EX-99.1 2 dex991.htm EXHIBIT 99.1 Exhibit 99.1

Exhibit 99.1

LOGO

FOR IMMEDIATE RELEASE

 

For additional information contact:   
Joseph Cormier    Mark Root
Vice President, M&A and IR    Executive Director, Corporate Communications
703-218-8258    703-218-8397; cell: 571-259-1169
joe.cormier@mantech.com    mark.root@mantech.com

ManTech Reports 2006 Third Quarter Results

 

    Revenue increased to $283.7 million in the third quarter, up 8.1% from the previous year

 

    Revenue increased to $846.5 million for the three quarters ending September 30, up 17.7% from the previous year

 

    Operating margin of 8.1% (or 8.6% before FAS123R expense) in the third quarter

 

    Diluted EPS from continuing operations of $0.41 (or $0.43 before FAS123R expense) in the third quarter, up from $0.39 in the previous year

 

    Record operating cash flow from continuing operations of $72.7 million in the third quarter based on receivable days sales outstanding of 65 days, down from 81 days in the second quarter

 

    Record contract awards of $985 million in the third quarter

 

    Total backlog increased to $2.71 billion in the third quarter, up 41.2% from the previous year

FAIRFAX, Virginia, November 2, 2006 – ManTech International Corporation (Nasdaq: MANT), a leading provider of innovative technologies and solutions focused on mission-critical national security programs for the Intelligence Community and the Departments of Defense, State, Homeland Security, and Justice; the Space Community; and other federal government customers, today announced results for the third quarter of 2006.

ManTech reported revenue of $283.7 million for the third quarter of 2006, up $21.3 million, or 8.1% on a total and organic basis, compared to $262.4 million for the same period in 2005. For the nine months ended September 30, 2006, ManTech reported revenue of $846.5 million, up 17.7% overall and 13.0% organically. The growth was primarily a result of the solid execution of the business strategy to focus on the high-end defense and intelligence markets in support of national security.

Operating income in the third quarter was $23.0 million (after a $1.3 million expense from FAS 123R), compared to $21.8 million for the same period in 2005. Net income from continuing operations in the third quarter was $13.8 million (after a $0.8 million after-tax expense from FAS 123R). Diluted earnings per share from continuing operations was $0.41.

 

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Excluding the effect of FAS 123R, ManTech’s operating income in the third quarter 2006 was $24.4 million (8.6% of revenue), up $2.6 million, or 11.9%, compared to $21.8 million (8.3% of revenue) for the same period in 2005. Excluding the effect of FAS 123R, net income from continuing operations in the third quarter was $14.6 million, up 12.3%, compared to $13.0 million in the same period in 2005. Diluted EPS from continuing operations prior to the effect of FAS123R was $0.43 for the third quarter versus $0.39 for the same period last year.

On January 1, 2006, the Company adopted Financial Accounting Standards Board Statement No. 123R, which requires the Company to recognize share-based payment transactions as a compensation expense in its financial statements. Because our third quarter 2005 financial results do not include the effect of FAS 123R, the Company believes that providing our third quarter 2006 financial results excluding the effect of FAS 123R provides a better comparison with prior results. A reconciliation of GAAP results with results excluding the effect of FAS 123R is provided at the end of this press release.

“ManTech delivered another solid operating quarter highlighted by our exceptional cash flow and contract awards,” said George J. Pedersen, Chairman of the Board and CEO of ManTech International Corporation. “Given our national security positioning, we are focused on continuing to deliver solutions supporting the Global War on Terror.”

Record Contract Awards

ManTech had $985 million in contract awards for the quarter, including over $100 million in classified contracts. ManTech was awarded a $725 million subcontract from Computer Sciences Corporation in support of the U.S. Army’s Logistics Regional Support Centers (RSC), which continues ManTech’s existing work with this customer for the next five years.

“The RSC award was a very important win for ManTech. We have been supporting this customer for over a decade and this new contract continues our existing work well into the future,” said Robert A. Coleman, President and Chief Operating Officer, ManTech International Corporation.

