-- $16.5 million, 5-year contract with the Pension Benefit Guaranty
Corporation ("PBGC") to provide software maintenance, operational and
production support services for the Participant Applications Maintenance
Team ("PAMT").
-- $14 million, 5-year contract with the Law Library of Congress to host,
maintain and enhance the Global Legal Information Network ("GLIN") and
supporting distance learning program.
-- $10 million, 5-year contract with the PBGC to provide development and
maintenance support to My Pension Benefit Administration ("My PBA").
Major ATSC highlights and accomplishments during the quarter included:
-- Winning all recompeted contracts, securing in excess of $30 million in
revenue over multiple years.
-- Closing of Potomac Management Group acquisition on September 1, 2007,
adding approximately $13 million in annual revenue with EBITDA margins in
the mid-teens.
-- Announcing the acquisition of Number Six Software, Inc. ("Number
Six"), expected to close in the next few days, adding approximately $33
million in annual revenue with 10 to 11% margins.
-- Increasing EBITDA (1) margins from 5% to 8% from the three months
ending June 30, 2007 to the three months ending September 30, 2007.
-- Executing a strategic partnership with Thomson Financial and ATSC's
commercial business unit, Appix, to target the broker dealer market by
integrating the Appix mortgage backed securities processing system into
Thomson Transaction Services main product, TTSHost.
-- Redeemed 2,835,222 warrants for $1,079,623 under the warrant
repurchase program initiated in January 2007.
Management's Outlook
Management will update guidance for the remainder of 2007 and provide
guidance for 2008 after the Number Six acquisition closes, which we expect
to occur in the next few days.
ATSC President and Chief Executive Officer Dr. Edward H. Bersoff stated,
"We are pleased to report a strong quarter of progress in which we won all
recompeted contracts, significantly increased our margins, and expanded our
market presence with the closing of the acquisition of Potomac Management
Group."
Bersoff continued, "While margin improvement continues to exceed
projections, our revenue growth has been slower than estimated due to
delays in several contract awards. Despite these issues, we are encouraged
by our 100% recompete record and considerable increase in our pipeline and
bid activity this past quarter."
Bersoff concluded, "We will continue to prioritize on growth opportunities
both from our new business development efforts and acquisitions. Our
recently announced acquisition of Number Six will add significant scale to
our business with no overlapping customers and expand our software
development capabilities. We believe the combination of our acquisition
strategy and the increasing pipeline from our new business development team
is establishing a strong platform for expansion in 2008 and beyond. We
continue to think the fundamentals of our business remain strong and the
Company is well-positioned to achieve its long-term growth strategy."
Conference Call
ATSC will conduct a third quarter conference call on Thursday, November 8,
at 8:30 a.m EST. The number for the live teleconference is 888-321-3075,
conference ID # 9420628.
A recorded replay of the teleconference will be available Thursday,
November 8, 2007, at 10:00 a.m. EST and will be available through Thursday,
November 22, 2007. The teleconference replay and can be accessed by dialing
877-519-4471, conference ID # 9420628. A recorded replay of the
teleconference will also be available on the Company website
(www.atsva.com) for one year from the conference call date.
About ATS Corporation
ATS Corporation operates through its subsidiaries, ATS, Reliable
Integration Services, Potomac Management Group ("PMG"), and Appix, Inc.
("Appix").
ATS Corporation is a leading provider of systems integration and
application development, IT infrastructure management and strategic
consulting services to U.S. federal and state and local government
agencies, financial institutions and government-sponsored enterprises.
Since its founding in 1978, ATS has been recognized for its custom software
development and software integration capabilities and its deep domain
expertise in federal government financial, human resource and data
management systems. ATS has built and implemented over 100 mission-critical
systems for clients.
