DELTEK, INC. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
REVENUES: | ||||||||||||||||
Software license fees | $ | 12,711 | $ | 18,508 | $ | 39,695 | $ | 57,647 | ||||||||
Consulting services | 19,737 | 23,060 | 59,019 | 69,650 | ||||||||||||
Maintenance and support services | 31,648 | 29,324 | 93,232 | 85,675 | ||||||||||||
Other revenues | 18 | 58 | 3,530 | 4,697 | ||||||||||||
Total revenues | 64,114 | 70,950 | 195,476 | 217,669 | ||||||||||||
COST OF REVENUES: | ||||||||||||||||
Cost of software license fees | 1,198 | 1,672 | 4,421 | 4,939 | ||||||||||||
Cost of consulting services | 16,716 | 18,277 | 50,173 | 57,632 | ||||||||||||
Cost of maintenance and support services | 5,493 | 5,438 | 16,762 | 15,864 | ||||||||||||
Cost of other revenues | 26 | 39 | 4,674 | 5,146 | ||||||||||||
Total cost of revenues | 23,433 | 25,426 | 76,030 | 83,581 | ||||||||||||
GROSS PROFIT | 40,681 | 45,524 | 119,446 | 134,088 | ||||||||||||
Research and development | 10,854 | 11,761 | 32,498 | 34,710 | ||||||||||||
Sales and marketing | 10,396 | 13,637 | 32,568 | 39,353 | ||||||||||||
General and administrative | 8,712 | 8,753 | 26,029 | 24,693 | ||||||||||||
Restructuring charge (benefit) | 552 | (61 | ) | 3,100 | 991 | |||||||||||
Total operating expenses | 30,514 | 34,090 | 94,195 | 99,747 | ||||||||||||
INCOME FROM OPERATIONS | 10,167 | 11,434 | 25,251 | 34,341 | ||||||||||||
Interest income | 13 | 168 | 35 | 618 | ||||||||||||
Interest expense | (1,917 | ) | (2,454 | ) | (4,899 | ) | (8,408 | ) | ||||||||
Other expense, net | (29 | ) | (60 | ) | (8 | ) | (261 | ) | ||||||||
INCOME BEFORE INCOME TAXES | 8,234 | 9,088 | 20,379 | 26,290 | ||||||||||||
Income tax expense | 1,627 | 1,063 | 6,217 | 8,821 | ||||||||||||
NET INCOME | $ | 6,607 | $ | 8,025 | $ | 14,162 | $ | 17,469 | ||||||||
EARNINGS PER SHARE | ||||||||||||||||
Basic | $ | 0.10 | $ | 0.17 | $ | 0.26 | $ | 0.38 | ||||||||
Diluted | $ | 0.10 | $ | 0.17 | $ | 0.26 | $ | 0.37 | ||||||||
COMMON SHARES AND EQUIVALENTS OUTSTANDING | ||||||||||||||||
Basic weighted average shares | 63,611 | 46,586 | 54,320 | 46,547 | ||||||||||||
Diluted weighted average shares | 64,808 | 47,605 | 54,967 | 47,795 | ||||||||||||
DELTEK, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands, except share data) | ||||||||
September 30, | December 31, | |||||||
2009 | 2008 | |||||||
(unaudited) | (unaudited) | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 130,388 | $ | 35,788 | ||||
Accounts receivable, net of allowance of $3,033 and $2,195 at September 30, 2009 and December 31, 2008, respectively |
38,262 | 47,747 | ||||||
Deferred income taxes | 4,253 | 4,635 | ||||||
Prepaid expenses and other current assets | 6,338 | 6,874 | ||||||
Income taxes receivable | 651 | 846 | ||||||
TOTAL CURRENT ASSETS | 179,892 | 95,890 | ||||||
PROPERTY AND EQUIPMENT, NET | 12,171 | 14,639 | ||||||
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET | 826 | 1,438 | ||||||
LONG-TERM DEFERRED INCOME TAXES | 6,860 | 4,125 | ||||||
INTANGIBLE ASSETS, NET | 13,942 | 17,396 | ||||||
GOODWILL | 57,829 | 57,654 | ||||||
OTHER ASSETS | 3,218 | 2,130 | ||||||
TOTAL ASSETS | $ | 274,738 | $ | 193,272 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
CURRENT LIABILITIES: | ||||||||
Current portion of long-term debt | $ | 13,952 | $ | 10,154 | ||||
Accounts payable and accrued expenses | 25,362 | 28,734 | ||||||
Accrued liability for redemption of stock in recapitalization | 317 | 317 | ||||||
Deferred revenues | 35,667 | 21,296 | ||||||
TOTAL CURRENT LIABILITIES | 75,298 | 60,501 | ||||||
LONG-TERM DEBT | 165,329 | 182,661 | ||||||
OTHER TAX LIABILITIES | 1,591 | 1,003 | ||||||
OTHER LONG-TERM LIABILITIES | 3,088 | 2,917 | ||||||
TOTAL LIABILITIES | 245,306 | 247,082 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
STOCKHOLDERS’ EQUITY (DEFICIT): | ||||||||
Preferred stock, $0.001 par value—authorized, 5,000,000 shares; none issued or outstanding at September 30, 2009 or December 31, 2008 |
– | – | ||||||
Common stock, $0.001 par value—authorized, 200,000,000 shares; issued and outstanding, 65,944,975 and 43,474,220 shares at September 30, 2009 and December 31, 2008, respectively |
