8-K 1 pressrelease.txt Q3 PRESS RELEASE -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------------------------------- 1 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): OCTOBER 27, 2004 --------------------------------------------- ANTEON INTERNATIONAL CORPORATION (Exact Name of Registrant as Specified in Charter) Delaware 001-31258 13-3880755 (State or Other Jurisdiction Commission File (IRS Employer of Incorporation) Number) Identification No.) 3211 Jermantown Road, Suite 700 Fairfax, Virginia 22030-2801 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (703) 246-0200 ================================================================================ Item 2.02. Results of Operations and Financial Condition. On October 27, 2004, Anteon International Corporation, a Delaware corporation (the "Company"), issued a press release announcing the Company's financial results for the third quarter ended September 30, 2004, as well as the schedule for a conference call and "web cast" on the same date. A copy of the Company's press release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein. Also attached to this Current Report on Form 8-K as Exhibit 99.2 is a reconciliation of certain non-GAAP financial measures expected to be discussed by the Company during its October 27, 2004 earnings conference call to the most directly comparable U.S. GAAP financial measures and is incorporated by reference herein. The information contained in this Form 8-K, including the attached exhibits, is being furnished under Item 2.02 and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. 1 Item 9.01. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. Exhibit No. Description ----------- 99.1 Press Release, dated October 27, 2004, announcing the Company's financial results for the third quarter ended September 30, 2004. 99.2 Reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures. -------------------------------------------------------------------------------- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ANTEON INTERNATIONAL CORPORATION Date: October 27, 2004 /s/ Curtis L. Schehr -------------------------- Curtis L. Schehr Senior Vice President, General Counsel and Secretary -------------------------------------------------------------------------------- Exhibit Index The following is a list of the Exhibits furnished herewith. Exhibit No. Description ----------- ------------- 99.1 Press Release, dated October 27, 2004, announcing the Company's financial results for the third quarter ended September 30, 2004. 99.2 Reconciliation of Non-GAAP financial measures to the most directly comparable GAAP financial measures. 2 Exhibit 99.1 3 NEWS FOR IMMEDIATE RELEASE Contacts: Investors Dennis Kelly (703) 246-0318 dkelly@anteon.com Media Tom Howell (703) 246-0525 thowell@anteon.com ANTEON REPORTS RECORD 3rd QUARTER 2004 RESULTS; AND INCREASES FULL YEAR EPS GUIDANCE o Revenues of $325.6 million, up 16.7% o Operating income of $27.7 million, up 21.9% o Fully diluted EPS of $0.45, up 50.0% o Free cash flow of $17.0 million FAIRFAX, VA, October 27, 2004 - Anteon International Corporation (NYSE: ANT), a leading information technology, and systems engineering and integration company, announced operating results today for its third quarter and nine months ended September 30, 2004. Financial Results Anteon's revenues for the third quarter of 2004 increased 16.7% to $325.6 million from $279.1 million for the comparable period in 2003. The organic revenue growth rate for the quarter was 13.9%. Operating income for the third quarter increased 21.9% to $27.7 million from $22.7 million for the comparable period in 2003. Net income for the third quarter increased 54.0% to $16.8 million versus $10.9 million in the comparable period in 2003. Earnings per share on a fully diluted basis was $0.45 versus $0.30 in the comparable quarter in 2003, an increase of 50.0%. Earnings per share of $0.45 for the third quarter of 2004 included a one time after tax benefit of $1.0 million related to a settlement from a prior acquisition. Excluding this benefit, EPS on an operating basis was $0.42. Free cash flow for the third quarter was $17.0 million, and accounts receivable days sales outstanding (DSO) at September 30, 2004 was 70 days. 4 Anteon's revenues for the nine months ended September 30, 2004 increased 20.5% to $917.9 million from $761.8 million reported in the comparable period in 2003. Operating income for the nine months ended September 30, 2004 increased 25.0% to $76.1 million versus $60.9 million for the comparable period in 2003. Net income for the nine months ended September 30, 2004 increased 47.9% to $44.8 million from $30.3 million for the comparable