SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 1, 2005
BLACKBAUD, INC.
Delaware
| 000-50600 | 11-2617163 | |
| (Commission File Number) | (IRS Employer ID Number) |
2000 Daniel Island Drive, Charleston, South Carolina 29492
Registrant’s telephone number, including area code (843) 216-6200
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On February 1, 2005, Blackbaud, Inc. issued a press release reporting unaudited financial results for the year ended December 31, 2004. A copy of this press release is attached.
The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 8.01. Other Events.
On February 1, 2005, Blackbaud, Inc. issued a press release announcing that its Board of Directors has adopted a dividend policy. Under the policy, Blackbaud declared a cash dividend of $0.05 per share payable on February 28, 2005 to stockholders of record on February 14, 2005, and announced that it intends to continue to pay quarterly dividends at an annual rate of $0.20 per share for the fiscal year ending December 31, 2005. The press release also announced that Blackbaud’s Board of Directors has approved a stock repurchase program whereby Blackbaud is authorized to repurchase up to $35 million of its outstanding common stock in open market or privately negotiated transactions. A copy of this press release is attached.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
| Exhibit No. | Description | |
| |
||
99.1
|
Press release dated February 1, 2005. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BLACKBAUD, INC. | ||
Date: February 1, 2005
|
/s/ Timothy V. Williams | |
| Timothy V. Williams, | ||
| Vice President and Chief Financial Officer |
Blackbaud, Inc. Announces Fourth Quarter 2004 Results
Charleston, S.C. (February 1, 2005) – Blackbaud, Inc. (Nasdaq: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, today announced financial results for its fourth quarter 2004.
For the quarter ended December 31, 2004, Blackbaud reported total revenue of $35.7 million, an increase of 17% compared with the fourth quarter of 2003. License revenue increased 15% to $6.8 million, services revenue increased 21% to $9.9 million, and maintenance and subscriptions revenue increased 17% to $17.6 million, over the comparable period.
Blackbaud’s loss from operations and net loss, determined in accordance with generally accepted accounting principles (GAAP), were $(9.2) million and $(4.3) million, respectively, for the fourth quarter 2004 compared with income from operations of $914,000 and a net loss of $129,000 in the same period last year. Pro forma income from operations and net income, which exclude stock-based compensation expense and amortization of intangibles arising from business combinations were $9.9 million and $6.2 million, respectively, compared with $8.5 million and $5.3 million in the same period last year, which represented growth rates of 16% and 15%, respectively.
GAAP diluted loss per share was $(0.10) for the quarter ended December 31, 2004, compared with $(0.00) in the same period last year. Pro forma earnings per share were $0.13 for the quarter ended December 31, 2004, an increase of 8% from the same period last year.
A reconciliation of GAAP to pro forma results has been provided in the financial statement tables included in the press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”
Cash from operations for the fourth quarter of 2004 was $10.2 million, and cash from operations for the full year 2004 was $43.5 million, up 19% on a year-over-year basis. Blackbaud had cash and cash equivalents of $42.1 million at December 31, 2004.
“We are very pleased with our fourth quarter results. Our ‘new revenue,’ which we define as the combination of our software and services revenue, grew at an impressive 18% year-over-year. Core products continue to drive the majority of Blackbaud’s growth, however, we are also very excited about the growing contribution from our newer product initiatives, such as the Patron Edge, Internet applications and an array of analytics offerings. The breadth, depth and seamless integration of our solutions provides the Company an opportunity to both attract new customers and continue offering new products to our 13,000 strong customer base. These make us the clear choice among nonprofits,” said Robert J. Sywolski, Chief Executive Officer of Blackbaud.
Initiating Cash Dividend and Share Buyback Program
Blackbaud is also announcing that its Board of Directors has adopted a policy to pay a $0.20 per share annual cash dividend to the owners of the Company’s common stock. The Board has declared a first quarter dividend of $.05 per share that will be distributed on February 28 to stockholders of record as of February 14.
