x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
MASSACHUSETTS
|
|
04-2741391
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
201 RIVERNECK ROAD
CHELMSFORD, MA
|
|
01824
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
|
¨
|
|
Accelerated filer
|
|
x
|
|
|
|
|
|||
Non-accelerated filer
|
|
¨
|
|
Smaller reporting company
|
|
¨
|
|
|
PAGE
NUMBER
|
PART I. FINANCIAL INFORMATION
|
|
|
|
|
|
Item 1.
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
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|
|
Item 2.
|
||
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|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
PART II. OTHER INFORMATION
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
September 30,
2014 |
|
June 30,
2014 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
48,876
|
|
|
$
|
47,287
|
|
Accounts receivable, net of allowance for doubtful accounts of $78 and $34 at September 30, 2014 and June 30, 2014, respectively
|
35,155
|
|
|
37,625
|
|
||
Unbilled receivables and costs in excess of billings
|
29,228
|
|
|
22,036
|
|
||
Inventory
|
30,771
|
|
|
31,655
|
|
||
Deferred income taxes
|
15,182
|
|
|
15,216
|
|
||
Prepaid income taxes
|
1,399
|
|
|
1,481
|
|
||
Prepaid expenses and other current assets
|
4,547
|
|
|
3,631
|
|
||
Current assets of discontinued operations
|
894
|
|
|
1,374
|
|
||
Total current assets
|
166,052
|
|
|
160,305
|
|
||
Restricted cash
|
265
|
|
|
265
|
|
||
Property and equipment, net
|
13,343
|
|
|
14,144
|
|
||
Goodwill
|
168,146
|
|
|
168,146
|
|
||
Intangible assets, net
|
23,244
|
|
|
25,006
|
|
||
Other non-current assets
|
1,255
|
|
|
987
|
|
||
Non-current assets of discontinued operations
|
4,685
|
|
|
4,859
|
|
||
Total assets
|
$
|
376,990
|
|
|
$
|
373,712
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
12,384
|
|
|
$
|
7,054
|
|
Accrued expenses
|
9,403
|
|
|
8,377
|
|
||
Accrued compensation
|
7,265
|
|
|
9,983
|
|
||
Deferred revenues and customer advances
|
3,649
|
|
|
5,898
|
|
||
Current liabilities of discontinued operations
|
1,383
|
|
|
1,618
|
|
||
Total current liabilities
|
34,084
|
|
|
32,930
|
|
||
Deferred gain on sale-leaseback
|
1,796
|
|
|
2,086
|
|
||
Deferred income taxes
|
5,437
|
|
|
5,911
|
|
||
Income taxes payable
|
3,154
|
|
|
3,154
|
|
||
Other non-current liabilities
|
1,307
|
|
|
1,666
|
|
||
Non-current liabilities of discontinued operations
|
771
|
|
|
818
|
|
||
Total liabilities
|
46,549
|
|
|
46,565
|
|
||
Commitments and contingencies (Note I)
|
|
|
|
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 85,000,000 shares authorized; 31,981,373 and 31,284,273 shares issued and outstanding at September 30, 2014 and June 30, 2014, respectively
|
320
|
|
|
312
|
|
||
Additional paid-in capital
|
244,609
|
|
|
241,725
|
|
||
Retained earnings
|
84,598
|
|
|
84,099
|
|
||
Accumulated other comprehensive income
|
914
|
|
|
1,011
|
|
||
Total shareholders’ equity
|
330,441
|
|
|
327,147
|
|
||
Total liabilities and shareholders’ equity
|
$
|
376,990
|
|
|
$
|
373,712
|
|
|
|
Three Months Ended
September 30, |
||||||
|
|
2014
|
|
2013
|
||||
Net revenues
|
|
$
|
54,061
|
|
|
$
|
50,726
|
|
Cost of revenues
|
|
30,062
|
|
|
29,164
|
|
||
Gross margin
|
|
23,999
|
|
|
21,562
|
|
||
Operating expenses:
|
|
|
|
|
||||
Selling, general and administrative
|
|
12,290
|
|
|
14,321
|
|
||
Research and development
|
|
7,951
|
|
|
9,312
|
|
||
Amortization of intangible assets
|
|
1,762
|
|
|
1,985
|
|
||
Restructuring and other charges
|
|
1,268
|
|
|
(15
|
)
|
||
Total operating expenses
|
|
23,271
|
|
|
25,603
|
|
||
