MRCY
#So, as we said, we don't expect LIT to have a material impact on either the quarter or for the year.
The capabilities ---+ that is a capabilities lead acquisition, it is obviously very small.
So essentially what we are doing is absorbing a little more on the OpEx front which is dominated by engineering.
So it is going to drive some of the R&D expense, a piece of which is money that we would likely have spent internally, but for the fact that we now own the capability through LIT.
So it kind of gets lost in the results; we don't see it making a big contribution to the year.
But we see it as a capability that we can leverage very effectively as we move forward.
And as we are seeing the market take shape in the future, we think that is an increasingly important capability and one that we have spent a lot of time working on, as has LIT.
And so it just made a lot of sense for us to acquire it.
So, put another way, really the increase in our guidance from 5% growth to now 6% to 8% in revenues and from 10% growth in adjusted EBITDA to now 9% to 13% is largely a result of the strong performance in the first half, as well as the improved government year fiscal 2016 budget outlook.
Sure.
So as I said in my prepared remarks, I think we are extremely well-positioned.
We are deeply entrenched in some very important production programs.
What is driving the growth is really Radar and EW modernization; the fact that we talked about the long-term trend of requiring more processing onboard military platforms to deal with the big data issue that is present.
As well relating to the LIT acquisition, we believe that we have a leadership position in embedded security for high-performance processing for defense and intelligence applications.
And with the wave of flow downs from DOD relating to program protection security requirements, we are exceptionally well-positioned there.
And that becomes a driver of growth in not only domestic sales but also for foreign military sales where, as our customers are looking to export their capabilities overseas, that technology needs to be protected.
And so, we're kind of right in the middle of that particular trend.
So, overall we feel that we are well-positioned.
Many of our programs, I think as we've talked about historically, have got FMS sales associated with them whether it be Aegis or Patriot or the F-35.
So again, we think that is going to continue to be an important part of the business, <UNK>.
Yes, so right now based upon our (inaudible) assumptions we believe that the Block 3 value to Mercury is approximately $58 million to $144 million.
It could change over time as the ship set assumptions; the number of platforms that are going to be upgraded is either increased or decreased.
But that is our expectation right now, Mike.
Well, we will see.
It is an area that ---+ the naval service fleet is an area that we are very focused on.
We believe we have got a set of capabilities that is broadly applicable to a number of different programs of which AMDR may be one.
It is too early to say anything specific about that, but it is certainly something that we would like to be a part of.
Yes, so again, talking about a specific utilization rate is not something that we'd discuss, other than to say that we are still running one shift and we have got plenty of capacity to meet both our forward revenue projections as well as potential future M&A.
The facility is performing extremely well, it is critically important as obviously programs such as Filthy Buzzard moves into full rate production later this year, as well as programs such as SEWIP, which you may recall received our first full rate production order for Block 2 last quarter.
So volumes are increasing, but we have still got plenty of capacity.
Sure.
So, we actually received an $11 million order of which we recognized slightly less than half from a bookings perspective associated with the EMD phase during Q2.
The other or the remainder we'll recognize as LRIP orders once the options for the LRIP firms up.
No, it is actually I think since what we thought was going to happen with ---+ when we were part of the Lockheed and Raytheon team; it really isn't to do with the content per se.
It is more around the assumptions of the number of ships that is going to be upgraded with the Block 3 capability.
Previously the assumption was much higher.
Our latest information is the number of ships that is going to be upgraded has gone down.
Now that is the current assumption, it may change over time.
But that is the assumption right now.
So it is more to do with number of ships than it is to do with the content.
Yes.
So I think the answer is, yes, this is going to play out over the long term, but we have already won several applications in the naval domain for the technology that we provided.
At our Investor Day recently we talked about not only being able to provide server class capability in an ATCA format, but we're also exploring the opportunity of providing it in a two use stackable form factor which again opens up other potential opportunities for us.
The nice thing about this opportunity is that it is basically all leveraged R&D.
We design a processing complex once and we can relay that out very cost-effectively and very quickly into different form factors.
So, we think that it's going to put us in an interesting position, particularly when you tie that highest performance processing with the source of embedded security capabilities that we are now delivering.
All right, thanks, <UNK>.
Okay, well thank you all for listening.
We look forward to speaking to you again next quarter.
Good evening.