In addition, Blackbaud’s Board of Directors has approved a share buyback of up to $35 million worth of the Company’s common stock, representing approximately 2.6 million shares at current market prices or approximately 5% of current shares outstanding. The shares may be purchased in conjunction with a public offering of Blackbaud stock, from time to time on the open market or in privately negotiated transactions depending on market conditions and other factors, all in accordance with the requirements of applicable law. The stock
buyback plan does not obligate the Company to acquire any specific number of shares and may be discontinued at any time. The Company may begin making purchases under the share buyback as early as of February 4.
Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, “The strength of Blackbaud’s cash flow generation capabilities has been established over a long period of time. We generated over $40 million in cash flow from operations during 2004, and, prior to going public in July 2004, the Company successfully paid off over $100 million in debt eighteen months ahead of schedule. We firmly believe that initiating a dividend and share buyback program is an excellent way to leverage our strong cash flow capabilities to maximize shareholder value.”
Conference Call Details
Blackbaud will host a conference call today, February 1, 2005 at 5:00 p.m. (EDT) to discuss the quarterly results and related matters. To access this call, dial 800-289-0572 (domestic) or 913-981-5543 (international). A replay of this conference call will be available through February 8, 2005, at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 3105404. A live webcast of this conference call will be available on the “Investor Relations” page of the Company’s web site, and a replay will be archived on the website as well.
About Blackbaud, Inc.
Blackbaud is the leading global provider of software and related services designed specifically for nonprofit organizations. More than 12,700 organizations — including the American Red Cross, Bowdoin College, the Chesapeake Bay Foundation, the Crohn’s & Colitis Foundation of America, the Detroit Zoological Society, Episcopal High School, Help the Aged, the Mayo Foundation, the New York Philharmonic and United Way of America — use Blackbaud products and consulting services for fundraising, financial management, business intelligence and school administration. Blackbaud’s solutions include The Raiser’s Edge®, The Financial Edge™, The Education Edge™, The Patron Edge™, Blackbaud NetCommunity™, The Information Edge™, WealthPoint™, and ProspectPoint™, as well as a wide range of consulting and educational services. Founded in 1981, Blackbaud is headquartered in Charleston, South Carolina, and has operations in Toronto, Ontario, Glasgow, Scotland, and Sydney, Australia. For more information, visit www.blackbaud.com.
Blackbaud, the Blackbaud logo, The Raiser’s Edge, The Financial Edge, The Education Edge, The Patron Edge, Blackbaud NetCommunity, The Information Edge, WealthPoint, and ProspectPoint are trademarks or registered trademarks of Blackbaud, Inc.
Forward-looking Statements
Except for historical information, all of the statements, expectations and assumptions contained in
this news release are forward-looking statements that involve a number of risks and uncertainties.
Although Blackbaud attempts to be accurate in making these forward-looking statements, it is
possible that future circumstances might differ from the assumptions on which such statements are
based. In addition, other important factors that could cause actual results to differ materially
from these forward-looking statements include the following: continued success in sales growth;
adoption of our products and services by nonprofits; uncertainty regarding increased business and
renewals from existing customers; risk associated with product concentration; lengthy sales and
implementation cycles; economic conditions and seasonality; competition; risks associated with
management of growth; risks related to our proposed dividend and
stock repurchase program, including potential limitations on our
ability to grow and the possibility that we might discontinue payment
of dividends; risks associated with acquisitions; technological changes that make our
products and services less competitive; the ability to attract and retain key personnel; and the
other risk factors set forth from time to time in the SEC filings for Blackbaud, copies of which
are available free of charge upon request from Blackbaud’s investor relations department.
Non-GAAP Financial Measures
Blackbaud has provided in this release certain financial information that has not been prepared in
accordance with GAAP. This information includes pro forma gross margin, pro forma operating income
and margin, pro forma net income and pro forma earnings per share. Blackbaud uses these non-GAAP
financial measures internally in analyzing its financial results and believes they are useful to
investors, as a supplement to GAAP measures, in evaluating Blackbaud’s ongoing operational
performance. Blackbaud believes that the use of these non-GAAP financial measures provides an
additional tool for investors to use in evaluating ongoing operating results and trends and in
comparing its financial results with other companies in Blackbaud’s industry, many of which
present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial results
discussed above exclude the impact of costs associated with the Blackbaud’s IPO (completed on July
22, 2004), amortization of intangibles arising from business combinations and the expensing of
stock option compensation.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure as detailed above. As previously mentioned, a reconciliation of GAAP to pro forma results has been provided in the financial statement tables included in this press release.
