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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
July 30, 2003
Date of Report (Date of earliest event reported)
MANTECH INTERNATIONAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 000-49604 22-1852179
------------------ ---------------- ------------
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
12015 Lee Jackson Highway, Fairfax, VA 22033
(Address of principal executive offices)
(703) 218-6000
(Registrant's telephone number, including area code)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits. The following exhibit is filed with this report.
99.1 Press Release dated July 30, 2003, announcing ManTech International
Corporation's second quarter financial results for fiscal year 2003 as well as
its earnings guidance for the third quarter of fiscal year 2003 and full fiscal
year 2003.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On July 30, 2003, ManTech International Corporation issued an earnings release
announcing its financial results for the second quarter ended June 30, 2003 as
well as its earnings guidance for the third quarter of fiscal year 2003 and full
fiscal year 2003. A copy of the earnings release is furnished as Exhibit 99.1 to
this Current Report.
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.
MANTECH INTERNATIONAL CORPORATION
Date: July 30, 2003 /s/ Ronald R. Spoehel
-------------------------------------------
Name: Ronald R. Spoehel
Title: Executive Vice President,
Chief Financial Officer and Treasurer
Peter LaMontagne
ManTech International Corporation Senior Corporate Vice President
12015 Lee Jackson Highway 703/218-8200
Fairfax, VA 22033-3300 703/218-8296 (fax)
www.mantech.com Corporatecommunications@mantech.com
FOR IMMEDIATE RELEASE
ManTech Reports Record Second Quarter Results and Final Integration of
Acquisitions
FAIRFAX, Virginia, July 30, 2003 - ManTech International Corporation (Nasdaq:
MANT), a leading provider of information technology and technical services
solutions to the Department of Defense and the intelligence community, today
announced record operating results for the second quarter and increased earnings
and revenue guidance for the full year 2003. ManTech's revenue for the second
quarter 2003 was $177.1 million, an increase of 48.6% over the same period in
2002, and fully diluted Earnings Per Share (EPS) rose 55.6% to $0.28. The
company also announced the completion of the integration of its recently
acquired companies and the consolidation of operations across the enterprise.
"ManTech's strong second quarter results demonstrate the value of our unified
business platform--we have completed the integration of all four acquisitions
and carried out additional consolidation among these acquisitions and the other
ManTech operations," stated George J. Pedersen, Chairman of the Board, CEO and
President of ManTech International Corporation. "The Company is now optimized to
take advantage of strong budget and spending trends on priority national
security programs--we see continued strong top line growth and solid margins.
ManTech's success in this quarter affirms our strategy to focus our business
development and acquisition efforts on high priority work for the national
security community, where we continue to have excellent revenue visibility. We
expect favorable spending and budget trends to continue to sustain our growth
well into 2005."
ManTech International Corporation reported revenue for the quarter ending June
30, 2003 of $177.1 million, up from $119.2 million for the same period in 2002,
an increase of 48.6%. The results reflect an organic growth rate of 13.0% over
the $156.7 million in pro forma revenue for the comparable period in 2002 which
includes the revenue for each period of the companies acquired by ManTech since
that time. This revenue growth was primarily attributable to new business
supporting national security programs for the intelligence community and
Department of Defense.
Operating income for the quarter was $15.3 million, an increase of 64.1% over
2002. Operating margin for the quarter expanded to 8.6% compared with 7.8% for
the same period in 2002. The margin expansion in the quarter is attributable
both to higher margin
ManTech Reports Record Second Quarter Results and Final Integration of
Acquisitions July 30, 2003 Page 8 contributions from acquired companies and to
operating efficiencies. Net income for the quarter rose 82.6% to $8.9 million
from $4.9 million in 2002. Fully diluted EPS were $0.28, up from $0.18 in 2002.
ManTech also announced the completion of the integration of the four companies
it had acquired in the past year, as well as the consolidation of various
operations across the enterprise. The National Security Solutions Group (NSSG),
the primary group supporting intelligence community customers, consolidated six
business units into three core operations focusing on mission critical systems
development, security, and intelligence operations. ManTech also announced the
formation of the Defense Systems Group (DSG), a consolidation of DoD-related
operations from NSSG and the Systems Engineering Group, to focus on Department
of Defense Armed Services customers. The company's Information Technology Group
will continue to focus on enterprise support services for federal agencies.