Key Performance Metrics

Reported backlog as of September 30, 2006 was $2.71 billion and funded backlog was $504 million. Revenue from the Department of Defense, the Intelligence Community and Homeland Security related customers accounted for 95.1% of revenue for the third quarter of 2006. ManTech derived 64.0% of its revenue during the third quarter of 2006 from prime contracts. ManTech’s time and materials contracts accounted for 65.8% of revenue, fixed-price contracts accounted for 9.7% of revenue and cost-plus contracts accounted for 24.5% of revenue. The Company had exceptionally strong cash collections in the third quarter generating $72.7 million in operating cash flow from continuing operations based on receivable days sales outstanding of 65 days, down from 81 days in the second quarter.

GRS Acquisition

On October 5, 2006, ManTech completed the acquisition of GRS Solutions, Inc. (GRS). GRS, based in Falls Church and founded in 1998, is a rapidly growing provider of specialized technical, operational and analytical services to the Intelligence Community. GRS provides innovative analysis, technical management, program development, and program implementation services supporting the counter terrorism /counter intelligence mission around the world. Over 90 percent of GRS’ employees have high level clearances. GRS generated annual revenues for its fiscal year ended September 30, 2006 in excess of $10 million with robust operating margins.

 

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Company Guidance

ManTech’s guidance for the fourth quarter and full year 2006 includes the addition of GRS Solutions, Inc. operating results in the fourth quarter 2006 but does not include any discontinued operations, future acquisitions or divestitures. The cost of stock options represents non-cash expenses that by themselves do not affect Company cash flows.

(Dollars in millions, except earnings per share amounts)

 

     4th Quarter 2006   Full Year 2006

Revenue

   $285 – $300   $1,131 – $1,146

Diluted Earnings Per Share from Continuing Operations, exclusive of effect of FAS 123R expense

   $0.43 – $0.45   $1.69 – $1.71

Effect of FAS 123R on diluted EPS

   ($0.02)   ($0.09)

Diluted Earnings Per Share from Continuing Operations

   $0.41 – $0.43   $1.60 – $1.62

Weighted Average Shares Outstanding

   34.2 million   33.9 million

Conference Call:

ManTech executive management will hold a conference call today at 5 p.m. EST, to discuss third quarter 2006 results and answer questions. Interested parties may access the call by dialing (800) 819-9193 (domestic) or (913) 981-4911 (international). The conference call will be Webcast (listen only) simultaneously via the Internet at www.mantech.com. Interested parties should dial in or log on approximately ten minutes prior to the start of the call.

A replay of the call will be available beginning at 9 p.m. today and will remain available through midnight, November 16. To access the replay, call (888) 203-1112 (domestic) or (719) 457-0820 (international). The confirmation code for the replay is 4179074. A replay will also be available on ManTech’s Website approximately two hours after the conclusion of the call.

About ManTech International Corporation:

Headquartered in Fairfax, Virginia, ManTech International Corporation is a leading provider of innovative technologies and solutions for mission-critical national security programs for the Intelligence Community; the Departments of Defense, State, Homeland Security and Justice; the Space Community and other U.S. federal government customers. ManTech’s expertise includes systems engineering, systems integration, technology and software development, enterprise security architecture, information assurance, intelligence operations support, network and critical infrastructure protection, information technology, communications integration and engineering support. The company supports the advanced telecommunications systems that are used in Operation Iraqi Freedom and in other parts of the world; provides the physical and cyber security to protect U.S. embassies all over the world; has developed a secure, collaborative communications system for the U.S. Department of Homeland Security; and builds and maintains secure databases that track terrorists. The company operates in the United States and over 40 countries worldwide. In 2005, Red Herring magazine selected ManTech as one of its Small Cap 100 Companies; and in 2006, Business 2.0 magazine named ManTech one of its 100 Fastest Growing Technology Companies. Additional information on ManTech can be found at www.mantech.com.

