|
|
|
|
|
Massachusetts
|
|
000-23599
|
|
04-2741391
|
(State or Other Jurisdiction
of Incorporation)
|
|
(Commission File Number)
|
|
(IRS Employer
Identification No.)
|
|
|
|
50 Minuteman Road, Andover, Massachusetts
|
|
01810
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
¨
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
¨
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
¨
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
¨
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Exhibit No.
|
Description
|
|
|
99.1
|
Press Release, dated October 30, 2018, of Mercury Systems, Inc.
|
99.2
|
Earnings Presentation, dated October 30, 2018, of Mercury Systems, Inc.
|
|
|
|
|
|
Dated: October 30, 2018
|
MERCURY SYSTEMS, INC.
|
|
|
|
By:
/s/ Michael D. Ruppert
Michael D. Ruppert
Executive Vice President, Chief Financial Officer,
and Treasurer
|
|
News Release
|
MERCURY SYSTEMS, INC.
|
|
|||||||
UNAUDITED CONSOLIDATED BALANCE SHEETS
|
|
|||||||
(In thousands)
|
|
|
|
|
||||
|
|
September 30,
|
|
June 30,
|
||||
|
|
2018
|
|
2018
|
||||
|
|
|
|
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
72,869
|
|
|
$
|
66,521
|
|
Accounts receivable, net
|
|
113,920
|
|
|
104,040
|
|
||
Unbilled receivables and costs in excess of billings
|
|
39,977
|
|
|
39,774
|
|
||
Inventory
|
|
121,156
|
|
|
108,585
|
|
||
Prepaid income taxes
|
|
6,736
|
|
|
3,761
|
|
||
Prepaid expenses and other current assets
|
|
9,521
|
|
|
9,062
|
|
||
Total current assets
|
|
364,179
|
|
|
331,743
|
|
||
|
|
|
|
|
||||
Property and equipment, net
|
|
50,829
|
|
|
50,980
|
|
||
Goodwill
|
|
520,589
|
|
|
497,442
|
|
||
Intangible assets, net
|
|
183,606
|
|
|
177,904
|
|
||
Other non-current assets
|
|
7,771
|
|
|
6,411
|
|
||
Total assets
|
|
$
|
1,126,974
|
|
|
$
|
1,064,480
|
|
|
|
|
|
|
||||
Liabilities and Shareholders’ Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
25,726
|
|
|
$
|
21,323
|
|
Accrued expenses
|
|
15,144
|
|
|
16,386
|
|
||
Accrued compensation
|
|
20,281
|
|
|
21,375
|
|
||
Deferred revenues and customer advances
|
|
21,605
|
|
|
12,596
|
|
||
Total current liabilities
|
|
82,756
|
|
|
71,680
|
|
||
|
|
|
|
|
||||
Deferred income taxes
|
|
13,266
|
|
|
13,635
|
|
||
Income taxes payable
|
|
2,879
|
|
|
998
|
|
||
Long-term debt
|
|
240,000
|
|
|
195,000
|
|
||
Other non-current liabilities
|
|
11,452
|
|
|
11,276
|
|
||
Total liabilities
|
|
350,353
|
|
|
292,589
|
|
||
|
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
|
||||
Common stock
|
|
472
|
|
|
469
|
|
||
Additional paid-in capital
|
|
587,788
|
|
|
590,163
|
|
||
Retained earnings
|
|
187,447
|
|
|
179,968
|
|
||
Accumulated other comprehensive income
|
|
914
|
|
|
1,291
|
|
||
Total shareholders’ equity
|
|
776,621
|
|
|
771,891
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
1,126,974
|
|
|
$
|
1,064,480
|
|
MERCURY SYSTEMS, INC.
