EX-99.1 2 dex991.htm EXHIBIT 99.1 Exhibit 99.1

Exhibit 99.1

LOGO

FOR IMMEDIATE RELEASE

 

Investor Relations Contact:

Dave Spille

VP, Investor Relations

Deltek, Inc.

703.885.9423

davespille@deltek.com

 

Media Relations Contact:

Warren Brown

VP, Strategic Communications

Deltek, Inc.

703.885.9746

warrenbrown@deltek.com

DELTEK REPORTS THIRD QUARTER 2008 FINANCIAL RESULTS

Q3 Net Income Increases 38% to $8.0 million

HERNDON, Va. – November 6, 2008 – Deltek, Inc. (Nasdaq: PROJ), the leading provider of enterprise applications software for project-focused businesses, today announced financial results for its third quarter ended September 30, 2008.

Total revenue for the third quarter of 2008 was $71.0 million, an increase of 1% from the prior year period. License revenue for Q3 was $18.5 million, a decrease of 13% from the prior year period, while consulting services revenue increased 1% to $23.1 million, and maintenance and support revenue increased 12% to $29.3 million.

GAAP net income for the third quarter of 2008 increased 38% to $8.0 million, or $0.18 per diluted share, compared to $5.8 million, or $0.14 per diluted share, in the third quarter of 2007.

Non-GAAP net income for the third quarter of 2008 increased 35% to $10.2 million, or $0.23 per diluted share, compared to $7.6 million, or $0.19 per diluted share, in the third quarter of 2007. Non-GAAP net income excludes the net-of-tax impact of stock-based compensation, retention payments associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets and restructuring charges. A reconciliation of GAAP to non-GAAP financial measures is provided in the tables at the end of this press release.

“While the escalating financial crisis resulted in delayed purchasing decisions from a number of our A&E customers, we continued to achieve strong results in our government contracting sector,” said Kevin Parker, president and CEO of Deltek. “In an extraordinarily challenging environment, we achieved double-digit license revenue growth from our government contracting customers, added over 100 new customers, improved service margins, delivered strong operating cash flows and maintained a healthy balance sheet.”


Additional Q3 Highlights

 

   

Q3 operating cash flow was $13 million, compared to negative $1 million in the prior year period, resulting in a cash balance of $28 million at September 30, 2008.

 

   

As a result of recently implemented international tax planning initiatives, along with other income tax credits, deductions and adjustments, we realized $2.5 million of tax savings in Q3.

 

   

During Q3, Deltek announced the acquisition of the MPM solution and all related assets for $16 million. MPM is an earned value management (EVM) software application used by government contractors and agencies, including 8 of the top 10 aerospace and defense contractors, to meet the complex compliance requirements of the U.S. Federal Government. With the addition of MPM, Deltek extends its leadership position as the largest and most comprehensive provider of earned value management applications in the industry and expands the earned value product options for Deltek customers.

 

   

Deltek announced the general availability of GCS Premier Version 5.0, which delivers significant enhancements to the industry’s leading project accounting solution for small- to medium-sized government contractors. GCS Premier also delivers a new user interface and role-based navigation improving efficiency and compliance. In addition, the new Premier Billing feature provides pre-built and customizable templates making invoicing faster and easier.

 

   

Deltek recently announced the latest release of GovWin, the only comprehensive business development and capture software solution designed specifically for government contractors. With this release, GovWin manages the complete procurement cycle, from opportunity identification and management, to contract award, contract data management and closeout. The release also allows users to effectively manage and quickly search all procurement documents throughout the project lifecycle.

Conference Call Information

Deltek will host a conference call at 5:00 p.m. Eastern Time today to discuss the Company’s third quarter results. To access this call, dial 1-877-381-6419 in North America and 1-706-643-9496 outside North America. The conference call also will be available via webcast at http://investor.deltek.com. Those unable to participate in the live call may hear a rebroadcast by dialing 1-800-642-1687 in North America and 1-706-645-9291 outside North America. The confirmation number is 68882972. The rebroadcast and the webcast will be available for replay through November 13, 2008.

