Operating Segment, Geographic Information And Significant Customers

3 Months Ended

Sep. 30, 2011

Operating Segment, Geographic Information And Significant Customers

Operating Segment, Geographic Information And Significant Customers

J. Operating Segment, Geographic Information and Significant Customers

Operating segments are defined as components of an enterprise evaluated regularly by the Company's senior management in deciding how to allocate resources and assess performance. The Company is organized in two business segments. These reportable segments were determined based upon the nature of the products offered to customers, the market characteristics of each operating segment and the Company's management structure:

• Advanced Computing Solutions ("ACS"). This business unit is focused on specialized, high performance signal end-to-end processing solutions that encompass signal acquisition including microwave front-end, digitalization, computing, storage and communications, targeted to key market segments, including defense, communications and other commercial application.

• Mercury Federal Systems ("MFS"). This business unit is focused on services and support work with the Department of Defense and federal intelligence and homeland security agencies, including designing and engineering new ISR capabilities to address present and emerging threats to U.S. forces.

The accounting policies of the reportable segments are the same as those described in "Note B: Summary of Significant Accounting Policies." The profitability measure employed by the Company and its chief operating decision maker ("CODM") for making decisions about allocating resources to segments and assessing segment performance was income (loss) from operations prior to stock compensation expense. As such, stock-based compensation expense has been excluded from each operating segments' income (loss) from operations below and reported separately to reconcile the reported segment income (loss) from operations to the consolidated operating income reported in the consolidated statements of operations. Additionally, asset information by reportable segment is not reported because the Company and its CODM utilize consolidated asset information when making business decisions. The following is a summary of the performance of the Company's operations by reportable segment:

	ACS		MFS			Stock Compensation Expense			Eliminations			Total
THREE MONTHS ENDED SEPTEMBER 30, 2011
Net revenues to unaffiliated customers	$	45,397	$	4,171		$	—		$	(446	)	$	49,122
Intersegment revenues		1,932		—			—			(1,932	)		—
Net revenues	$	47,329	$	4,171		$	—		$	(2,378	)	$	49,122
Income (loss) from operations	$	5,046	$	493		$	(2,040	)	$	66		$	3,565
Depreciation and amortization expense	$	2,656	$	15		$	—		$	—		$	2,671
THREE MONTHS ENDED SEPTEMBER 30, 2010
Net revenues to unaffiliated customers	$	50,475	$	1,854		$	—		$	(221	)	$	52,108
Intersegment revenues		1,408		—			—			(1,408	)		—
Net revenues	$	51,883	$	1,854		$	—		$	(1,629	)	$	52,108
Income (loss) from operations	$	7,865	$	(497	)	$	(1,290	)	$	(833	)	$	5,245
Depreciation and amortization expense	$	1,738	$	9		$	—		$	—		$	1,747

The geographic distribution of the Company's revenues from continuing operations is summarized as follows:

	U.S.		Europe		Asia Pacific		Eliminations			Total
THREE MONTHS ENDED SEPTEMBER 30, 2011
Net revenues to unaffiliated customers	$	46,877	$	792	$	1,453	$	—		$	49,122
Inter-geographic revenues		2,182		257		20		(2,459	)		—
Net revenues	$	49,059	$	1,049	$	1,473	$	(2,459	)	$	49,122
THREE MONTHS ENDED SEPTEMBER 30, 2010
Net revenues to unaffiliated customers	$	50,663	$	1,054	$	391	$	—		$	52,108
Inter-geographic revenues		1,456		644		93		(2,193	)		—
Net revenues	$	52,119	$	1,698	$	484	$	(2,193	)	$	52,108

Foreign revenue is based on the country in which the Company's legal subsidiary is domiciled.

The geographic distribution of the Company's long-lived assets from continuing operations is summarized as follows:

	U.S.		Europe		Asia Pacific		Eliminations		Total
September 30, 2011	$	14,196	$	21	$	4	$	—	$	14,221
June 30, 2011	$	15,390	$	24	$	704	$	—	$	16,118

Identifiable long-lived assets exclude goodwill and intangible assets.

Customers comprising 10% or more of the Company's revenues for the periods shown below are as follows:

	Three Months Ended September 30,
	2011			2010
Raytheon Company		21	%		17	%
Northrop Grumman Corporation		18	%		23	%
Lockheed Martin Corporation		12	%		13	%
KLA-Tencor Corporation		*			11	%
ASML Holding N.V.		*			10
		51	%		74	%

* Indicates that the amount is less than 10% of the Company's revenues for the respective period.

Although the Company typically has several customers from which it derives 10% or more of its revenue, the sales to each of these customers are spread across multiple programs and platforms. For the three months ended September 30, 2011, only the Joint Strike Fighter program at 16% comprised more than 10% of the Company's revenues. For the three months ended September 30, 2010, no single program comprised 10% or more of the Company's revenues.