|
|
|
|
|
||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
(In thousands, except per share data)
|
|
|
|
|
||||
|
|
Three Months Ended
|
||||||
|
|
September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Net revenues
|
|
$
|
144,056
|
|
|
$
|
106,069
|
|
Cost of revenues (1)
|
|
82,473
|
|
|
55,395
|
|
||
Gross margin
|
|
61,583
|
|
|
50,674
|
|
||
|
|
|
|
|
||||
Operating expenses:
|
|
|
|
|
||||
Selling, general and administrative (1)
|
|
24,741
|
|
|
20,568
|
|
||
Research and development (1)
|
|
14,948
|
|
|
13,742
|
|
||
Amortization of intangible assets
|
|
7,181
|
|
|
5,637
|
|
||
Restructuring and other charges
|
|
504
|
|
|
95
|
|
||
Acquisition costs and other related expenses
|
|
399
|
|
|
261
|
|
||
Total operating expenses
|
|
47,773
|
|
|
40,303
|
|
||
|
|
|
|
|
||||
Income from operations
|
|
13,810
|
|
|
10,371
|
|
||
|
|
|
|
|
||||
Interest income
|
|
66
|
|
|
19
|
|
||
Interest expense
|
|
(2,259
|
)
|
|
(3
|
)
|
||
Other (expense) income, net
|
|
(1,009
|
)
|
|
(815
|
)
|
||
|
|
|
|
|
||||
Income before income taxes
|
|
10,608
|
|
|
9,572
|
|
||
Tax provision (benefit)
|
|
3,129
|
|
|
(8,381
|
)
|
||
Net income
|
|
$
|
7,479
|
|
|
$
|
17,953
|
|
|
|
|
|
|
||||
Basic net earnings per share:
|
|
$
|
0.16
|
|
|
$
|
0.39
|
|
|
|
|
|
|
||||
Diluted net earnings per share:
|
|
$
|
0.16
|
|
|
$
|
0.38
|
|
|
|
|
|
|
||||
Weighted-average shares outstanding:
|
|
|
|
|
||||
Basic
|
|
47,048
|
|
|
46,504
|
|
||
Diluted
|
|
47,697
|
|
|
47,489
|
|
||
|
|
|
|
|
||||
(1) Includes stock-based compensation expense, allocated as follows:
|
||||||||
Cost of revenues
|
|
$
|
252
|
|
|
$
|
148
|
|
Selling, general and administrative
|
|
$
|
3,884
|
|
|
$
|
3,976
|
|
Research and development
|
|
$
|
543
|
|
|
$
|
497
|
|
MERCURY SYSTEMS, INC.
|
|
|
|
|
||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(In thousands)
|
|
|
|
|
||||
|
|
Three Months Ended
|
||||||
|
|
September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
7,479
|
|
|
$
|
17,953
|
|
Depreciation and amortization
|
|
11,546
|
|
|
9,337
|
|
||
Other non-cash items, net
|
|
5,520
|
|
|
813
|
|
||
Changes in operating assets and liabilities
|
|
(4,516
|
)
|
|
(20,075
|
)
|
||
|
|
|
|
|
||||
Net cash provided by operating activities
|
|
20,029
|
|
|
8,028
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
||||
Acquisition of businesses, net of cash acquired
|
|
(46,273
|
)
|
|
(6,000
|
)
|
||
Purchases of property and equipment
|
|
(3,727
|
)
|
|
(3,628
|
)
|
||
Other investing activities
|
|
—
|
|
|
(374
|
)
|
||
|
|
|
|
|
||||
Net cash used in investing activities
|
|
(50,000
|
)
|
|
(10,002
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Borrowings under credit facilities
|
|
45,000
|
|
|
—
|
|
||
Payments of deferred financing and offering costs
|
|
(1,851
|
)
|
|
—
|
|
||
Payments for retirement of common stock
|
|
(6,812
|
)
|
|
(13,548
|
)
|
||
|
|
|
|
|
||||
Net cash provided by (used in) financing activities
|
|