 

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About Deltek

Deltek (NASDAQ: PROJ) is the leading provider of enterprise applications software designed specifically for project-focused businesses. For more than two decades, our software applications have enabled organizations to automate mission-critical business processes around the engagement, execution and delivery of projects. More than 12,000 customers worldwide rely on Deltek to measure business results, optimize performance, streamline operations and win new business. For more information, visit www.deltek.com.

Use of Non-GAAP Financial Measures

This press release and the related conference call described above contain certain non-GAAP financial measures, including non-GAAP net income, non-GAAP operating income and adjusted EBITDA. The Company defines non-GAAP net income as GAAP net income before the net-of-tax impact of stock-based compensation, retention payments associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets, New Mountain Capital fees and restructuring charges. Non-GAAP operating income is defined as GAAP operating income before the pre-tax impact of stock-based compensation, retention payments associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets, New Mountain Capital fees and restructuring charges. Adjusted EBITDA is defined as GAAP net income before interest expenses (net of interest income), provision for income taxes, depreciation, amortization, stock-based compensation, retention payments associated with the Company’s 2005 recapitalization, New Mountain Capital fees and restructuring charges.

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.

 

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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.

 

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DELTEK, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

 

     September 30     December 31  
     2008     2007  

ASSETS

    

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 28,160     $ 17,091  

Accounts receivable, net of allowance of $2,564 and $2,866 at September 30, 2008 and December 31, 2007, respectively

     47,803       55,663  

Deferred income taxes

     4,798       5,027  

Prepaid expenses and other current assets

     5,477       7,104  

Income taxes receivable

     2,432       —    
                

TOTAL CURRENT ASSETS

     88,670       84,885  

PROPERTY AND EQUIPMENT, NET

     14,946       13,575  

CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET

     1,685       2,399  

LONG-TERM DEFERRED INCOME TAXES

     3,918       354  

INTANGIBLE ASSETS, NET

     18,828       13,132  

GOODWILL

     57,405       50,082  

OTHER ASSETS

     2,540       3,253  
                

TOTAL ASSETS

   $ 187,992     $ 167,680  
                

LIABILITIES AND STOCKHOLDERS’ DEFICIT

    

CURRENT LIABILITIES:

    

Current portion of long-term debt

   $ 1,991     $ 498  

Accounts payable and accrued expenses

     29,868       33,310  

Accrued liability for redemption of stock in recapitalization

     569       569  

Deferred revenues

     22,083       22,046  

Income taxes payable

     —         729  
                

TOTAL CURRENT LIABILITIES

     54,511       57,152  

LONG-TERM DEBT

     191,322       192,815  

OTHER TAX LIABILITIES

     925       551  

OTHER LONG-TERM LIABILITIES

     3,070       3,350  
                

TOTAL LIABILITIES

     249,828       253,868  

STOCKHOLDERS’ DEFICIT:

    

Preferred stock, $0.001 par value—authorized, 5,000,000 shares; none issued or outstanding at September 30, 2008 or December 31, 2007

     —         —    

Common stock, $0.001 par value—authorized, 200,000,000 shares; issued and outstanding, 43,175,196 and 43,046,523 shares at September 30, 2008 and December 31, 2007, respectively

     43       43  

Class A common stock, $0.001 par value—authorized, 100 shares; issued and outstanding, 100 shares at September 30, 2008 and December 31, 2007

     —         —    

Additional paid-in capital

     174,699       167,527  

Accumulated deficit

     (235,955 )     (253,424 )

Accumulated other comprehensive deficit

     (623 )     (334 )
                

TOTAL STOCKHOLDERS’ DEFICIT

     (61,836 )     (86,188 )
                

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

   $ 187,992     $ 167,680  
                


DELTEK, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2008     2007     2008     2007  

REVENUES:

        

Software license fees

   $ 18,508     $ 21,350     $ 57,647     $ 59,999  

Consulting services

     23,060       22,776       69,650       61,046  

Maintenance and support services

     29,324       26,088       85,675       75,463  

Other revenues

     58       190       4,697       4,719  
                                

Total revenues

     70,950       70,404       217,669       201,227  
                                

COST OF REVENUES:

        