period in 2003. Earnings per share on a fully diluted basis was $1.21 versus $0.82 in the first nine months of 2003, an increase of 47.6%. A reconciliation between certain non-GAAP financial measures discussed above and reported financial results is provided as an attachment to this press release. New Business Major contracts awarded during the third quarter were across the company's Department of Defense and Department of Homeland Security customers and included: o A task order contract with a ceiling of $870 million to support U.S. Navy shipboard maintenance and modernization programs; o A $320 million ceiling value contract to support command and control programs of the Space and Naval Warfare Systems Command; o A $150 million contract to support the military intelligence community's global CENTRIXS program and NATO component. These multi-national information sharing programs represent the most widely used coalition intelligence sharing systems in the world today; 5 o A $120 million contract to support the Naval Sea Systems Command integrated warfare systems programs; o A $118 million contract to support U.S. Army personnel recruitment and retention programs; o A $74 million contract to provide training for the Department of Homeland Security's U.S. Customs and Border Protection Agency; and, o A $29 million contract to design and operate the Advanced Training Technology Laboratory for the U.S. Joint Forces Command. This laboratory will develop and demonstrate new training systems technologies for joint, interagency, and multi-national operations. CEO Comments Joseph M. Kampf, President and Chief Executive Officer of Anteon, said, "This was another strong quarter for `Team' Anteon. Our impressive capture of five contracts, each with a potential value of over $100 million, our solid revenue growth, and our total qualified business opportunity pipeline of over $12 billion, reflect the continued robustness of the defense and national security marketplace and Anteon's status as a recognized leader in that sector. Our business development outlook is very positive. The 2005 Defense and Homeland Security Appropriations bills have been passed, and we expect to see a number of contract opportunities from our core business area customers, which we are well positioned to win. Based on the strength of our third quarter results and business outlook, we are again increasing our full year EPS guidance." 6 Company Guidance The Company provides guidance for the fourth quarter and full year 2004 as summarized in the table below.
2004 FINANCIAL GUIDANCE (Dollars and shares in millions, except per share amounts) Q4 2004 Full Year 2004 -------- -------------- Revenues $330 - $345 $1,250 - $1,265 Weighted Average Shares Outstanding 37.5 37.3 Tax Rate 38.8% 37.7% Fully Diluted Earnings Per Share Meet or exceed $0.42 Meet or exceed $1.63
Conference Call Anteon has scheduled a conference call for 10:00 a.m. Eastern Daylight Time TODAY, October 27, 2004, during which senior management will discuss third quarter results and respond to questions. The conference call will be Webcast (listen only) via Anteon's website at www.anteon.com. A telephone replay of the call also will be available beginning at 1:00 p.m. Eastern Daylight Time on October 27, 2004, until midnight October 30, 2004. To access the replay, call (800) 642-1687 (U.S.) or (706) 645-9291 (International). The confirmation code for access to the replay is 8656927. A replay also will be available on Anteon's website shortly after the conclusion of the call. About Anteon Anteon, headquartered in Fairfax, Virginia, is a leading information technology, and systems engineering and integration company, providing support to the U.S. federal government and international sectors. For over 28 years, the Company has designed, integrated, maintained and upgraded state-of-the-art systems for national defense, intelligence, emergency response and other high priority government missions. Anteon also provides many of its government clients with the systems analysis, integration and program management skills necessary to manage the development and operations of their mission critical systems. The Company currently has over 8,600 employees in more than 100 offices worldwide. Anteon consistently ranks among the top information technology integrators based on independent surveys. Anteon was cited by Forbes Magazine, in 2004, as one of the 25 fastest growing U.S. technology companies and has been named one of the world's top 100 information technology companies in Business Week's INFOTECH 100 Annual Report for the past two years. For more information, visit www.anteon.com. 7 Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this