Forward-Looking Information:

Statements and assumptions made in this press release, which do not address historical facts, constitute “forward-looking” statements that ManTech believes to be within the definition in the Private Securities Litigation Reform Act of

 

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1995 and involve risks and uncertainties, many of which are outside of our control. Words such as “may,” “will,” “intends,” “should,” “expects,” “plans,” “projects,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or “opportunity,” or the negative of these terms or words of similar import are intended to identify forward-looking statements.

These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation: adverse changes in U.S. government spending priorities; failure to retain existing U.S. government contracts, win new contracts, or win recompetes; uncertainties specifically related to discontinued operations, including our ability to sell or dispose of our MSM operations on terms that are favorable to us, or at all; adverse results of U.S. government audits of our government contracts; adverse effect of contract consolidation; adverse changes in our mix of contract types; risk of contract performance or termination; failure to obtain option awards, task orders or funding under contracts; failure to successfully integrate recently acquired companies or businesses into our operations or to realize any accretive or synergistic effects from such acquisitions; failure to identify, execute or effectively integrate future acquisitions; risks associated with complex U.S. government procurement laws and regulations; and competition. These and other risk factors are more fully discussed in the section entitled “Risks Factors “ in ManTech’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2006, and, from time to time, in ManTech’s other filings with the Securities and Exchange Commission, including among others, its reports on Form 10-Q.

The forward-looking statements included in this news release are only made as of the date of this news release and ManTech undertakes no obligation to publicly update any of the forward-looking statements made herein, whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise.

 

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MANTECH INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

 

     (unaudited)  
     September 30,
2006
    December 31,
2005
 

ASSETS

    

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 47,337     $ 5,662  

Receivables—net

     205,737       239,676  

Prepaid expenses and other

     13,799       7,393  

Assets of operations held for sale

     6,171       4,831  
                

Total current assets

     273,044       257,562  

Property and equipment—net

     12,746       11,713  

Goodwill

     227,747       227,747  

Other intangibles—net

     34,434       35,602  

Employee supplemental savings plan assets

     13,761       11,902  

Other assets

     10,030       11,459  
                

TOTAL ASSETS

   $ 571,762     $ 555,985  
                

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

CURRENT LIABILITIES:

    

Current portion of debt

   $ 42     $ 42,502  

Accounts payable and accrued expenses

     61,233       57,933  

Accrued salaries and related expenses

     42,059       41,428  

Deferred income taxes—current

     —         663  

Billings in excess of revenue earned

     5,036       6,611  

Liabilities of operations held for sale

     3,833       4,978  
                

Total current liabilities

     112,203       154,115  

Debt—net of current portion

     —         21  

Accrued retirement

     15,397       13,054  

Other long-term liabilities

     3,295       3,282  

Deferred income taxes—non-current

     8,232       6,920  
                

TOTAL LIABILITIES

     139,127       177,392  
                

COMMITMENTS AND CONTINGENCIES

     —         —    

STOCKHOLDERS’ EQUITY:

    

Common stock, Class A—$0.01 par value; 150,000,000 shares authorized; 18,619,453 and 18,016,328 shares issued and outstanding at September 30, 2006 and December 31, 2005, respectively.

     186       180  

Common stock, Class B—$0.01 par value; 50,000,000 shares authorized; 15,063,593 and 15,065,293 shares issued and outstanding at September 30, 2006 and December 31, 2005, respectively.

     151       151  

Additional paid in capital

     252,612       233,360  

Retained earnings

     181,685       144,903  

Unearned ESOP shares

     (2,033 )     —    

Accumulated other comprehensive income (loss)

     34       (1 )

Deferred compensation

     640       640  

Shares held in grantor trust

     (640 )     (640 )
                

TOTAL STOCKHOLDERS’ EQUITY

     432,635       378,593  
                

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 571,762     $ 555,985  
                

 

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MANTECH INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands Except Per Share Amounts)

 

     (unaudited)     (unaudited)  
     Three months ended September 30,     Nine months ended September 30,  
     2006     2005     2006     2005  
REVENUES    $ 283,695     $ 262,431     $ 846,466     $ 719,300  
COST OF SERVICES      235,539       216,260       702,225       592,130  
                                
