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8-K - FORM 8-K - MANTECH INTERNATIONAL CORPd8k.htm
EX-99.2 - EXHIBIT 99.2 - MANTECH INTERNATIONAL CORPdex992.htm

EXHIBIT 99.1

MANTECH INTERNATIONAL CORPORATION

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

On January 15, 2010, ManTech International Corporation (ManTech) completed the acquisition of all outstanding equity securities of Sensor Technologies Inc. (STI) for approximately $242.0 million in cash. The STI acquisition has been accounted for as a business combination using the acquisition method of accounting. Under the acquisition method of accounting, the initial purchase price was allocated to STI underlying assets and liabilities based on their fair values at the date of the acquisition. The excess of the purchase price over the underlying assets and liabilities was recorded as goodwill. The STI acquisition is already reflected in the condensed consolidated balance sheet as of March 31, 2010 included in our Quarterly Report on Form 10-Q for the three months ended March 31, 2010.

The unaudited pro forma condensed consolidated statements of income included in this report for the twelve months ended December 31, 2009 and the three months ended March 31, 2010 have been prepared by management as if the STI acquisition had occurred on January 1, 2009.

The unaudited pro forma adjustments are based on management’s preliminary estimates of the value of the tangible and intangible assets and liabilities acquired. As a result, the final adjustments may differ from those presented in this unaudited pro forma consolidated financial information. A change in the unaudited pro forma adjustments of the purchase price for the acquisition would primarily result in a reallocation affecting the value assigned to intangible assets and goodwill. The income statement effect of these changes would depend on the nature and amount of the assets or liabilities adjusted.

The accompanying unaudited pro forma condensed consolidated statements of income have been prepared by management in accordance with rules prescribed by Article 11 of Regulation S-X. This pro forma consolidated financial information is provided for illustrative purposes only and is not intended to represent what the actual consolidated results of operations would have been had the acquisition occurred on the date assumed, nor are they necessarily indicative of future consolidated results of operations. No effect has been given for operational efficiencies that may have been achieved if the acquisition had occurred on January 1, 2009.

This information should be read in conjunction with ManTech’s historical financial statements and the accompanying notes in both our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and our Quarterly Report on Form 10-Q for the three months ended March 31, 2010, and with STI’s historical financial statements and the accompanying notes that are included in this Current Report on Form 8-K.


MANTECH INTERNATIONAL CORPORATION

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

 

     Twelve months ended December 31, 2009  

(In Thousands Except Per Share Amounts)

   ManTech
International
Corporation
    Sensor
Technologies
Inc.
    Acquisition
Adjustments
(Notes below)
        Pro forma
Combined
 

REVENUES

   $ 2,020,334      $ 336,810      $ (75   (a)   $ 2,357,069   

Cost of Services

     1,668,763        306,167        (75   (a)     1,974,855   

General and administrative expenses

     172,492        2,226        12,465      (b)     187,183   
                                  

OPERATING INCOME

     179,079        28,417        (12,465       195,031   

Interest expense

     (1,141     (3     (4,135   (c)     (5,279

Interest income

     215        57        —            272   

Other income (expense), net

     355        (6     —            349   
                                  

INCOME FROM CONTINUING OPERATIONS

     178,508        28,465        (16,600       190,373   

BEFORE INCOME TAXES

          

Provision for income tax

     (66,744     —          (4,520   (d)     (71,264
                                  

INCOME FROM CONTINUING OPERATIONS

   $ 111,764      $ 28,465      $ (21,120     $ 119,109   
                                  

BASIC EARNINGS (LOSS) PER SHARE:

          

Basic earnings per share

   $ 3.13            $ 3.34   
                      

Weighted average common shares outstanding

     35,687              35,687   
                      

DILUTED EARNINGS (LOSS) PER SHARE:

          

Diluted earnings per share

   $ 3.11            $ 3.31   
                      

Weighted average common shares outstanding

     35,985              35,985   
                      

 

See notes to pro forma condensed consolidated financial statements.


