ManTech Reports Fourth Quarter and Full-Year 2004 Financial Results

ManTech Reports Fourth Quarter and Full-Year 2004 Financial Results

    Business Editors/Defense Writers

    FAIRFAX, Va.--(BUSINESS WIRE)--Feb. 24, 2005--ManTech International Corporation (Nasdaq:MANT)

    Highlights

--	2004 revenues increased 20 percent to $842.4 million
--	Organic revenue growth for the fourth quarter was 14 percent; and 16 percent for the full year 2004
--	Fourth quarter diluted EPS of $0.33; and $0.76 for the full year 2004
--	Defense Security Services contract completed - ManTech to treat MSM as a discontinued operation

    ManTech International Corporation (Nasdaq:MANT), a leading provider of innovative technologies and solutions focused on mission-critical national security programs for the Department of Defense, Intelligence Community, the Department of State, the Department of Justice, Department of Homeland Security, and other federal government customers today announced results for the fourth quarter and for the full year ended December 31, 2004, that reflect strong growth in revenues and profitability in our core business.
    "ManTech International Corporation achieved significant operational and strategic progress in 2004 and we continued to execute on our strategic plan to become a tier one industry player in the high-end Department of Defense, Intelligence Community, Department of State, Department of Justice, Department of Homeland Security and federal civilian agency markets," said George J. Pedersen, Chairman of the Board and CEO, ManTech International Corporation. "In 2004, we achieved strong revenue growth, greatly strengthened our management team and solidly advanced our leadership position - focusing on applying our innovative technologies to become a "go-to" solutions provider for key national security programs. This was a solid quarter for ManTech and a good year overall in terms of our revenues and growth. Total revenues were up 20 percent over the prior year and 18 percent over the prior quarter, operating cash flow was over $7 million for the quarter, and our DSO's were 79 days excluding MSM. These numbers demonstrate the strength and resilience of our core business despite our experience with the MSM Personnel Security Investigation (PSI) business. MSM completed its DSS contract, and of the $16.4 million of receivables submitted as a result of the final settlement negotiations, we have already collected $12.7 million and expect to receive payment on the final $3.7 million in early March. With that contract behind us, we have conducted a careful review of our PSI business and decided to place that unit into discontinued operations and offer it for sale. We are now concentrating fully on achieving growth in our primary target markets and continuing to pursue attractive acquisition opportunities."

    Fourth Quarter Results

    For the fourth quarter of 2004, ManTech reported revenue of $229.8 million, up $35.0 million, or 18 percent, compared to $194.8 million for the same period in 2003. The results reflect an organic growth rate of 14 percent from the comparable period in 2003.
    Operating income for the quarter was $16.2 million, compared to $16.8 for the fourth quarter of 2003. Operating margin for the quarter was 7.1 percent compared with 8.6 percent for the same period in 2003, reflecting the impact of MSM operations. Diluted EPS were $0.33 for the fourth quarter of 2004, as compared to $0.31 in 2003.

    Full Year 2004

    Revenues for the full year 2004 were $842.4 million, up $140.8 million, or 20 percent, over 2003 revenues of $701.6 million. Sales growth in 2004 was attributable to new business supporting national security programs for the Department of Defense, Intelligence Community, Homeland Security, Department of State and federal civilian agency customers. The results reflect a full year organic growth rate of 16 percent based on year-over-year pro forma revenue.
    Operating income for 2004 was $40.9 million, as compared to $61.0 million in 2003. The decrease was primarily attributable to the difficulties in the MSM subsidiary, which had an operating loss of approximately $27.5 million. Without MSM our operating income was over $68 million. Operating margins for the year 2004 were 4.9 percent, compared to 8.7 percent in 2003. Net income from continuing operations was $24.7 million for 2004, compared to $35.2 million for 2003. Diluted EPS for 2004 were $0.76, as compared to $1.09 in 2003.

    Business Highlights

    -- During 2004, ManTech was awarded contracts with an estimated
    value of approximately of $1.2 billion. Due to the nature of
    our business, several of our large awards were not announced.

    -- In January 2005 ManTech announced that it completed the
    transfer of its ManTech Environmental Technology Inc. business
    unit to Alion Science and Technology Corporation. The
    financial terms of the arrangement included an all cash
    payment of $7 million, which is expected to result in a gain
    of over $3.5 million in the first quarter of 2005.

