MERCURY SYSTEMS INC - FORM 8-K - EX-99.1 - PRESENTATION MATERIALS

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2011 Mercury Computer Systems, Inc.

Noble Financial

Seventh Annual

Equity Conference

May 17, 2011

Bob Hult

SVP & CFO

Didier Thibaud

SVP & GM

Exhibit 99.1

2011 Mercury Computer 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 fiscal 2011 business performance and beyond 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,” “plans,” “expects,” “anticipates,” “continue,”

“estimate,” “project,” “intend,” “likely,” “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,

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, continued funding of defense programs, the timing of such funding, 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, 2010. 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.

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides adjusted

EBITDA; free cash flow; cash and marketable securities, net of debt; and adjusted working capital, 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. Cash and marketable securities, net of debt is defined as cash and cash equivalents, short-term marketable securities and

related receivables, and long-term marketable securities less total borrowings under line of credit and total notes payable. Adjusted working

capital is defined as accounts receivable, net of allowance for doubtful accounts and inventory less accounts payable and accrued expenses. 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; free cash flow; cash and marketable securities, net of debt; and adjusted

working capital 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; free cash flow; cash and marketable securities, net of debt; and adjusted working capital 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.

Use

Non-GAAP

(Generally

Accepted

Accounting

Principles)

Financial

Measures

•

MRCY on NASDAQ

•

Real-time digital image, signal

and sensor processing solutions

•

Focused on DoD

high priorities:

C4ISR;

Electronic

Warfare;

Missile

Defense

•

Deployed on ~300 programs with

25+ Primes

•

$231M LTM revenues; 19% Adj.

EBITDA margin; 612 employees

•

Defense revenue ~80% and

42% growth FY07 to FY10

Best-of-breed provider of open, commercially developed,

application-ready and multi-INT subsystems for the ISR market

Introducing Mercury Computer Systems

2011 Mercury Computer Systems, Inc.

Current Management team has successfully transformed

the business and poised Mercury for growth

2011 Mercury Computer Systems, Inc.

2011 Mercury Computer Systems, Inc.

Mercury investment highlights

Pure-play C4ISR and defense electronics company entrenched on a

diverse mix of programs aligned with DoD priorities

Pure-play C4ISR and defense electronics company entrenched on a

diverse mix of programs aligned with DoD priorities

Best-of-breed provider of specialized computing subsystems

targeting the well funded and growing C4ISR market

Best-of-breed provider of specialized computing subsystems

targeting the well funded and growing C4ISR market

Increased demand for ISR and a rapidly evolving threat environment

driving greater demand for our products, solutions and capabilities

Increased demand for ISR and a rapidly evolving threat environment

driving greater demand for our products, solutions and capabilities

Well positioned to benefit from DoD procurement reform requiring

more affordable and rapidly developed upgrades leading to increased

outsourcing by the large Defense Primes

Well positioned to benefit from DoD procurement reform requiring

more affordable and rapidly developed upgrades leading to increased

outsourcing by the large Defense Primes

Well-defined strategy with a demonstrated track record

Successful transformation has positioned the business for strong

organic growth augmented through strategic acquisitions

Successful transformation has positioned the business for strong

organic growth augmented through strategic acquisitions

•

DoD spending projection is $708 billion for

2011

•

Defense procurement reform well underway

•

Our market opportunity is defined by the

growing demand for specialized embedded

defense computing solutions

•

C4ISR (Command, Control, Communications,

Computers, Intelligence, Surveillance and

Reconnaissance) is a $43 billion market

segment and a high priority for the defense

department

Procurement reform increasing opportunity for Mercury

C4ISR, Electronic Warfare and Missile Defense are DoD

priority areas and continue to be well funded

2011 Mercury Computer Systems, Inc.

•

Provide the war fighting capability

we need with the dollars we have

•

Restore affordability to Defense

goods and services procurement

•

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

As a direct result of procurement reform

Primes are

outsourcing to best-of-breed companies like Mercury

Defense procurement reform: Shifting DoD priorities

favor more affordable upgrades of existing platforms

•

Reduce risk given DoD shift to

firm fixed price contract awards

•

Primes shift from high fixed cost

to variable cost model

•

Affordably upgrade existing

platforms with new capabilities

•

Compress development and

deployment cycles

•

Differentiate solutions with less

internal R&D dollars

•

Increase success rate on new

programs and re-competes

Government

Primes

2011 Mercury Computer Systems, Inc.

•

Some C4ISR focus among broader capabilities set

•

Unwanted exposure to vulnerable portions of the DoD budget

•

Risk associated with government insourcing of services functions

•

Some C4ISR focus among broader capabilities set

•

Unwanted exposure to vulnerable portions of the DoD budget

•

Risk associated with government insourcing of services functions

•

Strong

C4ISR

focus.

