ANT Anteon Intl Corp

Anteon International Corporation (NYSE:ANT), a leading information technology, systems integration and engineering services company, announced today its operating results for the third quarter ended September 30, 2005. Financial Results Anteon's revenues for the third quarter of 2005 increased 17.3% to $382.1 million from $325.6 million for the comparable period in 2004. The organic revenue growth rate for the quarter was 15.8%. Operating income for the third quarter increased 27.8% to $35.4 million from $27.7 million for the comparable period in 2004. Net income for the third quarter increased 24.4% to $21.0 million versus $16.8 million in the comparable period in 2004. Earnings per share on a fully diluted basis was $0.55 versus $0.45 in the comparable quarter in 2004, an increase of 22.2%. Free cash flow for the third quarter was $13.1 million, and days sales outstanding at September 30, 2005 was 75 days. Anteon's revenues for the nine months ended September 30, 2005 increased 19.9% to $1.1 billion from $917.9 million reported in the comparable period in 2004. The organic revenue growth rate for the nine months ended September 30, 2005 was 16.6%. Operating income for the nine months ended September 30, 2005 increased 32.2% to $100.6 million versus $76.1 million for the comparable period in 2004. Net income for the nine months ended September 30, 2005 increased 31.5% to $59.0 million from $44.8 million for the comparable period in 2004. Earnings per share on a fully diluted basis was $1.56 versus $1.21 in the first nine months of 2004, an increase of 28.9%. 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 New orders during the quarter totaled $451 million, including: -- A $29.8 million contract from the Department of Interior Minerals Management Service to provide systems integration and application development support to their offshore operations in Alaska, the Gulf of Mexico, and the Pacific; -- A $26.5 million contract from the U.S. Navy Space and Naval Warfare Systems Center to provide C4ISR systems development, systems engineering and software development support for their Joint and National Systems Division; -- A $25.7 million contract from the U.S. Naval Sea Systems Command for ship repair and modernization of Mine Countermeasures Class Ships; -- An $18.7 million contract from the U.S. Air Force to provide services and software integration for weapon system life cycle management; and -- A $9.8 million contract from the U.S. Air Force to provide analytical modeling, simulation and training support to Joint Military Planning and Training Events. Company Guidance The Company provides guidance for the fourth quarter 2005 and updates its full year 2005 guidance as summarized in the table below. -0- *T 2005 FINANCIAL GUIDANCE Dollars and shares in millions, except per share amounts -------------------------------------------------------- Q4 2005 Full Year 2005 ------- -------------- Revenues $385-$400 $1,486-$1,501 Weighted Avg. Shares Outstanding 37.9 37.8 Tax Rate 37.8% 37.9% Fully Diluted Earnings Per Share Meet or exceed $0.54 Meet or exceed $2.10 *T CEO Comments Joseph M. Kampf, President and Chief Executive Officer of Anteon, said, "Anteon had a very strong third quarter. In almost every case, our three- and nine-month financial metrics set new record highs. As a result of this strong trend line, and our confidence in Q4 performance, we are again raising our guidance for 2005. Anteon's full year 2005 revenue guidance is now between $1.486 - $1.501 billion and full year fully diluted earnings per share is now expected to meet or exceed $2.10. I am also pleased with the strength of our qualified pipeline and continued opportunity for new business growth." Conference Call Anteon has scheduled a conference call for 10:00 a.m. Eastern Daylight Time TODAY, October 26, 2005, 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 26, 2005, until midnight November 2, 2005. To access the replay, call 877-519-4471 U.S. or 973-341-3080 international. The confirmation code for access to the replay is 6568554. A replay will also 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 company serving the