Deltek Reports Q3 EPS of $0.10 and Non-GAAP EPS of $0.15


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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
REVENUES:
Software license fees	$	12,711		$	18,508		$	39,695		$	57,647
Consulting services		19,737			23,060			59,019			69,650
Maintenance and support services		31,648			29,324			93,232			85,675
Other revenues		18			58			3,530			4,697
Total revenues		64,114			70,950			195,476			217,669

COST OF REVENUES:
Cost of software license fees		1,198			1,672			4,421			4,939
Cost of consulting services		16,716			18,277			50,173			57,632
Cost of maintenance and support services		5,493			5,438			16,762			15,864
Cost of other revenues		26			39			4,674			5,146
Total cost of revenues		23,433			25,426			76,030			83,581
GROSS PROFIT		40,681			45,524			119,446			134,088

Research and development		10,854			11,761			32,498			34,710
Sales and marketing		10,396			13,637			32,568			39,353
General and administrative		8,712			8,753			26,029			24,693
Restructuring charge (benefit)		552			(61	)		3,100			991
Total operating expenses		30,514			34,090			94,195			99,747

INCOME FROM OPERATIONS		10,167			11,434			25,251			34,341

Interest income		13			168			35			618
Interest expense		(1,917	)		(2,454	)		(4,899	)		(8,408	)
Other expense, net		(29	)		(60	)		(8	)		(261	)
INCOME BEFORE INCOME TAXES		8,234			9,088			20,379			26,290
Income tax expense		1,627			1,063			6,217			8,821

NET INCOME	$	6,607		$	8,025		$	14,162		$	17,469


EARNINGS PER SHARE
Basic	$	0.10		$	0.17		$	0.26		$	0.38

Diluted	$	0.10		$	0.17		$	0.26		$	0.37

COMMON SHARES AND EQUIVALENTS OUTSTANDING
Basic weighted average shares		63,611			46,586			54,320			46,547

Diluted weighted average shares		64,808			47,605			54,967			47,795


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


	September 30,			December 31,
	2009			2008
	(unaudited)			(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	130,388		$	35,788
Accounts receivable, net of allowance of $3,033 and $2,195 at September 30, 2009 and December 31, 2008, respectively		38,262			47,747
Deferred income taxes		4,253			4,635
Prepaid expenses and other current assets		6,338			6,874
Income taxes receivable		651			846
TOTAL CURRENT ASSETS		179,892			95,890

PROPERTY AND EQUIPMENT, NET		12,171			14,639
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET		826			1,438
LONG-TERM DEFERRED INCOME TAXES		6,860			4,125
INTANGIBLE ASSETS, NET		13,942			17,396
GOODWILL		57,829			57,654
OTHER ASSETS		3,218			2,130
TOTAL ASSETS	$	274,738		$	193,272

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current portion of long-term debt	$	13,952		$	10,154
Accounts payable and accrued expenses		25,362			28,734
Accrued liability for redemption of stock in recapitalization		317			317
Deferred revenues		35,667			21,296
TOTAL CURRENT LIABILITIES		75,298			60,501

LONG-TERM DEBT		165,329			182,661
OTHER TAX LIABILITIES		1,591			1,003
OTHER LONG-TERM LIABILITIES		3,088			2,917
TOTAL LIABILITIES		245,306			247,082

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY (DEFICIT):
Preferred stock, $0.001 par value—authorized, 5,000,000 shares; none issued or outstanding at September 30, 2009 or December 31, 2008		–			–
Common stock, $0.001 par value—authorized, 200,000,000 shares; issued and outstanding, 65,944,975 and 43,474,220 shares at September 30, 2009 and December 31, 2008, respectively		66			43
Class A common stock, $0.001 par value—authorized, 100 shares; issued and outstanding, 100 shares at September 30, 2009 and December 31, 2008		–			–
Additional paid-in capital		245,773			177,249
Accumulated deficit		(215,743	)		(229,905	)
Accumulated other comprehensive deficit		(664	)		(1,197	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		29,432			(53,810	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	274,738		$	193,272


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


	Nine Months Ended September 30,
	2009			2008
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	14,162		$	17,469
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for doubtful accounts		2,274			1,000
Depreciation and amortization		8,045			7,143
Amortization of debt issuance costs		701			595
Write down of acquired in process research and development		-			290
Stock-based compensation expense		6,230			5,925
Employee stock purchase plan expense		1,821			234
Restructuring charge, net		818			63
Loss on disposal of fixed assets		23			346
Deferred income taxes		(2,818	)		(2,455	)

Change in assets and liabilities, net of effects from acquisition:
Accounts receivable, net		7,416			6,907
Prepaid expenses and other assets		935			1,555
Accounts payable and accrued expenses		(3,469	)		(2,638	)
Income taxes receivable		175			(3,092	)
Excess tax benefit from stock awards		(61	)		(71	)
Other tax liabilities		588			374
Other long-term liabilities		(631	)		(456	)
Deferred revenues		15,012			(166	)
Net Cash Provided by Operating Activities		51,221			33,023