INVESTOR CONTACT:
Tim Dolan
Integrated Corporate Relations
617-217-2230
MEDIA CONTACT:
Megan McDonnell
Integrated Corporate Relations
203-682-8200
SOURCE: Blackbaud, Inc.
BLACKBAUD, INC.
BALANCE SHEETS
(In thousands, except share data)
| December 31, | ||||||||
| 2004 | 2003 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 42,144 | $ | 6,708 | ||||
Accounts receivable, net of allowance of $1,420 and
$1,222, respectively |
19,580 | 15,297 | ||||||
Prepaid expenses and other current assets |
1,806 | 2,713 | ||||||
Deferred tax asset, current portion |
542 | 1,799 | ||||||
Total current assets |
64,072 | 26,517 | ||||||
Property and equipment, net |
7,199 | 6,621 | ||||||
Deferred tax asset |
87,522 | 86,966 | ||||||
Goodwill |
1,673 | 1,386 | ||||||
Deferred financing fees, net |
133 | 156 | ||||||
Other assets |
209 | 99 | ||||||
Total assets |
$ | 160,808 | $ | 121,745 | ||||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities: |
||||||||
Trade accounts payable |
$ | 2,653 | $ | 2,590 | ||||
Current portion of long-term debt and capital lease
obligations |
44 | 142 | ||||||
Accrued expenses and other current liabilities |
16,019 | 10,438 | ||||||
Deferred revenue |
52,303 | 43,673 | ||||||
Total current liabilities |
71,019 | 56,843 | ||||||
Long-term debt and capital lease obligations |
— | 5,044 | ||||||
Total liabilities |
71,019 | 61,887 | ||||||
Commitments and contingencies |
||||||||
Stockholders’ equity: |
||||||||
Preferred stock; 20,000,000 shares authorized, none
outstanding |
— | — | ||||||
Common stock, $.001 par value and no par value; 180,000,000
and 95,000,000 shares authorized, 42,549,056 and
42,408,872 shares issued and outstanding in 2004
and 2003, respectively |
43 | 41,613 | ||||||
Additional paid-in capital |
55,292 | — | ||||||
Deferred compensation |
(1,064 | ) | (4,795 | ) | ||||
Accumulated other comprehensive income |
355 | 518 | ||||||
Retained earnings |
35,163 | 22,522 | ||||||
Total stockholders’ equity |
89,789 | 59,858 | ||||||
Total liabilities and stockholders’ equity |
$ | 160,808 | $ | 121,745 | ||||
BLACKBAUD, INC.
STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
| Three months ended December 31, | Years ended December 31, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
Revenue |
||||||||||||||||
License fees |
$ | 6,773 | $ | 5,912 | $ | 25,387 | $ | 21,339 | ||||||||
Services |
9,877 | 8,154 | 42,555 | 34,042 | ||||||||||||
Maintenance and subscriptions |
17,601 | 15,089 | 66,487 | 58,360 | ||||||||||||
Other revenue |
1,467 | 1,445 | 4,316 | 4,352 | ||||||||||||
Total revenue |
35,718 | 30,600 | 138,745 | 118,093 | ||||||||||||
Cost of revenue |
||||||||||||||||
Cost of license fees |
1,190 | 709 | 3,923 | 2,819 | ||||||||||||
Cost of services (of which $104, $1,051, $(540) and $3,342 in the three months