Limited

exposure

broader

DoD

budget

risk

•

Public asset with scale that provides clear C4ISR investment thesis

•

Business model that anticipated and expects to benefit from

shifting DoD priorities and Defense procurement reform

•

Well positioned for growth and higher returns in a consolidating

industry

•

Several private C4ISR companies with no near-term IPO plans

•

Several C4ISR companies have recently been acquired

•

Several private C4ISR companies with no near-term IPO plans

•

Several C4ISR companies have recently been acquired

C4ISR landscape –

a scarcity of public investment

opportunities

•

C4ISR assets embedded in broader defense capabilities portfolio

•

Focus split between commercial aerospace and defense industries

•

C4ISR assets embedded in broader defense capabilities portfolio

•

Focus split between commercial aerospace and defense industries

•

Engaged across all sectors of the defense industry

•

Limited growth due to exposure to broader DoD budget

•

Engaged across all sectors of the defense industry

•

Limited growth due to exposure to broader DoD budget

Defense

Primes

Defense

Primes

Large Cap

Diversified

Large Cap

Diversified

Semi-

Specialized

Small/Mid Cap

Semi-

Specialized

Small/Mid Cap

Private or

Acquired

Private or

Acquired

Pure-Play

C4ISR &

Defense

Electronics

Pure-Play

C4ISR &

Defense

Electronics

2011 Mercury Computer Systems, Inc.

Deployed on approximately 300 programs with 25+ Primes

We’ve been making customers successful for 30 years

Global Hawk

BAMS

Global Hawk

BAMS

F-35

SEWIP

Guardrail

Sampson

Patriot

Predator

Reaper

WAAS

Reaper

WAAS

Ocean Eye

THAAD

F-16

JCREW 3.3

SSEE (E)

SSEE (F)

SSEE (E)

SSEE (F)

2011 Mercury Computer Systems, Inc.

AEGIS

AEGIS Ashore

AEGIS

AEGIS Ashore

2011 Mercury Computer Systems, Inc.

Best-of-breed solutions spanning the entire signal

processing chain

2011 Mercury Computer Systems, Inc.

Full range of high-performance

embedded processor and I/O boards

for the most demanding applications

High-performance sub-systems

solutions spanning the entire signal

processing chain

Outsourced engineering and Systems

Integration services accelerate

development and deployment of

affordable customized subsystems for

ISR applications to Defense primes

High value added software and

middleware for signal and image

processing, visualization, analysis,

and image reconstruction

Boards

Systems

Services

Software

We solve problems that can’t be solved with commercial computing

•

State-of-the-art, mixed

silicon, real-time embedded

signal processing and multi-

computing solutions

•

Advanced size, weight and

power design and packaging

•

Ruggedized for deployment;

production volume ready

•

Application middleware:

portability, scalability, high-

availability, virtualization

•

Best performance available

using open standards

2011 Mercury Computer Systems, Inc.

C4I

Radar

EO/IR

•

More and better sensors

lead to overwhelming data

•

EW: new and rapidly

evolving threats

•

Radar: smaller, faster

targets. New technologies

•

EO/IR: leap in imaging

detail, onboard exploitation

and real-time tactical access

•

C4: Net-centric command,

control and collaboration

•

Time to relevant

information is critical

for the onboard processing products and solutions we provide

Increased demand for ISR and rapidly evolving threats

drive greater demand…

2011 Mercury Computer Systems, Inc.

2011 Mercury Computer Systems, Inc.

•

Countering rogue nations’

ballistic missile threats

•

First systems installed on

Aegis ships

•

$35M booked in FY10

•

43 ship upgrade scheduled

over 5 years

•

Upside opportunities:

