UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): November 12, 2012

 

 

Mercury Systems, Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Massachusetts   000-23599   04-2741391

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

201 Riverneck Road, Chelmsford, Massachusetts 01824

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (978) 256-1300

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

¨ 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))

 

 

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Effective at 5:00 p.m. on November 12, 2012, Mercury Computer Systems, Inc. (the “Company”) amended its Restated Articles of Organization with the Massachusetts Secretary of State to change the Company’s name to “Mercury Systems, Inc.” The change in name was approved by shareholders at the Annual Meeting of Shareholders held on October 17, 2012 and was previously approved by the Company’s Board of Directors. Attached as Exhibit 3.1 to this Current Report on Form 8-K (the “Report”) is a copy of the Articles of Amendment for the name change.

Item 7.01 Regulation FD Disclosure.

The management of the Company will present an overview of the Company’s business on November 13, 2012, at the Company’s Thirteenth Annual Investor Conference. Attached as Exhibit 99.1 to this Report is a copy of the slide presentation to be made by the Company at the conference.

This information is being furnished pursuant to Item 7.01 of this Report and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and will not be incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specifically identified as being incorporated therein by reference. This Report will not be deemed an admission as to the materiality of any information in this Report that is being disclosed pursuant to Regulation FD.

Please refer to page 2 of Exhibit 99.1 for a discussion of certain forward-looking statements included therein and the risks and uncertainties related thereto, as well as the use of non-GAAP financial measures included therein.

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit
No.

  

Description

  3.1    Articles of Amendment
99.1    Presentation materials dated November 13, 2012

 

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Dated: November 13, 2012     MERCURY SYSTEMS, INC.
    By:  

/s/ Kevin M. Bisson

      Kevin M. Bisson
      Senior Vice President, Chief Financial Officer, and Treasurer

 

3

Exhibit Index

 

Exhibit
No.

  

Description

  3.1    Articles of Amendment
99.1    Presentation materials dated November 13, 2012

 

4

Exhibit 3.1

MA SOC Filing Number: 201207406200 Date: 11/5/2012 3:22:00 PM

 

LOGO    LOGO                 
   William Francis Galvin                  

Secretary of the Commonwealth

One Ashburton Place, Boston, Massachusetts 02108-1512

 

FORM MUST BE TYPED

   Articles of Amendment    FORM MUST BE TYPED
   (General Laws Chapter 156D, Section 10.06, 950 CMR 113.34)   

(1) Exact name of corporation: Mercury Computer Systems, Inc.

(2) Registered office address: 201 Riverneck Road, Chelmsford, MA 01824

(number, street, city or town, state, zip code)

(3) These articles of amendment office article(s): I

(specify the number(s) of article(s) being amended (I-VI))

(4) Date adopted: October 17, 2012

  (month, day, year)

(5) Approved by:

(Check appropriate box)

 

  ¨ the incorporators.

 

  ¨ the board of directors without shareholder approval and shareholder approval was not required.

 

  þ the board of directors and the shareholders in the manner required by law and the articles of organization.

(6) State the article number and the text of the amendment. Unless contained in the text of the amendment, state the provisions for implementing the exchange, reclassification or cancellation of issued shares.

Article I – The name of the Corporation has been changed from “Mercury Computer Systems, Inc.” to “Mercury Systems, Inc.”

 

 

P.C.

To change the number of shares and the par value, * if any, of any type, or to designate a class or series, of stock, or change a designation of class of series of stock, which the corporation is authorized to issue, complete the following:

Total authorized prior to amendment:

 

WITHOUT PAR VALUE

 

WITH PAR VALUE

TYPE

 

NUMBER OF SHARES

 

TYPE

 

NUMBER OF SHARES

 

PAR VALUE

Total authorized after amendment:

 

WITHOUT PAR VALUE

 

WITH PAR VALUE

TYPE

 

NUMBER OF SHARES

 

TYPE

 

NUMBER OF SHARES

 

PAR VALUE

 

(7) The amendment shall be effective at the time and on the date approved by the Division, unless a later effective date not more than 90 days from the date and time of filling is specified: Effective at 5:00 p.m. on November 12, 2012

 

* G.L. Chapter 15GD eliminates the concept of par value, however a corporation may specify par value in Article III, See G. L. Chapter 15 GD, Section 6.21, and the comments relative thereto.

 

Signed by:     LOGO   

(Signature of authorized individual)

 

  ¨ Chairman of the board of directors,

 

  þ President

 

  ¨ Other officer

 

  ¨ Court-appointed fiducuary.
 

on this 5 th day of Novemer, 2012

MA SOC Filing Number: 201207406200 Date: 11/5/2012 3:22:00 PM

THE COMMONWEALTH OF MASSACHUSETTS

I hereby certify that, upon examination of this document, duly submitted to me, it appears that the provisions of the General Laws relative to corporations have been complied with, and I hereby approve said articles; and the filing fee having been paid, said articles are deemed to have been filed with me on:

November 05, 2012 03:22 PM

 

LOGO

WILLIAM FRANCIS GALVIN

Secretary of the Commonwealth

©
2012 Mercury Systems, Inc.
Mercury Systems
FY13 Investor Day Presentation
November 13, 2012
New York, NY
Exhibit 99.1

2
©
2012 Mercury Systems, Inc.
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 business performance and the Company’s plans for growth and improvement
in profitability and cash flow. You can identify these statements by the use of the words “may,”
“will,”
“could,”
“should,”
“would,”
“plans,”
“expects,”
“anticipates,”
“continue,”
“estimate,”
“project,”
“intend,”
“likely,”
“forecast,”
“probable”
and
similar expressions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ
materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to, continued funding
of defense programs, the timing of such funding, general economic and business conditions, including unforeseen weakness in
the Company’s markets, effects of continued geopolitical unrest and regional
conflicts, competition, changes in technology
and methods of marketing, delays in completing engineering and manufacturing programs, changes in customer order
patterns, changes in product mix, continued success in technological advances and delivering technological innovations,
changes in the U.S. Government’s interpretation of federal procurement rules and regulations, market acceptance of the
Company's products, shortages in components, production delays due to performance quality issues with outsourced
components, inability to fully realize the expected benefits from acquisitions and divestitures or delays in realizing such
benefits, challenges in integrating acquired businesses and achieving anticipated synergies, changes to export regulations,
increases in tax rates, changes to generally accepted accounting
principles, difficulties in retaining key employees and
customers, unanticipated costs under fixed-price service and system integration engagements, and various other factors
beyond our control. These risks and uncertainties also include such additional risk factors as are discussed in the Company's
filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended
June 30, 2012. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which
speak only as of the date made. The Company undertakes no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which such statement is made.
Use of Non-GAAP (Generally Accepted Accounting Principles) Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company
provides adjusted EBITDA and free cash flow, which are non-GAAP financial measures. Adjusted EBITDA excludes certain non-
cash and other specified charges. Free cash flow is defined as cash flow from operating activities less capital expenditures. 
The Company believes these non-GAAP financial measures are useful to help investors better understand its past financial
performance and prospects for the future. However, the presentation of adjusted EBITDA and free cash flow is not meant to
be considered in isolation or as a substitute for financial information provided in accordance with GAAP. Management
believes the adjusted EBITDA and free cash flow financial measures assist 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. A reconciliation of GAAP to non-GAAP financial results discussed in this
presentation is contained in the Appendix hereto.

