ManTech International
Annual Report 2003

Plain-text annual report

2003 Annual Report Secure Systems and Infrastructure Solutions Information Technology Solutions Systems Engineering Solutions Leading the Convergence of National Security and Technology About ManTech Founded in 1968, ManTech International Corporation is a leading provider of innovative technologies and solutions for mission-critical national security programs for the Intelligence Community, the Department of Defense 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. Over 90 percent of ManTech’s revenues are from defense and intelligence activities and the vast majority of the company’s 5,000 employees hold high level government security clearances. ManTech’s uniquely qualified employees have military and intelligence experience, security clearances and advanced information technology skills that allow us to address our customers’ key technology priorities and most pressing security needs—whether in secure environments or at front-line deployments.These capabilities, along with our comprehensive knowledge of our customers’ missions, enable ManTech to build and maintain long-standing relationships with customers. ManTech operates in the United States and over 30 countries worldwide.With more than thirty-five years of service to the U.S. government, ManTech is well positioned to continue this positive momentum in 2004 and beyond. Financial Highlights In thousands, except per share amounts 2003 2002 2001 2000 1999 Operating Results Revenues Gross profit Income from operations Income from continuing operations Net income Basic earnings per share from continuing operations Diluted earnings per share from continuing operations Balance Sheet Summary $701,601 $500,219 $431,436 $378,827 $353,924 131,833 60,964 35,160 35,160 1.10 1.09 92,903 38,540 22,832 19,151 0.89 0.88 78,099 30,050 16,240 795 0.87 0.87 63,413 18,589 7,125 1,739 0.39 0.38 57,618 15,168 6,796 4,069 0.37 0.36 Cash and cash equivalents $ 9,166 $ 81,096 $ 26,902 $ 29,578 $ 19,571 Working capital Total assets Long-term debt Total stockholders’ equity 131,841 436,134 25,184 287,704 152,700 364,388 25,000 245,998 67,622 71,882 66,784 186,242 186,843 186,070 70,343 22,557 73,000 21,794 72,005 19,548 800 800 700 700 600 600 500 500 400 400 300 300 200 200 100 100 0 0 $702 $702 $500 $500 $431 $431 $379 $379 $354 $354 $314 $314 $61 $39 $30 $35 $23 $16 $19 $15 $13 $7 $7 $3 98 99 00 01 02 03 98 99 00 01 02 03 98 99 00 01 02 03 Revenues (dollars in millions) Operating Income (dollars in millions) Income from Continuing Operations (dollars in millions) 2003 Annual Report ManTech International Corporation 1 Letter to Our Shareholders 2003 was an outstanding year for ManTech International. We achieved record growth in revenue and earnings, successfully acquired two companies and expanded our business base. Strong Financial Performance Our revenues rose 40 percent to $701.6 million in 2003 compared to $500.2 million in the prior year. Operating income increased 58 percent to $61 million in 2003. Operating income margins, driven largely by improvements in contract margins and a shift in contract mix, improved to 8.7 percent during the year, up from 7.7 percent in 2002. Earnings per share on a fully diluted basis were $1.09 last year, a 47 percent increase over the $0.74 earnings per share in 2002. Disciplined Execution In 2003 we took advantage of significant opportunities in our markets and we boosted our internal growth by approximately 14 percent and continued to make strategic acquisitions.The acquisitions we made over the past year- and-a-half have enhanced our technical capabilities, deepened our penetration into select target markets in defense and intelligence, and contributed significantly to sales and profit growth.Throughout 2003 we remained true to the strategic course we charted in 2001 to apply ManTech’s innovative technologies and solutions to advance national security programs that support the war on terrorism. Mr. George J. Pedersen Chairman of the Board CEO and President 2 ManTech International Corporation 2003 Annual Report In February of last year we acquired Integrated Data Strategic Progress Systems (IDS), a company respected for its development of Each acquisition has met our requirement to be a “force secure, advanced messaging and collaboration solutions multiplier,” allowing us to bid on larger, more complex that support national security networks and systems. IDS is contracts to a more diversified customer base. In 2003 we one of Microsoft’s leading certified partners supporting won contracts with a value of approximately $1 billion U.S. government classified intelligence community pro- and our business pipeline grew to $5 billion. Our backlog grams. In March 2003 we acquired MSM Security at year-end was $1.5 billion and our funded backlog grew Services, Inc., a leading provider of personnel security to $375 million. investigation services that performs background investigations used in the U.S. government’s clearance process.These acquisitions, combined with Aegis Research and CTX Corporation, acquired in 2002, have significantly increased our support of the Department of Defense and the nation’s intelligence programs.They have all been fully integrated into our corporate family. Today, approximately 95 percent of our revenue is derived from our defense and intelligence customers, up from 86 percent a year ago.The U.S. defense appropriations budget grew to $487 billion in 2004 and we believe it can continue to increase in 2005 and beyond.The Defense, Intelligence and Homeland Security organiza- tions will increasingly require far more sophisticated Most recently, we acquired the operations of information technology, communications, security and Affiliated Computer Services Inc. that support the U.S. intelligence collection systems—which we are actively Air Force Electronic Systems Center at Hanscom AFB, engaged in developing. Consequently, we see a continued Massachusetts and the Air Intelligence Agency at Lackland strong demand for our services in the years ahead. AFB,Texas.This acquisition, completed in February of 2004, supports a key objective of our strategy to broaden our support to the U.S. Air Force. 