SYSTEMS

Mercury Computer Systems reported results for its third quarter ended March 31, 2005. Third quarter revenues were $64.3 million, an increase of 42% compared to $45.4 million for the same period last year, and a new quarterly record for the Company. -- Operating income was $11.4 million, representing 17.7% of revenues. -- Third quarter net income was $8.2 million, an increase of 29.4% compared to $6.3 million for the same period last year. Third quarter net income was 12.7% of revenues. -- Earnings per share were $0.34 for the third quarter. -- Cash flows from operating activities were $13.6 million in the third quarter. Cash and marketable securities balance at the end of the quarter was $226.1 million. "We are pleased with the strong results posted for the third quarter, in our defense and commercial businesses," said Jay Bertelli, president and chief executive officer of Mercury Computer Systems, Inc. "On the strength of our backlog, particularly in our defense business unit, we anticipate full-year revenues to be at the top end of previous expectations, or $245 million." Backlog The Company's total backlog at the end of the quarter was $110.4 million, up $8.2 million from the beginning of the quarter. Of the total backlog, $100.1 million represents shipments scheduled over the next 12 months. The book-to-bill ratio for the third quarter exceeded one. Defense Electronics Defense Electronics revenues were $36.5 million, an increase of $9.8 million from the same quarter last year, primarily due to strength in signals intelligence and defense technologies segments. On a sequential basis, Defense Electronics revenues grew $3.3 million as a result of the timing of program- related revenues. Imaging and Visualization Solutions Revenues for Imaging and Visualization Solutions of $11.4 million were up $2.0 million from the same quarter last year, based primarily on contribution from the TGS acquisition. Sequentially, revenues declined $3.8 million from the second quarter, due to fluctuations in OEM customer order patterns. OEM Solutions OEM Solutions revenues were $14.2 million, which were up $4.9 million from last year's revenues for the same quarter. This growth reflects revenues from applications serving the semiconductor market. Sequentially, revenues for this business unit were up $3.8 million, driven primarily by the semiconductor segment. Momentum Computer business unit The Momentum Computer business unit reported revenues of $2.2 million during the third quarter. As Momentum was acquired in December 2004, this quarter represented the unit's first full quarter operating as a business unit of Mercury Computer Systems, Inc. Business Outlook In the fourth quarter of fiscal year 2005, revenues are expected to be approximately $66.0 million. At this revenue level, the Company anticipates earnings per share of $0.37 for the fourth quarter ended June 30, 2005. For the full year, revenues are expected to be approximately $245.0 million, at the top end of previous guidance. At this revenue level, the Company expects earnings per share of $1.21 for the fiscal year ended June 30, 2005. Recent Highlights -- March -- Mercury announced a 60x performance breakthrough in digital breast tomosynthesis (DBT) reconstruction. In a joint release with NVIDIA Corporation, Mercury highlighted the first results of its partnership with Massachusetts General Hospital (MGH), which were achieved with a combination of Mercury's work with MGH on its innovative DBT technique, and Mercury's unique image processing solution that uses enhanced NVIDIA Quadro professional graphics processor technology. -- March -- Mercury was selected by Compagnie Generale de Geophysique (CGG) for its Open Inventor(R) from Mercury and VolumeViz LDM (large data management) visualization components, to develop the latest version of CGG's Geocluster seismic processing software. CGG is a principal supplier of geophysical products and services to the worldwide oil and gas industry. -- March -- Mercury announced the release of FDK 2.0, the FPGA Compute Node Developer's Kit that enables high-speed data movement for FPGA-based applications. FDK 2.0 is a comprehensive suite of software tools, Mercury intellectual property (IP), the RACE-on-Chip high-bandwidth interconnect, and design consultation, designed to enable easy integration of application-specific IP into a switch fabric-based ulticomputer. -- February -- Mercury announced Ensemble2, the first high-speed Serial RapidIO-based system for the telecom infrastructure. A fully integrated AdvancedTCA system, Ensemble2 will enable seamless nteroperability with the latest silicon from leading manufacturers including TI, Freescale, Xilinx, Altera, Tundra Semiconductor, and Intel. Ensemble2 is designed to provide OEMs with cost efficiency and time-to-market advantages. -- February -- Mercury announced its E2-MTI advanced mezzanine card, which is based on the new Texas Instruments TMS320TCI6482 digital signal processor with Serial RapidIO. Designed for a broad range of production applications, the E2-MTI will be integrated into the Ensemble2 high- speed Serial RapidIO system, also announced in February. -- January -- Mercury announced its next-generation VME road map that includes both VITA 41 (VXS) systems, and VITA 46 (VPX) systems with the VITA 48 (ERDI) thermal management enhancements, to address diverse requirements in the defense market. VITA 41 VXS systems are especially well suited to high-performance applications in moderately benign environments, such as manned wide-body aircraft. The increased thermal management capability and two-level maintenance make VITA 46/48 systems well suited for the harshest military environments, such as tactical and unmanned platforms. -- January -- Mercury announced the availability of its Serial RapidIO- based silicon IP core. The core, which is designed for reuse, is fully compliant with the Serial RapidIO Specification 1.2 and optimized for performance, latency, and reliability in embedded communications and networking applications. -- January -- Mercury shipped its RACE++ Series conduction-cooled multicomputer systems to Northrop Grumman Electronic Systems Sector of Baltimore, Maryland, for the synthetic aperture radar (SAR) systems onboard the F/A-22 Raptor fighter jet. Mercury's embedded multicomputers process the vast amounts of ground image data retrieved from SAR systems and turn it into actionable information that can be accessed in real time by networked soldiers and military personnel around the globe. Conference Call Information Management will host a conference call today at 11:00 a.m. ET to review the financial results for the third quarter of fiscal year 2005. Management will discuss Mercury's quarterly financial results, business highlights, and outlook. In addition, Company representatives may answer one or more questions concerning business and financial developments and trends, the Company's view on earnings forecasts, and other business and financial matters affecting the Company, some of the responses to which may contain information that has not been previously disclosed. To listen to the conference call, dial (800) 565- 5442 in the USA and Canada, and for international, dial (913) 981-5591. The conference code number is 7499053. Please call five to ten minutes prior to the scheduled start time. This call will also be broadcast live over the web at www.mc.com/investor. A replay of the call by telephone will be available from approximately 2:00 p.m. ET on Thursday, April 21 through midnight ET on Friday, April 29. To access the replay, dial (888) 203-1112 in the USA and Canada, and for international, dial (719) 457-0820. Enter access code 7499053. A replay of the webcast of the call will be available for an extended period of time on the Financial Events page of the Company's website at www.mc.com/investor.