3
©
2012 Mercury Systems, Inc.
Agenda
•
Corporate Overview
–
Mark Aslett, President & CEO
•
Acquisition Strategy and Recent History
•
Keynote: Pierre Chao, Renaissance Advisors
•
Mercury Commercial Electronics
•
Mercury Defense Systems
•
Mercury Intelligence Systems
•
Financial Review
•
Closing Remarks / Q&A

4
©
2012 Mercury Systems, Inc.
Introducing Mercury Systems
•
MRCY on NASDAQ
•
Real-time image, signal, Big
Data processing subsystems
•
Commercial Item company;
unique business model
•
Focused on Defense and
Intelligence priorities
•
Deployed on ~300 programs
with 25+ Primes 
•
FY12 $245M revenues;
20% Adj. EBITDA margin.
800+ employees
•
Defense revenue 76%
growth (15% CAGR)
FY08–FY12
Best-of-breed provider of sensor and Big Data processing solutions

5
©
2012 Mercury Systems, Inc.
Mercury investor highlights
Pure-play
C4ISR
electronics
company
embedded
on
a
diverse
mix
of
programs
and
platforms
aligned
with
existing
and
emerging
priorities
Best-of-breed
provider
of
open
sensor
and
Big
Data
processing
subsystems
to
defense
Primes
and
to
the
Intelligence
Community
Increased ISR use, shift to onboard processing / exploitation, new EW
threats and Big Data driving greater demand for Mercury solutions
Well positioned to benefit from DoD procurement reform and slower
defense
spending,
which
are
increasing
outsourcing
by
defense
Primes
Well-defined strategy with a demonstrated track record of
double-digit defense revenue growth and improved profitability
Successful transformation has positioned the business for rebound
in organic growth supplemented through strategic acquisitions

6
©
2012 Mercury Systems, Inc.
Notes:
•
FY10 EPS of $1.22 were positively influenced by $0.68 from the partial reversal of the valuation allowance against deferred tax assets and an effective FY10 tax rate benefit of approximately
5% . Benefit calculation takes tax credit of $15.6M /23M shares.
•
FY11 EPS includes the impact of 5.6M additional shares from our follow-on public stock offering on February 16, 2011.
•
FY12 EPS  of $0.75 was positively influenced by $0.16 from the reversal of the LNX earnout.
FY08 –
FY12: Restored profitability and growth
76% defense revenue growth (15% CAGR) since FY08; 20% Adjusted EBITDA

7
©
2012 Mercury Systems, Inc.
We believe the defense industry will remain in
transition for the next 6-12 months …
•
Reduced growth in base defense spending and lower OCO
•
Potential for sequestration beginning January 2013
–
Soft sequestration already underway
–
Little guidance on nature and timing of sequestration resolution
•
New DoD roles and missions announced
–
Smaller force structure to protect readiness
–
Increased investment in key areas e.g. ISR, EW
–
Build capacity and capability of international partners
•
Defense procurement reform also underway
…
due
to
budget
and
political
uncertainty

8
©
2012 Mercury Systems, Inc.
A best-of-breed provider of
commercially developed, open
sensor and Big Data processing
systems, software and services for
critical commercial, defense and
intelligence applications
A best-of-breed provider of
commercially developed, open
sensor and Big Data processing
systems, software and services for
critical commercial, defense and
intelligence applications
Mercury’s vision

9
©
2012 Mercury Systems, Inc.
Mercury Systems strategy summary
Market Expansion
•
Grow sensor processing by modality
•
Protect and grow Radar market footprint
•
Grow EW focused on RF / microwave
•
Expand into Intelligence Community
•
Big Data processing, analytics and analysis
Evolve Business Model & Technology
•
Maintain Prime merchant supplier model
•
Direct / partner for Intelligence Community
•
Services-led customer engagement model
•
Open sensor and Big Data processing solutions
•
Long-term subsystem annuity revenues
Organic Growth
•
Grow subsystem content via Prime outsourcing
•
Supplemental customer R&D funding
•
Prime RF supply chain consolidation
•
Penetrate new Prime customers and divisions
•
Penetrate programs in growth markets 
Complementary Acquisitions
•
Expand / scale sensor processing capabilities
•
Accelerate growth in programs and content
•
Exploit RF fragmentation / underutilization
•
Acquire IC / C4ISR classified domain expertise

10
©
2012 Mercury Systems, Inc.
We are organizing around like capabilities to open
additional growth opportunities
Software, Services and Systems Integration
Mercury Systems
Mercury Systems is a best-of-breed provider of commercially developed,
open sensor and Big Data processing systems, software and services
for critical commercial, defense and intelligence applications.
Sensor and Big Data Processing Technology and Systems
Delivers
innovative,
commercially
developed,
open
sensor
and
Big
Data
processing
systems
for
critical
commercial,
defense
and
intelligence
applications.
We
deliver
solutions
that
are
secure
and
based
upon
open
architectures
and
widely
adopted
industry
standards.
We
deliver
rapid
time-to-value
and
world-class
service
and
support
to
our
commercial
and
prime
contractor
customers.
Mercury Commercial Electronics
Mercury Defense Systems
Delivers
innovative,
open
sensor
processing
solutions
to
key
prime
contractors
leveraging
commercially
available
technologies
and
solutions
from
our
Commercial
Electronics
business.
Defense
Systems
leverages
this
technology
to
develop
integrated
sensor
processing
subsystems,
often
including
classified
application-specific
software
and
IP
for
the
C4ISR
and
EW
markets.
Mercury Intelligence Systems
Delivers
cutting-edge
and
technologically
advanced
hardware
and
software
data
processing
solutions
and
predictive
analytics
capabilities
to
address
Intelligence
Community
and
Department
of
Defens
e mission
needs.
Our
unique
approach
and
solutions
facilitate
the
transformation
of
raw
data
into
information
and
then
to
actionable
intelligence.