release which are not historical facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in, or implied by, forward-looking statements. The Company has tried, whenever possible, to identify these forward-looking statements using words such as "projects," "anticipates," "believes," "estimates," "expects," "plans," "intends," and similar expressions. Similarly, statements herein that describe the Company's business strategy, outlook, objectives, plans, intentions or goals are also forward-looking statements. The risks and uncertainties involving forward-looking statements include the Company's dependence on continued funding of U.S. government programs, government contract procurement and termination risks, including risks associated with bid protests, and other risks described in the Company's Securities and Exchange Commission filings. These statements reflect the Company's current beliefs and are based upon information currently available to it. Be advised that developments subsequent to this release are likely to cause these statements to become outdated with the passage of time. The Company does not currently intend, however, to update the guidance provided today prior to its next earnings release. # # # 8
ANTEON INTERNATIONAL CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended September 30, 2004 and 2003 ($ and shares in thousands, except EPS) Three Months Ended Three Months Ended Percentage September 2004 September 2003 Change ------------------ ------------------- --------------- Revenues $ 325,581 $ 279,080 16.7% Costs of revenues 280,898 240,689 General and administrative expenses 16,473 14,969 Amortization of intangible assets 542 723 ---------------- ---------------- Operating income 27,668 22,699 21.9% Operating margin 8.5% 8.1% Other income 939 -- Secondary offering expenses -- 798 Interest expense 1,831 3,831 Minority interest in (earnings) losses 9 (18) ---------------- ---------------- Pretax income 26,785 18,052 48.4% Income tax 9,936 7,109 ---------------- ---------------- Net income $ 16,849 $ 10,943 54.0% ================ ================ After tax margin 5.18% 3.9% EBITDA 29,177 24,561 18.8% Cash flow from operations 17,784 17,054 4.3% Tax rate 37.1% 39.2% Basic shares 35,817 34,970 Diluted shares 37,253 37,084 EPS, basic $ 0.47 $ 0.31 51.6% EPS, diluted $ 0.45 $ 0.30 50.0%
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ANTEON INTERNATIONAL CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS for the nine months ended September 30, 2004 and 2003 ($ and shares in thousands, except EPS) Nine Months Ended Nine Months Ended Percentage September 2004 September 2003 Change ------------------- ------------------- -------------- Revenues $ 917,892 $ 761,764 20.5% Costs of revenues 791,152 656,695 General and administrative expenses 48,720 42,388 Amortization of intangible assets 1,901 1,763 ---------------- --------------- Operating Income 76,119 60,918 25.0% Operating margin 8.3% 8.0% Other income 943 -- Secondary offering expense -- 798 Interest expense 5,575 10,384 Minority interest (26) (50) ---------------- --------------- Pretax income 71,461 49,686 43.8% Income tax 26,613 19,359 ---------------- --------------- Net income $ 44,848 $ 30,327 47.9% ================ =============== After tax margin 4.9% 4.0% EBITDA 80,939 65,617 23.4% Cash flow from operations 48,246 40,826 18.2% Tax rate 37.2% 38.9% Basic shares 35,630 34,710 Diluted shares 37,201 36,816 EPS, basic $ 1.26 $ 0.87 44.8% EPS, diluted $ 1.21 $ 0.82 47.6%
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ANTEON INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS ($ in thousands) As of September 30, 2004 As of (unaudited) December 31, 2003 $ Change ---------------------- ------------------ -------------- ASSETS Cash and cash equivalents $ 14,647 $ 2,088 $ 12,559 Accounts receivable, net 257,384 222,937 34,447 Other current assets 16,983 19,566 (2,583) Property and equipment, net 12,864 12,759 105 Goodwill net 246,708 212,205 34,503 Intangible and other assets, net 15,625 9,725 5,900 -------------- -------------- ----------- Total assets $ 564,211 $ 479,280 $ 84,931 ============= ============== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable, accrued expenses and other current liabilities $ 145,000 $ 123,521 $ 21,479 Indebtedness 165,000 158,776 6,224 Deferred revenue 16,236 11,783 4,453 Other long-term liabilities 13,628 10,498 3,130 ------------- -------------- ----------- Total liabilities 339,864 304,578 35,286 Minority interest in subsidiaries 236 210 26 Stockholders' equity 224,111 174,492 49,619 ------------- -------------- ----------- Total liabilities and stockholders' equity $ 564,211 $ 479,280 $ 84,931 ============= ============== ===========