Income (loss) from operations
|
|
728
|
|
|
(4,041
|
)
|
||
Interest income
|
|
3
|
|
|
1
|
|
||
Interest expense
|
|
(8
|
)
|
|
(15
|
)
|
||
Other (expense) income, net
|
|
(6
|
)
|
|
432
|
|
||
Income (loss) from continuing operations before income taxes
|
|
717
|
|
|
(3,623
|
)
|
||
Tax benefit
|
|
—
|
|
|
(1,319
|
)
|
||
Income (loss) from continuing operations
|
|
717
|
|
|
(2,304
|
)
|
||
(Loss) income from discontinued operations, net of income taxes
|
|
(218
|
)
|
|
48
|
|
||
Net income (loss)
|
|
$
|
499
|
|
|
$
|
(2,256
|
)
|
|
|
|
|
|
||||
Basic net earnings (loss) per share:
|
|
|
|
|
||||
Income (loss) from continuing operations
|
|
$
|
0.02
|
|
|
$
|
(0.07
|
)
|
(Loss) income from discontinued operations, net of income taxes
|
|
—
|
|
|
—
|
|
||
Net income (loss)
|
|
$
|
0.02
|
|
|
$
|
(0.07
|
)
|
|
|
|
|
|
||||
Diluted net earnings (loss) per share:
|
|
|
|
|
||||
Income (loss) from continuing operations
|
|
$
|
0.02
|
|
|
$
|
(0.07
|
)
|
(Loss) income from discontinued operations, net of income taxes
|
|
—
|
|
|
—
|
|
||
Net income (loss)
|
|
$
|
0.02
|
|
|
$
|
(0.07
|
)
|
|
|
|
|
|
||||
Weighted-average shares outstanding:
|
|
|
|
|
||||
Basic
|
|
31,635
|
|
|
30,653
|
|
||
Diluted
|
|
32,481
|
|
|
30,653
|
|
||
|
|
|
|
|
||||
Comprehensive income (loss):
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
499
|
|
|
$
|
(2,256
|
)
|
Foreign currency translation adjustments
|
|
(97
|
)
|
|
59
|
|
||
Total comprehensive income (loss)
|
|
$
|
402
|
|
|
$
|
(2,197
|
)
|
|
Three Months Ended
September 30, |
||||||
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
499
|
|
|
$
|
(2,256
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization expense
|
3,630
|
|
|
4,120
|
|
||
Stock-based compensation expense
|
2,614
|
|
|
3,035
|
|
||
(Benefit) provision for deferred income taxes
|
(820
|
)
|
|
464
|
|
||
Excess tax benefit from stock-based compensation
|
(316
|
)
|
|
—
|
|
||
Other non-cash items
|
(285
|
)
|
|
(243
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, unbilled receivables, and costs in excess of billings
|
(4,303
|
)
|
|
(731
|
)
|
||
Inventory
|
859
|
|
|
2,274
|
|
||
Prepaid income taxes
|
83
|
|
|
(1,172
|
)
|
||
Prepaid expenses and other current assets
|
(902
|
)
|
|
736
|
|
||
Other non-current assets
|
146
|
|
|
27
|
|
||
Accounts payable and accrued expenses
|
3,544
|
|
|
(2,750
|
)
|
||
Deferred revenues and customer advances
|
(2,561
|
)
|
|
(1,238
|
)
|
||
Other non-current liabilities
|
(10
|
)
|
|
(93
|
)
|
||
Net cash provided by operating activities
|
2,178
|
|
|
2,173
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(905
|
)
|
|
(1,108
|
)
|
||
Net cash used in investing activities
|
(905
|
)
|
|
(1,108
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from employee stock plans
|
236
|
|
|
60
|
|
||
Excess tax benefits from stock-based compensation
|
316
|
|
|
—
|
|
||
Payments of capital lease obligations
|
(160
|
)
|
|
(121
|
)
|
||
Net cash provided by (used in) financing activities
|
392
|
|
|
(61
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(76
|
)
|
|
(24
|
)
|
||
Net increase in cash and cash equivalents
|
1,589
|
|
|
980
|
|
||
Cash and cash equivalents at beginning of period
|
47,287
|
|
|
39,126
|
|
||
Cash and cash equivalents at end of period
|
$
|
48,876
|
|
|
$
|
40,106
|
|
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
8
|
|
|
$
|
15
|
|
Income taxes
|
$
|
374
|
|
|
$
|
334
|
|
Supplemental disclosures—non-cash activities:
|
|
|
|
||||
Issuance of restricted stock awards to employees
|
$
|
7,052
|
|
|
$
|
7,728
|
|
Capital lease
|
$
|
—
|
|
|
$
|
494
|
|
A.
