the Securities Exchange Act of 1934
| 000-50600 | 11-2617163 | |
| (Commission File Number) | (IRS Employer ID Number) |
| 2000 Daniel Island Drive, Charleston, South Carolina | 29492 | |
| (Address of principal executive offices) | (Zip Code) |
| 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)) |
| Exhibit No. | Description | |||
| 99.1 | Press release dated October 31, 2005. |
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| BLACKBAUD, INC. |
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| Date: October 31, 2005 | /s/ Timothy V. Williams | |||
| Timothy V. Williams, | ||||
| Vice President and Chief Financial Officer | ||||
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BLACKBAUD, INC. ANNOUNCES RECORD THIRD QUARTER 2005 RESULTS, FOURTH QUARTER DIVIDEND AND CEO SUCCESSION PLAN CHARLESTON, S.C.--October 31, 2005 -- Blackbaud, Inc. (Nasdaq: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, today announced financial results for its third quarter 2005. For the quarter ended September 30, 2005, Blackbaud reported total revenue of $43.1 million, an increase of 18% compared with the third quarter of 2004. License revenue increased 17% to $7.3 million, services revenue increased 19% to $14.5 million, and maintenance and subscriptions revenue increased 17% to $20.0 million over the comparable period. Robert J. Sywolski, Chief Executive Officer of Blackbaud, stated, "We are very pleased with our third quarter results, which were again highlighted by both strength in our core applications and continued success with our newer solutions. During the quarter we generated the highest quarterly sales growth this year from our core business, thanks to the continued success of our flagship solution, Raisers Edge. Equally important, our new solutions continued to deliver very strong results, with sales growth coming in at over 40%." Blackbaud's income from operations and net income, determined in accordance with generally accepted accounting principles (GAAP), were $10.7 million and $7.7 million, respectively, for the third quarter 2005 compared with income from operations of $12.7 million and net income of $7.6 million in the same period last year. GAAP diluted earnings per share were $0.17 for the quarter ended September 30, 2005, compared with $0.16 in the same period last year. For the quarter ended September 30, 2005, pro forma income from operations and net income, which exclude stock-based compensation expense, certain adjustments to our deferred tax asset, costs of the Company's initial public offering in 2004 and amortization of intangibles arising from business combinations, were $12.3 million and $7.6 million, respectively, compared with $11.0 million and $6.7 million in the same period last year. Pro forma earnings per share were $0.17 for the quarter ended September 30, 2005. A reconciliation of GAAP to pro forma results has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures." Cash from operations for the third quarter and nine months ended September 30, 2005 was $19.8 million and $39.1 million, respectively, increases of 15% and 17% respectively over the prior year periods. Blackbaud had cash and cash equivalents of $20.7 million at September 30, 2005, a decrease from the $50.4 million level at the end of the prior quarter. As previously announced, in July the Company used $43.3 million of its cash to repurchase shares of its common stock in a self-tender offer. Additionally after completion of the tender, the Company used $2.3 million to repurchase another 171,420 shares in the market. Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, "Blackbaud continues to build on its track record of growth, profitability and predictability. Over the years, our business model has proven to deliver above average visibility compared with the overall software sector, while our business momentum has led to higher revenue growth than in prior years. Additionally, the high levels of profitability produced by our business model and favorable tax position has combined to drive very strong operating cash flows that are well above our earnings" FOURTH QUARTER DIVIDEND Blackbaud announced today that its Board of Directors has declared a fourth quarter dividend of $0.05 per share payable on November 30, 2005 to stockholders of record on November 15, 2005.
CEO SUCCESSION PLAN The Company announced that Robert J. Sywolski and the Board of Directors have initiated a succession process to identify a new chief executive officer. The Board has commenced a search and has already met with several highly qualified candidates. The Board intends to select and announce a successor as soon as possible and hopefully well before the expiration of Mr. Sywolski's contract in March 2006. Mr. Sywolski said, "Proper CEO succession is a necessary responsibility and critical component to the long-term strategy of any growing, successful company. I believe that now is the right time for Blackbaud to recruit a new CEO with the energy, experience and commitment to lead this Company to continued growth". CONFERENCE CALL DETAILS Blackbaud will host a conference call today, October 31, at 5:00 p.m. (EDT) to discuss the Company's financial results, operations and related matters. To access this call, dial 888-802-2266 (domestic) or 913-312-1270 (international). A replay of this conference call will be available through November 4, 2005, at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 4104567. 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 Web site as well. ABOUT BLACKBAUD Blackbaud is the leading global provider of software and related services designed specifically for nonprofit organizations. Approximately 13,000 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 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(R), The Financial Edge(TM), The Education Edge(TM), The Patron Edge (TM), Blackbaud(R) NetCommunity(TM), The Information Edge(TM), WealthPoint(TM) and ProspectPoint(TM), as well as a wide range of consulting and educational services. Founded in 1981, Blackbaud is headquartered in Charleston, South Carolina, and also has operations in Toronto, Ontario; Glasgow, Scotland; and Sydney, Australia. Blackbaud, the Blackbaud logo, The Raiser's Edge, The Financial Edge, The Education Edge, The Information Edge, The Patron Edge, Blackbaud NetCommunity, 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; risks associated with management of growth; the ability to attract and retain key personnel; risks related to our dividend and stock repurchase programs, including potential limitations on our ability to grow and the possibility that we might discontinue payment of dividends; 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 acquisitions; technological changes that make our products and services less competitive; 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 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, stock option compensation expense and certain adjustments to the deferred tax asset. 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 below. As previously mentioned, a reconciliation of GAAP to our non-GAAP financial measures has been provided in the financial statement tables included in this press release. INVESTOR CONTACT: Tim Dolan Integrated Corporate Relations 203-682-8200 MEDIA CONTACT: Megan McDonnell Integrated Corporate Relations 203-682-8200 SOURCE: Blackbaud, Inc.
