Deltek Reports Record Product Revenue of $28.9 Million, Up 12% from Prior Year

       
DELTEK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
Three Months Ended December 31, Twelve Months Ended December 31,
2011 2010 2011 2010
REVENUES:
Product revenues
Perpetual licenses $ 17,356 $ 20,830 $ 62,772 $ 64,787
Subscription and term licenses   11,495     4,994     39,170     5,258  
Total product revenues 28,851 25,824 101,942 70,045
Maintenance and support services 40,737 36,136 158,822 135,350
Consulting services and other revenues   17,817     24,184     79,777     74,253  
Total revenues   87,405     86,144     340,541     279,648  
COST OF REVENUES:
Cost of product revenues
Cost of perpetual licenses 1,633 2,551 6,604 6,234
Cost of subscription and term licenses   5,265     3,630     20,086     4,301  
Total cost of product revenues 6,898 6,181 26,690 10,535
Cost of maintenance and support services 5,819 6,961 25,041 25,594
Cost of consulting services and other revenues   16,407     21,295     72,616     66,991  
Total cost of revenues   29,124     34,437     124,347     103,120  
GROSS PROFIT   58,281     51,707     216,194     176,528  
OPERATING EXPENSES:
Research and development 14,777 16,089 63,263 52,591
Sales and marketing 21,712 24,363 86,620 62,382
General and administrative 11,349 15,887 50,011 50,371
Restructuring charge   2,780     672     12,191     1,590  
Total operating expenses   50,618     57,011     212,085     166,934  
 
INCOME (LOSS) FROM OPERATIONS 7,663 (5,304 ) 4,109 9,594
Interest income 52 22 153 62
Interest expense (2,709 ) (2,844 ) (11,282 ) (10,182 )
Other (expense) income , net (105 ) 289 (276 ) (9 )
Loss on extinguishment of debt   -     (1,744 )   -     (1,744 )
 
INCOME (LOSS) BEFORE INCOME TAXES 4,901 (9,581 ) (7,296 ) (2,279 )
Income tax expense (benefit)   1,900     (1,633 )   (3,906 )   2,821  
 
NET INCOME (LOSS) 3,001 (7,948 ) (3,390 ) (5,100 )
Net loss attributable to noncontrolling interests   -     17     -     178  
NET INCOME (LOSS) ATTRIBUTABLE TO DELTEK, INC. $ 3,001   $ (7,931 ) $ (3,390 ) $ (4,922 )
 
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO DELTEK, INC.
Basic $ 0.05   $ (0.12 ) $ (0.05 ) $ (0.08 )
Diluted $ 0.05   $ (0.12 ) $ (0.05 ) $ (0.08 )
 
COMMON SHARES AND EQUIVALENTS OUTSTANDING
Basic weighted average shares   65,029     65,078     65,380     64,768  
Diluted weighted average shares   66,567     65,078     65,380     64,768  
 
   
DELTEK, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
 
December 31, December 31,
2011 2010
 
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 35,243 $ 76,619

Accounts receivable, net of allowance of $1,714 and $1,600 at December 31, 2011 and December 31, 2010, respectively

58,899 57,915
Deferred income taxes 5,383 4,405
Prepaid expenses and other current assets 10,760 8,799
Income taxes receivable   -     2,475  
TOTAL CURRENT ASSETS 110,285 150,213
 
PROPERTY AND EQUIPMENT, NET 25,620 12,916
LONG-TERM DEFERRED INCOME TAXES 9,653 4,214
INTANGIBLE ASSETS, NET 54,994 69,083
GOODWILL 175,771 150,899
OTHER ASSETS   6,156     4,790  
TOTAL ASSETS $ 382,479   $ 392,115  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 528 $ 1,659
Accounts payable and accrued expenses 45,420 46,343
Deferred revenues 104,835 87,888
Income taxes payable   465     -  
TOTAL CURRENT LIABILITIES 151,248 135,890
 
LONG-TERM DEBT 166,894 195,897
OTHER TAX LIABILITIES 3,214 2,553
OTHER LONG-TERM LIABILITIES   18,180     6,389  
TOTAL LIABILITIES 339,536 340,729
 
COMMITMENTS AND CONTINGENCIES
 
STOCKHOLDERS’ EQUITY

Preferred stock, $0.001 par value—authorized, 5,000,000 shares; none issued or outstanding at December 31, 2011 and December 31, 2010

Common stock, $0.001 par value—authorized, 200,000,000 shares; 70,398,889 issued and 68,272,271 outstanding at December 31, 2011 and 68,794,774 issued and outstanding at December 31, 2010

70 69

Class A common stock, $0.001 par value—authorized, 100 shares; issued and outstanding, 100 shares at December 31, 2011 and December 31, 2010