Cost of software license fees

     1,672       1,773       4,939       6,003  

Cost of consulting services

     18,277       19,347       57,632       52,763  

Cost of maintenance and support services

     5,438       4,428       15,864       12,177  

Cost of other revenues

     39       175       5,146       5,187  
                                

Total cost of revenues

     25,426       25,723       83,581       76,130  
                                

GROSS PROFIT

     45,524       44,681       134,088       125,097  
                                

Research and development

     11,761       10,960       34,710       31,653  

Sales and marketing

     13,637       11,604       39,353       32,201  

General and administrative

     8,753       7,381       24,693       21,724  

Restructuring (benefit) charge

     (61 )     —         991       —    
                                

Total operating expenses

     34,090       29,945       99,747       85,578  
                                

INCOME FROM OPERATIONS

     11,434       14,736       34,341       39,519  

Interest income

     168       32       618       200  

Interest expense

     (2,454 )     (4,740 )     (8,408 )     (13,973 )

Other (expense) income, net

     (60 )     (30 )     (261 )     5  
                                

INCOME BEFORE INCOME TAXES

     9,088       9,998       26,290       25,751  

Income tax expense

     1,063       4,174       8,821       10,357  
                                

NET INCOME

   $ 8,025     $ 5,824     $ 17,469     $ 15,394  
                                

EARNINGS PER SHARE

        

Basic

   $ 0.19     $ 0.15     $ 0.41     $ 0.39  
                                

Diluted

   $ 0.18     $ 0.14     $ 0.39     $ 0.37  
                                

COMMON SHARES AND EQUIVALENTS OUTSTANDING

        

Basic weighted average shares

     43,135       39,450       43,099       39,433  
                                

Diluted weighted average shares

     44,154       41,102       44,347       41,054  
                                


DELTEK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

     Nine Months Ended September 30,  
     2008     2007  

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income

   $ 17,469     $ 15,394  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Provision for doubtful accounts

     1,000       1,251  

Depreciation and amortization

     7,143       6,959  

Amortization of debt issuance costs

     595       657  

Write down of acquired in process research and development

     290       —    

Stock-based compensation expense

     5,925       3,876  

Employee stock purchase plan expense

     234       —    

Restructuring charge, net

     63       —    

Loss on disposal of fixed assets

     346       214  

Deferred income taxes

     (2,454 )     (1,624 )

Change in assets and liabilities:

    

Accounts receivable, net

     6,907       (5,259 )

Prepaid expenses and other assets

     1,555       (1,265 )

Accounts payable and accrued expenses

     (2,638 )     (946 )

Income taxes payable/receivable

     (3,094 )     (1,577 )

Excess tax benefit from stock option exercises

     (71 )     —    

Other tax liabilities

     374       22  

Other long-term liabilities

     (456 )     (817 )

Deferred revenues

     (166 )     (4,760 )
                

Net Cash Provided by Operating Activities

     33,022       12,125  
                

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Acquisitions, net of cash acquired

     (17,424 )     (5,947 )

Purchase of property and equipment

     (5,000 )     (6,004 )

Capitalized software development costs

     (260 )     (412 )
                

Net Cash Used in Investing Activities

     (22,684 )     (12,363 )
                

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Issuance of common stock

     —         87  

Proceeds from exercise of stock options

     230       —    

Excess tax benefit from stock option exercises

     71       —    

Proceeds from issuance of stock under employee stock purchase plan

     712       —    

Offering costs paid for 2007 sale of common stock in initial public offering

     (275 )     (2,802 )

Redemption of stock and stockholder payments in recapitalization

     —         (4,780 )

Proceeds from the issuance of debt

     —         20,000  

Repayment of debt

     —         (14,612 )
                

Net Cash Provided by (Used in) Financing Activities

     738       (2,107 )
                

IMPACT OF FOREIGN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS

     (7 )     84  
                

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     11,069       (2,261 )

CASH AND CASH EQUIVALENTS—Beginning of period

     17,091       6,667  
                

CASH AND CASH EQUIVALENTS—End of period

   $ 28,160     $ 4,406  
                


DELTEK, INC.