–

New data recorder design

win in FY10

–

Lockheed Martin awarded

Aegis Ashore development

–

FMS sales opportunities

Aegis ballistic missile defense: SPY-1 BMD Radar

Mercury’s largest single program in production to date

2011 Mercury Computer Systems, Inc.

2011 Mercury Computer Systems, Inc.

•

Naval surface fleet EW

upgrade to counter

emerging peer threats

•

Lockheed Martin displaced

incumbent

•

Met compressed schedule

for field trials

•

Leveraged Mercury

application expertise

•

Delivered best-of-breed

application-ready subsystem

•

EW performance-optimized

Strong partnership with Prime driving Mercury content expansion

SEWIP Block 2: Countering new emerging peer threats

2011 Mercury Computer Systems, Inc.

2011 Mercury Computer Systems, Inc.

•

Software defined jammer

to defeat roadside bombs

–

Signal Processing & RF Tuners

•

Previous generations high

volume ground mobile

–

JCREW 2.1 25,000 systems

–

JCREW 3.2 5,000 systems

•

JCREW 3.3 Presolicitation:

–

Currently EDM phase

–

ITT sole source. LRIP up to

1,350 systems

–

LRIP period FY13 thru FY14

–

Navy intends to compete full

rate production

JCREW 3.3: Joint services CIED program of record

Potentially the largest program Mercury has won to date

Note: Mercury not involved in JCREW 2.1 and 3.2

We anticipated shifting DoD

priorities and uniquely

positioned our business for growth and higher returns

Mercury is a best-of-breed outsourcing partner to the Primes

Advanced Computing Solutions (ACS)

Primes

Traditional Model

and Competition

Traditional Model

and Competition

COTS Boards

“Plug-n-Pray”

36+ months Time to Market

COTS

Prime Application

Middleware

Operating System

COTS

Classified Platform-Ready

ISR Subsystem

12 months Time to Market

Unclassified Application-

Ready Subsystem

12 months Time to Market

Commercially Funded

Best-of-breed Products

Open Architecture

Customized Configuration

Services Led Engagement

Annuity Revenue Model

Mercury Federal Systems (MFS)

Application-Ready

Subsystem

Mercury

2011 Mercury Computer Systems, Inc.

Classified IP

2011 Mercury Computer Systems, Inc.

Application-ready subsystem and Prime outsourcing success story

•

First award $18M

–

Development

–

UAE

–

Entering production

•

Second award received

–

Taiwan

•

Potential future awards:

–

< 12 months: Saudi Arabia,

Turkey

–

> 12 months: Others

•

Major potential with US

Army upgrade

Patriot missile defense: Next generation ground radar

2011 Mercury Computer Systems, Inc.

Platform-ready ISR subsystem and Prime outsourcing success story

2011 Mercury Computer Systems, Inc.

MFS major program: Wide Area Airborne Surveillance

•

Quick reaction capability

MFS providing image

processing payload

•

Partnered with Prime and

other leading companies

•

Rapid prototyping and

demonstration of

best-of-breed solution

•

Open plug-n-play sensor

bus architecture

•

Real-time tailored feeds

directly to the forces

•

Near real-time “TIVO®”

capability

2011 Mercury Computer Systems, Inc.

Acquisition Case Study: LNX

•World-class supplier of next

generation RF receivers for signals

intelligence, communications

intelligence and electronic warfare

applications

•Increased

content

JCREW

3.3

by over 40%

•Acquired on January 12, 2011 for

$31

million,

plus

million

earn-out

•LNX FY10 revenue $14m, EBITDA

>15%, 65 employees

•Expected to be neutral to

modestly accretive within 12

months

Mercury has the strategy, infrastructure and pipeline to

supplement organic growth with acquisitions

Driving growth through acquisition

•

Expand ACS core business in ISR and EW by

adding relevant technology or products

•

Add Mercury content and services to existing

and future defense and intelligence programs

•

Add an ISR platform company to scale MFS

Focus on the following characteristics:

•

Demonstrated profitability and growth

•

Private; Low tens of millions revenue to start

•

Accretive within 12 months or less

•

Seek to execute with assets on hand / available

Proprietary pipeline of targets

•

Attractive destination for target companies

2011 Mercury Computer Systems, Inc.

Positioned for growth in a changing industry

•

Focused on the right Defense market segments:

