The Company believes that the presentation of these non-GAAP financial measures provides useful information to its investors and lenders because these measures enhance their overall understanding of the Company's financial performance and the prospects for the future of the Company's ongoing business operations. The Company believes that by reporting these measures, it provides insight and consistency in its financial reporting and presents a basis for comparison of its business operations between current, past and future periods. In addition, the measures provide a basis for the Company to compare its financial results to those of other comparable publicly traded companies and are used by its management team to plan and forecast its business.
Adjusted EBITDA is also used as the basis for the Company's calculations to determine compliance with its debt covenants and to assess its ability to borrow additional funds to finance or expand its operations.
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance which are prepared in accordance with U.S. GAAP and may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review the reconciliations of our GAAP to non-GAAP net income and adjusted EBITDA, which are set forth below.
Forward-Looking Statements
This press release and related conference call contain forward-looking statements that involve substantial risks and uncertainties. You can identify forward-looking statements by words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "should," "will," "would" or similar words. You should consider these statements carefully because they discuss our plans, targets, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There will be events in the future, however, that we are not able to predict accurately or control. Our actual results may differ materially from the expectations we describe in our forward-looking statements. Factors or events that could cause our actual results to materially differ may emerge from time to time, and it is not possible for us to accurately predict all of them. Before you invest in our common stock, you should be aware that the occurrence of any such event or of any of the additional events described as risk factors in the Company's filings with the Securities and Exchange Commission could have a material adverse effect on our business, results of operation and financial position. Any forward-looking statement made by us in this press release or related conference call speaks only as of the date on which we make it. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
| DELTEK, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
|
(in thousands, except per share data) |
||||||||
| Three Months Ended March 31, | ||||||||
| 2009 | 2008 | |||||||
| (unaudited) | (unaudited) | |||||||
| REVENUES: | ||||||||
| Software license fees | $ | 11,226 | $ | 17,007 | ||||
| Consulting services | 20,066 | 24,266 | ||||||
| Maintenance and support services | 30,597 | 28,065 | ||||||
| Other revenues | 104 | 16 | ||||||
| Total revenues | 61,993 | 69,354 | ||||||
| COST OF REVENUES: | ||||||||
| Cost of software license fees | 1,388 | 1,580 | ||||||
| Cost of consulting services | 17,317 | 20,163 | ||||||
| Cost of maintenance and support services | 5,740 | 5,627 | ||||||
| Cost of other revenues | 43 | 232 | ||||||
| Total cost of revenues | 24,488 | 27,602 | ||||||
| GROSS PROFIT | 37,505 | 41,752 | ||||||
| Research and development | 10,871 | 11,391 | ||||||
| Sales and marketing | 11,519 | 12,303 | ||||||
| General and administrative | 7,905 | 7,561 | ||||||
| Restructuring charge | 1,413 | - | ||||||
| Total operating expenses | 31,708 | 31,255 | ||||||
| INCOME FROM OPERATIONS | 5,797 | 10,497 | ||||||
| Interest income | 11 | 257 | ||||||
| Interest expense | (1,509 | ) | (3,474 | ) | ||||
| Other expense, net | (3 | ) | (37 | ) | ||||
| INCOME BEFORE INCOME TAXES | 4,296 | 7,243 | ||||||
| Income tax expense | 1,642 | 3,222 | ||||||
| NET INCOME | $ | 2,654 | $ | 4,021 | ||||
| EARNINGS PER SHARE | ||||||||
| Basic | $ | 0.06 | $ | 0.09 | ||||
| Diluted | $ | 0.06 | $ | 0.09 | ||||
|
COMMON SHARES AND EQUIVALENTS OUTSTANDING |
||||||||
| Basic weighted average shares | 43,214 | 43,058 | ||||||
| Diluted weighted average shares | 43,833 | 44,406 | ||||||