36,337
|
|
|
(13,548
|
)
|
||
|
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
|
(18
|
)
|
|
(41
|
)
|
||
|
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
|
6,348
|
|
|
(15,563
|
)
|
||
|
|
|
|
|
||||
Cash and cash equivalents at beginning of period
|
|
66,521
|
|
|
41,637
|
|
||
|
|
|
|
|
||||
Cash and cash equivalents at end of period
|
|
$
|
72,869
|
|
|
$
|
26,074
|
|
UNAUDITED SUPPLEMENTAL INFORMATION RECONCILIATION OF GAAP TO NON-GAAP MEASURES
|
||||||
(In thousands)
|
|
|
|
|
|
|
|
|
Three Months Ended
|
||||||
|
|
September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Cash flows from operations
|
|
$
|
20,029
|
|
|
$
|
8,028
|
|
Capital expenditures
|
|
(3,727
|
)
|
|
(3,628
|
)
|
||
Free cash flow
|
|
$
|
16,302
|
|
|
$
|
4,400
|
|
UNAUDITED SUPPLEMENTAL INFORMATION RECONCILIATION OF GAAP TO NON-GAAP MEASURES
|
||||||
(In thousands, except per share data)
|
|
|
|
|
|
|
UNAUDITED SUPPLEMENTAL INFORMATION RECONCILIATION OF GAAP TO NON-GAAP MEASURES
|
||||||
(In thousands)
|
|
|
|
|
|
|
|
|
Three Months Ended
|
||||||
|
|
September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Organic Revenue
|
|
$
|
112,801
|
|
|
$
|
106,069
|
|
Acquired Revenue
|
|
31,255
|
|
|
—
|
|
||
Net revenues
|
|
$
|
144,056
|
|
|
$
|
106,069
|
|
MERCURY SYSTEMS, INC.
|
|||
RECONCILIATION OF FORWARD-LOOKING GUIDANCE RANGE
|
|
|
|
Quarter Ending December 31, 2018
|
|
|
|
Year Ending June 30, 2019
|
|
|
|
(In thousands, except per share data)
|
|
|
|
|
|
Three Months Ending
|
|
Twelve Months Ending
|
||||||||||||
|
|
December 31, 2018
|
|
June 30, 2019
|
||||||||||||
|
|
Range
|
|
Range
|
||||||||||||
|
|
Low
|
|
High
|
|
Low
|
|
High
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
GAAP expectation -- Net income
|
|
$
|
8,300
|
|
|
$
|
10,300
|
|
|
$
|
39,100
|
|
|
$
|
45,600
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjust for:
|
|
|
|
|
|
|
|
|
||||||||
Other non-operating adjustments, net
|
|
—
|
|
|
—
|
|
|
400
|
|
|
400
|
|
||||
Interest expense (income), net
|
|
2,200
|
|
|
2,200
|
|
|
8,800
|
|
|
8,800
|
|
||||
Income taxes
|
|
3,100
|
|
|
3,900
|
|
|
14,900
|
|
|
17,400
|
|
||||
Depreciation
|
|
4,800
|
|
|
4,800
|
|
|
19,200
|
|
|
19,200
|
|
||||
Amortization of intangible assets
|
|
7,000
|
|
|
7,000
|
|
|
26,800
|
|
|
26,800
|
|
||||
Restructuring and other charges
|
|
—
|
|
|
—
|
|
|
500
|
|
|
500
|
|
||||
Impairment of long-lived assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Acquisition and financing costs
|
|
700
|
|
|
700
|
|
|
2,700
|
|
|
2,700
|
|
||||
Fair value adjustments from purchase accounting
|
|
—
|
|
|
—
|
|
|
600
|
|
|
600
|
|
||||
Litigation and settlement expense (income), net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Stock-based and other non-cash compensation expense
|
|
5,600
|
|
|
5,600
|
|
|
20,500
|
|
|
20,500
|
|
||||
Adjusted EBITDA expectation
|
|
$
|
31,700
|
|
|
$
|
34,500
|
|
|
$
|
133,500
|
|
|
$
|
142,500
|
|
MERCURY SYSTEMS, INC.