ISR, Electronic Warfare and Missile Defense

•

Positioned well on key programs and platforms

to address today’s and tomorrow’s threats

•

Business model aligned with Defense

procurement reform

•

Outsourcing partner to the Primes for best-of-

breed application-ready and ISR subsystems

•

Delivering strong organic growth in defense with

improving profitability

•

Pursuing complementary acquisitions to

supplement organic growth

Continuing to build a pure-play, best-of-breed ISR subsystems

and technology-enabled software and services company

2011 Mercury Computer Systems, Inc.

Financial Overview

2011 Mercury Computer Systems, Inc.

•

Profitability improving

•

Revenue growth accelerating

•

Generating healthy cash flows from

operations

•

Efficient working capital platform

•

Strong balance sheet

•

Closing on robust target business

model 17-18% adj. EBITDA margin

Financial highlights

2011 Mercury Computer Systems, Inc.

FY07 –

FY10: Restored profitability and growth

Defense 42% growth (12% CAGR) since FY07. LTM Adjusted EBITDA 19%

Adj. EBITDA $M

Notes:

•

FY07 –

FY10 figures are as reported in the Company’s fiscal 2010 Form 10K.

•

FY10 Earnings per Share were positively influenced by the partial reversal of the valuation allowance against deferred tax assets and an effective FY10 tax rate benefit of approximately

5%.

•

LTM is Q4 FY10 and Q1-Q3 FY11.

EBITDA Margin %

2011 Mercury Computer Systems, Inc.

Y-T-D FY11 year over year comparison

Revenue $M

Commercial

Defense

•

Engineering and supply

chain transformation

–

Engineering methods

–

Investments in DFM

–

Operational efficiencies

–

Reduced lead times

–

Improved cost of quality

–

Outsourced manufacturing

•

Customer satisfaction

–

Blue chip customers

–

Terms net 30

Efficient working capital platform to support growth

Note:

•

Net cash provided by operating activities % of revenue is 3 quarters ended March 31, 2010 and 2011, respectively.

•

Adjusted working capital % of revenue is fiscal year ending June 30, 2010 and LTM (Q4 FY10 and Q1-Q3 FY11).

2011 Mercury Computer Systems, Inc.

•

Organic growth only

•

ACS : MFS revenue split

90% : 10% respectively

•

High mix, low volume

•

R&D delivering significant

added value and returns

•

Increased engineering

services and systems

integration

•

Services-led design wins

lead to long-term

production subsystem

annuity revenues

Approaching target business model

GAAP

FY08

FY09

FY10

LTM

Target

Business

Model

Revenue

100%

Gross

Margin

58%

56%

54+%

SG&A and

Other OPEX

37%

29%

27%

25%

Low-mid 20’s

R&D

24%

22%

21%

19%

High Teens

Operating

Income

(3%)

12%

12-13%

Adj.

EBITDA

12%

15%

19%

17-18%

(1)

2011 Mercury Computer Systems, Inc.

(1)

Other OPEX includes: Amortization of Acquired Intangible Assets, Impairment of Long Lived Assets, Restructuring,

Gain on Sale of Long Lived Assets, and Acquisition Costs and Other Related Expenses.

(2)

LTM is Q4 FY10 and Q1-Q3 FY11.

Mercury’s balance sheet poised for investment

Acquisition financing available

Generating positive free cash flow from operations; zero debt

($M)

Q2’11 Cash and marketable securities

Net Proceeds from Stock Offering

LNX Acquisition (net of cash acquired)

(30)

Free cash flow

Q3’11 Cash and marketable securities

156

Other financing sources:

•

Operating line of credit

2011 Mercury Computer Systems, Inc.

Q4 FY11 guidance

Consensus

Q4 FY10

Actual

Quarter Ending June 30, 2011

Low

High

Revenue

$59

$64

$57

$59

GAAP EPS (Continuing)

$0.13

$0.77

$0.11

$0.13

Adj EBITDA

$10.0

$12.4

$9.0

$10.0

Note -

Adj EBITDA Adjustments:

Net income (Continuing)

18.0

3.4

4.0

Interest (income) expense, net

(0.0)

0.0

Income tax (benefit) expense

(8.4)

1.7

2.0

Depreciation

1.4

1.8

Amortization of acquired intangible assets

0.4

0.7

Fair value adjustments from purchase accounting

0.0

(0.1)