|
Description of Business
|
B.
|
Summary of Significant Accounting Policies
|
|
Three Months Ended September 30,
|
||||
|
2014
|
|
2013
|
||
Basic weighted-average shares outstanding
|
31,635
|
|
|
30,653
|
|
Effect of dilutive equity instruments
|
846
|
|
|
—
|
|
Diluted weighted-average shares outstanding
|
32,481
|
|
|
30,653
|
|
|
For the Three Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
Net revenues of discontinued operations
|
$
|
1,839
|
|
|
$
|
3,214
|
|
Costs of discontinued operations:
|
|
|
|
||||
Cost of revenues
|
1,225
|
|
|
2,191
|
|
||
Selling, general and administrative
|
647
|
|
|
780
|
|
||
Research and development
|
171
|
|
|
32
|
|
||
Amortization of intangible assets
|
124
|
|
|
123
|
|
||
Acquisition costs and other related expenses
|
33
|
|
|
—
|
|
||
(Loss) income from discontinued operations before income taxes
|
(361
|
)
|
|
88
|
|
||
Tax (benefit) provision
|
(143
|
)
|
|
40
|
|
||
(Loss) income from discontinued operations
|
$
|
(218
|
)
|
|
$
|
48
|
|
|
September 30,
2014 |
|
June 30,
2014 |
||||
Accounts receivable, net
|
$
|
303
|
|
|
$
|
925
|
|
Unbilled receivables and costs in excess of billings
|
401
|
|
|
248
|
|
||
Deferred income taxes
|
88
|
|
|
77
|
|
||
Prepaid expenses and other current assets
|
102
|
|
|
124
|
|
||
Property and equipment, net
|
431
|
|
|
475
|
|
||
Goodwill
|
2,283
|
|
|
2,283
|
|
||
Intangible assets, net
|
1,938
|
|
|
2,062
|
|
||
Other non-current assets
|
33
|
|
|
39
|
|
||
Assets of discontinued operations
|
$
|
5,579
|
|
|
$
|
6,233
|
|
Accounts payable
|
$
|
21
|
|
|
$
|
127
|
|
Accrued expenses
|
879
|
|
|
802
|
|
||
Accrued compensation
|
483
|
|
|
689
|
|
||
Deferred income taxes
|
771
|
|
|
818
|
|
||
Liabilities of discontinued operations
|
$
|
2,154
|
|
|
$
|
2,436
|
|
|
For the Three Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
Depreciation
|
$
|
44
|
|
|
$
|
38
|
|
Amortization of intangible assets
|
$
|
124
|
|
|
$
|
123
|
|
Stock-based compensation expense
|
$
|
63
|
|
|
$
|
47
|
|
D.
|
Fair Value of Financial Instruments
|
|
|
Fair Value Measurements
|
||||||||||||||
|
|
September 30, 2014
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
48,876
|
|
|
$
|
48,876
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
|
|
265
|
|
|
265
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
49,141
|
|
|
$
|
49,141
|
|
|
$
|
—
|
|
|
$
|
—
|
|
E.
|
Inventory
|
|
|
September 30, 2014
|
|
June 30, 2014
|
||||
Raw materials
|
|
$
|
12,845
|
|
|
$
|
13,755
|
|
Work in process
|
|
14,324
|
|
|
12,677
|
|
||
Finished goods
|
|
3,602
|
|
|
5,223
|
|
||
Total
|
|
$
|
30,771
|
|
|
$
|
31,655
|
|
F.
