Mercury Systems Inc · NASDAQ:MRCY

Mercury Systems — Mercury Computer Systems — Cowen and Company 28th Annual Aerospace/Defense Conference 2007

40 slides from Mercury Systems's conference presentation, Feb 6, 2007

  1. Slide 1: Cowen and Company 28th Annual Aerospace/Defense Conference

    Cowen and Company 28th Annual Aerospace/Defense Conference February 6, 2007 © 2005 Mercury Computer Systems, Inc. Jay Bertelli, President, Chief Executive Officer & Chairman Bob Hult, SVP, Chief Financial Officer

  2. Slide 2: Forward-Looking Safe Harbor Statement

    © 2005 Mercury Computer Systems, Inc. 2 Forward-Looking Safe Harbor Statement This presentation contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to anticipated fiscal 2007 business performance and b

  3. Slide 3: Mercury at a Glance

    © 2005 Mercury Computer Systems, Inc. 3 Mercury at a Glance • HQ in Chelmsford, MA Sales, support, and R&D centers in U.S., Europe, and Japan 823 employees worldwide • Founded in 1983 Seven acquisitions since 2004 • FY06 revenues: $236M 56/44% defense/commercial • Industry focus areas: Aerospace & D

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  6. Slide 6: What We Do

    © 2005 Mercury Computer Systems, Inc. 4 What We Do Architect specialized computing solutions Mercury software, systems engineering, and domain expertise Cell BE, FPGA, GPU, Multicore, Pentium DSP Aerospace & Defense Life Sciences Communications Video Semiconductor Geosciences Processor Platforms Com

  7. Slide 7: Diverse Base of Customers and Targets

    © 2005 Mercury Computer Systems, Inc. 5 Diverse Base of Customers and Targets Commercial Defense

  8. Slide 8: Investment Highlights

    © 2005 Mercury Computer Systems, Inc. 6 Investment Highlights • Data explosion across multiple markets demands skills in Mercury’s technology sweet spot • Well-positioned for rebound in defense market • Large opportunity in 3D medical imaging • Leveraging investments into adjacent and new markets •

  9. Slide 9: New Data-Hungry Applications in Multiple Markets

    © 2005 Mercury Computer Systems, Inc. 7 New Data-Hungry Applications in Multiple Markets • Improving sensors • Large data sets • Growing need for intensive computing • Enhanced image accuracy • Real-time 3D Multi-slice CT (32/64) 4 Gbytes typical OIV/VolumeViz large data set module 100 Gbytes typica

  10. Slide 10: Our Unique Competitive Advantages

    © 2005 Mercury Computer Systems, Inc. 8 Our Unique Competitive Advantages • Unique skill set and software for processing and visualizing data • Mercury’s heterogeneous architectures enable systems to perform optimally in demanding applications • Libraries and tools for multi-core, multi- processor c

  11. Slide 11: Defense: Well-Positioned for Rebound

    © 2005 Mercury Computer Systems, Inc. 9 Defense: Well-Positioned for Rebound • Strong customer base 20 years of experience COTS model • Technology leadership Strong position in large, complex radar systems and Signals Intelligence • Broadened product portfolio Radio Frequency, Data Acquisition, Batt

  12. Slide 12: Defense Embedded Computing Market Potential

    © 2005 Mercury Computer Systems, Inc. 10 Defense Embedded Computing Market Potential 90-95% Primes 5-10% COTS Opportunity for Collaborative COTS ® Source: The Embedded Computing Market 2006, Electronic Trend Publications Inc & Internal Estimates. Defense Weapons & C3 Boards and Systems A $14.2 Billi

  13. Slide 13: Defense 2006 Design Wins

    © 2005 Mercury Computer Systems, Inc. 11 Defense 2006 Design Wins $77 - $94 Million Total $30 - $35 Million Other $7 - $9 Million Signals Intelligence $40 - $50 Million Radar Revenue potential 3 – 5 Years:

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  15. Slide 15: Radar Leadership Positions Us for New Programs

    © 2005 Mercury Computer Systems, Inc. 13 Radar Leadership Positions Us for New Programs • Airborne surveillance: MP-RTIP Global Hawk (15 platforms) JSTARS and AWACS upgrade potential • Tactical fighters: F-35, F-22, F-16 • Shipboard missile defense: Aegis • UAV: Predator LYNX SAR • Land-based/mobile