Additional paid-in capital 273,496 261,837
Accumulated deficit (216,821 ) (213,431 )
Accumulated other comprehensive income 2,188 2,911
Treasury stock, at cost— 2,126,618 shares at December 31, 2011   (15,990 )   -  
TOTAL STOCKHOLDERS' EQUITY   42,943     51,386  
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 382,479   $ 392,115  
 
   
DELTEK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 
Twelve Months Ended December 31,
2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,390 ) $ (5,100 )
Adjustments:
Provision for doubtful accounts 767 324
Depreciation and amortization 25,592 15,515
Amortization of debt issuance costs and original issue discount 988 1,045
Loss on extinguishment of debt 1,744
Impairment of assets 1,933
Stock-based compensation expense 12,613 11,941
Employee stock purchase plan expense 264 273
Restructuring charge, net 2,170 537
Loss (gain) on disposal of fixed assets 189 (9 )
Other noncash activity 431 (124 )
Deferred income taxes (7,494 ) (5,752 )
 
Change in assets and liabilities, net of effects from acquisitions:
Accounts receivable, net 84 (4,397 )
Prepaid expenses and other assets (4,120 ) 3,474
Accounts payable and accrued expenses (1,121 ) 3,122
Income taxes receivable/payable 3,313 (2,061 )
Excess tax benefit from stock awards (164 ) (641 )
Other tax liabilities 716 669
Other long-term liabilities 11,271 (715 )
Deferred revenues   13,574     41,261  
Net Cash Provided by Operating Activities   55,683     63,039  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of WMG, Inc., net of cash acquired (25,664 ) -
Acquisition of Maconomy A/S, net of cash acquired (1,629 ) (66,303 )
Acquisition of assets of S.I.R.A., Inc., net of cash acquired (1,039 ) (6,109 )
Acquisition of INPUT, Inc., net of cash acquired (602 ) (59,374 )
Purchase of property and equipment (20,067 ) (4,925 )
Capitalized software development costs   (732 )   -  
Net Cash Used in Investing Activities   (49,733 )   (136,711 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 935 1,129
Excess tax benefit from stock awards 164 641
Proceeds from issuance of stock under employee stock purchase plan 745 791
Shares withheld for minimum tax withholding on vested restricted stock awards (2,388 ) (1,537 )
Proceeds from issuance of debt, net of original issue discount 198,000
Payments for deferred financing costs (241 ) (3,077 )
Purchase of treasury stock (15,990 ) -
Repayment of debt   (30,553 )   (179,483 )
Net Cash (Used in) Provided by Financing Activities   (47,328 )   16,464  
 
IMPACT OF FOREIGN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS   2     1,191  
 
NET DECREASE IN CASH AND CASH EQUIVALENTS (41,376 ) (56,017 )
 
CASH AND CASH EQUIVALENTS––Beginning of period   76,619     132,636  
 
CASH AND CASH EQUIVALENTS––End of period $ 35,243   $ 76,619  
 
       
DELTEK, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME
(in thousands, except per share data)
(unaudited)
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
 
Net Income (Loss) (GAAP Basis) $ 3,001 $ (7,931 ) $ (3,390 ) $ (4,922 )
Income Tax Expense (Benefit)   1,900   (1,633 )   (3,906 )   2,821  
Pre-Tax Income (Loss), Net of Noncontrolling Interests Loss (GAAP Basis) $ 4,901 $ (9,581 ) $ (7,296 ) $ (2,279 )
Adjustments:
Amortization of Acquired Intangibles 4,360 4,461 18,326 9,254
Stock-based Compensation 3,650 3,722 12,877 12,214
Restructuring Charge, Including Stock-based

Compensation of $0 and $547 for the three and twelve months ended December 31, 2011

2,780 672 12,191 1,590
Intangibles Impairment - 1,471 - 1,471
Net Impact of Acquisition-Related Deferred
Revenue before Fair Value Adjustment 195 5,637 4,111 8,275
Acquisition-Related Costs - 2,589 1,381 8,138
Loss on Extinguishment of Debt - 1,744 - 1,744
Net Impact of Acquisition-Related Deferred
Commissions before Fair Value Adjustment - (482 ) (570 ) (482 )
       
Adjusted Pre-Tax Income 15,886 10,233 41,020 39,925
 
Less: Adjusted Income Tax Expense 6,140 4,929 14,744 15,554
       
Non-GAAP Net Income $ 9,746 $ 5,304   $ 26,276   $ 24,371  
 
Non-GAAP Earnings Per Share (diluted) $ 0.15 $ 0.08   $ 0.39   $ 0.37  
Weighted Average Shares   66,567   66,278     66,667     66,042  
 
               
RECONCILIATION OF GAAP OPERATING INCOME (LOSS) AND OPERATING MARGIN (DEFICIT) TO NON-GAAP
OPERATING INCOME AND OPERATING MARGIN
(in thousands)
(unaudited)
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
 