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

(in thousands, except per share amounts)

(unaudited)

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
     2008     2007    2008    2007

Net Income (GAAP Basis)

   $ 8,025     $ 5,824    $ 17,469    $ 15,394

Income Tax Expense

     1,063       4,174      8,821      10,357
                            

Pre-Tax Income (GAAP Basis)

   $ 9,088     $ 9,998    $ 26,290    $ 25,751

Adjustments:

          

NMC Advisory and Transaction Fees

     —         —        —        250

Stock-based Compensation

     2,232       1,620      5,925      3,876

Recapitalization Retention Expense

     157       193      451      602

Amortization of Acquired Intangibles

     1,327       1,130      3,162      3,369

Restructuring (Benefit) Charge

     (61 )     —        991      —  
                            

Adjusted Pre-Tax Income

     12,743       12,941      36,819      33,848

Less: Adjusted Income Tax Expense

     2,503       5,334      12,969      13,547
                            

Non-GAAP Net Income

   $ 10,240     $ 7,607    $ 23,850    $ 20,301
                            

Non-GAAP Earnings Per Share (diluted)

   $ 0.23     $ 0.19    $ 0.54    $ 0.49
                            

Weighted Average Shares

     44,154       41,102      44,347      41,054
                            

RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME

(in thousands)

(unaudited)

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
     2008     2007    2008    2007

Operating Income - GAAP

   $ 11,434     $ 14,736    $ 34,341    $ 39,519

Plus: Stock-based Compensation and Recapitalization Retention Expense

     2,389       1,813      6,376      4,478

Plus: Amortization of Acquired Intangibles

     1,327       1,130      3,162      3,369

Plus: NMC Advisory and Transaction Fees

     —         —        —        250

Plus: Restructuring (Benefit) Charge

     (61 )     —        991      —  
                            

Operating Income - Non-GAAP

   $ 15,089     $ 17,679    $ 44,870    $ 47,616
                            


RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA

(in thousands)

(unaudited)

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
     2008     2007    2008    2007

Net Income (GAAP Basis)

   $ 8,025     $ 5,824    $ 17,469    $ 15,394

NMC Advisory and Transaction Fees

     —         —        —        250

Stock-based Compensation

     2,232       1,620      5,925      3,876

Recapitalization Retention Expense

     157       193      451      602

Depreciation

     1,191       977      3,315      2,416

Amortization

     1,662       1,514      4,135      4,543

Interest Expense, net

     2,286       4,708      7,790      13,773

Income Tax Provision

     1,063       4,174      8,821      10,357

Restructuring (Benefit) Charge

     (61 )     —        991      —  
                            

Adjusted EBITDA

   $ 16,555     $ 19,010    $ 48,897    $ 51,211
                            

STOCK-BASED COMPENSATION AND RECAPITALIZATION RETENTION EXPENSES

(in thousands)

(unaudited)

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
     2008    2007    2008     2007

Cost of Software License Fees

   $ 1    $ —      $ 3     $ 2

Cost of Consulting Services

     390      365      1,133       833

Cost of Maintenance and Support Services

     61      58      (45 )     128

Research and Development

     520      441      1,440       1,096

Sales and Marketing

     490      343      1,356       853

General and Administrative

     927      606      2,489       1,566
                            

Total

   $ 2,389    $ 1,813    $ 6,376     $ 4,478
                            


AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS

(in thousands)

(unaudited)

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
     2008    2007    2008    2007

Cost of Software License Fees

   $ 307    $ 429    $ 992    $ 1,282

Cost of Consulting Services

     20      24      59      40

Cost of Maintenance and Support Services

     —        —        —        —  

Research and Development

     290      —        290      160

Sales and Marketing

     692      659      1,766      1,833

General and Administrative

     18      18      55      54
                           

Total

   $ 1,327    $ 1,130    $ 3,162    $ 3,369
                           

AMORTIZATION AND DEPRECIATION EXPENSES

(in thousands)

(unaudited)

 

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
     2008    2007    2008    2007

Cost of Software License Fees

   $ 646    $ 816    $ 1,973    $ 2,463

Cost of Consulting Services

     593      341      1,346      807

Cost of Maintenance and Support Services

     274      112      528      263

Research and Development

     460      268      980      822

Sales and Marketing

     752      830      2,246      2,260

General and Administrative

     128      124      377      344
                           

Total

   $ 2,853    $ 2,491    $ 7,450    $ 6,959