MANTECH INTERNATIONAL CORPORATION

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

 

     Three months ended March 31, 2010  

(In Thousands Except Per Share Amounts)

   ManTech
International
Corporation
    Sensor
Technologies
Inc.
   Acquisition
Adjustments
(Notes below)
         Pro forma
Combined
 

REVENUES

   $ 587,557      $ 17,965    $ —           $ 605,522   

Cost of Services

     499,566        16,623      —             516,189   

General and administrative expenses

     42,759        170      368      (b)      43,297   
                                  

OPERATING INCOME

     45,232        1,172      (368        46,036   

Interest expense

     (997     —        (155   (c)      (1,152

Interest income

     128        —        —             128   

Other income (expense), net

     (62     —        —             (62
                                  

INCOME FROM CONTINUING OPERATIONS

     44,301        1,172      (523        44,950   

BEFORE INCOME TAXES

            

Provision for income tax

     (16,760     —        (248   (d)      (17,008
                                  

INCOME FROM CONTINUING OPERATIONS

   $ 27,541      $ 1,172    $ (771      $ 27,942   
                                  

BASIC EARNINGS (LOSS) PER SHARE:

            

Basic earnings per share

   $ 0.76              $ 0.78   
                        

Weighted average common shares outstanding

     36,020                36,020   
                        

DILUTED EARNINGS (LOSS) PER SHARE:

            

Diluted earnings per share

   $ 0.76              $ 0.77   
                        

Weighted average common shares outstanding

     36,332                36,332   
                        

See notes to pro forma condensed consolidated financial statements.


MANTECH INTERNATIONAL CORPORATION

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

 

1. Basis of Pro Forma Presentation

The accompanying unaudited pro forma consolidated financial information has been prepared to give effect to the completed acquisition. The unaudited pro forma condensed consolidated statements of income are based on the individual statements of income of ManTech and STI and combine the results of operations of ManTech and of STI for the year ended December 31, 2009 and the three months ended March 31, 2010 as if the acquisition had occurred on January 1, 2009 for both pro forma statements of income.

The STI acquisition has been accounted for as a business combination using the acquisition method of accounting under the Financial Accounting Standard Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations. Under the acquisition method of accounting, the initial purchase price was allocated to STI underlying assets and liabilities based on their fair values at the date of the acquisition. The excess of the purchase price over the underlying assets and liabilities was recorded as goodwill. Detailed information regarding the purchase price allocation was included in the accompanying notes to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the three months ended March 31, 2010.

 

2. Pro Forma Adjustments

Pro forma adjustments are necessary to reflect the allocation of the purchase price, including adjusting assets and liabilities to fair value and recognizing intangibles, with related changes in depreciation and amortization expense, and to reflect the effects of the financing necessary to complete the acquisition.

The pro forma adjustments included in the unaudited pro forma condensed consolidated statements of income are as follows:

a) To offset the impact of work that STI subcontracted to ManTech during the periods presented in the pro forma statements of income.

b) To reflect the amortization expense relating to the identifiable intangible assets recorded as a result of the acquisition STI on January 15, 2010. Intangible assets are being amortized using the pattern of benefits method. The following table sets forth the components of intangible assets associated with the acquisition (Dollars in Thousands):

 

     Preliminary
Fair Value
   Estimated
Useful Life

Backlog

   $ 7,750    1 year

Customer Relationships

     85,200    20 years

Non-Compete Agreements

     250    4 years
         

Total Intangible Assets

   $ 93,200   
         

Backlog and customer relationships represent the underlying relationships and agreements with STI’s existing customers. Non-compete agreements represent the amount of lost business that could occur if the sellers, in the absence of non-compete agreements, were to compete with the Company.

c) To record additional interest expense had increased borrowings under our credit facility for the acquisition of STI been in place at the beginning of the earliest period presented. These adjustments are not meant to be representative of the debt level and interest expense that might have been required had the acquisition taken place at the beginning of the periods and is not indicative of past or future performance. The adjustments have been calculated by applying the


average LIBOR rate for the twelve months ended December 31, 2009 and the three months ended March 31, 2010, plus the applicable market-rate spread determined based on the Company’s leverage ratio calculation, with an assumed debt level of $200.0 million during each respective period.

Deferred financing fees of approximately $0.7 million were capitalized in conjunction with amending our revolving credit agreement. All capitalized loan costs have been amortized over the expected life of the loan. Additional loan costs related to the amendment of our revolving credit agreement in connection with the STI acquisition have been amortized over the remaining expected life of the loan.

d) To record an income tax provision for STI historical and pro forma adjustments at a statutory rate of 38.1% and 38.2% for the twelve months ended December 31, 2009 and the three months ended March 31, 2010, respectively.

 

3. Pro Forma Earnings Per Share

The pro forma basic and diluted earnings per share are based on the weighted average number of shares of ManTech common stock outstanding during the periods. The diluted weighted average number of shares does not include outstanding stock options if their inclusion would be anti-dilutive.