  16. Slide 16: Medical Imaging: Large Opportunity

    © 2005 Mercury Computer Systems, Inc. 14 Medical Imaging: Large Opportunity Mercury Segments DMI – Diagnostic Medical Imaging modalities Market growth of 3% to 10% PACS – Picture Archiving and Communications System Market growth of 12+% and higher growth in 3D Microscopy & Biotech Visualization High

  17. Slide 17: Trends Driving Strong Medical Imaging Growth

    © 2005 Mercury Computer Systems, Inc. 15 Trends Driving Strong Medical Imaging Growth • Aging population More diagnostic imaging • Better acquisition sensors More data More compute intensive tasks • Interventional radiology a reality with more cost-effective compute power enabling real time visualiz

  18. Slide 18: Revolutionary 3D Transformation

    © 2005 Mercury Computer Systems, Inc. 16 Revolutionary 3D Transformation • The market requires a more productive means of visualization throughout the medical imaging workflow Acquisition Reconstruction Visualization Distribution Advanced Research Professional Services & Support

  19. Slide 19: Unique Strengths in Life Sciences

    © 2005 Mercury Computer Systems, Inc. 17 Unique Strengths in Life Sciences • Medical Imaging 19 years of experience Unique skill set for emerging 3D market • Successful introduction of software applications and full systems for end users • Expanding product portfolio PACS 3D visualization server MRI

  20. Slide 20: World's First Thin Client/Server

    © 2005 Mercury Computer Systems, Inc. 18 World’s First Thin Client/Server • Visage ™ CS Thin Client/Server The world’s first fully scalable thin client/server Instant interactive viewing for 2D, 3D and 4D studies Optimal use of existing PCs throughout the enterprise Tight integration with PACS and m

  21. Slide 21: Life Sciences 2006 Design Wins

    © 2005 Mercury Computer Systems, Inc. 19 Life Sciences 2006 Design Wins Total Pre-Clinical Drug Microscopy Surgical Navigation Diagnostic Medical Imaging PACS Revenue potential: $10 - $15 Million / Year

  22. Slide 22: CIV Transition in Revenues FY05 – FY07

    © 2005 Mercury Computer Systems, Inc. 20 CIV Transition in Revenues FY05 – FY07 Legacy New FY05 FY06 FY07 Fcst New Legacy 83% 17% 59% 41% 34% 66%

  23. Slide 23: Leveraging Technology into New Markets

    © 2005 Mercury Computer Systems, Inc. 21 Leveraging Technology into New Markets • Increasing multi-market leverage of R&D investments Includes both organically developed and acquired technology Significant trend reversal Market Investments Leveraged Investments Cell Solutions 3D Imaging Software A/D

  24. Slide 24: Leverage Example: Cell BE-based Solutions

    © 2005 Mercury Computer Systems, Inc. 22 Leverage Example: Cell BE-based Solutions Cell Solutions Medical/ Biotech Radar Video Gaming Semi Creation Oil & Gas Intelligence National Labs • 5-100x faster than conventional microprocessors • A strong match to Mercury’s unique capabilities Architected to

  25. Slide 25: Semiconductor Creation Market

    © 2005 Mercury Computer Systems, Inc. 23 Semiconductor Creation Market • Supplying application- enabling solutions to leading OEMs • Growth driven by production design wins Mask generation Wafer inspection Reticle inspection • Positioned for the next wave Mercury Cell BE-based solutions uniquely mee

  26. Slide 26: Growth Opportunity: EDA Mask Synthesis

    © 2005 Mercury Computer Systems, Inc. 24 Growth Opportunity: EDA Mask Synthesis • Compute-intensive processing required to prepare designs for mask creation Resolution Enhancement Technology (RET) Design For Manufacturing (DFM) • Mercury Cell BE-based solutions to provide over 10 Teraflops to speed

  27. Slide 27: New Growth Opportunity: Oil & Gas

    © 2005 Mercury Computer Systems, Inc. 25 New Growth Opportunity: Oil & Gas • Competitive advantages in computing and visualization Performance/watt/cubic inch Extremely large data sets • Computing platforms Seismic acquisition and processing • Visualization Seismic QC and interpretation Horizons, fa

  28. Slide 28: New Growth Opportunity: Asset Protection

    © 2005 Mercury Computer Systems, Inc. 26 New Growth Opportunity: Asset Protection • Forest fire detection and monitoring • Precision agriculture • Border surveillance • Oil and gas pipeline monitoring • Power line monitoring • Surveillance and reconnaissance • Commercial and military avionics Synthe

