Vangent, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - Vangent, Inc.	c98579e8vk.htm

Exhibit 99.1

VANGENT, INC.
FOURTH QUARTER AND FULL YEAR 2009 FINANCIAL RESULTS

KEY HIGHLIGHTS

	•		Financial results reflect planned disposition of Latin American business; Latin American financial results are reflected separately as Discontinued Operations

	•		Company Record with $1.2 Billion in New Awards, Add-Ons and Extensions in 2009

	•		Fourth Quarter 2009 Revenue Grows 14% to $172.5 Million

	•		Fourth Quarter 2009 Government Group Revenue Up 14% to $152.4 Million

	•		Days Sales Outstanding Down to 57 Days at End of 2009

Total Revenue

•

Fourth Quarter Ended December 31, 2009:

	•		Total revenue from continuing operations for the fourth quarter totaled $172.5 million, an increase of 14% percent or $21.2 million over the same period last year.

	•		Improvement in total revenue primarily reflects higher revenue from Vangent’s Government Group which increased 14% percent to $152.4 million in the fourth quarter of 2009.

•

Full Year 2009:

	•		Total revenue from continuing operations for the full year ended December 31, 2009 was $584 million, an increase of $52 million or 10% percent over the same period last year.

	•		Full year 2009 revenue growth primarily attributable to a $57.4 million or 13% increase in Government Group revenue.

Adjusted EBITDA

•

Fourth Quarter Ended December 31, 2009:

•

Adjusted EBITDA totaled $19.4 million in the fourth quarter ended December 31, 2009 compared to $19.9 million in the comparable period last year.

•

Full Year 2009:

•

Adjusted EBITDA totaled $70.1 million in the year ended December 31, 2009 compared to $71.1 million in the full year 2008.

Discontinued Operations

•

Fourth Quarter Ended December 31, 2009:

	•		Vangent completed evaluation of its international business strategy and made the decision to sell its business operations in Latin America largely based on desire to focus resources on its core government business.

	•		As a result, the Company’s fourth quarter and end-of-year 2009 financial results have been recast to separately reflect that business as a discontinued operation.

•

Full Year 2009:

•

Revenue from discontinued operations for the year ended December 31, 2009 totaled $22.8 million compared with $26.2 million in the full year 2008, a reduction of $3.4 million, or 13%.

Balance Sheet and Cash Position

	•		Vangent ended the fourth quarter of 2009 with a DSO of 57 days, down from 73 days at the end of 2008.

	•		Total debt at year end December 31, 2009 was $420.4 million.

	•		Cash and cash equivalents totaled $44.6 million and Vangent had $49.8 million of unused revolving credit capacity available to the Company at year end December 31, 2009.

	•		Cash flow from continuing operations totaled $49.4 million.

	•		Capital expenditures totaled $10.7 million at year end 2009, a slight increase over capital expenditures of $9.1 million at year end 2008.

New Business

	•		For 2009, Vangent booked $1.2 billion in new awards, add-ons and extensions to existing contracts — a Company record.

	•		Vangent’s total contract backlog was $2.1 billion at the end of 2009 and the Company’s current pipeline of new business opportunities totaled $5.8 billion.

Vangent, Inc.
Condensed Consolidated Statements of Operations
(in thousands)


	Three Months Ended						Years Ended
	December 31,						December 31,
	2009			2008			2009			2008
Revenue	$	172,544		$	151,315		$	583,986		$	532,049
Cost of revenue		146,085			127,821			490,500			440,495

Gross profit		26,459			23,494			93,486			91,554
General and administrative expenses		10,874			10,201			40,387			46,440
Selling and marketing expenses		4,684			3,540			18,003			14,930
Impairment of goodwill and intangible assets		11,227			13,766			11,227			13,766

Operating income (loss)		(326	)		(4,013	)		23,869			16,418
Interest expense and other, net		8,903			8,948			34,289			35,244

Loss from continuing operations before income taxes		(9,229	)		(12,961	)		(10,420	)		(18,826	)
Provision (benefit) for income taxes		1,727			(563	)		6,794			4,939
Loss from discontinued operations (net of tax)		(12,636	)		(2,685	)		(16,794	)		(2,742	)

Net loss	$	(23,592	)	$	(15,083	)	$	(34,008	)	$	(26,507	)


Statements of Operations Data as a Percent of Revenue

Revenue		100.0	%		100.0	%		100.0	%		100.0	%
Cost of revenue		84.7			84.5			84.0			82.8

Gross profit margin		15.3			15.5			16.0			17.2
General and administrative expenses		6.3			6.8			6.9			8.7
Selling and marketing expenses		2.7			2.3			3.1			2.8
Impairment of goodwill and intangible assets		6.5			9.1			1.9			2.6

Operating income margin		(0.2	)		(2.7	)		4.1			3.1
Interest expense and other, net		5.1			5.9			5.9			6.6

Loss before income taxes		(5.3	)		(8.6	)		(1.8	)		(3.5	)
Provision (benefit) for income taxes		1.1			(0.3	)		1.1			1.0
Loss from discontinued operations (net of tax)		(7.3	)		(1.7	)		(2.9	)		(0.5	)