11
©
2012 Mercury Systems, Inc.
1.
Expand our capabilities and offerings for sensor and Big Data processing
2.
Grow business by sensor modality and within the Intelligence Community
3.
Penetrate customers, programs and platforms through new design wins
4.
Capitalize on Prime outsourcing and supply chain consolidation
5.
Acquire to scale our sensor processing and intelligence businesses
Growth strategy summary
Mercury has strategically positioned its business to grow

12
©
2012 Mercury Systems, Inc.
We are the only commercial item company with the
end-to-end capabilities and differentiated technology …
…
to build today’s sophisticated sensor processing subsystems targeting new
platforms or upgrades
Services and Systems Integration
Open Sensor Processing Subsystems

13
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2012 Mercury Systems, Inc.
RF DISTRIBUTION / CONDITIONING
FREQUENCY DOWNCONVERSION
TUNING / SYNTHESIS
SYNTH
TUNER
RF
In the ‘Acquire’
stage, we now have strong Microwave and
RF capabilities critical to EW and SIGINT subsystems

14
©
2012 Mercury Systems, Inc.
FILTERING
DIGITAL FILTERING /
CONDITIONING
ANALOG-TO-DIGITAL
CONVERSION
In the ‘Digitize’
stage, we have added to our Echotek
capabilities through the Micronetics acquisition

15
©
2012 Mercury Systems, Inc.
Our processing capabilities encompass specialized FPGA sensor
processing, Intel server-class DSP and leading GPU compute
DIGITAL SIGNAL &
IMAGE PROCESSING
SENSOR-SPECIFIC
PROCESSING
FPGA / GPGPU / High Density Server / Low Density Server / Switch
Fabric
BIG DATA EXPLOITATION
PROCESSING
Integrated Product Security
DATA DISTRIBUTION /
SWITCHING

16
©
2012 Mercury Systems, Inc.
KOR provides EW exploitation (DRFM), while PDI adds
Big Data processing, analytics and analysis for the IC
BIG-DATA PROCESSING,
ANALYTICS, ANALYSIS
TRACKING, ID & DECEPTION
MULTI-INT DATA FUSION
& ANALYSIS

17
©
2012 Mercury Systems, Inc.
Micronetics brings high-power amplifiers as well as
EW and communications subsystems expertise
FREQUENCY UPCONVERSION /
FILTERING
TRANSMISSION
DIGITAL-TO-ANALOG
CONVERSION

18
©
2012 Mercury Systems, Inc.
1.
Expand our capabilities and offerings for sensor and Big Data processing
2.
Grow business by sensor modality and within the Intelligence Community
3.
Penetrate customers, programs and platforms through new design wins
4.
Capitalize on Prime outsourcing and supply chain consolidation
5.
Acquire to scale our sensor processing and intelligence businesses
Growth strategy summary
Mercury has strategically positioned its business to grow

19
©
2012 Mercury Systems, Inc.
Defense electronics is a $40B+ market
Source: The Teal Group June 2011

20
©
2012 Mercury Systems, Inc.
EW
EW
Radar
Radar
…
drive demand for our onboard sensor processing solutions
Increased demand for ISR and rapidly evolving threats …
•
More and better sensors.
Overwhelming data. 
•
EW:  new and rapidly
evolving threats
•
Radar:  smaller, faster
targets. New technologies
•
EO/IR:  leap in resolution,
onboard exploitation and
real-time tactical access
•
C4I:  Net-centric command,
control and collaboration 
•
Time to actionable
intelligence key
C4I
C4I
EO/IR
EO/IR

21
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2012 Mercury Systems, Inc.
We have systematically broadened our addressable
market within C4ISR …
…
by investing in new products and capabilities
Note: Mercury Systems FY12 total $245M. Excludes $15M of Commercial and $3M of other defense revenue.
C4I
C4I
EW
EW
RADAR
RADAR
EO/IR
EO/IR
FY12 Revenue
$16M
$135M
$42M
$27M
$7M
% of Revenue
7%
59%
19%
12%
3%
Y/Y Growth
536%
14%
20%
97%
(15%)
Sensor, Program, Platform and Prime Agnostic
SONAR
SONAR
Mercury FY12 Defense Revenue by Market Segment

22
©
2012 Mercury Systems, Inc.
Micronetics strengthens and grows our EW business
Note:  Total FY12 revenues are as reported in the Company’s and Micronetics, Inc.’s fiscal 2012 Form 10-Ks, as applicable.

23
©
2012 Mercury Systems, Inc.
1.
Expand our capabilities and offerings for sensor and Big Data processing
2.
Grow business by sensor modality and within the Intelligence Community
3.
Penetrate customers, programs and platforms through new design wins
4.
Capitalize on Prime outsourcing and supply chain consolidation
5.
Acquire to scale our sensor processing and intelligence businesses
Growth strategy summary
Mercury has strategically positioned its business to grow

24
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2012 Mercury Systems, Inc.
We are deployed on 300+ programs with 25+ Primes
RADAR
EW
EO/IR –
C4I
BAMS; NATO AGS
Global Hawk
BAMS; NATO AGS
Global Hawk
SEWIP
SEWIP
AEGIS
AEGIS Ashore
AEGIS
AEGIS Ashore
F-15
F-15
Patriot
Patriot
Black Hawk
Black Hawk
Reaper
Gorgon Stare
Reaper
Gorgon Stare
F-16
F-16
Badger/Buzzard
Badger/Buzzard
Shadow
Shadow
Global Hawk
Global Hawk
F-35
F-35
F-35
F-35
F-16
F-16
P-8
P-8

25
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2012 Mercury Systems, Inc.
Notes: Remaining potential values and timing reflect Management’s current estimates and are subject to change.
**
Programs are currently being competed with multiple Primes.
Key programs in production
Mercury’s perspective on phase, timing and potential value

26
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2012 Mercury Systems, Inc.
Notes: Remaining potential values and timing reflect Management’s current estimates and are subject to change.
**
Programs are currently being competed with multiple Primes.
Healthy mix of design wins
Mercury’s perspective on phase, timing and potential value

27
©
2012 Mercury Systems, Inc.
1.
Expand our capabilities and offerings for sensor and Big Data processing
2.
Grow business by sensor modality and within the Intelligence Community
3.
Penetrate customers, programs and platforms through new design wins
4.
Capitalize on Prime outsourcing and supply chain consolidation
5.
Acquire to scale our sensor processing and intelligence businesses
Growth strategy summary
Mercury has strategically positioned its business to grow

28
©
2012 Mercury Systems, Inc.
•
Restore affordability to defense 
goods and services procurement
•
Provide the warfighting capability
we need with the dollars we have
•
Shorten procurement cycles; focus  
on upgrades to address urgent needs
•
Obtain greater efficiency, 
affordability and productivity in
defense spending
•
Avoid program turbulence and
maintain a vibrant and healthy
defense industry
Government
Primes
•
Reduce risk given DoD shift to      
firm-fixed price contract awards
•
Primes shift from high fixed-cost     
to variable operating cost model
•
Affordably upgrade existing
platforms with new capabilities
•
Compress development and
deployment cycles
•
Differentiate solutions with       
fewer internal R&D dollars
•
Increase success rate on new
programs and recompetes
Slower defense spending growth and procurement reform
are causing our customers to outsource more
We have strategically positioned Mercury to assist
©
2012 Mercury Systems, Inc.