U.S. Federal government and international customers. Anteon designs, integrates, maintains, and upgrades state-of-the-art systems for national defense, intelligence, homeland security, and other high priority government missions. Anteon provides numerous government clients with the systems integration, strategy and program management, systems engineering, operations services, and simulation and training skills necessary to manage the development and operations of their mission critical systems. The Company was founded in 1976 and currently employs over 9,500 employees in more than 100 offices worldwide. Anteon consistently ranks among the top information technology integrators based on independent surveys, and has been named to the Forbes List of the 400 Best Big Companies in 2005, earning distinction on the Forbes Platinum List. Anteon is included in the Standard & Poor's MidCap 400 Index. For more information, visit www.anteon.com. 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 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. -0- *T ANTEON INTERNATIONAL CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended September 30, 2005 and 2004 ($ in thousands, except EPS) Three Three Months Months Ended Ended September September Percentage 2005 2004 Change --------- --------- Revenues $382,050 $325,581 17.3% Costs of revenues 327,381 280,898 General and administrative expenses 18,615 16,473 Amortization of intangible assets 685 542 --------- --------- Operating income 35,369 27,668 27.8% Operating margin 9.3% 8.5% Other income 102 939 Interest expense 2,214 1,831 Minority interest (5) 9 --------- --------- Pretax income 33,252 26,785 24.1% Income tax 12,290 9,936 --------- --------- Net income $ 20,962 $ 16,849 24.4% ========= ========= After tax margin 5.5% 5.2% Cash flow from operations 14,852 17,784 (16.5%) Tax rate 37.0% 37.1% Basic shares 37,107 35,817 Diluted shares 37,857 37,253 EPS, basic $ 0.56 $ 0.47 19.1% EPS, diluted $ 0.55 $ 0.45 22.2% UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS for the nine months ended September 30, 2005 and 2004 ($ in thousands, except EPS) Nine Nine Months Months Ended Ended September September Percentage 2005 2004 Change ----------- --------- ---------- Revenues $1,100,627 $917,892 19.9% Costs of revenues 940,588 791,152 General and administrative expenses 57,355 48,720 Amortization of intangible assets 2,057 1,901 ----------- --------- Operating Income 100,627 76,119 32.2% Operating margin 9.1% 8.3% Other income 1,009 943 Interest expense 6,534 5,575 Minority interest (58) (26) ----------- --------- Pretax income 95,044 71,461 33.0% Income tax 36,084 26,613 ----------- --------- Net income $ 58,960 $ 44,848 31.5% =========== ========= After tax margin 5.4% 4.9% Cash flow from operations 86,429 48,246 79.1% Tax rate 38.0% 37.2% Basic shares 36,682 35,630 Diluted shares 37,884 37,201 EPS, basic $ 1.61 $ 1.26 27.8% EPS, diluted $ 1.56 $ 1.21 28.9% ANTEON INTERNATIONAL CORPORATION UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS ($ in thousands) As of September As of 30, 2005 December (unaudited) 31, 2004 $Change ----------- --------- -------- ASSETS Cash and cash equivalents $ 32,612 $ 4,103 $28,509 Short term investments 42,525 -- 42,525 Accounts receivable, net 317,881 317,296 585 Other current assets 15,462 17,205 (1,743) Property and equipment, net 14,495 12,920 1,575 Goodwill 241,965 242,066 (101) Intangible and other assets, net 17,631 19,836 (2,205) ----------- --------- -------- Total assets $ 682,571 $613,426 $69,145 =========== ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable/accrued expenses and other current liabilities $ 168,261 $154,031 $14,230 Indebtedness 163,350 184,388 (21,038) Deferred revenue 14,984 13,764 1,220 Other long-term liabilities 14,040 13,685 355 ----------- --------- -------- Total liabilities 360,635 365,868 (5,233) Minority interest in subsidiaries 340 282 58 Stockholders' equity 321,596 247,276 74,320 ----------- --------- -------- Total liabilities and stockholders' equity $ 682,571 $613,426 $69,145 =========== ========= ======== ANTEON INTERNATIONAL CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS ($ in thousands) For