Welcome to the Mercury Computer Systems, Inc. fourth quarter fiscal 2008 earnings results conference call. (Operator Instructions) At this time for opening remarks and introductions I would like to turn the call over to Leslie Shafer, Manager of Financial Planning and Analysis.

With me today are President and Chief Executive Officer, Mark Aslett, and our Senior Vice President and Chief Financial Officer, Bob Hult. If you have not received a copy of the earnings release, you can find it on our website www.mc.com. We’d like to remind you that remarks that we may make during this call about future expectations, trends and plans for the company and its business constitute forward-looking statements which involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Additional information regarding forward-looking statements and risk factors is included in the press release we issued this afternoon reporting the company’s fourth quarter and fiscal year 2008 results and in the company’s periodic reports filed with the SEC. We caution listeners of today’s conference call not to place undue reliance upon any forward-looking statements which speak only as of the date of this call. We undertake no obligation to update any forward-looking statements. In addition to reporting financial results in accordance with Generally Accepted Accounting Principles or GAAP, we will also be discussing non-GAAP financial measures adjusted to exclude certain charges which we will specifically identify. Management believes these non-GAAP 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 their corresponding GAAP financial measures to manage the company’s business, to evaluate its performance compared to prior periods in the market place, and to establish operational goals. However, they are not meant to be considered in isolation or as a substitute for financial information provided in accordance with GAAP. A reconciliation of GAAP to non-GAAP financial measures discussed in today’s conference call is contained in the press release we issued this afternoon. I am now pleased to turn the call over to Mercury’s CEO, Mark Aslett.

I’ll begin with a review of the quarter and the full year followed by an update on the business. Bob will then review the financials and discuss our guidance for the first quarter. At that point we’ll open it up to your questions. We continue to execute against our turnaround plan this quarter making measurable progress operationally and delivering financial results at or near the top end of our guidance range. We saw the profitability we expected in the economic core of our enterprise, ACS defense, which posted another good quarter of performance. However, as we anticipated this growth was partially offset by the continuing revenue decline in the ACS commercial coupled with losses in our non-core businesses. The strategy we’re executing is aimed at eliminating or where possible reversing these losses and unlocking the fundamental value of Mercury’s core. We’re working to rationalize our portfolio of unprofitable and non-core businesses and redirect the resources toward strengthening ACS and developing the new products we need to drive growth. The enterprise must be sustained while this takes place and to do that we need to take costs out of the business, improve operations, improve our profitability and increase our cash flow in the near term. In just a moment I’ll discuss the progress we made this quarter in each of these three areas. First looking at our financial results, total revenue for the fourth quarter was $55.2 million. This compares with $55.4 million in the sequential third quarter and $57.8 million in the fourth quarter of fiscal 2007. Please note, all historical figures have been adjusted for the discontinued operations relating to the sale of our embedded systems and professional services business as noted in the press release. For the full fiscal year, total revenue declined by 3% to approximately $210…

I will review revenue for the fourth quarter and full fiscal year of 2008 including details by business unit; discuss company operating performance, balance sheet and cash flow results; and then finish with a discussion regarding the outlook for the first quarter of fiscal 2009. I will discuss the numbers on both a GAAP and non-GAAP basis. In the fourth quarter Mercury’s subsidiary Visage Imaging sold its embedded systems and professional services businesses. All historical statements have been adjusted to reflect this discontinued operation. Fourth quarter revenues were $55.2 million at the top end of our guidance range of approximately $53 million to $56 million and approximately flat with the third quarter revenues. GAAP operating losses were $21.0 million. These losses include $18.0 million in goodwill impairment charges, $17.4 million of which relates to our Visage Imaging business and $0.6 million relating to our AUSG, Avionics and Unmanned Systems Group, business. These losses also include a $3.2 million gain relating the sale of our AUSG intellectual property and associated inventory to Honeywell. Given that the sale of AUSG’s assets did not qualify the discontinued operations accounting treatment nor did it reflect the business unit’s typical revenue activity, the gain was recorded as a contra-operating expense. The GAAP operating losses also include stock-based compensation expense of $1 million, amortization of acquired intangibles of $1.8 million, and $3.7 million in restructuring costs pertaining to a June 2008 workforce reduction in the AUSG deal and the closure of our first Germany office. The GAAP net loss of continuing operations for the fourth quarter was $19.5 million resulting in a loss per share of $0.90. The miss from our guided range of a loss of $0.30 to a loss of $0.22 is attributable to the $18 million goodwill impairment charge as noted previously. On…

(Operator Instructions) Our first question comes from Stephen Levenson - Stifel Nicolaus & Company, Inc. Stephen Levenson - Stifel Nicolaus & Company, Inc.: In terms of the delays on some of these defense items, is this something that you think is going to be sort of a permanent push-out to the right or is it more likely that there’ll be some catch up along the way?