29
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2012 Mercury Systems, Inc.
Our business model is aligned to the needs of our customers
…
as they outsource more work to companies like Mercury
Primes
Primes, IC
Traditional Prime Model
and Competition
COTS Boards
“Plug-n-Pray”
36+ months Time to Market
COTS
COTS
COTS
Classified Prime/Gov’t IP
Application Ready
Subsystem
and
Modular Building Blocks
12 months Time to Market
RF
IF
Proc
Sensor and Big Data
Processing Solutions
12 months Time to Market
Classified Prime/Gov’t IP
Defense and Intelligence Systems
Mercury Systems
Commercial Electronics
Application Ready
Subsystem from
Commercial Electronics

30
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2012 Mercury Systems, Inc.
Outsourcing could substantially increase our market
opportunity even with slower growth in defense spending
10% additional outsourcing
doubles our market opportunity
25% additional outsourcing
quadruples our market opportunity
Sources: The Teal Group June 2011; Management estimates of outsourcing potential

31
©
2012 Mercury Systems, Inc.
1.
Expand our capabilities and offerings for sensor and Big Data processing
2.
Grow business by sensor modality and within the Intelligence Community
3.
Penetrate customers, programs and platforms through new design wins
4.
Capitalize on Prime outsourcing and supply chain consolidation
5.
Acquire to scale our sensor processing and intelligence businesses
Growth strategy summary
Mercury has strategically positioned its business to grow

32
©
2012 Mercury Systems, Inc.
Agenda
•
Corporate Overview
•
Acquisition Strategy and Recent History
–
Gerry Haines, SVP Corporate Development
•
Keynote: Pierre Chao, Renaissance Advisors
•
Mercury Commercial Electronics
•
Mercury Defense Systems
•
Mercury Intelligence Systems
•
Financial Review
•
Closing Remarks / Q&A

33
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2012 Mercury Systems, Inc.
…
resulting in a unique microwave and digital platform
We’ve completed Phase 1 of our M&A strategy …
•
Expanded capabilities across
sensor processing  chain
•
Expanded addressable
market by acquiring IC /
classified domain expertise
•
Disciplined evaluation:
–
Growth supported by market-
based program assumptions
–
Demonstrated profitability
and cash generation
–
Revenue and cost synergies
–
Immediately EBITDA accretive
–
GAAP EPS accretive within
reasonable period
–
At or above target model for
Adjusted EBITDA % over time

34
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2012 Mercury Systems, Inc.
Micronetics acquisition case study
Now part of Mercury Commercial Electronics
(1)
As of March 31, 2012.
Financial Summary
(1)
Financial Summary
(1)
Revenue
Revenue
Select Customers
Select Customers
Select Programs
Select Programs
$46 million
Description
Description
Investment Thesis
Investment Thesis
•
Acquisition creates a unique,
scalable microwave, RF and
digital solutions platform
•
Fills key capability gaps in RF
and completes Phase I of
acquisition agenda
•
Expands Mercury footprint
with key customers (Exelis and
BAE) and on key EW programs
Sensor Processing Chain
Sensor Processing Chain
•
Ownership:
Public
(NOIZ)
•
HQ:
Hudson,
NH
•
Founded:
1975
•
Manufactures microwave and
RF components and
subsystems used in
commercial wireless, defense
and aerospace products
•
Includes EW & SATCOM
Adj. EBITDA
Adj. EBITDA
~16% -
17%
•
SEWIP
•
F-15 EW
•
SIRFC/AIDEWS
•
Commercial
SATCOM
•
Closed Aug 2012
•
Transaction value = $76.4M
•
Immediately accretive to EBITDA
Transaction
Transaction

35
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2012 Mercury Systems, Inc.
Phase 2 will focus on scaling our sensor processing
subsystems and intelligence businesses
•
Enable growth in programs and content
–
Fastest approach to build EBITDA
•
Emphasize opportunities to address underutilization
and industry fragmentation
–
Greater opportunity for synergies
•
Will pursue smaller acquisitions opportunistically
–
Continue to add to core capabilities along sensor chain
–
Expand addressable market by acquiring IC / C4ISR domain expertise
•
Balance sheet and capital structure supports M&A agenda
–
$500M universal shelf
–
$200M senior unsecured revolving credit line closed October 2012
Well positioned to augment organic growth through acquisitions
when market conditions improve

36
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2012 Mercury Systems, Inc.
Agenda
•
Corporate Overview
•
Acquisition Strategy and Recent History
•
Keynote: Pierre Chao, Renaissance Advisors
•
Mercury Commercial Electronics
•
Mercury Defense Systems
•
Mercury Intelligence Systems
•
Financial Review
•
Closing Remarks / Q&A

37
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2012 Mercury Systems, Inc.
Agenda
•
Corporate Overview
•
Acquisition Strategy and Recent History
•
Keynote: Pierre Chao, Renaissance Advisors
•
Mercury Commercial Electronics
–
Didier Thibaud, President
•
Mercury Defense Systems
•
Mercury Intelligence Systems
•
Financial Review
•
Closing Remarks / Q&A

38
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2012 Mercury Systems, Inc.
Mercury Commercial Electronics at a glance
Select Programs
Select Programs
Description
Description
Capabilities
Capabilities
Select Customers
Select Customers
** Program being competed with multiple Primes
•
Commercial item business
•
Focused on HLS, ISR, EW and Big Data processing
•
Lead open architecture and industry standard adoption
•
Develop differentiated sensor chain building blocks
•
Deliver services-led Application Ready Subsystems
•
RF and microwave solutions
–
Wideband and high-power RF
–
Wideband, fast, low-noise tuners
•
Digital solutions
–
RF and A/D matched with extremely dense FPGA processing
–
Expertise in integrating and optimizing RF and digital electronics
•
Embedded processing solutions
–
High density computing using server class Intel, GPU and storage
–
Secure systems and advanced packaging

39
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2012 Mercury Systems, Inc.
Micronetics increases MCE’s revenues in RF/Microwave by 184%
Note:  Total FY12 Micronetics revenues as reported in Micronetics, Inc.’s fiscal 2012 Form 10-K.
*  Excludes sales to affiliate entities.