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ANTEON INTERNATIONAL CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in thousands) For the nine months ended September 30, 2004 2003 ------------------ ------------------ Operating Activities: Net income $ 44,848 $ 30,327 Adjustments to reconcile net income to net cash provided by operating activities: Gain on settlement of subordinated notes payable (1,327) -- Depreciation and amortization on property and equipment, intangibles and financing fees 5,368 5,827 Deferred income taxes 343 (3,307) Minority interest in earnings of subsidiaries 26 50 Changes in assets and liabilities (1,012) 7,929 --------------- --------------- Net Cash Provided By Operating Activities 48,246 40,826 --------------- --------------- Investing Activities: Purchases of property, equipment and other assets (2,846) (2,241) Costs of acquisitions, net of cash acquired (43,295) (92,369) --------------- --------------- Net Cash Used For Investing Activities (46,141) (94,610) --------------- --------------- Financing Activities Principal payment on bank and subordinated notes payable (1,350) (38) Principal payments on term loans (1,125) (2,849) Proceeds from term loan 16,125 -- Deferred financing fees (294) (249) Net proceeds (payments)on revolving credit facility (4,400) 50,400 Redemption of senior subordinated notes payable (1,876) -- Principal payment under capital lease obligations (240) -- Proceeds from certain stockholders related to second offering -- 900 Proceeds from issuance of common stock, net of expense 3,614 4,078 --------------- --------------- Net Cash Provided By Financing Activities 10,454 52,242 --------------- --------------- Cash And Cash Equivalents: Net Increase (decrease) in cash and cash equivalents 12,559 (1,542) Cash and cash equivalents, beginning of period 2,088 4,266 --------------- --------------- Cash and cash equivalents, end of period $ 14,647 $ 2,724 --------------- ---------------
12 RECONCILIATION BETWEEN TOTAL REVENUE GROWTH AND ORGANIC REVENUE GROWTH ($ in thousands) Q3 YTD Q3 2003 Revenue $ 279,080 $ 761,764 2004 Revenue 325,581 917,892 ------------ ------------ Total Revenue Growth over 2003 16.7% 20.4% 2003 Revenue 279,080 761,764 Less 2003 ISI Revenues -- 11,588 ------------ ------------ Adjusted 2003 Revenues (a) 279,080 750,176 ============ ============ 2004 Revenue 325,581 917,892 Less H1 2004 acquisition Revenues -- 70,182 Less 2004 acquisition Revenues 7,791 7,791 ------------ ------------ Adjusted Total 2004 Revenue (b) 317,790 839,569 ============ ============ Organic Revenue Growth over 2003 (b-a)/a 13.9% 11.9% 13 RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW ($ in thousands) Q3 YTD ------ -------- Cash flow from operations 17,784 48,246 Less: Capital Expenditures (802) (2,846) ------------- ------------- Free cash flow 16,982 45,400 ============= ============= 14
RECONCILIATION BETWEEN NET INCOME AND EBITDA ( in thousands) 2004 --------------------------------------------------- Q1 Q2 Q3 YTD Q3 -- -- -- ------ Net income $ 13,334 $ 14,665 $ 16,849 $ 44,848 Other income -- (4) (939) (943) Secondary offering expenses -- -- -- -- Provision for income taxes 8,406 8,271 9,936 26,613 Interest expense, net of interest income 1,794 1,950 1,831 5,575 Amortization 679 680 542 1,901 Depreciation 1,053 934 958 2,945 ----------- ---------- ---------- ----------- EBITDA (1) $ 25,266 $ 26,496 $ 29,177 $ 80,939 =========== ========== ========== ===========
RECONCILIATION BETWEEN NET INCOME AND EBITDA ( in thousands) 2003 --------------------------------------------------- Q1 Q2 Q3 Q4 -- -- -- ----- Net income $ 9,075 $ 10,309 $ 10,943 $ 5,863 Secondary offering expenses -- -- 798 54 Provision for income taxes 5,688 6,562 7,109 3,414 Interest expense, net of interest income 3,191 3,363 3,830 13,860 Amortization 477 563 723 687 Depreciation 892 936 1,158 1,454 ----------- ---------- ---------- ----------- EBITDA (1) $ 19,323 $ 21,733 $ 24,561 $ 25,332 =========== ========== ========== =========== (1) "EBITDA" as defined represents income before income taxes plus depreciation, amortization, net interest expense and secondary offering expenses. EBITDA is a key financial measure but should not be construed as an alternative to operating income or cashflows from operating activities (as determined in accordance with accounting principles generally accepted in the United States of America). The company believes that EBITDA is a useful supplement to net income and other income statement data in understanding cash flows generated from operations that are available for taxes, debt service and capital expenditures.