Net loss		(13.7	)%		(10.0	)%		(5.8	)%		(5.0	)%

Vangent, Inc.
Condensed Consolidated Balance Sheets
(in thousands)


	December 31,
	2009		2008
Assets
Current assets:
Cash and cash equivalents	$	44,638	$	19,446
Trade receivables, net		109,846		123,382
Prepaid expenses and other assets		10,353		10,733
Assets of discontinued operations		15,036		9,844

Total current assets		179,873		163,405

Property and equipment, net		25,124		25,715
Intangible assets, net		151,860		175,259
Goodwill		268,212		278,231
Deferred debt financing costs and other		8,433		10,620
Assets of discontinued operations		6,727		13,044

Total assets	$	640,229	$	666,274


Liabilities and Stockholder’s Equity
Current liabilities:
Current portion of long-term debt	$	13,534	$	—
Accounts payable and accrued liabilities		64,849		70,737
Accrued interest payable		8,186		8,304
Deferred tax liability		5,628		3,962
Deferred revenue		3,976		2,582
Liabilities of discontinued operations		7,521		2,548

Total current liabilities		103,694		88,133

Long-term debt, net of current portion		406,832		420,366
Other long-term liabilities		7,194		7,879
Deferred tax liability		12,144		5,259
Liabilities of discontinued operations		502		—

Total liabilities		530,366		521,637


Stockholder’s equity		109,863		144,637

Total liabilities and stockholder’s equity	$	640,229	$	666,274

Vangent, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)


	Years Ended
	December 31,
	2009			2008
Cash flows from operating activities
Net loss	$	(34,008	)	$	(26,507	)
Loss from discontinued operations		(16,794	)		(2,742	)

Loss from continuing operations		(17,214	)		(23,765	)
Goodwill impairment charges		11,227			13,766
Depreciation and amortization		31,883			33,558
Equity-based compensation expense		1,048			1,053
Deferred income taxes		5,822			3,806
Net changes in operating assets and liabilities:
Trade receivables		14,401			(18,942	)
Prepaid expenses and other assets		5,012			3,538
Accounts payable and other liabilities		(2,751	)		5,396

Continuing operations, net		49,428			18,410
Discontinued operations, net		(9,041	)		—

Net cash provided by operating activities		40,387			18,410


Cash flows from investing activities
Acquisition, net of cash acquired		—			(3,892	)
Capital expenditures		(10,682	)		(9,053	)
Discontinued operations, net		(5,101	)		(585	)

Net cash used in investing activities		(15,783	)		(13,530	)


Cash flows from financing activities
Repayment of senior secured term loan		—			(7,834	)
Investment from parent and other		(188	)		21
Capital lease payments		—			(275	)

Net cash used in financing activities		(188	)		(8,088	)

Effect of exchange rate changes on cash and cash equivalents		34			(1,751	)

Net increase (decrease) in cash and cash equivalents		24,450			(4,959	)
Cash and cash equivalents, beginning of year		21,134			26,093

Cash and cash equivalents, end of year
Continuing operations	$	44,638		$	19,446

Discontinued operations	$	946		$	1,688

Vangent, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(in thousands)
(unaudited)


	Three Months Ended						Years Ended
	December 31,						December 31,
	2009			2008			2009			2008
Net loss	$	(23,592	)	$	(15,083	)	$	(34,008	)	$	(26,507	)
Provision for income taxes		1,727			(563	)		6,794			4,939
Interest expense, net of interest income		8,895			8,968			34,281			35,243
Depreciation and amortization		8,029			8,120			31,883			33,558

EBITDA (a)		(4,941	)		1,442			38,950			47,233

Discontinued operations		12,636			2,685			16,794			2,742
Impairment charges for goodwill and intangibles		11,227			13,766			11,227			13,766
Equity-based compensation expense		272			213			1,048			1,053
Net transition and contract settlement costs		—			1,051			—			4,514
Management fee and expenses		315			292			1,289			1,164
Other		(83	)		474			810			588

Adjusted EBITDA (b)	$	19,426		$	19,923		$	70,118		$	71,060


(a)		EBITDA is defined as net income (loss) before interest, income taxes, and depreciation and amortization. Management uses this measure as an indicator of operating performance. EBITDA is not an indicator of financial performance under generally accepted accounting principles (“GAAP”) or a measure of liquidity and may not be comparable to similarly captioned information reported by other companies. In addition, it should not be considered as an alternative to, or more meaningful than, income (loss) before income taxes, cash flows from operating activities, or other traditional indicators of operating performance.

(b)		Adjusted EBITDA is a financial measure used to calculate the consolidated leverage ratio, one of the more restrictive financial covenants under the senior secured credit facility. Adjusted EBITDA excludes (i) discontinued operations, (ii) impairment charges for goodwill and intangibles, (iii) equity-based compensation expense, (iv) net transition and contract settlement costs, (v) management fee and expenses paid to Veritas Capital, and (vi) and other items included in the debt agreement.

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Vangent, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - March 30, 2010

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Vangent, Inc. Reports