| DELTEK, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands, except share data) | ||||||||
| March 31, |
December 31, |
|||||||
| 2009 | 2008 | |||||||
| (unaudited) |
(unaudited) |
|||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 42,952 | $ | 35,788 | ||||
|
Accounts receivable, net of allowance of 3,303 and 2,195 at March 31, 2009 and December 31, 2008, respectively |
39,664 | 47,747 | ||||||
| Deferred income taxes | 5,020 | 4,635 | ||||||
| Prepaid expenses and other current assets | 8,069 | 6,874 | ||||||
| Income taxes receivable | - | 846 | ||||||
| TOTAL CURRENT ASSETS | 95,705 | 95,890 | ||||||
| PROPERTY AND EQUIPMENT, NET | 13,849 | 14,639 | ||||||
| CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET | 1,242 | 1,438 | ||||||
| LONG-TERM DEFERRED INCOME TAXES | 4,833 | 4,125 | ||||||
| INTANGIBLE ASSETS, NET | 16,130 | 17,396 | ||||||
| GOODWILL | 57,647 | 57,654 | ||||||
| OTHER ASSETS | 2,004 | 2,130 | ||||||
| TOTAL ASSETS | $ | 191,410 | $ | 193,272 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Current portion of long-term debt | $ | - | $ | 10,154 | ||||
| Accounts payable and accrued expenses | 27,776 | 28,734 | ||||||
| Accrued liability for redemption of stock in recapitalization | 317 | 317 | ||||||
| Deferred revenues | 24,806 | 21,296 | ||||||
| Income taxes payable | 674 | – | ||||||
| TOTAL CURRENT LIABILITIES | 53,573 | 60,501 | ||||||
| LONG-TERM DEBT | 182,661 | 182,661 | ||||||
| OTHER TAX LIABILITIES | 1,091 | 1,003 | ||||||
| OTHER LONG-TERM LIABILITIES | 2,886 | 2,917 | ||||||
| TOTAL LIABILITIES | 240,211 | 247,082 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS’ DEFICIT: | ||||||||
|
Preferred stock, $0.001 par value—authorized, 5,000,000 shares; none issued or outstanding at March 31, 2009 or December 31, 2008 |
– | – | ||||||
|
Common stock, $0.001 par value—authorized, 200,000,000 shares; issued and outstanding, 44,112,177 and 43,474,220 shares at March 31, 2009 and December 31, 2008 |
44 | 43 | ||||||
|
Class A common stock, $0.001 par value—authorized, 100 shares; issued and outstanding, 100 shares at March 31, 2009 and December 31, 2008 respectively |
– | – | ||||||
| Additional paid-in capital | 179,611 | 177,249 | ||||||
| Accumulated deficit | (227,251 | ) | (229,905 | ) | ||||
| Accumulated other comprehensive deficit | (1,205 | ) | (1,197 | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | (48,801 | ) | (53,810 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 191,410 | $ | 193,272 | ||||
| DELTEK, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (in thousands) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2009 | 2008 | |||||||
| (unaudited) | (unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 2,654 | $ | 4,021 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Provision for doubtful accounts | 1,389 | 48 | ||||||
| Depreciation and amortization | 2,859 | 2,343 | ||||||
| Amortization of debt issuance costs | 270 | 198 | ||||||
| Stock-based compensation expense | 2,011 | 2,297 | ||||||
| Employee stock purchase plan expense | 109 | 67 | ||||||
| Restructuring charge, net | 529 | – | ||||||
| Loss on disposal of fixed assets | 6 | 64 | ||||||
| Deferred income taxes | (1,188 | ) | (1,538 | ) | ||||
| Change in assets and liabilities: | ||||||||
| Accounts receivable, net | 6,662 | 8,338 | ||||||
| Prepaid expenses and other assets | (995 | ) | (896 | ) | ||||
| Accounts payable and accrued expenses | (2,022 | ) | (1,426 | ) | ||||
| Income taxes payable/receivable | 1,474 | 2,522 | ||||||
| Excess tax deficiency from stock option exercises | 46 | – | ||||||
| Other tax liabilities | 88 | 193 | ||||||
| Other long-term liabilities | (147 | ) | (110 | ) | ||||
| Deferred revenues | 3,624 | 4,111 | ||||||
| Net Cash Provided by Operating Activities | 17,369 | 20,232 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | (292 | ) | (2,066 | ) | ||||
| Capitalized software development costs | (150 | ) | - | |||||
| Net Cash Used in Investing Activities | (442 | ) | (2,066 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from exercise of stock options | 90 | 72 | ||||||
| Excess tax deficiency from exercise of stock options | (46 | ) | – | |||||
| Proceeds from issuance of stock under employee stock purchase plan | 310 | 305 | ||||||