15 Exhibit 99.2 16 RECONCILIATION BETWEEN TOTAL REVENUE GROWTH AND ORGANIC REVENUE GROWTH ($ in thousands) Q3 YTD Q3 2003 Revenue $ 279,080 $ 761,764 2004 Revenue 325,581 917,892 ------------ ------------ Total Revenue Growth over 2003 16.7% 20.4% 2003 Revenue 279,080 761,764 Less 2003 ISI Revenues -- 11,588 ------------ ------------ Adjusted 2003 Revenues (a) 279,080 750,176 ============ ============ 2004 Revenue 325,581 917,892 Less H1 2004 acquisition Revenues -- 70,182 Less 2004 acquisition Revenues 7,791 7,791 ------------ ------------ Adjusted Total 2004 Revenue (b) 317,790 839,569 ============ ============ Organic Revenue Growth over 2003 (b-a)/a 13.9% 11.9% 17 RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW ($ in thousands) Q3 YTD ------ -------- Cash flow from operations 17,784 48,246 Less: Capital Expenditures (802) (2,846) ------------- ------------- Free cash flow 16,982 45,400 ============= ============= 18
RECONCILIATION BETWEEN NET INCOME AND EBITDA ( in thousands) 2004 --------------------------------------------------- Q1 Q2 Q3 YTD Q3 -- -- -- ------ Net income $ 13,334 $ 14,665 $ 16,849 $ 44,848 Other income -- (4) (939) (943) Secondary offering expenses -- -- -- -- Provision for income taxes 8,406 8,271 9,936 26,613 Interest expense, net of interest income 1,794 1,950 1,831 5,575 Amortization 679 680 542 1,901 Depreciation 1,053 934 958 2,945 ----------- ---------- ---------- ----------- EBITDA (1) $ 25,266 $ 26,496 $ 29,177 $ 80,939 =========== ========== ========== ===========
RECONCILIATION BETWEEN NET INCOME AND EBITDA ( in thousands) 2003 --------------------------------------------------- Q1 Q2 Q3 Q4 -- -- -- ----- Net income $ 9,075 $ 10,309 $ 10,943 $ 5,863 Secondary offering expenses -- -- 798 54 Provision for income taxes 5,688 6,562 7,109 3,414 Interest expense, net of interest income 3,191 3,363 3,830 13,860 Amortization 477 563 723 687 Depreciation 892 936 1,158 1,454 ----------- ---------- ---------- ----------- EBITDA (1) $ 19,323 $ 21,733 $ 24,561 $ 25,332 =========== ========== ========== =========== (1) "EBITDA" as defined represents income before income taxes plus depreciation, amortization, net interest expense and secondary offering expenses. EBITDA is a key financial measure but should not be construed as an alternative to operating income or cashflows from operating activities (as determined in accordance with accounting principles generally accepted in the United States of America). The company believes that EBITDA is a useful supplement to net income and other income statement data in understanding cash flows generated from operations that are available for taxes, debt service and capital expenditures.
19 NET DEBT ($ in thousands) Net Debt Q3 2004 Revolving credit facility $ -- Term Loan 165,000 --------------- Total: $ 165,000 Less: cash 14,647 --------------- Net debt $ 150,353 =============== 20