|
Goodwill
|
|
|
September 30, 2014
|
|
June 30, 2014
|
||||
MCE goodwill
|
|
$
|
134,378
|
|
|
$
|
134,378
|
|
MDS goodwill
|
|
33,768
|
|
|
33,768
|
|
||
Total goodwill
|
|
$
|
168,146
|
|
|
$
|
168,146
|
|
G.
|
Restructuring Plan
|
|
|
Severance &
Related |
|
Facilities
& Other |
|
Total
|
||||||
Restructuring liability at June 30, 2014
|
|
$
|
1,371
|
|
|
$
|
772
|
|
|
$
|
2,143
|
|
MCE restructuring and other charges
|
|
669
|
|
|
750
|
|
|
1,419
|
|
|||
MDS restructuring and other charges
|
|
33
|
|
|
—
|
|
|
33
|
|
|||
Cash paid
|
|
(962
|
)
|
|
(242
|
)
|
|
(1,204
|
)
|
|||
Reversals(*)
|
|
(184
|
)
|
|
—
|
|
|
(184
|
)
|
|||
Restructuring liability at September 30, 2014
|
|
$
|
927
|
|
|
$
|
1,280
|
|
|
$
|
2,207
|
|
H.
|
Income Taxes
|
I.
|
Commitments and Contingencies
|
J.
|
Debt
|
K.
|
Stock-Based Compensation
|
|
|
Options Outstanding
|
|||||||
|
|
Number of
Shares |
|
Weighted Average
Exercise Price |
|
Weighted Average
Remaining Contractual Term (Years) |
|||
Outstanding at June 30, 2014
|
|
1,435
|
|
|
$
|
11.76
|
|
|
2.23
|
Granted
|
|
—
|
|
|
—
|
|
|
|
|
Exercised
|
|
(37
|
)
|
|
6.33
|
|
|
|
|
Cancelled
|
|
(62
|
)
|
|
23.58
|
|
|
|
|
Outstanding at September 30, 2014
|
|
1,336
|
|
|
$
|
11.37
|
|
|
2.02
|
|
|
Non-vested Restricted Stock Awards
|
|||||
|
|
Number of
Shares |
|
Weighted Average
Grant Date Fair Value |
|||
Outstanding at June 30, 2014
|
|
2,091
|
|
|
$
|
10.15
|
|
Granted
|
|
620
|
|
|
11.38
|
|
|
Vested
|
|
(660
|
)
|
|
10.31
|
|
|
Forfeited
|
|
(126
|
)
|
|
10.90
|
|
|
Outstanding at September 30, 2014
|
|
1,925
|
|
|
$
|
10.44
|
|
|
Three Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
Cost of revenues
|
$
|
151
|
|
|
$
|
207
|
|
Selling, general and administrative
|
1,966
|
|
|
2,314
|
|
||
Research and development
|
434
|
|
|
467
|
|
||
Share-based compensation expense before tax
|
2,551
|
|
|
2,988
|
|
||
Income tax benefit
|
(919
|
)
|
|
(1,072
|
)
|
||
Net compensation expense
|
$
|
1,632
|
|
|
$
|
1,916
|
|
L.
|
Operating Segment, Geographic Information and Significant Customers
|
•
|
Mercury Commercial Electronics (“MCE”): this operating segment delivers affordable, innovative, commercially developed, specialized processing subsystems for critical commercial, defense and intelligence applications. MCE delivers secure solutions that are based upon open architectures and widely adopted industry standards. MCE delivers
|
•
|
Mercury Defense Systems (“MDS”): this operating segment provides significant capabilities relating to pre-integrated, open, affordable electronic warfare ("EW"), electronic attack ("EA") and electronic counter measure ("ECM") subsystems, and signals intelligence ("SIGINT") and electro-optical/infrared ("EO/IR") processing technologies. MDS deploys these solutions on behalf of defense prime contractors and the Department of Defense ("DoD"), leveraging commercially available technologies and solutions (or “building blocks”) from the MCE business and other commercial suppliers. MDS leverages this technology to develop integrated sensor processing subsystems, often including classified application-specific software and intellectual property ("IP") for the C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance), EW, and ECM markets. MDS brings significant domain expertise to customers, drawing on over 25 years of experience in EW, SIGINT, and radar environment test and simulation.