Any statements in this press release about future expectations, plans, and
prospects for ATSC, including statements about the estimated value of the
contract and work to be performed, and other statements containing the
words "estimates," "believes," "anticipates," "plans," "expects," "will,"
and similar expressions, constitute forward-looking statements within the
meaning of The Private Securities Litigation Reform Act of 1995. Actual
results may differ materially from those indicated by such forward-looking
statements as a result of various important factors, including: our
dependence on our contracts with federal government agencies for the
majority of our revenue, our dependence on our GSA schedule contracts and
our position as a prime contractor on government-wide acquisition contracts
to grow our business, and other factors discussed in our latest annual
report on Form 10-K filed with the Securities and Exchange Commission on
March 26, 2007. In addition, the forward-looking statements included in
this press release represent our views as of November 7, 2007. We
anticipate that subsequent events and developments will cause our views to
change. However, while we may elect to update these forward-looking
statements at some point in the future, we specifically disclaim any
obligation to do so. These forward-looking statements should not be relied
upon as representing our views as of any date subsequent to November 7,
2007.
Additional information about ATSC may be found at www.atsva.com.
(1) EBITDA after extraordinary items is a non-GAAP measure that is defined
as GAAP net income plus other expense, interest expense, income taxes,
and depreciation and amortization adjusted for extraordinary expenses
not expected to be reflected in the going performance of ATS related to
the loss on warrant liabilities and vested, canceled options of the
former Chief Financial Officer. The extraordinary expenses were only
incurred in the first quarter of 2007. 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 is not a recognized term under U.S.
GAAP and does not purport to be an alternative to net income as measure
of operating performance or the cash flows from operating activities as
a measure of liquidity. Please refer to the table at the end of this
release that reconciles GAAP net income to EBITDA.
(2) Adjusted EBITDA - Earnings before interest, taxes, depreciation and
amortization adjusted for one time items not expected to be reflected
in the ongoing performance of ATSC and related to severance expenses
and start-up Sarbanes-Oxley compliance costs. Adjusted EBITDA is not a
recognized term under U.S. GAAP and does not purport to be an
alternative to net income as measure of operating performance or the
cash flows from operating activities as a measure of liquidity. Please
refer to the table at the end of this release that reconciles GAAP net
income to Adjusted EBITDA.
Reconciliation of GAAP Net Income to
"EBITDA (1) and Adjusted EBITDA (2)"
3 months 9 months
ending ending
9/30/2007 9/30/2007
------------- ------------
Net Income (Loss) $ 353,000 $ (6,294,000)
Adjustments to EBITDA:
Depreciation $ 186,000 $ 465,000
Amortization Intangibles $ 1,146,000 $ 2,871,000
Interest $ 125,000 $ (26,000)
Taxes $ 233,000 $ 507,000
------------- ------------
EBITDA $ 2,043,000 $ (2,477,000)
EBITDA after Extraordinary Items
Warrants $ 6,930,000
Stock Compensation Lloyd $ 590,000
------------- ------------
(1) EBITDA after Extraordinary Items $ 2,043,000 $ 5,043,000
"Adjusted EBITDA"
Severance $ 38,000 $ 360,000
SOX $ 144,000 $ 231,000
------------- ------------
Total Adjustments to EBITDA $ 182,000 $ 591,000
(2) "Adjusted EBITDA" $ 2,225,000 $ 5,634,000
============= ============
ATS Corporation
Consolidated Balance Sheets (unaudited)
September 30, December 31,
2007 2006
(unaudited)
