Operating Segment, Geographic Information And Significant Customers

6 Months Ended

Dec. 31, 2011

Operating Segment, Geographic Information And Significant Customers [Abstract]

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 operating 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: this operating segment is focused on specialized, high-performance embedded, real-time digital image and complete signal 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

applications. With the addition of KOR, the ACS segment also designs and develops DRFM units for a variety of modern EW applications, as well as radar environment simulation and test systems for defense applications.

• Mercury Federal Systems:  this services-oriented operating segment supports work for the Department of Defense as well as intelligence and homeland security agencies, including the design, development, and implementation of new ISR capabilities to address present and emerging threats to U.S. forces. With the addition of PDI, our MFS segment also provides sophisticated analytic exploitation, multi-sensor fusion, and data processing services for the U.S. intelligence community.

No revenues or expenses from KOR or PDI are included in either the ACS or MFS operating segments for any of the periods presented below.

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 DECEMBER 31, 2011
Net revenues to unaffiliated customers	$	64,062	$	5,191		$	—		$	(1,294	)	$	67,959
Intersegment revenues		1,996		—			—			(1,996	)		—
Net revenues	$	66,058	$	5,191		$	—		$	(3,290	)	$	67,959
Income (loss) from operations	$	14,572	$	1,050		$	(1,812	)	$	(325	)	$	13,485
Depreciation and amortization expense	$	2,582	$	15		$	—		$	—		$	2,597
THREE MONTHS ENDED DECEMBER 31, 2010
Net revenues to unaffiliated customers	$	51,893	$	3,565		$	—		$	55		$	55,513
Intersegment revenues		1,363		—			—			(1,363	)		—
Net revenues	$	53,256	$	3,565		$	—		$	(1,308	)	$	55,513
Income (loss) from operations	$	7,595	$	66		$	(1,633	)	$	490		$	6,518
Depreciation and amortization expense	$	1,860	$	9		$	—		$	—		$	1,869
SIX MONTHS ENDED DECEMBER 31, 2011
Net revenues to unaffiliated customers	$	109,458	$	9,363		$	—		$	(1,740	)	$	117,081
Intersegment revenues		3,929		—			—			(3,929	)		—
Net revenues	$	113,387	$	9,363		$	—		$	(5,669	)	$	117,081
Income (loss) from operations	$	19,618	$	1,543		$	(3,852	)	$	(259	)	$	17,050
Depreciation and amortization expense	$	5,238	$	30		$	—		$	—		$	5,268
SIX MONTHS ENDED DECEMBER 31, 2010
Net revenues to unaffiliated customers	$	102,369	$	5,419		$	—		$	(167	)	$	107,621
Intersegment revenues		2,771		—			—			(2,771	)		—
Net revenues	$	105,140	$	5,419		$	—		$	(2,938	)	$	107,621
Income (loss) from operations	$	15,460	$	(431	)	$	(2,923	)	$	(343	)	$	11,763
Depreciation and amortization expense	$	3,598	$	18		$	—		$	—		$	3,616

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 DECEMBER 31, 2011
Net revenues to unaffiliated customers	$	66,458	$	349	$	1,152	$	—		$	67,959
Inter-geographic revenues		762		178		11		(951	)		—
Net revenues	$	67,220	$	527	$	1,163	$	(951	)	$	67,959
THREE MONTHS ENDED DECEMBER 31, 2010
Net revenues to unaffiliated customers	$	50,642	$	1,308	$	3,563	$	—		$	55,513
Inter-geographic revenues		2,420		518		27		(2,965	)		—
Net revenues	$	53,062	$	1,826	$	3,590	$	(2,965	)	$	55,513
SIX MONTHS ENDED DECEMBER 31, 2011
Net revenues to unaffiliated customers	$	113,335	$	1,141	$	2,605	$	—		$	117,081
Inter-geographic revenues		2,944		435		31		(3,410	)		—
Net revenues	$	116,279	$	1,576	$	2,636	$	(3,410	)	$	117,081
SIX MONTHS ENDED DECEMBER 31, 2010
Net revenues to unaffiliated customers	$	101,305	$	2,362	$	3,954	$	—		$	107,621
Inter-geographic revenues		3,876		1,162		120		(5,158	)		—
Net revenues	$	105,181	$	3,524	$	4,074	$	(5,158	)	$	107,621

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
December 31, 2011	$	14,419	$	29	$	4	$	—	$	14,452
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 December 31,						Six Months Ended December 31,
	2011			2010			2011			2010
Raytheon Company		30	%		23	%		27	%		20	%
Northrop Grumman Corporation		27	%		14	%		23	%		18	%
Lockheed Martin Corporation		17	%		15	%		14	%		14	%
		74	%		52	%		64	%		52	%

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. Programs comprising 10% or more of the Company's revenue for the periods shown below are as follows:

	Three Months Ended December 31,						Six Months Ended December 31,
	2011			2010			2011			2010
Joint Strike Fighter		21	%		*	%		19	%		*	%
Classified Airborne Radar Program		19	%		*	%		11	%		*	%
Aegis		13	%		12	%		11	%		12	%
		53	%		12	%		41	%		12	%

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