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2012 Mercury Systems, Inc.
We have positioned Commercial Electronics as the
best-of-breed outsourcing partner to the Primes …
•
Minimize risk through
Application Ready
Subsystems (ARS)
•
Drive affordability: modular
building blocks with R&D
leveraged across programs
•
Innovate through technology
leadership giving customers
competitive advantage
•
Lead open architecture
industry standards
•
Positioned to be the
outsourcing partner and
trusted advisor in sensor
chain processing
Primes
Primes
Mercury Commercial Electronics
Commercially Developed
Modular Building Blocks
& Open Middleware
12 months Time to Market
RF
Open Middleware
IF
Proc
Open Architecture
Sensor Processing
Subsystem
12 months Time to Market
Application Ready
Software Toolkit
Application Ready
Subsystem
…
for commercially-developed, open sensor processing subsystems

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2012 Mercury Systems, Inc.
Mercury’s largest single program in production to date
Aegis ballistic missile defense: SPY-1 BMD Radar
Countering rogue nations’
ballistic missile threats
•
Highest performance radar
processor Application Ready
Subsystem
•
$9M booked in FY12,  
$85M+ booked to date
•
Additional 27 ship sets
expected through GFY16
•
AMDR selection in FY13
–
SPY-1 replacement Radar
–
FY16 introduction
–
Partnering with LM

42
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2012 Mercury Systems, Inc.
Program in production; FMS and US Army upgrade driving growth
Patriot missile defense: Next-generation ground radar
Services-led design win –
Prime outsourcing example
•
Sophisticated radar
processor Application Ready
Subsystem
•
Production awards received
to date: $41M
–
UAE, Taiwan, Saudi Arabia
•
Potential future FMS awards
–
Up to 15 countries including
Turkey, Qatar, Kuwait, etc
•
US Army Patriot upgrade
could begin in GFY13
–
First PO received for US Army

43
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2012 Mercury Systems, Inc.
Strong partnership with Prime driving Mercury content expansion
SEWIP: Countering new emerging peer threats
Delivered best-of-breed RF, microwave and digital receiver subsystems
•
Naval surface fleet EW
upgrade: 100+ ships
•
Upgrade to AN/SLQ-32
passive detection
•
Block 2:
–
Opportunity to expand
through LNX & Micronetics
–
Entering LRIP; production
begins GFY15
•
Block 3:
–
Electronic attack
–
Lockheed and Raytheon
partnering
–
Upside opportunity due to
strategic supplier relationship
with Lockheed on Block 2

44
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2012 Mercury Systems, Inc.
Acquisition strategy is driving growth in EW and enabling access
to new customers and programs
Electronic warfare system upgrade for F-15 C/D
Micronetics EW design win
•
Provides fighter jets with
advanced radar warning and
countermeasure capabilities
•
F-15 electronic upgrades for
FMS and USAF
•
RF & microwave content
•
Contract from RSAF for 84
new F-15 C/D and 70
upgrade kits
•
Received $11.7M in Q1 FY13
•
New award expected in FY13

45
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2012 Mercury Systems, Inc.
•
Provides advanced radar
warning, situational
awareness, jamming and EW
•
Target rotary and fixed-wing
aircraft (AH-64, F-16, CV22,
MH-60, POD)
•
Positioned for US upgrade
programs
•
Providing several microwave
assemblies per system
•
In production, $5M-$10M/yr
Acquisition strategy driving growth in EW and opening access to
new platforms
Exelis SIRFC and AIDEWS
Micronetics EW design win

46
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2012 Mercury Systems, Inc.
Raytheon
Advanced
Distributed
Aperture
System
(ADAS
-
DVE)
Delivered first system for Technology Demonstration phase
Expected Program of Record to start end of GFY14
Northrop Grumman F-16 SABR
New AESA radar upgrade design win with one of the Prime contenders
Taiwan awarded 145 F-16 Radar to Lockheed Martin
Major new design win summary
JCREW: Counter-IED
Funding delays impacting JCREW I1B1
Boeing P8-MMA
New design wins providing Radar and sonar processing
Flight testing, in LRIP phase –
117 planes plus FMS opportunities
E2D Advanced Hawkeye
New Radar design win with one of the Prime contenders
Program aims to build 75 new aircraft

47
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2012 Mercury Systems, Inc.
Summary –
Well positioned for market rebound
•
Short-term challenges due to macro environment
•
Well positioned on key programs and platforms
•
Unique strategy with capabilities covering the full sensor chain
•
Unique and differentiated open architecture building blocks
•
New capabilities in RF driving expansion in EW market
•
Outsourcing partner to Primes for sensor processing subsystems

48
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2012 Mercury Systems, Inc.
Agenda
•
Corporate Overview
•
Acquisition Strategy and Recent History
•
Keynote: Pierre Chao, Renaissance Advisors
•
Mercury Commercial Electronics
•
Mercury Defense Systems
–
Kevin Carnino, President
•
Mercury Intelligence Systems
•
Financial Review
•
Closing Remarks / Q&A

49
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2012 Mercury Systems, Inc.
Mercury Defense Systems at a glance
Select Programs
Select Programs
Select Customers
Select Customers
Description
Description
Capabilities
Capabilities
•
Delivers
innovative,
open
sensor
processing
solutions
to
key
Prime
contactors
•
Leverages commercially available technologies and
solutions from Commercial Electronics business
•
Develops integrated sensor processing subsystems, often
with classified application-specific software and IP for the
C4ISR and EW markets
•
Filthy Badger
•
Filthy Buzzard
•
Gorgon Stare
•
Eurofighter
•
Patriot III
•
Advanced Radar Environment Simulator (ARES)
•
Electronic Warfare (EW)
–
Electronic countermeasure (ECM) subsystems for airborne and
surface-based installations
•
Signals Intelligence (SIGINT)
–
Small UAV payloads for communications DF and signal intercept
•
Electro-Optical / Infrared (EO/IR)
–
Real-time, on-board image processing, storage and exploitation
systems for UAV applications
•
Test and Simulation
–
Advanced RF-based environment simulators used to validate, verify
and test radar sensors and platforms

50
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2012 Mercury Systems, Inc.
•
Direct customer
collaboration to develop
mission-unique subsystems
•
Leveraging commercially
developed technologies
–
Quicker program execution
–
Proven technologies
–
More affordable
•
Mature capabilities for
critical EW markets
•
Directs customer needs
into MCE IR&D
•
Compliant government
program/contract
management
Mercury Commercial Electronics
Primes
Primes
Sensor Processing
Solutions
12+ months Time to Market
Open Architecture
Sensor Processing
Subsystem
12 months Time to Market
Mercury Defense Systems
Application Ready
Subsystem
Classified Prime/Gov’t IP
Application Ready
Subsystem
Defense Systems expands Mercury ’ s addressable
market through C4ISR and EW domain expertise
Risk reduction, schedule mitigation and affordability

