Consistent with high-level plans described during its January 26, 2006 earnings call, Mercury Computer Systems today announced that it has initiated certain measures across the organization to realign operating expenses with previously announced revised growth projections. As part of this initiative, the Company's worldwide workforce including contractors will be reduced by approximately 80 positions, or 8% of the workforce. This workforce reduction action will affect each of Mercury's business units and is expected to yield annual cost savings of more than $7M. "The temporary softness in our defense business caused by shifting priorities within DoD, and the transition to our 3D strategy adoption in the Life Science markets, necessitate these cost-saving measures," said Jay Bertelli, president and chief executive officer of Mercury Computer Systems, Inc. "While these have been difficult decisions to make, this action enables us to focus our product investments in the areas of greatest promise for our future in both defense and commercial markets. The cost reduction decisions were made in the context of customer satisfaction as our top priority. We need to focus our energies on products and services that our customers value highly," Mr. Bertelli continued. "To gain the best investment leverage going forward, we will continue our strategy of collaboration, such as our alliance with IBM on the Cell BE processor; and with research hospitals such as the Massachusetts General Hospital and the University of Maryland Medical School -- for IP that is advancing the state of the art for diagnostic imaging." The workforce reduction is expected to result in total cash expenditures of approximately $2 million, payable over the next three quarters. Mercury currently expects to accrue for these charges in the third fiscal quarter ending March 31, 2006. The impact of the cost-saving measures on Mercury's financial results, and outlook for the remaining fiscal year, will be discussed by management during the Company's teleconference immediately following the release of its 3QFY06 earnings, scheduled for April 27, 2006.