66 | 43 | ||||||
Class A common stock, $0.001 par value—authorized, 100 shares; issued and outstanding, 100 shares at September 30, 2009 and December 31, 2008 |
– | – | ||||||
Additional paid-in capital | 245,773 | 177,249 | ||||||
Accumulated deficit | (215,743 | ) | (229,905 | ) | ||||
Accumulated other comprehensive deficit | (664 | ) | (1,197 | ) | ||||
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | 29,432 | (53,810 | ) | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | 274,738 | $ | 193,272 | ||||
DELTEK, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(in thousands) | ||||||||
Nine Months Ended September 30, | ||||||||
2009 | 2008 | |||||||
(unaudited) | (unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 14,162 | $ | 17,469 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Provision for doubtful accounts | 2,274 | 1,000 | ||||||
Depreciation and amortization | 8,045 | 7,143 | ||||||
Amortization of debt issuance costs | 701 | 595 | ||||||
Write down of acquired in process research and development | - | 290 | ||||||
Stock-based compensation expense | 6,230 | 5,925 | ||||||
Employee stock purchase plan expense | 1,821 | 234 | ||||||
Restructuring charge, net | 818 | 63 | ||||||
Loss on disposal of fixed assets | 23 | 346 | ||||||
Deferred income taxes | (2,818 | ) | (2,455 | ) | ||||
Change in assets and liabilities, net of effects from acquisition: | ||||||||
Accounts receivable, net | 7,416 | 6,907 | ||||||
Prepaid expenses and other assets | 935 | 1,555 | ||||||
Accounts payable and accrued expenses |
(3,469 |
) | (2,638 | ) | ||||
Income taxes receivable |
175 |
(3,092 | ) | |||||
Excess tax benefit from stock awards |
(61 |
) |
(71 | ) | ||||
Other tax liabilities | 588 | 374 | ||||||
Other long-term liabilities | (631 | ) | (456 | ) | ||||
Deferred revenues | 15,012 | (166 | ) | |||||
Net Cash Provided by Operating Activities |
51,221 |
33,023 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Acquisitions, net of cash acquired | - | (17,424 | ) | |||||
Purchase of property and equipment | (1,863 | ) | (5,000 | ) | ||||
Capitalized software development costs | (150 | ) | (261 | ) | ||||
Net Cash Used in Investing Activities | (2,013 | ) | (22,685 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Issuance of common stock in connection with rights offering, net of issuance costs | 58,228 | – | ||||||
Proceeds from exercise of stock options | 759 | 230 | ||||||
Excess tax benefit from stock awards |
61 |
|
71 | |||||
Proceeds from issuance of stock under employee stock purchase plan | 2,015 | 712 | ||||||
Offering costs paid for 2007 sale of common stock in initial public offering | – | (275 | ) | |||||
Payments for deferred financing costs | (2,336 | ) | – | |||||
Repayment of debt | (13,534 | ) | – | |||||
Net Cash Provided by Financing Activities |
45,193 |
738 | ||||||
IMPACT OF FOREIGN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 199 | (7 | ) | |||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 94,600 | 11,069 | ||||||
CASH AND CASH EQUIVALENTS––Beginning of period | 35,788 | 17,091 | ||||||
CASH AND CASH EQUIVALENTS––End of period | $ | 130,388 | $ | 28,160 | ||||
DELTEK, INC. | |||||||||||||||||||||||||||||
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME | |||||||||||||||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||||||
Net Income (GAAP Basis) | $ | 6,607 | $ | 8,025 | $ | 14,162 | $ | 17,469 | |||||||||||||||||||||
Income Tax Expense | 1,627 | 1,063 | 6,217 | 8,821 | |||||||||||||||||||||||||
Pre-Tax Income (GAAP Basis) | $ | 8,234 | $ | 9,088 | $ | 20,379 | $ | 26,290 | |||||||||||||||||||||
Adjustments: | |||||||||||||||||||||||||||||
Stock-based Compensation | 3,799 | 2,337 | 8,140 | 6,160 | |||||||||||||||||||||||||
Recapitalization Retention Expense | - | 157 | 152 | 451 | |||||||||||||||||||||||||
Amortization of Acquired Intangibles | 1,054 | 1,327 | 3,491 | 3,162 | |||||||||||||||||||||||||
Restructuring Charge | 552 | (61 | ) | 3,100 | 991 | ||||||||||||||||||||||||
Adjusted Pre-Tax Income | 13,639 | 12,848 | 35,262 | 37,054 | |||||||||||||||||||||||||
