Deltek Reports Q2 License Revenue of $15.8 Million, Total

Deltek Reports Q2 License Revenue of $15.8 Million, Total Revenue of $69.4 Million



DELTEK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
REVENUES:
Software license fees	$	15,758		$	22,132		$	26,984		$	39,139
Consulting services		19,216			22,324			39,282			46,590
Maintenance and support services		30,987			28,286			61,584			56,351
Other revenues		3,408			4,623			3,512			4,639
Total revenues		69,369			77,365			131,362			146,719

COST OF REVENUES:
Cost of software license fees		1,835			1,687			3,223			3,267
Cost of consulting services		16,140			19,192			33,457			39,355
Cost of maintenance and support services		5,529			4,799			11,269			10,426
Cost of other revenues		4,605			4,875			4,648			5,107
Total cost of revenues		28,109			30,553			52,597			58,155
GROSS PROFIT		41,260			46,812			78,765			88,564

Research and development		10,773			11,558			21,644			22,949
Sales and marketing		10,653			13,413			22,172			25,716
General and administrative		9,412			8,379			17,317			15,940
Restructuring charge		1,135			1,052			2,548			1,052
Total operating expenses		31,973			34,402			63,681			65,657

INCOME FROM OPERATIONS		9,287			12,410			15,084			22,907

Interest income		11			193			22			450
Interest expense		(1,473	)		(2,480	)		(2,982	)		(5,954	)
Other income (expense), net		24			(164	)		21			(201	)
INCOME BEFORE INCOME TAXES		7,849			9,959			12,145			17,202
Income tax expense		2,948			4,536			4,590			7,758

NET INCOME	$	4,901		$	5,423		$	7,555		$	9,444


EARNINGS PER SHARE
Basic	$	0.09		$	0.12		$	0.15		$	0.20

Diluted	$	0.09		$	0.11		$	0.15		$	0.20

COMMON SHARES AND EQUIVALENTS OUTSTANDING
Basic weighted average shares		52,394			46,552			49,560			46,527

Diluted weighted average shares		52,914			47,692			49,940			47,812


DELTEK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

	June 30,			December 31,
	2009			2008
	(unaudited)			(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	113,457		$	35,788
Accounts receivable, net of allowance of $3,632 and $2,195 at June 30, 2009 and December 31, 2008, respectively		47,196			47,747
Deferred income taxes		4,640			4,635
Prepaid expenses and other current assets		6,466			6,874
Income taxes receivable		857			846
TOTAL CURRENT ASSETS		172,616			95,890

PROPERTY AND EQUIPMENT, NET		12,861			14,639
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET		1,034			1,438
LONG-TERM DEFERRED INCOME TAXES		5,820			4,125
INTANGIBLE ASSETS, NET		14,982			17,396
GOODWILL		57,763			57,654
OTHER ASSETS		1,593			2,130
TOTAL ASSETS	$	266,669		$	193,272

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current portion of long-term debt	$	-		$	10,154
Accounts payable and accrued expenses		28,122			28,734
Accrued liability for redemption of stock in recapitalization		317			317
Deferred revenues		37,032			21,296
TOTAL CURRENT LIABILITIES		65,471			60,501

LONG-TERM DEBT		179,604			182,661
OTHER TAX LIABILITIES		1,130			1,003
OTHER LONG-TERM LIABILITIES		3,024			2,917
TOTAL LIABILITIES		249,229			247,082

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY (DEFICIT):
Preferred stock, $0.001 par value—authorized, 5,000,000 shares; none issued or outstanding at June 30, 2009 or December 31, 2008		–			–
Common stock, $0.001 par value—authorized, 200,000,000 shares; issued and outstanding, 64,268,327 and 43,474,220 shares at June 30, 2009 and December 31, 2008, respectively		64			43
Class A common stock, $0.001 par value—authorized, 100 shares; issued and outstanding, 100 shares at June 30, 2009 and December 31, 2008		–			–
Additional paid-in capital		240,450			177,249
Accumulated deficit		(222,350	)		(229,905	)
Accumulated other comprehensive deficit		(724	)		(1,197	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		17,440			(53,810	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	266,669		$	193,272


DELTEK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Six Months Ended June 30,
	2009			2008
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	7,555		$	9,444
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for doubtful accounts		2,472			489
Depreciation and amortization		5,529			4,597
Amortization of debt issuance costs		481			396
Stock-based compensation expense		4,179			3,693
Employee stock purchase plan expense		162			130
Restructuring charge, net		918			495
Loss on disposal of fixed assets		23			321
Deferred income taxes		(1,909	)		(1,564	)

Change in assets and liabilities:
Accounts receivable, net		(1,675	)		4,888
Prepaid expenses and other assets		501			1,509
Accounts payable and accrued expenses		(1,480	)		(1,379	)
Income taxes receivable		(120	)		(3,768	)
Excess tax benefit (deficiency) benefit from exercise of stock options		108			(59	)
Other tax liabilities		127			202
Other long-term liabilities		(289	)		(303	)
Deferred revenues		16,065			804
Net Cash Provided by Operating Activities		32,647			19,895

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(931	)		(4,295	)
Capitalized software development costs		(150	)		(261	)
Net Cash Used in Investing Activities		(1,081	)		(4,556	)

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		677			192
Excess tax (deficiency) benefit from exercise of stock options		(108	)		59
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		(13,211	)		–
Net Cash Provided by Financing Activities		45,896			281

IMPACT OF FOREIGN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS		207			148

NET INCREASE IN CASH AND CASH EQUIVALENTS		77,669			15,768

CASH AND CASH EQUIVALENTS––Beginning of period		35,788			17,091

CASH AND CASH EQUIVALENTS––End of period	$	113,457		$	32,859


DELTEK, INC.
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(in thousands, except per share data)
(unaudited)