ended December 31, 2004 and 2003 and the years ended December 31, 2004
and 2003, respectively, was stock option compensation expense (benefit)) |
6,158 | 5,659 | 22,146 | 21,006 | ||||||||||||
Cost of maintenance and subscriptions (of which $15, $161, $(91) and $505 in
the three months ended December 31, 2004 and 2003 and the years ended
December 31, 2004 and 2003, respectively, was stock option compensation expense (benefit)) |
2,620 | 2,805 | 10,484 | 11,837 | ||||||||||||
Cost of other revenue |
1,409 | 1,156 | 3,986 | 3,712 | ||||||||||||
Total cost of revenue |
11,377 | 10,329 | 40,539 | 39,374 | ||||||||||||
Gross profit |
24,341 | 20,271 | 98,206 | 78,719 | ||||||||||||
Sales and marketing |
6,791 | 5,892 | 27,437 | 21,883 | ||||||||||||
Research and development |
4,630 | 4,009 | 17,875 | 15,516 | ||||||||||||
General and administrative |
3,147 | 3,043 | 12,240 | 11,085 | ||||||||||||
Amortization |
— | 48 | 32 | 848 | ||||||||||||
Costs of initial public offering |
— | — | 2,455 | — | ||||||||||||
Stock option compensation |
18,955 | 6,365 | 19,010 | 23,691 | ||||||||||||
Total operating expenses |
33,523 | 19,357 | 79,049 | 73,023 | ||||||||||||
(Loss) Income from operations |
(9,182 | ) | 914 | 19,157 | 5,696 | |||||||||||
Interest income |
198 | 27 | 331 | 97 | ||||||||||||
Interest expense |
(4 | ) | (343 | ) | (272 | ) | (2,559 | ) | ||||||||
Other income, net |
14 | 334 | 356 | 235 | ||||||||||||
(Loss) Income before provision for income taxes |
(8,974 | ) | 932 | 19,572 | 3,469 | |||||||||||
Income tax provision |
(4,688 | ) | 1,061 | 6,931 | 3,947 | |||||||||||
Net (loss) income |
$ | (4,286 | ) | $ | (129 | ) | $ | 12,641 | $ | (478 | ) | |||||
Earnings (loss) per share |
||||||||||||||||
Basic |
$ | (0.10 | ) | $ | (0.00 | ) | $ | 0.30 | $ | (0.01 | ) | |||||
Diluted |
$ | (0.10 | ) | $ | (0.00 | ) | $ | 0.27 | $ | (0.01 | ) | |||||
Common shares and equivalents outstanding |
||||||||||||||||
Basic weighted average shares |
42,544,596 | 42,408,873 | 42,496,280 | 42,395,594 | ||||||||||||
Diluted weighted average shares |
42,544,596 | 42,408,873 | 46,540,790 | 42,395,594 | ||||||||||||
Summary of stock option compensation expense (benefit) |
||||||||||||||||
Cost of services |
$ | 104 | $ | 1,051 | $ | (540 | ) | $ | 3,342 | |||||||
Cost of maintenance and subscription revenue |
15 | 161 | (91 | ) | 505 | |||||||||||
Total cost of revenue |
119 | 1,212 | (631 | ) | 3,847 | |||||||||||
Sales and marketing |
82 | 616 | (112 | ) | 1,817 | |||||||||||
Research and development |
60 | 702 | (457 | ) | 2,341 | |||||||||||
General and administrative |
18,813 | 5,047 | 19,579 | 19,533 | ||||||||||||
Total operating expense |
18,955 | 6,365 | 19,010 | 23,691 | ||||||||||||
Total stock option compensation expense (benefit) |
$ | 19,074 | $ | 7,577 | $ | 18,379 | $ | 27,538 | ||||||||
BLACKBAUD, INC.
