenue plan, and maximizing our cash. At the same time we believe that we have sufficient liquidity and financial flexibility to manage the ongoing needs of the business."