------------- -------------
Assets
Current Assets
Cash $ 239,908 $ 213,395
Accounts receivable 29,567,802 -
Prepaid expenses and other current assets 1,019,782 136,006
Income tax receivable 2,721,771 -
Deferred income taxes, current 1,115,021 -
------------- -------------
Total Current Assets 34,664,284 349,401
Short-term investments held in Trust account - 121,024,475
Restricted Cash 1,262,530 -
Cash and cash equivalents held in trust fund - 1,332
Property and equipment, net 1,503,049 -
Goodwill 77,222,617 -
Intangible assets, net 17,161,816 -
Deferred acquisition costs - 1,361,215
Other assets 431,730 -
Deferred income tax benefit - 502,744
------------- -------------
Total Assets $ 132,246,026 $ 123,239,167
============= =============
Liabilities and Stockholders' Equity
Line of credit $ - $ -
Notes payable and capital leases - current
portion 918,298 -
Accounts payable and accrued expenses 8,575,221 942,146
Accrued salaries and related taxes 4,892,712 -
Accrued leave benefits 2,680,450 -
Income taxes payable 230,865 310,606
Warrant liabilities - 13,860,000
Other current liabilities 509,873 -
Deferred income taxes - current portion - 40,489
------------- -------------
Total Current Liabilities 17,807,419 15,153,241
Notes Payable 14,996,253 -
Capital leases - net of current portion 107,689 -
Other long-term liabilities 328,573 -
Deferred income taxes - net of current portion 5,605,770 -
------------- -------------
Total Liabilities 38,845,704 15,153,241
Common stock, subject to possible redemption
4,197,900 shares - 23,424,282
Interest income attributable to common stock
subject to possible redemptions
(net of taxes of $0 and $561,204, respectively) - 702,752
------------- -------------
Total common stock subject to possible
redemption - 24,127,034
------------- -------------
Commitments and Contingencies - -
Stockholders' Equity
Common stock - $.0001 par value;
100,000,000 shares authorized;
26,626,079 and 26,250,000 issued;
18,283,324 and 26,250,000 outstanding,
respectively (which includes 0 and
4,197,900 shares subject to possible
redemption, respectively) 2,662 2,625
Additional paid-in capital 126,772,677 81,467,698
Treasury stock, at cost 8,342,755 shares (30,272,007) -
Retained earnings (deficit) (3,103,010) 2,488,569
------------- -------------
Total Stockholders' Equity 93,400,322 83,958,892
Total Liabilities and Stockholders' Equity $ 132,246,026 $ 123,239,167
============= =============
ATS Corporation
Consolidated Statements of Operations (unaudited)
Successor Successor
----------------------- -----------------------
ATS Corp ATS Corp ATS Corp ATS Corp
3 months 3 months 9 months 9 months
ending ending ending ending
9/30/2007 9/30/2006 9/30/2007 9/30/2006
Revenue $25,646,747 - $75,372,148 -
Operating Costs and
Expenses
Cost of Services 17,753,224 - 52,922,818 -
Selling, general and
administrative 5,850,756 102,400 18,006,631 996,021
Depreciation and
Amortization 186,052 - 465,608 -
Amortization of
Intangible Assets 1,146,205 - 2,870,689 -
----------- ----------- ----------- -----------
Total operating costs and
expenses 24,936,237 102,400 74,265,746 996,021
Operating Income 710,510 (102,400) 1,106,402 (996,021)
Other Income (Expense)
Interest Income
(expense), net (124,571) 1,448,763 26,417 4,032,676
Gain (Loss) on warrant
liabilities - 4,200,000 (6,930,000) 5,040,000
Other income 93 - 9,847 -
----------- ----------- ----------- -----------
Income (Loss) Before
Income Taxes 586,032 5,546,363 (5,787,334) 8,076,655
Income Tax (Benefit)
Expense
Current 232,827 840,378 506,999 1,721,171
Deferred - (232,431) - (348,483)
----------- ----------- ----------- -----------
Income (Loss) from
Continuing Operations 353,205 4,938,416 (6,294,333) 6,703,967
=========== =========== =========== ===========
Loss from Discontinued
Operations - - - -