ManTech reported recent contract awards and contract expansions with an
estimated value in excess of $250 million, including previously unannounced
classified contract awards and existing contract expansions totaling
approximately $150 million. Demonstrating the capabilities of the Company in
both expansion of existing customer relationships and in leveraging its enhanced
market position provided through its acquisitions, ManTech highlighted its
second quarter contract announcements which included the $88.6 million contract
award in support of State Department IT modernization efforts and the $6.8
million Air Force award that resulted from a joint business development effort
by an established ManTech operation and a newly acquired company.
ManTech reported backlog of $1.5 billion as of June 30, 2003, compared with $1.1
billion on the same date in 2002. Funded backlog as of June 30, 2003 was $342.2
million, an increase of 69.3% over the same date in 2002. GSA schedule contract
value at June 30, 2003 was estimated at $1.1 billion, up from $939.2 million on
the same date in 2002. At the end of the second quarter, ManTech had
approximately $700 million in proposals under evaluation and a pipeline of
qualified opportunities exceeding $4.5 billion.
ManTech derived 90.1% of its revenue during the quarter ended June 30, 2003 from
prime contracts, and approximately 39% of its revenue for the period came from
work under GSA schedule contracts. Revenue from the Department of Defense and
the intelligence community accounted for 88.7% of revenue for the second quarter
ending June 30, 2003. Revenue from work in secure systems and information
technology solutions increased to 81.7% of revenue in the second quarter 2003
from 74.7% in 2002.
ManTech increased 2003 fiscal year guidance to reflect strong performance in the
first half of the year and positive spending trends in its core intelligence
community and DoD markets:
3rd Quarter 2003 Full Year 2003
---------------------------------- ----------------------------------
Revenue $180 million - $184 million $695 million - $705 million
Diluted Earnings Per Share $0.28 - $0.29 $1.07 - $1.09
Weighted Average Common 32,235,633 32,133,084
Shares Outstanding
Conference Call
ManTech has scheduled a conference call for 5:00 p.m., EDT July 30, 2003, during
which executive management will discuss second quarter results and respond to
questions. Interested parties may access the call by dialing (800) 759-3578 or
(706) 679-7301. 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 time of the call.
A replay of the call will also be available beginning at 9:00 p.m. on July 30,
2003, and will remain available through midnight on August 6, 2003. To access
the replay, call 1-800-642-1687 or 706-645-9291. The confirmation code for the
replay is 1578232. 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 delivers a
broad array of information technology and technical services solutions to U.S.
federal government customers, focusing primarily on critical national defense
programs for the intelligence community and Department of Defense. ManTech
designs, develops, procures, implements, operates, tests and maintains
mission-critical, enterprise information technology and communication systems
and infrastructures for federal government customers in the United States and 34
countries worldwide. Additional information can be found at www.mantech.com or
by calling 703-218-8200.
This press release contains forward-looking statements that involve substantial
risks and uncertainties. You can identify these statements by forward-looking
words such as "may," "will," "expect," "intend," "anticipate," "believe,"
"estimate," "continue" and other similar words. You should read statements that
contain these words carefully because they discuss the Company's future
expectations, make projections of the company's future results of operations or
financial condition or state other forward-looking information. Examples of such
forward-looking statements include the company's expected future earnings as
suggested by backlog and GSA schedule value estimates; updated guidance
projections; and the company's belief that there will be increased defense and
intelligence spending in the future. Such statements are subject to factors that
could cause actual results to differ materially from anticipated results. The
factors that could cause actual results to differ materially from those
anticipated include, but are not limited to the following: failure of government
customers to exercise options under contracts; funding decisions of U.S.
Government projects; government contract procurement (such as bid protest) and
termination risks; competitive factors such as pricing pressures and/or
competition to hire and retain employees; the company's ability to identify,
execute or effectively integrate future acquisitions; the company's ability to
successfully raise additional capital; changes to the tax laws relating to the
treatment and deductibility of goodwill or any change in tax rates; additional
costs related to compliance with the Sarbanes-Oxley Act of 2002, any revised
NASDAQ listing standards, SEC rule changes or other corporate governance issues;
failure to experience continued positive defense and intelligence budget and
spending trends; material changes in laws or regulations applicable to the
company's businesses and other risk factors discussed in the company's filings
with the Securities and Exchange Commission. The statements in this press
release are made as of July 30, 2003, and the company undertakes no obligation
to update any of the forward looking statements made herein, whether as a result
of new information, future events, changes in expectations or otherwise.