Operating Income (Loss) and Margin (Deficit)- GAAP $ 7,663 9 % $ (5,304 ) -6 % $ 4,109 1 % $ 9,594 3 %
Amortization of Acquired Intangibles 4,360 4,461 18,326 9,254
Stock-based Compensation 3,650 3,722 12,877 12,214
Restructuring Charge, Including Stock-based

Compensation of $0 and $547 for the three and twelve months ended December 31, 2011

2,780 672 12,191 1,590
Intangibles Impairment - 1,471 - 1,471
Net impact of Acquisition-Related Deferred
Revenue before Fair Value Adjustment 195 5,637 4,111 8,275
Acquisition-Related Costs - 2,589 1,381 8,138
Net Impact of Acquisition-Related Deferred
Commissions before Fair Value Adjustment - (482 ) (570 ) (482 )
       
Operating Income and Margin - Non-GAAP $ 18,648 21 % $ 12,766   14 % $ 52,425   15 % $ 50,054   17 %
 
Total Revenues $ 87,405 $ 86,144   $ 340,541   $ 279,648  
 
Total Revenues (Non-GAAP) $ 87,600 $ 91,781   $ 344,652   $ 287,923  
 
         
RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA
(in thousands)
(unaudited)
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
 
Net Income (Loss) (GAAP Basis) $ 3,001 $ (7,931 ) $ (3,390 ) $ (4,922 )
Amortization 4,422 4,522 18,524 9,606
Income Tax Expense (Benefit) 1,900 (1,633 ) (3,906 ) 2,821
Loss on Extinguishment of Debt - 1,744 - 1,744
Stock-based Compensation 3,650 3,722 12,877 12,214
Restructuring Charge, Including Stock-based

Compensation of $0 and $547 for the three and twelve months ended December 31, 2011

2,780 672 12,191 1,590
Intangibles Impairment - 1,471 - 1,471
Interest Expense, net 2,657 2,822 11,129 10,120
Net Impact of Acquisition-Related Deferred
Revenue before Fair Value Adjustment 195 5,637 4,111 8,275
Depreciation 1,433 1,886 7,068 5,909
Acquisition-Related Costs - 2,589 1,381 8,138
Net Impact of Acquisition-Related Deferred
Commissions before Fair Value Adjustment - (482 ) (570 ) (482 )
       
Adjusted EBITDA $ 20,038 $ 15,019   $ 59,415   $ 56,484  
 
 
REVENUES
(in thousands)
(unaudited)
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
 
Total Revenues (GAAP) $ 87,405 $ 86,144 $ 340,541 $ 279,648
Net Impact of Maconomy Acquisition-Related
Deferred Revenue before Fair Value Adjustment - 2,209 427 4,847
Net Impact of INPUT Acquisition-Related
Deferred Revenue before Fair Value Adjustment 113 3,428 3,306 3,428
Net Impact of WMG Acquisition-Related
Deferred Revenue before Fair Value Adjustment   82   -     378     -  
Total Revenues (Non-GAAP) $ 87,600 $ 91,781   $ 344,652   $ 287,923  
 
 
STOCK-BASED COMPENSATION EXPENSE
(in thousands)
(unaudited)
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
 
Cost of Perpetual Licenses $ 6 $ 5 $ 17 $ 10
Cost of Subscription and Term Licenses 86 40 255 40
Cost of Maintenance and Support Services 290 284 1,091 946
Cost of Consulting Services and Other Revenues 417 456 1,531 1,300
Research and Development 683 882 2,630 2,775
Sales and Marketing 904 900 2,819 2,817
General and Administrative 1,264 1,155 4,534 4,326
Restructuring Charge   -   -     547     -  
Total $ 3,650 $ 3,722   $ 13,424   $ 12,214  
 
     
AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS
(in thousands)
(unaudited)
   
Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
 
Cost of Perpetual Licenses $ 709 $ 879 $ 3,300 $ 1,788
Cost of Subscription and Term Licenses 1,083 990 4,500 1,628
Cost of Consulting Services and Other Revenues 19 19 78 78
Sales and Marketing 2,547 2,570 10,437 5,748
General and Administrative   2   3   11   12
Total $ 4,360 $ 4,461 $ 18,326 $ 9,254
 
 
 
AMORTIZATION AND DEPRECIATION EXPENSES
(in thousands)
(unaudited)
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
 
Cost of Perpetual Licenses $ 768 $ 944 $ 3,511 $ 2,154
Cost of Subscription and Term Licenses 1,168 1,000 4,812 1,638
Cost of Maintenance and Support Services 179 352 1,045 1,138
Cost of Consulting Services and Other Revenues 365 353 1,439 1,447
Research and Development 412 392 1,819 1,334
Sales and Marketing 2,645 2,998 11,617 6,769
General and Administrative   318   369   1,349   1,035
Total $ 5,855 $ 6,408 $ 25,592 $ 15,515
 

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