2003 Annual Report ManTech International Corporation 3 Letter to Our Shareholders (Continued) Our Employees Creating Shareholder Value ManTech’s success is attributable to our employees who We have a dedicated workforce, a very strong balance support critical missions here at home and abroad for the sheet, minimal debt, the financial resources to meet our Department of Defense, Intelligence Community, the goals—and we are in a time of expanding defense budgets. Department of Homeland Security, the Department ManTech possesses a talented management team, ably sup- of Justice, the FBI, U.S. Citizenship and Immigration ported and guided by an exceptional Board of Directors Services, IRS, Bureau of Immigration and Customs and Advisory Board. Leveraging those assets, we will Enforcement, other agencies, as well as the nation’s space continue to follow the course we have charted as we focus and environmental programs. Many of our employees serve on executing our strategic plan: supporting our customers in hostile environments in countries around the world, and their mission-critical needs, generating solid profit and some on year-around assignments, and others on short, revenues, expanding our opportunities, optimizing discrete and dangerous missions. For example, you will resources and creating shareholder value. find ManTech employees on the battlefield and at many of America’s embassies around the world.You may have Sincerely, also heard, via a CNN story, how ManTech employees supported the technology and the efforts to help capture Saddam Hussein.We are grateful to our employees, are proud of them, and we commit our resources to ensure their safety and the success of their missions. 4 ManTech International Corporation 2003 Annual Report Board of Directors George J. Pedersen Chairman of the Board, CEO and President Barry G. Campbell Former Chairman and CEO, Tracor Systems Technology, Inc. Edward S. Civera, CPA Managing General Partner, Civera Investment Partnership Former Partner, Coopers & Lybrand (PricewaterhouseCoopers) Management Team George J. Pedersen Chairman of the Board, CEO and President Ronald R. Spoehel Director, Executive Vice President and CFO R. Evans Hineman Executive Vice President and President, National Security Systems Group Advisory Board Admiral David E. Jeremiah U.S. Navy (Ret.) Chairman of Advisory Board Former Vice Chairman of Joint Chiefs of Staff Mary K. Bush President Bush International, Inc. Edward M. Cook President and CEO, Migration Software President and CEO, eBoomerang, Inc. Lt. General Lincoln D. Faurer U.S. Air Force (Ret.) President, LDF, Inc. Robert Fogel Dean of Administration Harvard University Graduate School of Education Walter R. Fatzinger, Jr. Vice Chairman and Director, ASB Capital Management, Inc. Richard J. Kerr Former Deputy Director, Central Intelligence Agency, CIA Officer Michael D. Golden Founding Partner, Golden and Nelson, PLLC Stephen W. Porter Partner, Arnold and Porter Stephen D. Harlan, CPA Partner, Harlan Enterprises, LLC Former Vice Chairman of KPMG Peat Marwick Raymond A. Ranelli, CPA Former Partner, PricewaterhouseCoopers Ronald R. Spoehel Executive Vice President and CFO Maj. General Eugene C. Renzi U.S. Army (Ret.) Executive Vice President and President, Defense Systems Group Bradley H. Feldmann Senior Corporate Vice President and President, Information Technology Group Dr. Kurt J. Snapper, Jr. Senior Corporate Vice President and Chief Science and Technology Officer Peter B. LaMontagne Senior Corporate Vice President Kevin M. Phillips Corporate Vice President and Assistant to the Chairman Lt. General Gordon E. Fornell U.S. Air Force (Ret.) William H. Geiger Former President and CEO Aegis Research Corporation Dr. Roger L. Hagengruber Former Senior Vice President National Security, Sandia National Laboratory Dr. Robert J. Hermann Senior Partner, Global Technology Partners, LLC Lt. General Harley A. Hughes U.S. Air Force (Ret.) General Thomas C. Richards U.S. Air Force (Ret.) Former President and CEO National Security Industrial Association Former Administrator, Federal Aviation Administration Joseph H. Rothenberg Former NASA Associate Administrator, Space Flight Former Director, Goddard Space Flight Center President, Universal Space Network Forward-Looking Statement Certain statements and assumptions in this annual report contain or are based on “forward-looking” information that ManTech International Corporation 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 contacts or win new contracts; failure to obtain option awards, task orders, or funding under contracts; risks of contract performance; risks of contract termination, either for default or for the convenience of the U.S. government; adverse results of U.S. government audits of our U.S. government contracts; and risks associated with complex U.S. government procurement laws and regulations. These and other risk factors are more fully discussed in the section entitled “Risk Factors or Risks Related to the Company 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 annual report only are made as of the date of this publication and we undertake no obligation to the 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. Shareholder Information Corporate Information Corporate Headquarters ManTech International Corporation 12015 Lee Jackson Highway, Suite 800 Fairfax,Virginia 22033-3300 Main: (703) 218-6000 Fax: (703) 218-8296 Website www.mantech.com Independent Accountants Deloitte & Touche LLP McLean,Virginia Transfer Agent Stockholders may obtain information with respect to share position, transfer requirements, address changes, lost stock certificates and duplicate mailings by writing or telephoning: American Stock Transfer & Trust Co. 59 Maiden Lane New York, N Y 10038 Attn: Shareholder Services 800-937-5449 or 718-921-8200 www.amstock.com Investor Communications Investors seeking the Form 10-K and additional information about the company may call 703-218-6000, write to Investor Relations at our corporate headquarters, or send an email to investor@mantech.com. ManTech’s earnings announcements, news releases, SEC filings and other investor information are available in the Investors section of our website. Annual Meeting ManTech’s Annual Meeting will be held on Wednesday, June 23, 2004 at 11:00 a.m. ET at the Fair Lakes Hyatt, Fairfax,Virginia. Employment It is ManTech’s policy to recruit, hire, employ, train and promote persons in all job classifications without regard to race, color, religion, sex, age, national origin or disability. Class A Common Stock Stock symbol: MANT Listed: NASDAQ National Market 12015 Lee Jackson Highway, Fairfax, Virginia 22033-3300 703.218.6000 l www.mantech.com 

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