|
|||
RECONCILIATION OF FORWARD-LOOKING GUIDANCE RANGE
|
|
|
|
Quarter Ending December 31, 2018
|
|
|
|
Year Ending June 30, 2019
|
|
|
|
(In thousands, except per share data)
|
|
|
|
|
|
Three Months Ending December 31, 2018
|
||||||||||||||
|
|
Range
|
||||||||||||||
|
|
Low
|
|
High
|
||||||||||||
GAAP expectation -- Net income and earnings per share
|
|
$
|
8,300
|
|
|
$
|
0.17
|
|
|
$
|
10,300
|
|
|
$
|
0.22
|
|
Amortization of intangible assets
|
|
7,000
|
|
|
|
|
7,000
|
|
|
|
||||||
Restructuring and other charges
|
|
—
|
|
|
|
|
—
|
|
|
|
||||||
Impairment of long-lived assets
|
|
—
|
|
|
|
|
—
|
|
|
|
||||||
Acquisition and financing costs
|
|
700
|
|
|
|
|
700
|
|
|
|
||||||
Fair value adjustments from purchase accounting
|
|
—
|
|
|
|
|
—
|
|
|
|
||||||
Litigation and settlement expense (income), net
|
|
—
|
|
|
|
|
—
|
|
|
|
||||||
Stock-based and other non-cash compensation expense
|
|
5,600
|
|
|
|
|
5,600
|
|
|
|
||||||
Impact to income taxes (1)
|
|
(2,900
|
)
|
|
|
|
(2,900
|
)
|
|
|
||||||
Adjusted income and adjusted earnings per share expectation
|
|
$
|
18,700
|
|
|
$
|
0.39
|
|
|
$
|
20,700
|
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted weighted-average shares outstanding expectation:
|
|
|
|
47,800
|
|
|
|
|
47,800
|
|
|
|
Twelve Months Ending June 30, 2019
|
|||||||||||||||
|
|
Range
|
|||||||||||||||
|
|
Low
|
|
High
|
|||||||||||||
GAAP expectation -- Net income and earnings per share
|
|
$
|
39,100
|
|
|
$
|
0.82
|
|
|
$
|
45,600
|
|
|
$
|
0.96
|
|
|
Amortization of intangible assets
|
|
26,800
|
|
|
|
|
26,800
|
|
|
|
|||||||
Restructuring and other charges
|
|
500
|
|
|
|
|
500
|
|
|
|
|||||||
Impairment of long-lived assets
|
|
—
|
|
|
|
|
—
|
|
|
|
|||||||
Acquisition and financing costs
|
|
2,700
|
|
|
|
|
2,700
|
|
|
|
|||||||
Fair value adjustments from purchase accounting
|
|
600
|
|
|
|
|
600
|
|
|
|
|||||||
Litigation and settlement expense (income), net
|
|
—
|
|
|
|
|
—
|
|
|
|
|||||||
Stock-based and other non-cash compensation expense
|
|
20,500
|
|
|
|
|
20,500
|
|
|
|
|||||||
Impact to income taxes (1)
|
|
(11,400
|
)
|
|
|
|
(11,400
|
)
|
|
|
|||||||
Adjusted income and adjusted earnings per share expectation
|
|
$
|
78,800
|
|
|
$
|
1.65
|
|
|
$
|
85,300
|
|
|
$
|
1.79
|
|
|
|
|
|
|
|
|
|
|
|
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Diluted weighted-average shares outstanding expectation:
|
|
|
|
47,700
|
|
|
|
|
47,700
|
|
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|
|
|
|
|
|
|
|
|
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(1) Impact to income taxes is calculated by recasting income before income taxes to include the add-backs involved in determining adjusted income and recalculating the income tax provision using this adjusted income from operations before income taxes.
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