    Key Performance Metrics

    Reported backlog as of December 31, 2004 was $1.7 billion, an increase from $1.5 billion as of December 31, 2003. Funded backlog also increased during the year to $450 million from $375 million at the end of 2003. ManTech derived approximately 86 percent of its revenue during 2004 from prime contracts and approximately 44 percent of its revenue from work under GSA schedule contracts. Revenue from the Department of Defense, the Intelligence Community, the Department of State and the Department of Homeland Security, accounted for 92 percent of revenue during 2004. ManTech's time and materials contracts accounted for 61 percent of revenue, while fixed-price contracts accounted for 11 percent of revenue and cost-plus contracts accounted for 28 percent of revenue. Revenue derived from secure systems and information technology solutions grew to 85 percent of revenue in 2004, compared to 82 percent in 2003.
    "As we enter 2004, strong budget trends for our markets, our solid balance sheet, our expanded leadership team and our strong core business will allow us to capitalize on the momentum created from our unified business platform," said Robert A. Coleman, President and Chief Operating Officer, ManTech International Corporation. "Information technology that helps the U.S. government to securely share information to fight the war on terror remains in demand and we are poised to continue to provide those services."

    Company Guidance

    ManTech's guidance for the first quarter and full year 2005 reflects the continuation of very strong underlying trends in its national security business, but does not include any future acquisitions or divestitures.

1st Quarter 2005 Full Year 2005 -------------- --------------------------- --------------------------- Revenue $214 million - $218 million $930 million - $950 million -------------- --------------------------- --------------------------- Diluted Earnings Per Share $0.38 - $0.40 $1.40 - $1.50 -------------- --------------------------- ---------------------------

    Conference Call:

    ManTech executive management will hold a conference call today at 5 p.m. EST, to discuss fourth quarter and 2004 year end results and answer questions. Interested parties may access the call by dialing (800) 565-5442 (domestic) or (913) 981-5591 (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, March 10. To access the replay, call (888) 203-1112 (domestic) or (719) 457-0820 (international). The confirmation code for the replay is 8814209. 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 Department of Defense, the Intelligence Community, the Department of State, the Department of Justice, the Department of Homeland Security and other U.S. federal government customers. The company's expertise includes 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 is helping the Department of Justice's U.S. Marshal Service deploy a common, office automation system. With annual revenues of $842 million and more than 5,500 highly qualified employees and several thousand consultants, the company operates in the United States and more than 30 countries worldwide. In 2004, ManTech was selected by Business Week magazine as one of the Top 100 Hot Growth Companies and was ranked by VARBusiness magazine as one of its Top 50 Fastest-Growing Solution Providers. 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 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 or win new contracts; failure to obtain option awards, task orders, or funding under contracts; risks of contract performance; uncertainties specifically related to discontinued operations; adverse results of U.S. government audits of our U.S. government contracts; risks associated with complex U.S. government procurement laws and regulations; failure to experience favorable results from acquisition synergies; risks of contract termination, either for default or for the convenience of the U.S. government; and material changes in laws or regulations applicable to the company's businesses. These and other risk factors are more fully discussed in the section entitled "Risks Related to the Company's Business" in ManTech's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2004, and, from time to time, in ManTech's other filings with the Securities and Exchange Commission, including among others, its reports on Form 8-K and 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.

MANTECH INTERNATIONAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands Except Per Share Amounts)

Three Month Ended Year Ended December 31, December 31, ------------------------- ------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------

REVENUES $ 229,811 $ 194,812 $ 842,422 $ 701,601 COST OF SERVICES 188,660 158,175 713,436 569,768 ------------ ------------ ------------ ------------ GROSS PROFIT 41,151 36,637 128,986 131,833 ------------ ------------ ------------ ------------

COSTS AND EXPENSES: General and administrative 23,047 18,661 82,604 66,318 Depreciation and amortization 1,867 1,193 5,437 4,551 ------------ ------------ ------------ ------------ Total costs and expenses 24,914 19,854 88,041 70,869 ------------ ------------ ------------ ------------

INCOME FROM OPERATIONS 16,237 16,783 40,945 60,964

Interest expense 516 478 2,176 2,117 Equity in (earnings) losses of affiliates (152) (182) (574) 662 Other (income) (370) (518) (553) (1,034) ------------ ------------ ------------ ------------ INCOME BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTEREST 16,243 17,005 39,896 59,219

Provision for income taxes (5,497) (6,908) (15,182) (24,052) Minority interest (2) (3) (7) (7) ------------ ------------ ------------ ------------ NET INCOME $ 10,744 $ 10,094 $ 24,707 $ 35,160 ============ ============ ============ ============

BASIC EARNINGS (LOSS) PER SHARE: Income from continuing operations $ 0.33 $ 0.31 $ 0.76 $ 1.10 ------------ ------------ ------------ ------------ $ 0.33 $ 0.31 $ 0.76 $ 1.10 ============ ============ ============ ============ Weighted average common shares outstanding 32,437,937 32,084,941 32,302,285 31,988,143 ============ ============ ============ ============