Financials Follow
MANTECH INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
Three months ended June 30, Six months ended June 30,
-------------------------- -------------------------
REVENUES $ 177,076 $ 119,168 $ 325,199 $ 227,302
COST OF SERVICES 144,350 97,280 264,132 185,890
------------ ------------ ----------- -----------
GROSS PROFIT 32,726 21,888 61,067 41,412
------------ ------------ ----------- -----------
RETURN ON SALES % 18.5% 18.4% 18.8% 18.2%
COSTS AND EXPENSES:
General and administrative 16,195 12,057 30,934 23,490
Depreciation and amortization 1,242 516 2,177 1,004
------------ ------------ ----------- -----------
Total costs and expenses 17,437 12,573 33,111 24,494
------------ ------------ ----------- -----------
INCOME FROM OPERATIONS 15,289 9,315 27,956 16,918
RETURN ON SALES % 8.6% 7.8% 8.6% 7.4%
Interest expense (income) 687 (14) 1,021 203
Other (income) expense (352) (225) 270 (522)
------------ ------------ ----------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES AND 14,954 9,554 26,665 17,237
MINORITY INTEREST
Provision for income taxes* (6,075) (3,896) (10,823) (7,004)
Minority interest (2) (1) (3) (3)
------------ ------------ ----------- -----------
INCOME FROM CONTINUING OPERATIONS 8,877 5,657 15,839 10,230
Loss on disposal of discontinued operations--net -- (795) -- (795)
------------ ------------ ----------- -----------
NET INCOME $ 8,877 $ 4,862 $ 15,839 $ 9,435
============ ============ =========== ===========
BASIC EARNINGS (LOSS) PER SHARE:
Income from continuing operations $ 0.28 $ 0.21 $ 0.50 $ 0.42
Loss from discontinued operations -- (0.03) -- (0.03)
------------ ------------ ----------- -----------
$ 0.28 $ 0.18 $ 0.50 $ 0.39
============ ============ =========== ===========
============ ============ =========== ===========
Weighted average common shares outstanding 31,941,783 26,373,719 31,928,870 24,553,641
============ ============ =========== ===========
DILUTED EARNINGS (LOSS) PER SHARE:
Income from continuing operations $ 0.28 $ 0.21 $ 0.50 $ 0.41
Loss from discontinued operations -- (0.03) -- (0.03)
------------ ------------ ----------- -----------
$ 0.28 $ 0.18 $ 0.50 $ 0.38
============ ============ =========== ===========
Weighted average common shares outstanding 31,994,687 26,697,911 31,964,829 24,838,112
============ ============ =========== ===========
*NOTE: ManTech reported cash tax savings related to the four recent acquisitions
of $1.1 million during the second quarter of 2003 due to the deductibility of
$153.4 million of goodwill and related intangibles. The goodwill and related
intangibles are deductible because ManTech and the shareholders of the acquired
companies made a joint section 338(h) (10) election under the federal Tax Code.