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2012 Mercury Systems, Inc.
Filthy Badger / Buzzard: vulnerability assessment / training
New EW design win in MDS (KOR)
•
Electronic attack systems
produced for Navy/AF 
vulnerability assessment
and tactics training
•
$65M Filthy Badger IDIQ
renewal expected
•
Next-generation DRFM,
Filthy Buzzard in
development
•
$58M BOA for Filthy Buzzard
received Q1 FY13
•
MCE providing microwave
products for both programs
Mercury is covering full spectrum of EW through KOR acquisition

52
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2012 Mercury Systems, Inc.
Several opportunities for growth over the next 3-6 years
Gorgon Stare Increment 2
Nation’s premier EO/IR wide area surveillance system
•
Increment 2
–
New onboard processor
and storage for advanced
wide-area sensors
–
Quick-reaction capability;
delivery in 18 months
–
Total contract potential
$31-$35M
–
$25M booked FY12
•
Future increments to GFY18
–
Processor upgrades
–
Onboard multi-INT fusion
•
MCE providing state of the
art ruggedized processing
architecture

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2012 Mercury Systems, Inc.
MCE’s processor architectures essential for enhanced capabilities
Radar and EW test and simulation
Enhanced capabilities for AESA and SAR testing
•
Produces realistic
environments for radar and
EW testing and evaluation
•
Significantly reduces
program cost by minimizing
flight time
•
Used by key Primes and
government agencies
•
Programs of interest:
–
Patriot missile production
–
Eurofighter development
and production
–
Advanced Radar Environment
Simulator (ARES); joint
services test capability
A
B

54
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2012 Mercury Systems, Inc.
FELCO: Onboard Multi-INT Exploitation for UAVs
Collaboration with ITT Exelis
Mercury processors
New design win summary
New program pursuits
Low-altitude UAV DF/Intercept System
Enables cross-cueing of EO/IR sensors in real time
Mercury-developed system
Test and Simulation: Radar and EW Environment Simulators
Enhanced testing for AESA and SAR-capable sensors
Classified domestic and international programs

55
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2012 Mercury Systems, Inc.
Summary –
MDS brings value to Mercury by:
•
Expanding Mercury’s addressable market by focusing on EW,
SIGINT and EO/IR systems domain expertise
•
Leveraging MCE’s technology to develop integrated, open
architecture mission level solutions for the C4ISR market
•
Reducing customers’
program risk with rapid solution
development and domain-based systems engineering expertise
•
Experienced managing classified applications, government
programs and contracts

56
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2012 Mercury Systems, Inc.
Agenda
•
Corporate Overview
•
Acquisition Strategy and Recent History
•
Keynote: Pierre Chao, Renaissance Advisors
•
Mercury Commercial Electronics
•
Mercury Defense Systems
•
Mercury Intelligence Systems
–
Matt Hughes, President
•
Financial Review
•
Closing Remarks / Q&A

57
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2012 Mercury Systems, Inc.
Mercury Intelligence Systems at a glance
Capabilities
Capabilities
Description
Description
Select Markets
Select Markets
Select Customers
Select Customers
•
Delivers technologically advanced hardware and software
data processing solutions
•
Provides predictive analytics capabilities to address
IC and DoD mission needs
•
Unique approach for transforming raw data into
information and then to actionable intelligence
•
Cloud infrastructure expertise
•
Ingest and management of Big Data
•
Predictive analytics
•
Multi-discipline intelligence analysis
•
Software design and systems architecture
•
10,000 sq feet TS/SCI accredited development lab
•
85% of personnel have TS/SCI clearances
•
Locations: Aurora, CO; Augusta, GA; Rome, NY;
Omaha, NE; Kunia, HI; San Antonio, TX; Kandahar, AF
•
Classified cloud-based fusion and exploitation programs
•
Infrastructure modernization within the IC
•
National-level systems designed to support strategic and
tactical customers
•
Affordable Big Data solutions for Service cryptologic
elements (Army, Navy, Air Force)
•
Tactical systems with AFRL and ONI “Cloud Afloat”

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2012 Mercury Systems, Inc.
Intelligence Community Big Data challenges
•
Enormous amounts of
data generated daily by
individuals, systems and
adversaries
•
Current collection
exceeds the capacity of
traditional databases and
software tools
•
Increasingly complex legal
and data security needs
•
Estimated $80B spent
annually in IC data
collection, analysis and
dissemination within the
intelligence life cycle
Legacy intelligence systems cannot meet 21st century needs
ORGANIZE           ANALYZE           DECIDE
Sensor Data
Web Data
Documents
Event Data
Data storage and
retrieval –
access
control
Data processing,
reduction and
tagging
Analytics
Visualization

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2012 Mercury Systems, Inc.
Mercury Intelligence Systems:
Cradle-to-grave Big Data management for the IC
Mercury combines best-of-breed solutions with skilled community
experts to transform perishable data into persistent intelligence
Processing Big Data
•
Turning data
into information
•
Off-line forensics
analysis
•
Real-time
information discovery
•
Pattern of life
identification and
analysis
–
Anomaly detection
–
Statistical analysis
Predictive Analytics
•
Transforming
information into
intelligence
–
Derive meaning,
context and intent
–
Requires a human to
interpret
Multi-Discipline
Intelligence Analysis
•
Mercury high
performance processing
solutions
–
Real-time, high-
volume 
•
Big Data life cycle
–
Data ingest
–
Analytics and storage
–
Visualization
•
Structured and
unstructured data
•
Providing decision
makers with
actionable
intelligence
•
Avoid strategic
surprise

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2012 Mercury Systems, Inc.
Unique solutions positioned to meet increasing demand
Commercial Electronics and Intelligence Systems:
Enabling confidence in and protection of our sensitive data
•
Real-time nature of IC
requirements stresses
traditional methods
•
MCE provides best-in-class
computing power, cutting
edge security and speed to
today’s problems
•
Intelligence Systems brings
MCE processing performance
to bear on the traditionally
“closed”
IC customer
•
Uniquely designed systems
for challenging intelligence
problems
Mercury Commercial Electronics
Primes
Intelligence Community
Big Data Processing
Solutions
12+ months Time to Market
Open Architecture
Big Data Processing
Subsystem
12 months Time to Market
Mercury Intelligence Systems
Application Ready
Subsystem
Classified Prime/Gov’t IP
Application Ready
Subsystem

