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

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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