  29. Slide 29: New Growth Opportunity: Communications

    © 2005 Mercury Computer Systems, Inc. 27 New Growth Opportunity: Communications • Communications market potential System development platforms for wireless infrastructure applications • Growth Opportunity AdvancedTCA DSP and FPGA compute solutions • Example: Satellite ground stations for Ancillary T

  30. Slide 30: Semiconductor and Communications 2006 Design Wins

    © 2005 Mercury Computer Systems, Inc. 28 Semiconductor and Communications 2006 Design Wins $31 - $63 Million Total $6 - $18 Million Communications: • ATC • NextGen Base Stations $25 - $45 Million Semiconductor: • Reticle Inspection • EDA • Alignment Revenue potential / Year:

  31. Slide 31: Financial Overview

    Financial Overview © 2005 Mercury Computer Systems, Inc.

  32. Slide 32: Revenue Follows Technology Cycles

    © 2005 Mercury Computer Systems, Inc. 30 Revenue Follows Technology Cycles Revenue ($M) $86 $107 $141 $181 $150 $180 $186 $236 $230* 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007E Echotek – A/D-D/A June Fiscal Year End *Per Company guidance, January 25, 2007 earnings conference call PowerPC RACE

  33. Slide 33: GAAP Net Income and EBITDA

    © 2005 Mercury Computer Systems, Inc. 31 GAAP Net Income and EBITDA (30) (20) (10) - 10 20 30 40 50 60 70 *Per Company guidance, January 25, 2007 earnings conference call EBITDA excludes the following charges from Net Income: Interest * Expense, Taxes, Depreciation and Amortization: $(16.2) $(18.1)

  34. Slide 34: Focus on Working Capital

    © 2005 Mercury Computer Systems, Inc. 32 Focus on Working Capital • Supply chain transformation Competitive advantage for Mercury and customers • Customer satisfaction DSO target 45 days Inventory Turns 4.9 6.9 5.4 4.6 4.4 8.0 2003 2004 2005 2006 2007E Model Days Sales Outstanding 2003 2004 2005 200

  35. Slide 35: Strong Balance Sheet

    © 2005 Mercury Computer Systems, Inc. 33 Strong Balance Sheet Historically strong balance sheet Net cash positive * Convertible senior notes offering Quarter ended December 31, 2006 Cash and Equivalents $137 Total Current Assets $172 Total Assets $377 Total Debt $125 Total Liabilities $189 Stockhold

  36. Slide 36: Commitment to Timeless Business Model

    © 2005 Mercury Computer Systems, Inc. 34 Commitment to Timeless Business Model Non-GAAP FY04 FY05 FY06 Guidance FY07* Timeless Business Model Revenue 100% 100% 100% 100% 100% Gross Margin 67% 66% 62% 56% 60+% SG&A 30% 29% 34% R&D 21% 20% 25% Income from Operations 17% 17% 3% (4%) 16-18% *Per Company

  37. Slide 37: Q3 Fiscal Year 2007 Guidance

    © 2005 Mercury Computer Systems, Inc. 35 Q3 Fiscal Year 2007 Guidance • Impact of equity-based compensation costs related to FAS 123(R) of approximately $2.8M excluded from non- GAAP • Acquisition-related amortization of approximately $1.8 M excluded from non-GAAP Notes: 1) Figures in millions, exce

  38. Slide 38: Fiscal Year 2007 Guidance

    © 2005 Mercury Computer Systems, Inc. 36 Fiscal Year 2007 Guidance Fiscal Year Ending June 30, 2007 Revenues ($M) $230 GAAP Non-GAAP Gross Margin 56% 56% EPS $(0.85) $(0.13) Notes: 1) Figures in millions, except percent and per share data which includes adjustment for contingent convertibles, in acc

  39. Slide 39: Investment Highlights

    © 2005 Mercury Computer Systems, Inc. 37 Investment Highlights • Data explosion across multiple markets demands skills in Mercury’s technology sweet spot • Well-positioned for rebound in defense market • Large opportunity in 3D medical imaging • Leveraging investments into adjacent and new markets •

  40. Slide 40: www.mc.com

    © 2005 Mercury Computer Systems, Inc. 38 www.mc.com NASDAQ: MRCY

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