GROSS PROFIT      48,156       46,171       144,241       127,170  
                                
COSTS AND EXPENSES:         

General and administrative

     22,951       22,327       69,731       62,510  

Depreciation and amortization

     2,191       2,008       6,327       5,147  
                                

Total costs and expenses

     25,142       24,335       76,058       67,657  
                                
INCOME FROM CONTINUING OPERATIONS      23,014       21,836       68,183       59,513  

Interest (expense), net

     (291 )     (1,120 )     (1,684 )     (1,956 )

Equity in earnings of affiliates

     —         157       —         435  

Gain (Loss) on disposal of an operation

     —         —         —         3,698  

Other income (expense), net

     21       (52 )     8       (228 )
                                

INCOME BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTEREST

     22,744       20,821       66,507       61,462  

Provision for income taxes

     (8,962 )     (7,833 )     (26,204 )     (24,085 )

Minority interest

     —         (3 )     —         (9 )
                                

INCOME FROM CONTINUING OPERATIONS—net of taxes

     13,782       12,985       40,303       37,368  

(Loss) from discontinued operations—net of taxes

     (1,092 )     (1,298 )     (3,521 )     (3,612 )
                                

NET INCOME

   $ 12,690     $ 11,687     $ 36,782     $ 33,756  
                                

BASIC EARNINGS (LOSS) PER SHARE:

        

Income from continuing operations—net of taxes

   $ 0.41     $ 0.39     $ 1.21     $ 1.14  

(Loss) from discontinued operations—net of taxes

     (0.03 )     (0.04 )     (0.11 )     (0.11 )
                                
Basic earnings per share    $ 0.38     $ 0.35     $ 1.10     $ 1.03  
                                

Weighted average common shares outstanding

     33,598,476       32,955,258       33,389,961       32,753,215  
                                

DILUTED EARNINGS (LOSS) PER SHARE:

        

Income from continuing operations—net of taxes

   $ 0.41     $ 0.39     $ 1.19     $ 1.12  

(Loss) from discontinued operations—net of taxes

     (0.04 )     (0.04 )     (0.10 )     (0.10 )
                                
Diluted earnings per share    $ 0.37     $ 0.35     $ 1.09     $ 1.02  
                                

Weighted average common shares outstanding

     33,969,810       33,477,813       33,808,125       33,221,562  
                                

 

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MANTECH INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

 

     (unaudited)  
     Nine months ended September 30,  
     2006     2005  

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income

   $ 36,782     $ 33,756  

Adjustments to reconcile net income to net cash used in operating activities:

    

Equity in earnings of affiliates

     —         (435 )

Decrease in deferred income taxes

     (2,278 )     (2,210 )

Stock-based compensation

     4,095       18  

Tax benefit from the exercise of stock options for 2005

     —         1,872  

Depreciation and amortization

     7,259       6,357  

Gain on disposal of an operation

     —         (3,698 )

Loss from discontinued operations

     3,521       3,612  

Changes in assets and liabilities-net of effects from acquired, disposed, and discontinued businesses:

    

Receivables—net

     33,939       (23,587 )

Prepaid expenses and other

     (3,478 )     277  

Accounts payable and accrued expenses

     3,300       2,940  

Accrued salaries and related expenses

     631       1,220  

Billings in excess of revenue earned

     (1,575 )     3,385  

Accrued retirement

     2,343       (1,100 )

Dividends from Vosper-Mantech Limited

     —         357  

Other

     (1,513 )     1,108  
                

Net cash flows from continuing operations

     83,026       23,872  

Net cash flows from discontinued operations

     (5,881 )     14,137  
                

Net cash flows from operating activities

     77,145       38,009  
                

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Purchase of property and equipment

     (3,582 )     (5,198 )

Investment in capitalized software for internal use

     (2,126 )     (1,617 )

Acquisition of businesses, net of cash acquired

     —         (106,638 )