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2012 Mercury Systems, Inc.
Leveraged technology driving new growth opportunities
New market opportunities in Big Data processing:
Data security and verification
•
Big Data processing
technology demonstrator
•
High-bandwidth
network analysis can be
applied to other missions
•
Unique balance of high-
performance, real-time
processing, I/O and security
critical to IC solutions
•
Architecture fully leveraged
from sensor processing
•
Now have customer access
with Intelligence Systems

62
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2012 Mercury Systems, Inc.
Summary –
MIS brings value to Mercury by:
•
Offering unique cradle-to-grave capabilities for processing Big
Data in the IC
•
Knowing how to transform data into intelligence with speed,
agility and security
•
Being uniquely positioned to bring MCE’s best-in-class
technology to bear on IC challenges
•
Bringing Mercury’s best-in-class speed and agility to bear on
protecting our national security

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2012 Mercury Systems, Inc.
Agenda
•
Corporate Overview
•
Acquisition Strategy and Recent History
•
Keynote: Pierre Chao, Renaissance Advisors
•
Mercury Commercial Electronics
•
Mercury Defense Systems
•
Mercury Intelligence Systems
•
Financial Review
–
Kevin Bisson, CFO
•
Closing Remarks / Q&A

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2012 Mercury Systems, Inc.
Revenue summary by market
Notes:
•
Total FY08 – FY12 revenues are as reported in the Company’s fiscal 2012 Form 10-K.
•
Mercury Systems FY12 pro forma MDS revenues include KOR revenues for the period of December 30, 2011 – June 30, 2012 and Mercury Federal Systems for fiscal 2012.
•
Mercury Systems FY12 pro forma MIS revenues include PDI revenues for the period of December 30, 2011 – June 30, 2012.

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Defense revenue growth acceleration
15% CAGR since FY08
FY08
FY09
FY10
FY11
FY12
FY08-12
CAGR
ACS & MFS Defense
130.3
144.8
157.5
180.4
210.1
YOY Growth %
11%
9%
15%
16%
13%
KOR Electronics
11.9
Paragon Dynamics
7.9
Total Defense
130.3
144.8
157.5
180.4
229.9
YOY Growth %
11%
9%
15%
27%
15%
ACS Commercial
59.9
44.2
42.3
48.3
15.0
YOY Growth %
(26%)
(4%)
14%
(69%)
(29%)
Total Mercury
190.2
188.9
199.8
228.7
244.9
YOY Growth %
(1%)
6%
14%
7%
7%
Notes:
•
Total FY08 – FY12 revenues are as reported in the Company’s fiscal 2012 Form 10-K.
•
Revenues from KOR and PDI reflect a partial period,  December 30, 2011 – June 30, 2012 

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FY08 –
FY12: Improved financial performance
GAAP
FY08
Actual
FY09
Actual
FY10
Actual
FY11
Actual
FY12
Actual
Bookings ($M)
199
210
206
202
231
Revenue ($M)
190
189
200
229
245
Gross Margin
% Revenue
57.8%
55.8%
56.3%
56.8%
55.6%
Operating Expenses ($M)
Amort/Acq. Costs
Restructuring Expense
115
5
4
98
2
2
95
2
105
2
106
5
3
Operating Income ($M)
% Revenue
(5)
(2.8%)
8
4.1%
17
8.7%
25
10.9%
30
12.3%
EPS (Continuing)
EPS (Amort/Acq. Costs)
($0.21)
$0.35
$1.22
$0.71
($0.06)
$0.75
($0.12)
Adj EBITDA ($M)
% Revenue
23
11.8%
23
12.1%
30
14.9%
41
17.9%
49
20.0%
Operating  Cash Flow ($M)
14
11
16
31
32

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2012 Mercury Systems, Inc.
Profitability restored and improved
Notes:
•
FY08-12 figures are as reported in the Company’s fiscal 2012 Form 10K.
•
FY10 Earnings per share of $1.22 were positively influenced by $0.68 from the partial reversal of the valuation allowance against deferred tax assets and an
effective FY10 tax rate benefit of approximately 5%.
•
FY11 and FY12 EPS includes the impact of 5.6M additional shares from our follow-on public stock offering on February 16, 2011.

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Adjusted EBITDA above historic target business model
Notes:
•
FY08 figures are as reported in the Company’s fiscal 2010 Form 10K. FY09-11 figures are as reported in the Company’s fiscal 2011 Form 10K.
•
Adjusted EBITDA excludes interest income and expense, income taxes, depreciation, amortization of acquired intangible assets, restructuring expense, 
impairment of long-lived assets, acquisition and other related expenses, fair value adjustments from purchase accounting, and stock-based compensation costs.

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2012 Mercury Systems, Inc.
Healthy free cash flow from operations
•
Engineering and supply
chain transformation
–
Engineering methods
–
Investments in DFM
–
Operational efficiencies
–
Reduced lead times
–
Improved cost of quality
–
Outsourced
manufacturing
Note:
•
Free cash flow is defined as cash provided by operating activities less capital expenditures.
•
Efficient working capital
platform supports
growth

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2012 Mercury Systems, Inc.
Strong balance sheet with sufficient liquidity
Zero debt and expanded revolving credit line
•
$500M Shelf Registration
•
$200M senior unsecured revolving line of credit
(no drawdowns)
Other financing sources available

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2012 Mercury Systems, Inc.
Summary of new revolving credit line terms
Currently undrawn
Borrower
Mercury Systems, Inc.
Facility
$200.0M senior unsecured revolving credit facility
Accordion
Up to $50.0M in the form of an incremental revolving credit facility or term loan
Use of Proceeds
Working capital, acquisitions and general corporate purposes
Security
Unsecured; negative pledge on assets
Maturity
5 years from the Closing Date (October 12, 2017)
Borrowing Rates &
Commitment Fees
Borrowing Rates –
based on leverage:
–
LIBOR Spread: 150-225 bps
–
Base Rate Spread: 50-125 bps
Commitment Fees: 25-30 bps
Financial
Covenants
Leverage Ratio:  3.50x
Interest Coverage Ratio:  3.00x

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2012 Mercury Systems, Inc.
Achieved historic target business model
GAAP
FY08
FY09
FY10
FY11
FY12
Target
Business
Model
Revenue
100%
100%
100%
100%
100%
100%
Gross Margin
58%
56%
56%
57%
56%
54+%
SG&A and
other OPEX(1)
37%
29%
27%
26%
25%
Low-mid 20’s
R&D
24%
22%
21%
19%
19%
High Teens
Operating Income
(3%)
4%
9%
11%
12%
12-13%
Adj. EBITDA
12%
12%
15%
18%
20%
17-18%
(1)
Other OPEX includes Amortization of Acquired Intangible Assets, Impairment of Goodwill and Long Lived Assets, Change in the fair value of the liability related to the LNX earn-out, 
Restructuring, Gain on Sale of Long Lived Assets, and Acquisition Costs and Other Related Expenses.