the nine months ended September 30, 2005 2004 -------- -------- OPERATING ACTIVITIES: Net income $58,960 $44,848 Adjustments to reconcile net income to net cash provided by operating activities: Gain on settlement of subordinated notes payable -- (1,327) Gain on reversal of an acquisition reserve (900) -- Depreciation and amortization on property and equipment, intangibles and financing fees 5,662 5,368 Restricted stock compensation 28 -- Deferred income taxes 1,475 343 Minority interest in earnings of subsidiaries 58 26 Changes in assets and liabilities 21,146 (1,012) -------- -------- Net Cash Provided By Operating Activities 86,429 48,246 -------- -------- INVESTING ACTIVITIES: Purchases of property, equipment and other assets (4,674) (2,846) Purchases of short term investments (71,025) -- Proceeds from short term investments 28,500 -- Costs of acquisitions, net of cash acquired -- (43,295) Other 101 -- -------- -------- Net Cash Used For Investing Activities (47,098) (46,141) -------- -------- FINANCING ACTIVITIES Principal payment on subordinated notes payable -- (1,350) Principal payments on Term Loan B (1,238) (1,125) Proceeds from Term Loan B -- 16,125 Deferred financing fees -- (294) Net proceeds (payments)on revolving credit facility (19,800) (4,400) Redemption of senior subordinated notes payable -- (1,876) Principal payment under capital lease obligations (166) (240) Proceeds from issuance of common stock, net of expense 10,382 3,614 -------- -------- Net Cash Provided/ (Used For) Financing Activities (10,822) 10,454 -------- -------- CASH AND CASH EQUIVALENTS: Net Increase in cash and cash equivalents 28,509 12,559 Cash and cash equivalents, beginning of period 4,103 2,088 -------- -------- Cash and cash equivalents, end of period $32,612 $14,647 -------- -------- RECONCILIATION BETWEEN TOTAL REVENUE GROWTH AND ORGANIC REVENUE GROWTH ($ in thousands) Q1 Q2 Q3 Q3 YTD --------- --------- --------- ----------- 2004 Revenue $288,150 $304,161 $325,581 $ 917,892 2005 Revenue 349,982 368,595 382,050 1,100,627 --------- --------- --------- ----------- Total Revenue Growth over 2004 21.5% 21.2% 17.3% 19.9% Less: 2004 IMSI and STI Revenues -- -- (7,791) (7,791) --------- --------- --------- ----------- Adjusted 2004 Revenues (a) 288,150 304,161 317,790 910,101 --------- --------- --------- ----------- 2005 Revenue 349,982 368,595 382,050 1,100,627 Less: 2005 IMSI and STI Revenues (12,430) (13,273) (14,135) (39,838) --------- --------- --------- ----------- Adjusted Total 2004 Revenue (b) $337,552 $355,322 $367,915 $1,060,789 ========= ========= ========= =========== Organic Revenue Growth over 2004 (b-a)/a 17.1% 16.8% 15.8% 16.6% (1) The Company defines organic growth as the increase in revenues excluding the revenues associated with acquisition, divestitures and closures of businesses in comparable periods. The Company believes that organic growth is a useful supplemental measure to revenue. The Company uses organic growth as part of its evaluation of core operating results and underlying trends. RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW (in thousands) Free Cash Flow Q1 2005 Q2 2005 Q3 2005 Q3 YTD ---------------------------------- -------- -------- -------- -------- Cash flow from operations $51,713 $19,864 $14,852 $86,429 Less: capital expenditures (1,538) (1,431) (1,705) (4,674) -------- -------- -------- -------- Free cash flow (2) $50,175 $18,433 $13,147 $81,755 ======== ======== ======== -------- (2) The Company believes that free cash flow is a useful supplemental measure of cash available to the Company after the payments for the capital expenditures. NET DEBT RECONCILIATION ($ in thousands) Net Debt Q3 2005 Q2 2005 Q1 2005 ----------------------------------------- -------- --------- --------- Revolving credit facility $ -- $ -- $ -- Term Loan B 163,350 163,763 164,175 -------- --------- --------- Total: 163,350 163,763 164,175 Less: cash (32,612) (30,125) (35,145) Short term investments (42,525) (30,000) -- -------- --------- --------- Net debt $88,213 $103,638 $129,030 ======== ========= ========= (3) The Company believes that net debt is a useful measure of actual indebtedness of the Company. *T