| Offering costs paid for 2007 sale of common stock in initial public offering | – | (275 | ) | |||||
| Repayment of debt | (10,154 | ) | – | |||||
| Net Cash (Used In) Provided by Financing Activities | (9,800 | ) | 102 | |||||
| IMPACT OF FOREIGN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 37 | 5 | ||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 7,164 | 18,273 | ||||||
| CASH AND CASH EQUIVALENTS––Beginning of period | 35,788 | 17,091 | ||||||
| CASH AND CASH EQUIVALENTS––End of period | $ | 42,952 | $ | 35,364 | ||||
| DELTEK, INC. | ||||||||||||
| RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME | ||||||||||||
|
(in thousands, except per share data) |
||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2009 | 2008 | |||||||||||
| Net Income (GAAP Basis) | $ | 2,654 | $ | 4,021 | ||||||||
| Income Tax Expense | 1,642 | 3,222 | ||||||||||
| Pre-Tax Income (GAAP Basis) | $ | 4,296 | $ | 7,243 | ||||||||
| Adjustments: | ||||||||||||
| Stock-based Compensation | 2,120 | 2,364 | ||||||||||
| Recapitalization Retention Expense | 145 | 169 | ||||||||||
| Amortization of Acquired Intangibles | 1,264 | 1,004 | ||||||||||
| Restructuring Charge | 1,413 | - | ||||||||||
| Adjusted Pre-Tax Income | 9,238 | 10,780 | ||||||||||
| Less: Adjusted Income Tax Expense | 3,589 | 4,616 | ||||||||||
| Non-GAAP Net Income | $ | 5,649 | $ | 6,164 | ||||||||
| Non-GAAP Earnings Per Share (diluted) | $ | 0.13 | $ | 0.14 | ||||||||
| Weighted Average Shares | 43,833 | 44,406 | ||||||||||
| RECONCILIATION OF GAAP OPERATING INCOME AND | ||||||||||||
| OPERATING MARGIN TO NON-GAAP OPERATING INCOME AND OPERATING MARGIN | ||||||||||||
| (in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2009 | 2008 | |||||||||||
| Operating Income and Operating Margin - GAAP | $ | 5,797 | 9 | % | $ | 10,497 | 15 | % | ||||
|
Plus: Stock-based Compensation and Recapitalization Retention Expense |
2,265 | 2,533 | ||||||||||
| Plus: Amortization of Acquired Intangibles | 1,264 | 1,004 | ||||||||||
| Plus: Restructuring Charge | 1,413 | - | ||||||||||
| Operating Income and Operating Margin - Non-GAAP | $ | 10,739 | 17 | % | $ | 14,034 | 20 | % | ||||
| Total Revenues | $ | 61,993 | $ | 69,354 | ||||||||
| RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA | ||||||||||||
| (in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2009 | 2008 | |||||||||||
| Net Income (GAAP Basis) | $ | 2,654 | $ | 4,021 | ||||||||
| Stock-based Compensation | 2,120 | 2,364 | ||||||||||
| Recapitalization Retention Expense | 145 | 169 | ||||||||||
| Depreciation | 1,247 | 1,020 | ||||||||||
| Amortization | 1,611 | 1,323 | ||||||||||
| Interest Expense, net | 1,498 | 3,217 | ||||||||||
| Income Tax Provision | 1,642 | 3,222 | ||||||||||
| Restructuring Charge | 1,413 | - | ||||||||||
| Adjusted EBITDA | $ | 12,330 | $ | 15,336 | ||||||||
| STOCK-BASED COMPENSATION AND RECAPITALIZATION RETENTION EXPENSES | ||||||||||||
| (in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2009 | 2008 | |||||||||||
| Cost of Software License Fees | $ | - | $ | 1 | ||||||||
| Cost of Consulting Services | 445 | 426 | ||||||||||
| Cost of Maintenance and Support Services | 103 | 269 | ||||||||||
| Research and Development | 575 | 550 | ||||||||||
| Sales and Marketing | 385 | 477 | ||||||||||
| General and Administrative | 757 | 810 | ||||||||||
| Total | $ | 2,265 | $ | 2,533 | ||||||||
| AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS | ||||||||||||
| (in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2009 | 2008 | |||||||||||
| Cost of Software License Fees | $ | 355 | $ | 430 | ||||||||
| Cost of Consulting Services | 20 | 19 | ||||||||||
| Sales and Marketing | 871 | 537 | ||||||||||
| General and Administrative | 18 | 18 | ||||||||||
| Total | $ | 1,264 | $ | 1,004 | ||||||||
| AMORTIZATION AND DEPRECIATION EXPENSES | ||||||||||||
| (in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2009 | 2008 | |||||||||||
| Cost of Software License Fees | $ | 706 | $ | 751 | ||||||||
| Cost of Consulting Services | 418 | 358 | ||||||||||
| Cost of Maintenance and Support Services | 212 | 129 | ||||||||||
| Research and Development | 283 | 256 | ||||||||||
| Sales and Marketing | 1,095 | 731 | ||||||||||
| General and Administrative | 144 | 118 | ||||||||||
| Total | $ | 2,858 | $ | 2,343 | ||||||||