|
|
|
MCE
|
|
MDS
|
|
Eliminations
|
|
Total
|
||||||||
THREE MONTHS ENDED
SEPTEMBER 30, 2014 |
|
|
|
|
|
|
|
|
||||||||
Net revenues to unaffiliated customers
|
|
$
|
48,556
|
|
|
$
|
5,379
|
|
|
$
|
126
|
|
|
$
|
54,061
|
|
Intersegment revenues
|
|
501
|
|
|
140
|
|
|
(641
|
)
|
|
—
|
|
||||
Net revenues
|
|
$
|
49,057
|
|
|
$
|
5,519
|
|
|
$
|
(515
|
)
|
|
$
|
54,061
|
|
Adjusted EBITDA
|
|
$
|
7,289
|
|
|
$
|
486
|
|
|
$
|
228
|
|
|
$
|
8,003
|
|
THREE MONTHS ENDED
SEPTEMBER 30, 2013 |
|
|
|
|
|
|
|
|
||||||||
Net revenues to unaffiliated customers
|
|
$
|
43,488
|
|
|
$
|
7,916
|
|
|
$
|
(678
|
)
|
|
$
|
50,726
|
|
Intersegment revenues
|
|
1,114
|
|
|
—
|
|
|
(1,114
|
)
|
|
—
|
|
||||
Net revenues
|
|
$
|
44,602
|
|
|
$
|
7,916
|
|
|
$
|
(1,792
|
)
|
|
$
|
50,726
|
|
Adjusted EBITDA
|
|
$
|
2,343
|
|
|
$
|
1,062
|
|
|
$
|
(82
|
)
|
|
$
|
3,323
|
|
|
|
Three Months Ended September 30,
|
||||||
|
|
2014
|
|
2013
|
||||
Income (loss) from continuing operations
|
|
$
|
717
|
|
|
$
|
(2,304
|
)
|
Interest expense, net
|
|
5
|
|
|
14
|
|
||
Tax benefit
|
|
—
|
|
|
(1,319
|
)
|
||
Depreciation
|
|
1,700
|
|
|
1,974
|
|
||
Amortization of intangible assets
|
|
1,762
|
|
|
1,985
|
|
||
Restructuring and other charges
|
|
1,268
|
|
|
(15
|
)
|
||
Stock-based compensation expense
|
|
2,551
|
|
|
2,988
|
|
||
Adjusted EBITDA
|
|
$
|
8,003
|
|
|
$
|
3,323
|
|
|
|
US
|
|
Europe
|
|
Asia Pacific
|
|
Eliminations
|
|
Total
|
||||||||||
THREE MONTHS ENDED
SEPTEMBER 30, 2014 |
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues to unaffiliated customers
|
|
$
|
53,085
|
|
|
$
|
346
|
|
|
$
|
630
|
|
|
$
|
—
|
|
|
$
|
54,061
|
|
Inter-geographic revenues
|
|
583
|
|
|
—
|
|
|
—
|
|
|
(583
|
)
|
|
—
|
|
|||||
Net revenues
|
|
$
|
53,668
|
|
|
$
|
346
|
|
|
$
|
630
|
|
|
$
|
(583
|
)
|
|
$
|
54,061
|
|
THREE MONTHS ENDED
SEPTEMBER 30, 2013 |
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues to unaffiliated customers
|
|
$
|
49,456
|
|
|
$
|
508
|
|
|
$
|
762
|
|
|
$
|
—
|
|
|
$
|
50,726
|
|
Inter-geographic revenues
|
|
819
|
|
|
157
|
|
|
140
|
|
|
(1,116
|
)
|
|
—
|
|
|||||
Net revenues
|
|
$
|
50,275
|
|
|
$
|
665
|
|
|
$
|
902
|
|
|
$
|
(1,116
|
)
|
|
$
|
50,726
|
|
|
|
U.S.