Net Income (Loss) $ 353,205 $ 4,938,416 $(6,294,333)$ 6,703,967
=========== =========== =========== ===========
Calculation of Net Income
for Diluted Earnings
Net Income less gain on
derivative liabilities - $(4,200,000) - $(5,040,000)
----------- ----------- ----------- -----------
Adjusted Net income for
diluted earnings $ 353,205 $ 738,416 $(6,294,333)$ 1,663,967
=========== =========== =========== ===========
Weighted average number of
shares outstanding
-basic 18,194,081 26,250,000 18,870,815 26,250,000
=========== =========== =========== ===========
-diluted 18,499,615 26,250,000 18,870,815 26,250,000
=========== =========== =========== ===========
Weighted average number of
shares outstanding
exclusive of shares
subject to possible
redemption
-basic 18,194,081 26,250,000 18,870,815 26,250,000
=========== =========== =========== ===========
-diluted 18,499,615 26,250,000 18,870,815 26,250,000
=========== =========== =========== ===========
Basic net income (loss)
per share
-Continuing operations $ 0.02 $ 0.19 $ (0.33)$ 0.26
-Discontinued operations - - - -
=========== =========== =========== ===========
Net income (loss) $ 0.02 $ 0.19 $ (0.33)$ 0.26
Net income (loss) not
subject to possible
redemption $ 0.02 $ - $ - $ -
=========== =========== =========== ===========
Weighted average number of
shares outstanding - 26,250,000 - 26,250,000
Shares assumed from the
conversion of warrants - 3,111,111 - 3,818,182
----------- ----------- ----------- -----------
Weighted average number of
shares outstanding -
diluted - 29,361,111 - 30,068,182
=========== =========== =========== ===========
Diluted net income (loss)
per share
-Continuing operations $ 0.02 $ 0.03 $ (0.33)$ 0.06
-Discontinued operations - - - -
=========== =========== =========== ===========
Net income (loss) $ 0.02 $ 0.03 $ (0.33)$ 0.06
Net income (loss) not
subject to possible
redemption $ 0.02 $ 0.19 $ (0.33)$ 0.26
Predecessor
-----------------------
ATS I ATS I
3 months 9 months
ending ending
7/31/2006 7/31/2006
Revenue $30,048,881 $86,231,975
Operating Costs and
Expenses
Cost of Services 18,907,450 54,138,280
Selling, general and
administrative 9,430,722 27,807,147
Depreciation and
Amortization 202,314 622,314
Amortization of
Intangible Assets 5,035 34,202
----------- -----------
Total operating costs and
expenses 28,545,521 82,601,943
Operating Income 1,503,360 3,630,032
Other Income (Expense)
Interest Income
(expense), net (92,504) (277,396)
Gain (Loss) on warrant
liabilities -
Other income 31,223 47,118
----------- -----------
Income (Loss) Before
Income Taxes 1,442,079 3,399,754
Income Tax (Benefit)
Expense
Current 750,691 1,564,180
Deferred - -
----------- -----------
Income (Loss) from
Continuing Operations 691,388 1,835,574
=========== ===========
Loss from Discontinued
Operations (623,773) (1,194,681)
Net Income (Loss) $ 67,615 $ 640,893
=========== ===========
Calculation of Net Income
for Diluted Earnings
Net Income less gain on
derivative liabilities - -
----------- -----------
Adjusted Net income for
diluted earnings $ 67,615 $ 640,893
=========== ===========
Weighted average number of
shares outstanding
-basic 19,022,500 19,022,500
=========== ===========
-diluted 19,469,600 19,469,600
=========== ===========
Weighted average number of
shares outstanding
exclusive of shares
subject to possible
redemption
-basic 19,022,500 19,022,500
=========== ===========
-diluted 19,469,600 19,469,600
=========== ===========
Basic net income (loss)
per share
-Continuing operations $ 0.04 $ 0.10
-Discontinued operations (0.03) (0.06)
=========== ===========
Net income (loss) $ 0.00 $ 0.03
Net income (loss) not
subject to possible
redemption $ - $ -
=========== ===========
Weighted average number of
shares outstanding - -
Shares assumed from the
conversion of warrants - -
----------- -----------
Weighted average number of