Less: Adjusted Income Tax Expense | 3,757 | 2,544 | 12,081 | 13,062 | |||||||||||||||||||||||||
Non-GAAP Net Income | $ | 9,882 | $ | 10,304 | $ | 23,181 | $ | 23,992 | |||||||||||||||||||||
Non-GAAP Earnings Per Share (diluted) | $ | 0.15 | $ | 0.22 | $ | 0.42 | $ | 0.50 | |||||||||||||||||||||
Weighted Average Shares | 64,808 | 47,605 | 54,967 | 47,795 | |||||||||||||||||||||||||
RECONCILIATION OF GAAP OPERATING INCOME AND OPERATING MARGIN TO NON-GAAP OPERATING INCOME AND OPERATING MARGIN | |||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||||||
Operating Income and Margin - GAAP | $ | 10,167 | 16 | % | $ | 11,434 | 16 | % | $ | 25,251 | 13 | % | $ | 34,341 | 16 | % | |||||||||||||
Plus: Stock-based Compensation and Recapitalization Retention Expense | 3,799 | 2,494 | 8,292 | 6,611 | |||||||||||||||||||||||||
Plus: Amortization of Acquired Intangibles | 1,054 | 1,327 | 3,491 | 3,162 | |||||||||||||||||||||||||
Plus: Restructuring Charge | 552 | (61 | ) | 3,100 | 991 | ||||||||||||||||||||||||
Operating Income and Margin - Non-GAAP | $ | 15,572 | 24 | % | $ | 15,194 | 21 | % | $ | 40,134 | 21 | % | $ | 45,105 | 21 | % | |||||||||||||
Total Revenues | $ | 64,114 | $ | 70,950 | $ | 195,476 | $ | 217,669 | |||||||||||||||||||||
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA | |||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||||||
Net Income (GAAP Basis) | $ | 6,607 | $ | 8,025 | $ | 14,162 | $ | 17,469 | |||||||||||||||||||||
Stock-based Compensation | 3,799 | 2,337 | 8,140 | 6,160 | |||||||||||||||||||||||||
Recapitalization Retention Expense | - | 157 | 152 | 451 | |||||||||||||||||||||||||
Depreciation | 1,255 | 1,191 | 3,796 | 3,315 | |||||||||||||||||||||||||
Amortization | 1,262 | 1,662 | 4,254 | 4,135 | |||||||||||||||||||||||||
Interest Expense, net | 1,904 | 2,286 | 4,864 | 7,790 | |||||||||||||||||||||||||
Income Tax Provision | 1,627 | 1,063 | 6,217 | 8,821 | |||||||||||||||||||||||||
Restructuring Charge | 552 | (61 | ) | 3,100 | 991 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | 17,006 | $ | 16,660 | $ | 44,685 | $ | 49,132 | |||||||||||||||||||||
STOCK-BASED COMPENSATION AND RECAPITALIZATION RETENTION EXPENSES | |||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||||||
Cost of Software License Fees | $ | - | $ | 1 | $ | - | $ | 3 | |||||||||||||||||||||
Cost of Consulting Services | 932 | 425 | 1,778 | 1,214 | |||||||||||||||||||||||||
Cost of Maintenance and Support Services | 308 | 73 | 513 | (18 | ) | ||||||||||||||||||||||||
Research and Development | 884 | 545 | 1,880 | 1,496 | |||||||||||||||||||||||||
Sales and Marketing | 705 | 512 | 1,506 | 1,404 | |||||||||||||||||||||||||
General and Administrative | 970 | 938 | 2,615 | 2,512 | |||||||||||||||||||||||||
Total | $ | 3,799 | $ | 2,494 | $ | 8,292 | $ | 6,611 | |||||||||||||||||||||
AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS | |||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||||||
Cost of Software License Fees | $ | 155 | $ | 307 | $ | 773 | $ | 992 | |||||||||||||||||||||
Cost of Consulting Services | 20 | 20 | 59 | 59 | |||||||||||||||||||||||||
Research and Development | - | 290 | - | 290 | |||||||||||||||||||||||||
Sales and Marketing | 874 | 692 | 2,617 | 1,766 | |||||||||||||||||||||||||
General and Administrative | 5 | 18 | 42 | 55 | |||||||||||||||||||||||||
Total | $ | 1,054 | $ | 1,327 | $ | 3,491 | $ | 3,162 | |||||||||||||||||||||
AMORTIZATION AND DEPRECIATION EXPENSES | |||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||||||
Cost of Software License Fees | $ | 365 | $ | 646 | $ | 1,546 | $ | 1,973 | |||||||||||||||||||||
Cost of Consulting Services | 362 | 593 | 1,213 | 1,346 | |||||||||||||||||||||||||
Cost of Maintenance and Support Services | 205 | 274 | 630 | 528 | |||||||||||||||||||||||||
Research and Development | 401 | 460 | 976 | 980 | |||||||||||||||||||||||||
Sales and Marketing | 1,058 | 752 | 3,246 | 2,246 | |||||||||||||||||||||||||
General and Administrative | 126 | 128 | 439 | 377 | |||||||||||||||||||||||||
Total | $ | 2,517 | $ | 2,853 | $ | 8,050 | $ | 7,450 | |||||||||||||||||||||