|
|
Europe
|
|
Asia Pacific
|
|
Eliminations
|
|
Total
|
||||||||||
September 30, 2014
|
|
$
|
13,298
|
|
|
$
|
40
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
13,343
|
|
June 30, 2014
|
|
$
|
14,090
|
|
|
$
|
48
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
14,144
|
|
|
|
Three Months Ended September 30,
|
||||
|
|
2014
|
|
2013
|
||
Raytheon Company
|
|
35
|
%
|
|
13
|
%
|
Lockheed Martin Corporation
|
|
30
|
%
|
|
12
|
%
|
Northrop Grumman Corporation
|
|
*
|
|
|
16
|
%
|
BAE Systems PLC
|
|
*
|
|
|
11
|
%
|
|
|
65
|
%
|
|
52
|
%
|
*
|
Indicates that the amount is less than
10%
of the Company’s revenues for the respective period.
|
*
|
Indicates that the amount is less than
10%
of the Company’s revenues for the respective period.
|
M.
|
Subsequent Events
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
(In thousands)
|
|
September 30, 2014
|
|
As a % of
Total Net Revenue |
|
September 30, 2013
|
|
As a % of
Total Net Revenue |
||||||
Net revenues
|
|
$
|
54,061
|
|
|
100.0
|
%
|
|
$
|
50,726
|
|
|
100.0
|
%
|
Cost of revenues
|
|
30,062
|
|
|
55.6
|
|
|
29,164
|
|
|
57.5
|
|
||
Gross margin
|
|
23,999
|
|
|
44.4
|
|
|
21,562
|
|
|
42.5
|
|
||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||
Selling, general and administrative
|
|
12,290
|
|
|
22.7
|
|
|
14,321
|
|
|
28.2
|
|
||
Research and development
|
|
7,951
|
|
|
14.7
|
|
|
9,312
|
|
|
18.4
|
|
||
Amortization of intangible assets
|
|
1,762
|
|
|
3.3
|
|
|
1,985
|
|
|
3.9
|
|
||
Restructuring and other charges
|
|
1,268
|
|
|
2.4
|
|
|
(15
|
)
|
|
—
|
|
||
Total operating expenses
|
|
23,271
|
|
|
43.1
|
|
|
25,603
|
|
|
50.5
|
|
||
Income (loss) from operations
|
|
728
|
|
|
1.3
|
|
|
(4,041
|
)
|
|
(8.0
|
)
|
||
Other (expense) income, net
|
|
(11
|
)
|
|
0.0
|
|
|
418
|
|
|
0.9
|
|
||
Income (loss) from continuing operations before income taxes
|
|
717
|
|
|
1.3
|
|
|
(3,623
|
)
|
|
(7.1
|
)
|
||
Tax benefit
|
|
—
|
|
|
—
|
|
|
(1,319
|
)
|
|
(2.6
|
)
|
||
Income (loss) from continuing operations
|
|
717
|
|
|
1.3
|
|
|
(2,304
|
)
|
|
(4.5
|
)
|
||
(Loss) income from discontinued operations, net of taxes
|
|
(218
|
)
|
|
(0.4
|
)
|
|
48
|
|
|
0.1
|
|
||
Net income (loss)
|
|
$
|
499
|
|
|
0.9
|
%
|
|
$
|
(2,256
|
)
|
|
(4.4
|
)%
|
(In thousands)
|
|
September 30, 2014
|
|
September 30, 2013
|
|
$ Change
|
|
% Change
|
|||||||
MCE
|
|
$
|
48,556
|
|
|
$
|
43,488
|
|
|
$
|
5,068
|
|
|
12
|
%
|
MDS
|
|
5,379
|
|
|
7,916
|
|
|
(2,537
|
)
|
|
(32
|
)%
|
|||
Eliminations
|
|
126
|
|
|
(678
|
)
|
|
804
|
|
|
119
|
%
|
|||
Total revenues
|
|
$
|
54,061
|
|
|
$
|
50,726
|
|
|
$
|
3,335
|
|
|
7
|
%
|
•
|
the acquisition of other companies or businesses;
|
•
|
the repayment and refinancing of debt;
|
•
|
capital expenditures;
|
•
|
working capital; and
|
•
|
other purposes as described in the prospectus supplement.