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Defense industry conditions are currently challenging
•
Adversely impacting financial results
•
Restructurings lead to $25M of recurring annualized savings
•
Forecasting more conservatively
•
Focused on managing controllable items
•
Sufficient liquidity and improved financial flexibility
Substantial operating leverage when defense market rebounds

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2012 Mercury Systems, Inc.
Updated business model raises Adjusted EBITDA target
In a more normalized industry environment
(1)
Other OPEX includes, Impairment of Goodwill and Long Lived Assets, Change in the fair value of the liability related to the LNX earn-out, Restructuring, Gain on Sale of Long Lived Assets,
and Acquisition Costs and Other Related Expenses.
(2)
Amortization includes fair value adjustment from purchase accounting and $4.9M LNX earnout reversal in FY12.
GAAP
FY12
Historic
Target Business
Model
Current Target
Business Model
Revenue
100%
100%
100%
Gross Margin
56%
54+%
45-50%
SG&A and
other OPEX
(1)
25%
Low-mid 20’s
Low 20’s
R&D
19%
High Teens
11-13%
Amortization
(2)
0%
—
2-3%
Operating Income
12%
12-13%
12-13%
Adj EBITDA
20%
17-18%
18-22%

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2012 Mercury Systems, Inc.
Financial summary
•
15% Defense revenue CAGR FY08-FY12
•
Profitability restored and improved
•
Converted earnings growth to healthy free cash flows
•
Strong balance sheet; zero debt
•
$200M revolving credit facility and $500M universal shelf
•
Exceeded historic target model; new targets established
•
Reduced cost structure due to challenging industry environment

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2012 Mercury Systems, Inc.
Agenda
•
Corporate Overview
•
Acquisition Strategy and Recent History
•
Keynote: Pierre Chao, Renaissance Advisors
•
Mercury Commercial Electronics
•
Mercury Defense Systems
•
Mercury Intelligence Systems
•
Financial Review
•
Closing Remarks / Q&A

77
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2012 Mercury Systems, Inc.
Well positioned for market rebound
•
Focused on important defense and intelligence priorities
•
Well positioned on key programs and platforms
•
Capabilities help address today’s and tomorrow’s threats
•
Business model aligned with defense procurement reform
•
Outsourcing partner to Primes for open sensor subsystems
•
Pursuing acquisitions to gain additional capability and scale

©
2012 Mercury Systems, Inc.
Appendix

79
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2012 Mercury Systems, Inc.
Adjusted EBITDA reconciliation
Years Ended June
30
(000'S)
2008
2009
2010
2011
2012
Income (loss) from continuing operations
$          (4,437)
$             7,909
$          28,069
$          18,507
$          22,619
Interest expense (income), net
(3,129)
492
(151)
45
27
Income tax expense (benefit)
3,710
109
(9,377)
8,060
9,152
Depreciation
7,372
5,640
5,147
6,364
7,859
Amortization of acquired intangible assets
5,146
2,414
1,710
1,984
3,799
Restructuring
4,454
1,712
231
—
2,821
Impairment of long-lived assets
561
—
211
150
—
Acquisition costs and other related expenses
—
—
—
412
1,219
Fair value adjustments from purchase accounting
—
—
—
(219)
(5,238)
Stock-based compensation costs
8,848
4,582
4,016
5,580
6,616
Adjusted EBITDA
$          22,525
$          22,858
$          29,856
$          40,883
$          48,874

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2012 Mercury Systems, Inc.
Free cash flow reconciliation
Years Ended June
30
2008
2009
2010
2011
2012
Cash flows from operating activities
$         13,726
$         11,199
$         15,708
$         31,474
$         31,869
Capital expenditures
(4,625)
(4,126)
(7,334)
(8,825)
(9,427)
Free cash flow
$            9,101
$            7,073
$            8,374
$         22,649
$         22,442

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2012 Mercury Systems, Inc.
Glossary
ADAS
Advanced Distributed Aperture System
EMD
Engineering and Manufacturing Development
MMSP
Multimission Signal Processor
AEGIS
Aegis Ballistic Missile Defense System
EO/IR
Electro-optical / Infrared
OpenVPX
System-level specification for VPX, initiated
by Mercury
AESA
Active Electronically Scanned Array
EW
Electronic Warfare
ONI
Office of Naval Intelligence
AFRL
Air Force Research Laboratory
FELCO
Federated Embedded Intel-Server for
Collaborative Operations
QRC
Quick Reaction Capability
AIDEWS
Advanced Integrated Defensive Electronic
Warfare Suite
FMS
Foreign Military Sales
RF
Radio Frequency
AMDR
Air and Missile Defense Radar
FPGA
Field Programmable Gate Array
SABR
Scalable Agile Beam Radar
ARES
Advanced Radar Environment Simulator
FRP
Full Rate Production
SAR
Synthetic Aperture Radar
ASIP
Airborne Signals Intelligence Payload
GPU
Graphics Processing Unit
SEWIP
Surface Electronic Warfare Improvement Program
BAMS
Broad Area Maritime Surveillance
HLS
Homeland Security
SIGINT
Signals Intelligence
BMD
Ballistic Missile Defense
IC
Intelligence Community
SIRFC
Suite of Integrated RF Countermeasures
BOA
Basic Ordering Agreement
IDIQ
Indefinite
Quantity
/
Indefinite
Delivery
SSEE
Ships Signal Exploitation Equipment
C4ISR
Command, Control, Communications,
Computers, Intelligence, Surveillance,
Reconnaissance
INT
Intelligence
SSI
Services & Systems Integration Group
COMINT
Communications Intelligence
I/O
Input / Output
SWaP
Size Weight and Power
COTS
Commercial off-the Shelf
JCREW
Joint
Counter
Radio
Controlled
Improvised Explosive Device Electronic
Warfare
TD
Technology Demonstration
DEWS
Digital Electronic Warfare System
JSF
Joint Strike Fighter
TR
Tech Refresh
DF
Direction Finding
LRIP
Low-Rate Initial Production
TS/SCI
Top Secret
/ Sensitive Compartmented Information
DFM
Design for Manufacturing
MCE
Mercury Commercial Electronics
UAE
United Arab Emirates
DRFM
Digital Radio Frequency Memory
MDS
Mercury Defense Systems
UAS
Unmanned Aircraft System
DSP
Digital Signal Processing
MIS
Mercury Intelligence Systems
UAV
Unmanned Aerial Vehicle
DVE
Degraded Visual Environment
MMA
Multimission Maritime Aircraft
VADER
Vehicle and Dismount Exploitation Radar