Stock-based compensation cost

1.0

1.4

Adj EBITDA

12.4

9.0

10.0

2011 Mercury Computer Systems, Inc.

Last 15 quarter’s revenues and EPS exceeded

or met the top end of guidance

2008

Reported

Guidance

Reported

Guidance

Reported

Guidance

Reported

Guidance

Revenue ($M)

49.2

48.0

52.6

51.0

56.5

53.0-55.0

55.2

53.0-56.0

EPS ($)

0.09

(0.08)

0.04

(0.05)

0.04

(0.04)-0.00

0.01

(0.05)-0.01

2009

Revenue ($M)

49.1

47.0-49.0

50.7

47.0-49.0

50.6

48.0-50.0

48.4

46.0-48.0

EPS ($)

0.07

(0.07)-(0.03)

0.03

(0.05)-0.00

0.20

0.05-0.09

0.13

0.05-0.08

2010

Revenue ($M)

47.4

43.0-45.0

45.2

40.0-42.0

43.6

41.0-43.0

63.6

58.0-60.0

EPS ($)

0.19

0.03-0.08

0.08

(0.08)-(0.04)

0.16

(0.15)-(0.11)

0.77

0.25-0.28

2011

Revenue ($M)

52.1

48.0-50.0

55.5

54.0-55.0

59.9

58.0-60.0

57.0-59.0

EPS ($)

0.16

0.03-0.06

0.22

0.10-0.12

0.20

0.16-0.18

0.11-0.13

Note:

Non-GAAP

GAAP

Note: Q3’11 EPS actuals pre-stock offering were $0.22.

2011 Mercury Computer Systems, Inc.

2011 Mercury Computer Systems, Inc.

Mercury investment highlights

Pure-play C4ISR and defense electronics company entrenched on a

diverse mix of programs aligned with DoD priorities

Pure-play C4ISR and defense electronics company entrenched on a

diverse mix of programs aligned with DoD priorities

Best-of-breed provider of specialized computing subsystems

targeting the well funded and growing C4ISR market

Best-of-breed provider of specialized computing subsystems

targeting the well funded and growing C4ISR market

Increased demand for ISR and a rapidly evolving threat environment

driving greater demand for our products, solutions and capabilities

Increased demand for ISR and a rapidly evolving threat environment

driving greater demand for our products, solutions and capabilities

Well positioned to benefit from DoD procurement reform requiring

more affordable and rapidly developed upgrades leading to increased

outsourcing by the large Defense Primes

Well positioned to benefit from DoD procurement reform requiring

more affordable and rapidly developed upgrades leading to increased

outsourcing by the large Defense Primes

Well-defined strategy with a demonstrated track record

Successful transformation has positioned the business for strong

organic growth augmented through strategic acquisitions

Successful transformation has positioned the business for strong

organic growth augmented through strategic acquisitions

2011 Mercury Computer Systems, Inc.

Appendix

Adjusted EBITDA reconciliation

2011 Mercury Computer Systems, Inc.

Twelve Months

Ended

Nine

Months

Ended

March 31,

Years Ended June

30,

(000'S)

2011

2010

2009

2008

Income (loss) from continuing operations

32,273

14,243

10,039

28,069

7,909

(4,437)

Interest expense (income), net

(120)

(151)

492

(3,129)

Income tax expense (benefit)

(2,598)

5,780

(999)

(9,377)

109

3,710

Depreciation

5,997

4,640

3,790

5,147

5,640

7,372

Amortization of acquired intangible assets

1,707

1,299

1,302

1,710

2,414

5,146

Restructuring

(12)

—

243

231

1,712

4,454

Impairment of long-lived assets

—

211

—

561

Acquisition costs and other related expenses

407

—

Fair value adjustments from purchase accounting

148

—

Stock-based compensation costs

5,270

4,222

2,968

4,016

4,582

8,848

Adjusted EBITDA

43,210

30,788

17,434

29,856

22,858

22,525

Adjusted working capital reconciliation

2011 Mercury Computer Systems, Inc.

As of

June 30,

March 31,

(000's)

2010

2011

Accounts receivable, net of allowance for doubtful accounts

36,726

43,604

Inventory

17,622

19,279

Accounts payable

(10,533)

(7,030)

Accrued expenses

(5,025)

(6,782)

Adjusted working capital

38,790

49,071

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