DILUTED EARNINGS (LOSS) PER SHARE: Income from continuing operations $ 0.33 $ 0.31 $ 0.76 $ 1.09 ------------ ------------ ------------ ------------ $ 0.33 $ 0.31 $ 0.76 $ 1.09 ============ ============ ============ ============ Weighted average common shares outstanding 32,916,281 32,495,649 32,478,946 32,190,523 ============ ============ ============ ============

MANTECH INTERNATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)

December 31, --------------------- 2004 2003 ---------- ---------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 22,935 $ 9,166 Cash in escrow -- 829 Receivables--net 215,767 204,539 Prepaid expenses and other 9,524 17,527 Assets held for sale 806 938 ---------- ---------- Total current assets 249,032 232,999

Property and equipment--net 13,815 10,920 Goodwill 156,402 149,548 Other intangibles 19,798 15,741 Investments 6,011 5,560 Employee supplemental savings plan assets 12,208 10,594 Other assets 10,316 10,378 ---------- ---------- TOTAL ASSETS $ 467,582 $ 435,740 ========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of debt $ 25,080 $ 77 Accounts payable and accrued expenses 53,757 45,157 Accrued salaries and related expenses 36,084 30,548 Deferred income taxes--current 5,860 20,092 Billings in excess of revenue earned 5,543 4,514 Liabilities held for sale 425 770 ---------- ---------- Total Current Liabilities 126,749 101,158 Debt--net of current portion 104 25,184 Accrued retirement 13,434 11,914 Other long-term liabilities 5,793 5,178 Deferred income taxes--non-current 923 4,553 Minority interest 56 49 ---------- ---------- TOTAL LIABILITIES $ 147,059 $ 148,036 ========== ========== COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY:

Common stock, Class A--$0.01 par value; 150,000,000 shares authorized; 17,418,950 and 17,047,820 shares issued and outstanding at December 31, 2004 and 2003, respectively $ 174 $ 170 Common stock, Class B--$0.01 par value; 50,000,000 shares authorized; 15,065,293 and 15,075,293 shares issued and outstanding at December 31, 2004 and 2003, respectively 151 151 Additional paid-in capital 219,664 212,564 Retained earnings 100,710 76,003 Accumulated other comprehensive income (loss) 205 (1,184) Unearned ESOP shares (381) -- Deferred compensation 640 640 Shares held in grantor trust (640) (640) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 320,523 287,704 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 467,582 $ 435,740 ========== ==========

MANTECH INTERNATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands)

Year Ended December 31, --------------------- 2004 2003 ---------- ----------

CASH FLOWS FROM OPERATING ACTIVITIES: Net income $24,707 $35,160 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Equity in (earnings) losses of affiliates (572) 662 Gain on sale of investment in GSE ---- (176) Deferred income taxes (17,862) 8,334 Depreciation and amortization 7,235 7,772 Change in assets and liabilities--net of effects from acquired and disposed businesses: Increase in receivables (11,228) (58,297) Decrease (Increase) in prepaid expenses and other 8,003 (10,305) Increase in accounts payable and accrued expenses 8,599 6,881 Increase in accrued salaries and related expenses 5,536 4,550 Increase in billings in excess of revenue earned 1,029 1,346 Increase in accrued retirement 1,520 2,359 Increase in other 36 196 ---------- ----------

Net cash (used in) provided by operating activities of continuing operations 27,003 (1,518) ========== ==========

CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment and software for internal use (6,351) (3,336) Proceeds from sales of property and equipment ---- 2 Investment in capitalized software products (120) (1,752) Acquisition of businesses (10,969) (69,155) Dividends from MASI U.K. 357 315 ---------- ---------- Net cash used in investing activities of continuing operations (17,083) (73,926) ========== ==========

CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options 3,930 2,121 Payment of not-to-compete financings ---- (1,000) ---------- ----------

Net cash provided by (used in) financing activities of continuing operations 3,930 1,121 ========== ==========

NET CASH FLOWS FROM DISCONTINUED OPERATIONS (81) 2,393 ========== ==========

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 13,769 (71,930) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,166 81,096 ---------- ----------

CASH AND CASH EQUIVALENTS, END OF PERIOD $22,935 $9,166 ========== ==========

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CONTACT: ManTech International Corporation, Fairfax Mark Root, 703-218-8397 cell: 703-407-9393 mark.root@mantech.com or Maureen Crystal, 703-218-8262 maureen.crystal@mantech.com

KEYWORD: VIRGINIA DISTRICT OF COLUMBIA INDUSTRY KEYWORD: LEGAL/LAW AEROSPACE/DEFENSE GOVERNMENT EARNINGS CONFERENCE CALLS SOURCE: ManTech International Corporation

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