|
|
|
As of and for the three
month period ended September 30, |
||||||
(In thousands)
|
|
2014
|
|
2013
|
||||
Net cash provided by operating activities
|
|
$
|
2,178
|
|
|
$
|
2,173
|
|
Net cash used in investing activities
|
|
$
|
(905
|
)
|
|
$
|
(1,108
|
)
|
Net cash provided by (used in) financing activities
|
|
$
|
392
|
|
|
$
|
(61
|
)
|
Net increase in cash and cash equivalents
|
|
$
|
1,589
|
|
|
$
|
980
|
|
Cash and cash equivalents at end of period
|
|
$
|
48,876
|
|
|
$
|
40,106
|
|
(In thousands)
|
|
Total
|
|
Less Than
1 Year |
|
2-3
Years |
|
4-5
Years |
|
More Than
5 Years |
||||||||||
Purchase obligations
|
|
$
|
31,118
|
|
|
$
|
31,118
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating leases
|
|
24,483
|
|
|
4,881
|
|
|
8,338
|
|
|
3,701
|
|
|
7,563
|
|
|||||
Capital lease obligations and other
|
|
190
|
|
|
190
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
$
|
55,791
|
|
|
$
|
36,189
|
|
|
$
|
8,338
|
|
|
$
|
3,701
|
|
|
$
|
7,563
|
|
|
|
Three Months Ended
September 30, |
||||||
(In thousands)
|
|
2014
|
|
2013
|
||||
Income (loss) from continuing operations
|
|
$
|
717
|
|
|
$
|
(2,304
|
)
|
Interest expense, net
|
|
5
|
|
|
14
|
|
||
Tax benefit
|
|
—
|
|
|
(1,319
|
)
|
||
Depreciation
|
|
1,700
|
|
|
1,974
|
|
||
Amortization of intangible assets
|
|
1,762
|
|
|
1,985
|
|
||
Restructuring and other charges
|
|
1,268
|
|
|
(15
|
)
|
||
Stock-based compensation cost
|
|
2,551
|
|
|
2,988
|
|
||
Adjusted EBITDA
|
|
$
|
8,003
|
|
|
$
|
3,323
|
|
|
|
Three Months Ended
September 30, |
||||||
(In thousands)
|
|
2014
|
|
2013
|
||||
Cash provided by operating activities
|
|
$
|
2,178
|
|
|
$
|
2,173
|
|
Capital expenditures for property and equipment
|
|
(905
|
)
|
|
(1,108
|
)
|
||
Free cash flow
|
|
$
|
1,273
|
|
|
$
|
1,065
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 6.
|
EXHIBITS
|
10.1
|
|
Amended and Restated Performance-Based Restricted Stock Award Agreement under the 2005 Plan
|
|
|
|
10.2
|
|
Separation Agreement, dated as of September 3, 2014 by and between the Company and Kevin M. Bisson
|
|
|
|
31.1
|
|
Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
31.2
|
|
Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.1+
|
|
Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101
|
|
The following materials from the Company’s Quarterly Report on the Form 10-Q for the quarter ended September 30, 2014 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Cash Flows; and (iv) notes to the Consolidated Financial Statements
|
+
|
Furnished herewith. This certificate shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
|
MERCURY SYSTEMS, INC.
|
||
|
|
|
By:
|
|
/
S
/ G
ERALD
M. H
AINES II
|
|
|
Gerald M. Haines II
|
|
|
Executive Vice President,
|
|
|
Chief Financial Officer, and Treasurer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Mercury Systems, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/
S
/ M
ARK
A
SLETT
|
Mark Aslett
|
PRESIDENT AND CHIEF EXECUTIVE OFFICER
[PRINCIPAL EXECUTIVE OFFICER]
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Mercury Systems, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/
S
/ G
ERALD
M. H
AINES II
|
Gerald M. Haines II
|
EXECUTIVE VICE PRESIDENT,
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CHIEF FINANCIAL OFFICER, AND TREASURER
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[PRINCIPAL FINANCIAL OFFICER]
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/
S
/ M
ARK
A
SLETT
|
Mark Aslett
|
PRESIDENT AND CHIEF EXECUTIVE OFFICER
|
|
/
S
/ G
ERALD
M. H
AINES II
|
Gerald M. Haines II
|
EXECUTIVE VICE PRESIDENT,
|
CHIEF FINANCIAL OFFICER, AND TREASURER
|