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2009				2008					2009				2008

Net Income (GAAP Basis)	$	4,901			$	5,423				$	7,555			$	9,444
Income Tax Expense		2,948				4,536					4,590				7,758
Pre-Tax Income (GAAP Basis)	$	7,849			$	9,959				$	12,145			$	17,202
Adjustments:
Stock-based Compensation		2,221				1,459					4,341				3,823
Recapitalization Retention Expense		7				125					152				294
Amortization of Acquired Intangibles		1,173				831					2,437				1,835
Restructuring Charge		1,135				1,052					2,548				1,052

Adjusted Pre-Tax Income		12,385				13,426					21,623				24,206

Less: Adjusted Income Tax Expense		4,735				5,902					8,324				10,518

Non-GAAP Net Income	$	7,650			$	7,524				$	13,299			$	13,688

Non-GAAP Earnings Per Share (diluted)	$	0.14			$	0.16				$	0.27			$	0.29
Weighted Average Shares		52,914				47,692					49,940				47,812




RECONCILIATION OF GAAP OPERATING INCOME AND OPERATING MARGIN TO NON-GAAP OPERATING INCOME AND OPERATING MARGIN
(in thousands)
(unaudited)

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2009				2008					2009				2008

Operating Income and Margin - GAAP	$	9,287	13	%	$	12,410		16	%	$	15,084	11	%	$	22,907		16	%
Plus: Stock-based Compensation and Recapitalization Retention Expense		2,228				1,584					4,493				4,117
Plus: Amortization of Acquired Intangibles		1,173				831					2,437				1,835
Plus: Restructuring Charge		1,135				1,052					2,548				1,052

Operating Income and Margin - Non-GAAP	$	13,823	20	%	$	15,877		21	%	$	24,562	19	%	$	29,911		20	%

Total Revenues	$	69,369			$	77,365				$	131,362			$	146,719




RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA
(in thousands)
(unaudited)

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2009				2008					2009				2008

Net Income (GAAP Basis)	$	4,901			$	5,423				$	7,555			$	9,444
Stock-based Compensation		2,221				1,459					4,341				3,823
Recapitalization Retention Expense		7				125					152				294
Depreciation		1,294				1,104					2,541				2,124
Amortization		1,381				1,150					2,992				2,473
Interest Expense, net		1,462				2,287					2,960				5,504
Income Tax Provision		2,948				4,536					4,590				7,758
Restructuring Charge		1,135				1,052					2,548				1,052

Adjusted EBITDA	$	15,349			$	17,136				$	27,679			$	32,472




STOCK-BASED COMPENSATION AND RECAPITALIZATION RETENTION EXPENSES
(in thousands)
(unaudited)

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2009				2008					2009				2008

Cost of Software License Fees	$	-			$	1				$	-			$	2
Cost of Consulting Services		401				363					846				789
Cost of Maintenance and Support Services		102				(360	)				205				(91	)
Research and Development		421				401					996				951
Sales and Marketing		416				415					801				892
General and Administrative		888				764					1,645				1,574
Total	$	2,228			$	1,584				$	4,493			$	4,117




AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS
(in thousands)
(unaudited)

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2009				2008					2009				2008

Cost of Software License Fees	$	263			$	255				$	618			$	685
Cost of Consulting Services		19				20					39				39
Sales and Marketing		872				537					1,743				1,074
General and Administrative		19				19					37				37
Total	$	1,173			$	831				$	2,437			$	1,835




AMORTIZATION AND DEPRECIATION EXPENSES
(in thousands)
(unaudited)

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2009				2008					2009				2008

Cost of Software License Fees	$	475			$	576				$	1,181			$	1,327
Cost of Consulting Services		433				395					851				753
Cost of Maintenance and Support Services		213				125					425				254
Research and Development		292				264					575				520
Sales and Marketing		1,093				763					2,188				1,494
General and Administrative		169				131					313				249
Total	$	2,675			$	2,254				$	5,533			$	4,597




RECONCILIATION OF GAAP EPS TO EPS EXCLUDING THE RIGHTS OFFERING
(in thousands, except per share data)
(unaudited)

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2009				2008					2009				2008

Net Income (GAAP Basis)	$	4,901			$	5,423				$	7,555			$	9,444

GAAP Earnings Per Share (diluted)	$	0.09			$	0.11				$	0.15			$	0.20
Rights Offering	$	0.02			$	0.01				$	0.02			$	0.01
Earnings Per Share Excluding the Rights Offering (diluted)	$	0.11			$	0.12				$	0.17			$	0.21

Weighted Average Shares		52,914				47,692					49,940				47,812
Rights Offering		8,926				3,448					6,217				3,446
Weighted Average Shares (Excluding the Rights Offering)		43,988				44,244					43,723				44,366




RECONCILIATION OF NON-GAAP EPS TO NON-GAAP EPS EXCLUDING THE RIGHTS OFFERING
(in thousands, except per share data)
(unaudited)

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2009				2008					2009				2008

Net Income (Non-GAAP Basis)	$	7,650			$	7,524				$	13,299			$	13,688

Non-GAAP Earnings Per Share (diluted)	$	0.14			$	0.16				$	0.27			$	0.29
Rights Offering	$	0.03			$	0.01				$	0.03			$	0.02
Non-GAAP Earnings Per Share Excluding the Rights Offering (diluted)	$	0.17			$	0.17				$	0.30			$	0.31

Weighted Average Shares		52,914				47,692					49,940				47,812
Rights Offering		8,926				3,448					6,217				3,446
Weighted Average Shares (Excluding the Rights Offering)		43,988				44,244					43,723				44,366

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