I think the push is grouped into two categories Steve. Two of the pushes that we saw were due to funding delays. We expect that those deals should come in during FY09. The other was to do with a program that we believe that we are a part of that was contested. So that one is a little bit uncertain at this point because we don’t know exactly what’s going to happen with the result of the protests. Stephen Levenson - Stifel Nicolaus & Company, Inc.: I’m going to guess that that’s broad area Marine surveillance?

That would be correct. If that contest is withheld, the timing is a little uncertain. If the contest is turned down, then we should proceed here shortly. Stephen Levenson - Stifel Nicolaus & Company, Inc.: Within the last few days there are some reports coming out that the Department of Defense is looking to reprogram about $1.3 billion to intelligence surveillance and reconnaissance projects and programs. Do you think that might help you and if so, how?

We think probably yes. We have a focus on that part of the market going forward. The concept that we’re working on around the converged sensor networking architecture is really directly targeted at the ISR space. So hopefully we will benefit from the funding redirection on a go-forward basis Steve. Stephen Levenson - Stifel Nicolaus & Company, Inc.: Is that something you think you could see that could add to revenue in 2009 or do you think it’s more likely to take more time?

Hard to tell at this point. My gut would say it’ll probably take a little bit longer than that.

Our next question comes from Jonathan Ho - William Blair & Co. LLC. Jonathan Ho - William Blair & Co. LLC: With regard to the book-to-bill, this seemed to come in a little bit lighter than what you guys had talked about. Can you talk about just maybe the shortfall relative to your expectations and where that took place?

Yes, sure. We thought last quarter and we said on the call that we expected the book-to-bill to be below 1. It did come in slightly lower than expected at 0.8. However as we said I think if you kind of step back and you look at the big picture, the book-to-bill for the year is 1.04 which is the first time it’s been above 1 since fiscal year 05. So the delays or the reason behind having the book-to-bill at the 0.8 level is really primarily due to the program bookings in defense that I previously mentioned being pushed out. Jonathan Ho - William Blair & Co. LLC: Have you guys seen any of those covenants that’s taking place or is it still kind of hanging out there at this point?

The two that were funding related have pushed further into FY09. As I say the one program that was contested, it’s a little uncertain as to the timing yet because it’s really outside of our control. At this point we believe it’s going to be within the FY09 financial year. Jonathan Ho - William Blair & Co. LLC: Taking a look at the discontinuing of some of the businesses, can you sort of walk us through what you think is the timing for that and exiting 09 what those expectations are at this point?

We haven’t set specific timing Jonathan regarding some of the remaining non-core businesses. What we said is that we expect to exit the full-year FY09 as a much more focused business. We think we’ve got a couple of assets here that have got value and we’re going to run a systematic process for those, but saying much beyond that we don’t think is prudent at this stage. Jonathan Ho - William Blair & Co. LLC: With regard to VI, what type of traction are you guys seeing there with the arrangements that you have and what’s the visibility at this point of the accelerated ramp in revenue?

I think we’re definitely making progress with VI. Revenues were up as we said over 30% on a quarterly basis. That is very much driven by a new client in service software, the CS product line. In addition the pipeline continues to grow. We feel good about the growth in the platform. I think the uncertainty is around the conversion of our pipeline to revenues and the timing associated with that. It appears that the timing of getting some of the deals through the pipeline is taking slightly longer than what we originally anticipated. But overall I think we feel good about VI’s prospects and the direction in which it’s heading. Jonathan Ho - William Blair & Co. LLC: On gross margins, it came in a little bit weaker than we were expecting even though we saw higher defense revenue. Was there any mix issue or anything within the ACS space that might have impacted margins this quarter?

It was purely mix related. Again, I think looking at what the product mix was and the mix of programs dictates really where we’re going to end up at a gross margin level. If you look at where we were in Q4 and what we’re projecting in Q1, we’re expecting to bounce back here in a little bit.

Our next question comes from [Jim McCary - David J. Green]. [Jim McCary - David J. Green]: Nice job generating some cash Bob. And I wanted to follow up with two questions in that regard. In terms of the restructuring charges for the year, could you tell me how much was cash restructuring?

The total restructuring for the year was $3.7 million there; about half cash, a couple million. It did not all hit in the June quarter. Some of it will hit here in the September quarter. But roughly half is the cash outflow. [Jim McCary - David J. Green]: As we look at working capital, how are you thinking about that for the upcoming fiscal year?

From my perspective Jim, it’s certainly an area of focus. I think if you look at what we’ve done over the last couple of quarters, we’ve made some pretty significant progress. In Q4 inventory was down quite substantially; we got the DSOs down by improving the linearity and having a pretty intense focus on cash collections. We’re going to continue that operational discipline going into 09 so we believe that we’re going to be able to sweat additional cash flow out of the working capital. But it’s probably going to be at a lower rate than what you’ve seen in the last couple of quarters combined. [Jim McCary - David J. Green]: Yes. You’ve made some progress but it’s tougher going forward.

Correct. Yes.

It appears that we have no further questions.

I’d like to thank you all very much for listening and we’ll see you again next quarter.