STATEMENTS OF CASH FLOWS
(In thousands)
| Years ended December 31, | ||||||||
| 2004 | 2003 | |||||||
Cash flows from operating activities |
||||||||
Net income (loss) |
$ | 12,641 | $ | (478 | ) | |||
Adjustments to reconcile net income (loss) to net cash
provided by operating activities |
||||||||
Depreciation |
2,489 | 2,781 | ||||||
Amortization of intangibles |
32 | 848 | ||||||
Stock option compensation |
16,603 | 25,845 | ||||||
Amortization of deferred financing fees |
184 | 858 | ||||||
Deferred taxes |
701 | 2,178 | ||||||
Tax benefit
on exercise of nonqualified stock options |
179 | — | ||||||
Changes in assets and liabilities, net of acquisition |
||||||||
Accounts receivable |
(3,761 | ) | (1,561 | ) | ||||
Prepaid expenses and other assets |
785 | (1,424 | ) | |||||
Trade accounts payable |
54 | 470 | ||||||
Accrued expenses and other current liabilities |
5,459 | 2,662 | ||||||
Deferred revenue |
8,183 | 4,407 | ||||||
Total adjustments |
30,908 | 37,064 | ||||||
Net cash provided by operating
activities |
43,549 | 36,586 | ||||||
Cash flows from investing activities |
||||||||
Purchase of property and equipment |
(3,039 | ) | (2,666 | ) | ||||
Purchase of net assets of acquired company |
(166 | ) | (1,082 | ) | ||||
Net cash used in investing activities |
(3,205 | ) | (3,748 | ) | ||||
Cash flows from financing activities |
||||||||
Repayments on long-term debt and capital
lease obligations |
(5,142 | ) | (45,295 | ) | ||||
Proceeds from exercise of stock options |
673 | 232 | ||||||
Payment of deferred financing fees |
(161 | ) | — | |||||
Net cash used in financing activities |
(4,630 | ) | (45,063 | ) | ||||
Effect of exchange rate on cash and cash equivalents |
(278 | ) | 230 | |||||
Net increase (decrease) in cash and cash equivalents |
35,436 | (11,995 | ) | |||||
Cash and cash equivalents, beginning of year |
6,708 | 18,703 | ||||||
Cash and cash equivalents, end of year |
$ | 42,144 | $ | 6,708 | ||||
Supplemental disclosures of cash flow information |
||||||||
Cash paid during the year for |
||||||||
Interest |
$ | 45 | $ | 1,285 | ||||
Taxes |
4,009 | 1,612 | ||||||
Noncash activities |
||||||||
Change in fair value of derivative instruments |
$ | — | $ | 389 | ||||
BLACKBAUD, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands, except per share amounts)
| Three Months Ended | Years Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
GAAP revenue |
$ | 35,718 | $ | 30,600 | $ | 138,745 | $ | 118,093 | ||||||||
GAAP gross margin |
$ | 24,341 | $ | 20,271 | $ | 98,206 | $ | 78,719 | ||||||||
Pro forma adjustments: |
||||||||||||||||
Amortization of deferred stock compensation |
119 | 1,212 | (631 | ) | 3,847 | |||||||||||
Pro forma gross profit |
$ | 24,460 | $ | 21,483 | $ | 97,575 | $ | 82,566 | ||||||||
Pro forma gross margin |
68 | % | 70 | % | 70 | % | 70 | % | ||||||||
GAAP (loss) income from operations |
$ | (9,182 | ) | $ | 914 | $ | 19,157 | $ | 5,696 | |||||||
Pro forma adjustments: |
||||||||||||||||
Amortization of deferred stock compensation |
19,074 | 7,577 | 18,379 | 27,538 | ||||||||||||
Costs of initial public offering |
— | — | 2,455 | — | ||||||||||||
Amortization of intangibles from business combinations |
— | 48 | 32 | 848 | ||||||||||||
Total pro forma adjustments |
19,074 | 7,625 | 20,866 | 28,386 | ||||||||||||
Pro forma income from operations |
$ | 9,892 | $ | 8,539 | $ | 40,023 | $ | 34,082 | ||||||||
Pro forma operating margin |
28 | % | 28 | % | 29 | % | 29 | % | ||||||||
GAAP net (loss) income |
$ | (4,286 | ) | $ | (129 | ) | $ | 12,641 | $ | (478 | ) | |||||
Pro forma adjustments: |
||||||||||||||||
Total pro forma adjustments affecting income from operations |
19,074 | 7,625 | 20,866 | 28,386 | ||||||||||||
Tax impact related to pro forma adjustments |
(8,627 | ) | (2,150 | ) | (8,840 | ) | (8,000 | ) | ||||||||
Pro forma net income |
$ | 6,161 | $ | 5,346 | $ | 24,667 | $ | 19,908 | ||||||||
GAAP shares used in computing diluted (loss) income per share |
42,545 | 42,409 | 46,541 | 42,396 | ||||||||||||
Pro forma adjustments: |
||||||||||||||||
Incremental shares related to stock options |
4,157 | 3,403 | (508 | ) | 2,548 | |||||||||||
Shares used in computing pro forma earnings per diluted share |
46,702 | 45,812 | 46,033 | 44,944 | ||||||||||||
Pro forma earnings per diluted share |
$ | 0.13 | $ | 0.12 | $ | 0.54 | $ | 0.44 | ||||||||