8/1/2003 - Mercury Computer Systems, Inc. (NASDAQ: MRCY), reported results for its fourth quarter and fiscal year ended June 30, 2003. The Company posted its 50th consecutive quarter of profitable performance.
Fourth quarter revenues were $44.5 million, an increase of 3.5% over the prior year’s fourth quarter. Operating income was $5.8 million, representing 13.1% of revenues; included in operating income was a $1.4 million charge related to a workforce reduction.
Fourth quarter net income was $4.2 million, or 9.5% of revenues. Diluted earnings per share were $0.20 for the fourth quarter.
Cash flows from operating activities generated $7.6 million in the fourth quarter and $50.5 million for the fiscal year. For the 2003 fiscal year, revenues were $180.2 million, up 20% over the 2002 fiscal year. Full year operating income was $25.8 million, or 14.3% of revenues, an increase of $11.3 million over 2002. Net income was $22.7 million or 12.6% of revenues, versus $15.8 million and 10.5% in the prior year. Fiscal 2003 diluted earnings per share were $1.03.
We are pleased with the results for the fourth quarter and the 2003 fiscal year," said Jay Bertelli, president and chief executive officer of Mercury Computer Systems. "Revenue grew 20% for the year, and operating income expanded by $11 million. Our working capital initiatives demonstrated good progress as we generated more than $7 million in cash flow from operations during the fourth quarter and more than $50 million in cash flow from operations for the year. Strong operational results allow us to continue to invest for the success of our customers."
The Company’s total backlog position at the end of the quarter was $57.3 million, down from $78.4 million at the beginning of the fiscal year. Of the current total backlog, $50.2 million represents shipments scheduled over the next 12 months.
Revenues for the quarter from defense electronics were $32.5 million, representing 73% of total revenues. For the fiscal year, defense electronics revenues were $124.1 million, representing 69% of the Company’s total revenues, compared to $98.2 million, or 65% of revenues for the same period of fiscal 2002, a year-over-year increase of 26%. The full year increase in defense electronics revenues occurred within each of the three primary application markets within the segment, including radar, signals intelligence, and emerging applications markets.
Revenues for the quarter from medical imaging were $7.4 million, representing 17% of total revenues. For the fiscal year, medical imaging revenues were $35.7 million, representing 20% of the Company’s total revenues, compared to $41.4 million, or 28% of total revenues for fiscal 2002. The full year 14% year-over-year decrease was driven by reductions in CT-related revenue, partially offset by a 7% increase in revenues in other modalities, including MRI and digital X-ray.
Revenues for the quarter from OEM solutions were $4.6 million, representing 10% of the Company’s total revenues. For the fiscal year, OEM solutions revenues were $20.4 million, representing 11% of the Company’s total revenues, compared to $10.5 million, or 7% of revenues for the same period of fiscal 2002, a year-over-year increase of 94%. The full year revenue growth is due primarily to increased shipments to semiconductor capital equipment OEMs for developing and testing new semiconductor inspection and mask-generation systems.
July 31 – In a separate release today, Mercury unveiled the Diamond SeriesTM scalable open-system multicomputers based on Intel® processors and a Linux operating environment. The Diamond Series multicomputers combine Mercury's deep knowledge and industry leadership in signal and image processing libraries and customized subsystem integration with the latest Intel XeonTM processors in an industrial-grade, scalable, rack-mount server. The systems are designed for a broad set of applications across a range of commercial and industrial environments such as medical imaging, sonar signal processing, and inspection systems.
June 18 – Mercury elected two new directors to the board: Dr. Richard P. Wishner and Mr. Lee C. Steele. Dr. Wishner is a senior consultant to private industry and government specializing in technology and business development, and management. Mr. Steele is a partner with Tatum CFO Partners LLP in its Boston office and has more than 25 years of financial experience. Mr. Steele will serve as a member of the audit committee of the board of directors.
June 4 – Mercury announced it shipped RACE SeriesTM systems to General Atomics for use in development and production orders of the company’s LYNX Synthetic Aperture Radar (SAR) system. The LYNX SAR reconnaissance and surveillance system gathers radar data used in creating high-resolution images in adverse weather conditions. The system may be deployed on various airborne platforms, is compact and lightweight, and is designed to fit on unmanned aerial vehicles (UAVs) such as the Predator.
April 8 – Mercury announced that its RACE++® Series conduction-cooled multicomputers have been designed into the digital reconnaissance camera component of the Navy’s SHAred Reconnaissance Pod (SHARP) system by Recon/Optical, a principal supplier of sophisticated reconnaissance imaging systems for industrial and military applications. The SHARP system, which has entered a new round of low-rate initial production, is an all-weather medium- and high-altitude electro-optical and infrared digital reconnaissance capability currently utilized by the F/A-18F Super Hornet fighter jets.
April 7 – Mercury announced that SOSTAR GmbH of Immenstaad, Germany will use RACE++ multicomputer systems in the development of the Stand-Off Surveillance and Target Acquisition Radar (SOSTAR-X) system. The SOSTAR-X system is a European radar development including a two-dimensional Active Electronically Scanned Array (AESA) antenna, operations and control, data link and groundstation. The SOSTAR system is a comprehensive ground surveillance and target tracking system that combines advanced radar technologies such as ground moving target identification (GMTI), swath and spotlight synthetic aperture radar (SAR), classification and data exploitation technologies.
This section presents our current expectations and estimates, given current visibility, on our business outlook. It is possible that actual performance will differ materially from the ranges and estimates given - either on the upside or on the downside. Investors should consider all of the risks, including those listed in the Safe Harbor Statement below, with respect to these estimates and make themselves aware of the risk factors that may impact the Company’s actual performance.
Recognizing the current limited visibility to timing of defense orders, the Company is projecting flat to modest revenue growth in fiscal 2004, with total revenue in the range of $180 to $190 million, and earnings per share of between $0.85 and $0.95. This compares to fiscal 2003 earnings per share of $1.03. The fiscal 2003 earnings included the final payments totaling $5.8 million booked for the sale of its Shared Storage Business Unit (SSBU).
In the first quarter of fiscal year 2004, revenues are expected to be in the range of $39 to $42 million. At these revenue levels, the Company projects a range of $0.13 to $0.17 for earnings per share for the first quarter ended September 30, 2003.
About Mercury Computer Systems, Inc.
Mercury Computer Systems, Inc. (NASDAQ: MRCY) is the leading supplier of high-performance embedded, real-time digital signal and image processing computer systems. Mercury’s products play a critical role in a wide range of applications, transforming sensor data to information for analysis and interpretation. In military reconnaissance and surveillance platforms the company’s systems process real-time radar, sonar, and signals intelligence data. Mercury’s systems are also used in state-of-the-art medical diagnostic imaging devices including MRI, CT, PET, and digital X-ray, and in semiconductor imaging applications including photomask generation and wafer inspection.
Based in Chelmsford, Massachusetts, Mercury serves customers in North America, Europe and Asia through its direct sales force and a network of subsidiaries and distributors.
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