MANTECH INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Six months ended June
30,
-------------------------
2003 2002
----------- -----------
(unaudited (unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 15,839 $ 9,435
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Equity in losses (earnings) of affiliates 781 (483)
Loss from discontinued operations -- 795
Deferred income taxes (1,928) (2,995)
Minority interest in income of consolidated subsidiaries 3 3
Loss on disposals of property and equipment 11 8
Depreciation and amortization 3,107 1,749
Change in assets and liabilities--net of effects from acquired and discontinued
businesses:
Increase in receivables (5,752) (11,786)
(Increase) decrease in prepaid expenses and other (1,643) 2,374
Decrease in accounts payable and accrued expenses (708) (2,439)
(Decrease) increase in accrued salaries and related expenses (3,159) 467
Increase in billings in excess of revenue earned 1,988 306
Increase (decrease) in other long-term liabilities 86 (51)
Increase in accrued retirement 403 540
---------- ----------
Net cash provided by (used in) operating activities of continuing operations 9,028 (2,077)
---------- ----------
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property and equipment
Investment in Integrated Data Systems, net of cash acquired of $2,820 (63,139) --
Investment in MSM Security Services, Inc., net of cash acquired of $20 (5,093) --
Investment in property and equipment (1,884) (1,510)
Investment in capitalized software products (1,015) (322)
Investment in CTX Corporation (37) --
Investment in Aegis Research Corporation (10) --
Dividends from MASI U.K. -- 286
Proceeds from notes receivable -- 250
Dividends from GSE Preferred Stock -- 75
---------- ----------
Net cash used in investing activities of continuing operations (71,177) (1,219)
---------- ----------
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of not-to-compete financings (1,000) --
Proceeds from exercise of stock options 160 268
Proceeds from common stock issuance--net of offering expenses -- 110,157
Net decrease in borrowings under lines of credit -- (32,300)
Repayment of subordinated debt -- (8,000)
Repayment of term loan -- (5,908)
---------- ----------
Net cash (used in) provided by financing activities of continuing operations (840) 64,217
---------- ----------
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (11) (135)
NET CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS 2,317 (2,772)
---------- ----------
---------- ----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (60,683) 58,014
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 81,096 26,902
---------- ----------
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 20,413 $ 84,916
========== ==========
MANTECH INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
June 30, December 31,
2003 2002
--------- ----------
(unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 20,413 $ 81,096
Cash in escrow 1,485 --
Receivables--net 151,740 133,122
Prepaid expenses and other 10,992 8,955
Assets held for sale 819 6,738
----------- -------------
Total current assets 185,449 229,911
Property and equipment--net 11,258 9,131
Goodwill 146,233 94,003
Other intangibles 17,942 10,231
Investments 10,306 7,631
Employee supplemental savings plan assets 8,461 8,068
Other assets 5,906 5,413
----------- ------------
TOTAL ASSETS $ 385,555 $ 364,388
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of debt $ 76 $ 1,000
Accounts payable and accrued expenses 36,082 32,905
Accrued salaries and related expenses 24,822 23,619
Deferred income taxes 10,146 11,888
Billings in excess of revenue earned 5,138 2,700
Liabilities held for sale 643 5,099
---------- ------------
Total current liabilities 76,907 77,211
Debt--net of current portion 25,223 25,000
Accrued retirement 9,958 9,555
Other long-term liabilities 5,444 1,838
Deferred income taxes 5,390 4,744
Minority interest 45 42
---------- ------------
TOTAL LIABILITIES 122,967 118,390
---------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, Class A 164 163
Common stock, Class B 156 156
Additional paid in capital 207,956 206,861
Retained earnings 56,682 40,843
Accumulated other comprehensive loss (1,827) (2,025)
Unearned ESOP shares (543) --
Deferred compensation 640 640
Shares held in grantor trust (640) (640)
---------- ------------
TOTAL STOCKHOLDERS' EQUITY 262,588 245,998
---------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 385,555 $ 364,388
---------- ------------
MANTECH INTERNATIONAL CORPORATION
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION,
AND AMORTIZATION (EBITDA)
(Dollars in Thousands)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- -----------------------------
2003 2002 2003 2002
------------ ------------- ------------ -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net Income 8,877 4,862 15,839 9,435
Plus: Loss from Discontinued Operations - 795 - 795
------------ ------------- ------------ -------------
Income from Continuing Operations 8,877 5,657 15,839 10,230
Plus: Interest Expense (Income) 687 (14) 1,021 203
Income Taxes 6,075 3,896 10,823 7,004
Depreciation and Amortization 1,695 885 3,107 1,749
Other (Income) Expense (352) (225) 270 (522)
Minority Interest 2 1 3 3
------------ ------------- ------------ -------------
EBITDA 16,984 10,200 31,063 18,667
------------ ------------- ------------ -------------
EBITDA ROS% 9.6% 8.6% 9.6% 8.2%
NOTE: EBITDA is defined as net income plus the loss from discontinued
operations, interest expense, income taxes, depreciation and amortization, other
expense, minority interest, and minus interest income and other income.
EBITDA as calculated by us may be calculated differently than EBITDA for other
companies. We have provided EBITDA because we believe it is a commonly used
measure of financial performance in comparable companies and is provided to help
investors evaluate companies on a consistent basis, as well as to enhance an
understanding of our operating results. EBITDA should not be construed as either
an alternative to net income as an indicator of our operating performance or as
an alternative to cash flows as a measure of liquidity.