Proceeds from disposal of an operation

     —         7,000  
                

Net investing cash flows from continuing operations

     (5,708 )     (106,453 )

Net investing cash flows from discontinued operations

     (125 )     (355 )
                

Net cash flows from investing activities

     (5,833 )     (106,808 )
                

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Proceeds from exercise of stock options

     10,255       9,201  

Tax benefit from the exercise of stock options for 2006

     2,589       —    

Repayment of debt

     (79 )     (60 )

Net (decrease) increase in borrowings under line of credit

     (42,402 )     50,000  
                

Net cash flows from financing activities

     (29,637 )     59,141  
                

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

     41,675       (9,658 )

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

     5,662       22,946  
                

CASH AND CASH EQUIVALENTS, END OF PERIOD

   $ 47,337     $ 13,288  
                

 

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MANTECH INTERNATIONAL CORPORATION

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

(Dollars in Thousands Except Per Share Date)

The company has presented net income, as adjusted, to reflect the impact that the adoption of 123[R] had on the Company’s earnings per share. Management believes that these non-GAAP financial measures provide investors useful information as they facilitate the comparison of current performance to prior performance. These non-GAAP measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.

 

     Three months ended September 30, 2006     Nine months ended September 30, 2006  
     As Reported     Adjustments     Pro Forma     As Reported     Adjustments     Pro Forma  
     (unaudited)     (unaudited)  

REVENUES

   283,695       283,695     846,466       846,466  

COST OF SALES

   235,539       235,539     702,225       702,225  
                            

GROSS PROFIT

   48,156       48,156     144,241       144,241  
                            

General and Administrative

   22,951     (1,347 )   21,604     69,731     (4,007 )   65,724 (1)

Depreciation and amortization

   2,191       2,191     6,327       6,327  
                                    

Total costs and expenses

   25,142     (1,347 )   23,795     76,058     (4,007 )   72,051  
                                    

INCOME FROM CONTINUING OPERATIONS

   23,014     1,347     24,361     68,183     4,007     72,190  

Interest (expense), net

   (291 )     (291 )   (1,684 )     (1,684 )

Other income (expense), net

   21       21     8       8  
                                    

INCOME BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTEREST

   22,744     1,347     24,091     66,507     4,007     70,514  

Provision for income taxes

   (8,962 )   (531 )   (9,493 )   (26,204 )   (1,579 )   (27,783 )(2)
                                    

INCOME FROM CONTINUING OPERATIONS-net of taxes

   13,782     816     14,598     40,303     2,428     42,731  

(Loss) from discontinued operations-net of taxes

   (1,092 )     (1,092 )   (3,521 )     (3,521 )
                                    

NET INCOME

   12,690     816     13,506     36,782     2,428     39,210  
                                    

BASIC EARNINGS (LOSS) PER SHARE:

            

Income from continuing operations-net of taxes

   0.41     0.02     0.43     1.21     0.07     1.28  

(Loss) from discontinued operations-net of taxes

   (0.03 )     (0.03 )   (0.11 )     (0.11 )
                                    

Basic earnings per share

   0.38     0.02     0.40     1.10     0.07     1.17  
                                    

DILUTED EARNINGS (LOSS) PER SHARE:

            

Income from continuing operations-net of taxes

   0.41     0.02     0.43     1.19     0.06     1.25  

(Loss) from discontinued operations-net of taxes

   (0.04 )     (0.04 )   (0.10 )     (0.10 )
                                    

Diluted earnings per share

   0.37     0.02     0.39     1.09     0.06     1.15  
                                    

Weighted average common shares:

            

-Basic

   33,598,476       33,598,476     33,389,961       33,389,961  

-Diluted

   33,969,810     326,368     34,296,178     33,808,125     348,285     34,156,410  

(1) Adjusted to eliminate the FAS 123R stock compensation expense resulting from the adoption of FAS 123R on January 1, 2006.
(2) Adjusted to eliminate the tax effect of the adjustment in Note 1 at an effective tax rate of 39.4%

###

 

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