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired		-			(17,424	)
Purchase of property and equipment		(1,863	)		(5,000	)
Capitalized software development costs		(150	)		(261	)
Net Cash Used in Investing Activities		(2,013	)		(22,685	)

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		759			230
Excess tax benefit from stock awards		61			71
Proceeds from issuance of stock under employee stock purchase plan		2,015			712
Offering costs paid for 2007 sale of common stock in initial public offering		–			(275	)
Payments for deferred financing costs		(2,336	)		–
Repayment of debt		(13,534	)		–
Net Cash Provided by Financing Activities		45,193			738

IMPACT OF FOREIGN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS		199			(7	)

NET INCREASE IN CASH AND CASH EQUIVALENTS		94,600			11,069

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

CASH AND CASH EQUIVALENTS––End of period	$	130,388		$	28,160


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


	Three Months Ended									Nine Months Ended
	September 30,									September 30,
	2009				2008					2009				2008

Net Income (GAAP Basis)	$	6,607			$	8,025				$	14,162			$	17,469
Income Tax Expense		1,627				1,063					6,217				8,821
Pre-Tax Income (GAAP Basis)	$	8,234			$	9,088				$	20,379			$	26,290
Adjustments:
Stock-based Compensation		3,799				2,337					8,140				6,160
Recapitalization Retention Expense		-				157					152				451
Amortization of Acquired Intangibles		1,054				1,327					3,491				3,162
Restructuring Charge		552				(61	)				3,100				991

Adjusted Pre-Tax Income		13,639				12,848					35,262				37,054

Less: Adjusted Income Tax Expense		3,757				2,544					12,081				13,062

Non-GAAP Net Income	$	9,882			$	10,304				$	23,181			$	23,992

Non-GAAP Earnings Per Share (diluted)	$	0.15			$	0.22				$	0.42			$	0.50
Weighted Average Shares		64,808				47,605					54,967				47,795




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


	Three Months Ended									Nine Months Ended
	September 30,									September 30,
	2009				2008					2009				2008

Operating Income and Margin - GAAP	$	10,167	16	%	$	11,434		16	%	$	25,251	13	%	$	34,341		16	%
Plus: Stock-based Compensation and Recapitalization Retention Expense		3,799				2,494					8,292				6,611
Plus: Amortization of Acquired Intangibles		1,054				1,327					3,491				3,162
Plus: Restructuring Charge		552				(61	)				3,100				991

Operating Income and Margin - Non-GAAP	$	15,572	24	%	$	15,194		21	%	$	40,134	21	%	$	45,105		21	%

Total Revenues	$	64,114			$	70,950				$	195,476			$	217,669




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


	Three Months Ended									Nine Months Ended
	September 30,									September 30,
	2009				2008					2009				2008

Net Income (GAAP Basis)	$	6,607			$	8,025				$	14,162			$	17,469
Stock-based Compensation		3,799				2,337					8,140				6,160
Recapitalization Retention Expense		-				157					152				451
Depreciation		1,255				1,191					3,796				3,315
Amortization		1,262				1,662					4,254				4,135
Interest Expense, net		1,904				2,286					4,864				7,790
Income Tax Provision		1,627				1,063					6,217				8,821
Restructuring Charge		552				(61	)				3,100				991

Adjusted EBITDA	$	17,006			$	16,660				$	44,685			$	49,132




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


	Three Months Ended									Nine Months Ended
	September 30,									September 30,
	2009				2008					2009				2008

Cost of Software License Fees	$	-			$	1				$	-			$	3
Cost of Consulting Services		932				425					1,778				1,214
Cost of Maintenance and Support Services		308				73					513				(18	)
Research and Development		884				545					1,880				1,496
Sales and Marketing		705				512					1,506				1,404
General and Administrative		970				938					2,615				2,512
Total	$	3,799			$	2,494				$	8,292			$	6,611




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


	Three Months Ended									Nine Months Ended
	September 30,									September 30,
	2009				2008					2009				2008

Cost of Software License Fees	$	155			$	307				$	773			$	992
Cost of Consulting Services		20				20					59				59
Research and Development		-				290					-				290
Sales and Marketing		874				692					2,617				1,766
General and Administrative		5				18					42				55
Total	$	1,054			$	1,327				$	3,491			$	3,162




AMORTIZATION AND DEPRECIATION EXPENSES
(in thousands)
(unaudited)


	Three Months Ended									Nine Months Ended
	September 30,									September 30,
	2009				2008					2009				2008

Cost of Software License Fees	$	365			$	646				$	1,546			$	1,973
Cost of Consulting Services		362				593					1,213				1,346
Cost of Maintenance and Support Services		205				274					630				528
Research and Development		401				460					976				980
Sales and Marketing		1,058				752					3,246				2,246
General and Administrative		126				128					439				377
Total	$	2,517			$	2,853				$	8,050			$	7,450

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