shares outstanding -
diluted - -
=========== ===========
Diluted net income (loss)
per share
-Continuing operations $ 0.04 $ 0.10
-Discontinued operations (0.03) (0.06)
=========== ===========
Net income (loss) $ 0.00 $ 0.03
Net income (loss) not
subject to possible
redemption $ 0.00 $ 0.03
ATS Corporation
Consolidated Statement of Cash Flows (unaudited)
(Successor) (Predecessor)
For the Nine For the Nine For the Nine
Months Ended Months Ended Months Ended
September 30, September 30, July 31,
2007 2006 2006
============ ============ ============
Cash Flows from Operating Activities
Net income (loss) $ (6,294,333) $ 6,703,967 $ 640,893
Adjustments to reconcile net
income (loss) to net cash (used
in) provided by operating
activities:
Depreciation and amortization 465,608 -- 656,516
Amortization of intangibles 2,870,689 -- --
Deferred income taxes (1,942,376) (348,483) (1,786,808)
Deferred rent -- -- (231,492)
Loss on disposal of equipment -- -- 58,283
Stock-based compensation 778,443 -- --
Board of Director's stock
compensation 42,638 -- --
Interest on notes payable 14,141 -- --
(Gain) Loss on derivative
liabilities attributable to
warrants 6,930,000 (5,040,000) --
Changes in assets and
liabilities, net of effects of
acquisitions:
Accounts receivable (5,813,760) -- (360,727)
Interest receivable -- (128,876) --
Prepaid expenses (632,007) 67,930 49,645
Prepaid supplies -- -- 381,361
Income taxes receivable (277,399) (195,214) (363,610)
Other assets (61,965) -- (213,229)
Accounts payable and accrued
expenses 46,826 1,234,167 (844,118)
Accrued salaries and related
taxes (4,027,516) -- (770,593)
Accrued vacation 391,839 -- 95,167
Other current liabilities (385,324) -- --
Other long-term liabilities (362,767) -- --
============ ============ ============
Net Cash (Used in) Provided by
Operating Activities (8,257,263) 2,293,491 (2,688,712)
============ ============ ============
Cash Flows from Investing Activities
Purchase of property and
equipment (359,976) -- (298,988)
Sale of U.S. government
securities held in Trust fund 121,024,475 -- --
Purchase of U.S. government
securities held in Trust fund -- (595,573,920) --
Maturities of U.S. government
securities held in Trust fund -- 593,344,327 --
Purchase of Advanced Technology
Systems Incorporated, net of
cash received (79,396,068) -- --
Purchase of Potomac Management
Group, Inc., net of cash
received (13,684,302) --
Purchase of Reliable Integration
Services, Inc., net of cash
received (997,849) -- --
Deferred acquisition costs -- (1,154,976) --
Release of cash held in Trust Fund 1,332 269,161 --
Restricted cash (44,748) -- --
============ ============ ============
Net Cash Provided by (Used in)
Investing Activities 26,542,864 (3,115,408) (298,988)
============ ============ ============
Cash Flows from Financing Activities
Net borrowings on line-of-credit 13,496,253 -- 1,687,035
Payments on notes payable -- -- (41,469)
Payments on capital leases (52,989) -- (19,959)
Payments to repurchase stock
purchase warrants (1,430,345) -- --
Payments to repurchase treasury
stock (30,272,007) -- (4,662)
============ ============ ============
Net Cash (Used in) Provided by
Financing Activities (18,259,088) -- 1,620,945
============ ============ ============
Net Increase (Decrease) in Cash 26,513 (821,917) (1,366,755)
Cash, beginning of period 213,395 1,855,394 1,366,755
============ ============ ============
Cash, end of period $ 239,908 $ 1,033,477 $ --
============ ============ ============
Contact Information: Company Contact: Joann O'Connell Vice President, Investor Relations ATS Corporation (703) 506-0088 Pubic Relations Contact: David Knowles 301-924-0330 x25 Investor Relations Contact: Laura Kowalcyk Investor Relations CJP Communications for ATS Corporation (212) 279-3115 ext. 209 Email Contact: lkowalcyk@cjpcom.com