BLACKBAUD, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) September 30, December 31, 2005 2004 --------------------------------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 20,703 $ 42,144 Accounts receivable, net of allowance of $1,229 and $1,420, respectively 22,348 19,580 Prepaid expenses and other current assets 11,945 1,806 Deferred tax asset, current portion 1,022 542 --------------------------------------- Total current assets 56,018 64,072 Property and equipment, net 7,389 7,199 Deferred tax asset 75,480 87,522 Goodwill 2,194 1,673 Intangible assets, net 415 - Other assets 139 342 --------------------------------------- Total assets $ 141,635 $ 160,808 ======================================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 2,742 $ 2,653 Current portion of capital lease obligations - 44 Accrued expenses and other current liabilities 14,736 16,019 Deferred revenue 59,736 51,593 --------------------------------------- Total current liabilities 77,214 70,309 Long-term deferred revenue 1,209 710 --------------------------------------- Total liabilities 78,423 71,019 --------------------------------------- Commitments and contingencies Stockholders' equity: Preferred stock; 20,000,000 shares authorized, none outstanding - - Common stock, $.001 par value; 180,000,000 shares authorized, 45,888,206 and 42,549,056 shares issued at September 30, 2005 and December 31, 2004, respectively 46 43 Additional paid-in capital 63,816 55,292 Deferred compensation (485) (1,064) Treasury stock, at cost; 3,998,013 shares at September 30, 2005 (56,229) - Accumulated other comprehensive income 167 355 Retained earnings 55,897 35,163 --------------------------------------- Total stockholders' equity 63,212 89,789 --------------------------------------- Total liabilities and stockholders' equity $ 141,635 $ 160,808 =======================================
BLACKBAUD, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except share and per share amounts) Three months Nine months ended September 30, ended September 30, 2005 2004 2005 2004 ------------------------------ --------------------------------- Revenue License fees $ 7,291 $ 6,244 $ 22,063 $ 18,614 Services 14,486 12,145 40,070 32,808 Maintenance and subscriptions 20,005 17,101 57,779 49,126 Other revenue 1,362 920 3,443 2,849 ------------------------------ --------------------------------- Total revenue 43,144 36,410 123,355 103,397 ------------------------------ --------------------------------- Cost of revenue Cost of license fees 1,077 975 3,166 2,468 Costuofsservicesble(ofewhicha$55,ance$(1,211),7$229 and $(644) in the three months ended September 30, 2005 and 2004 and the nine months ended September 30, 2005 and 2004, respectively, was stock based compensation expense (benefit)) 7,236 4,930 20,996 16,482 Cost of maintenance and subscriptions (of which $6, $(168), $28 and $(106) in the three months ended September 30, 2005 and 2004 and the nine months ended September 30, 2005 and 2004, respectively, was stock based compensation expense (benefit)) 3,083 2,544 9,071 8,130 Cost of other revenue 1,166 802 3,101 2,578 ------------------------------ --------------------------------- Total cost of revenue 12,562 9,251 36,334 29,658 ------------------------------ --------------------------------- Gross profit 30,582 27,159 87,021 73,739 ------------------------------ --------------------------------- Sales and marketing 8,595 6,858 25,088 20,151 Research and development 5,309 4,541 15,640 13,245 General and administrative 4,405 3,408 12,246 9,462 Amortization 10 - 10 32 Costs of initial public offering - 805 - 2,455 Stock based compensation expense (benefit) 1,546 (1,138) (2,970) 55 ------------------------------ --------------------------------- Total operating expenses 19,865 14,474 50,014 45,400 ------------------------------ --------------------------------- Income from operations 10,717 12,685 37,007 28,339 Interest income 190 79 770 133 Interest expense (12) (18) (37) (268) Other (expense) income, net (32) (4) (34) 342 ------------------------------ --------------------------------- Income before provision for income taxes 10,863 12,742 37,706 28,546 Income tax provision 3,143 5,155 10,592 11,619 ------------------------------ --------------------------------- Net income $ 7,720 $ 7,587 $ 27,114 $ 16,927 ============================== ================================= Earnings per share Basic $ 0.18 $ 0.18 $ 0.64 $ 0.40 Diluted $ 0.17 $ 0.16 $ 0.58 $ 0.36 Common shares and equivalents outstanding Basic weighted average shares 41,961,726 42,536,961 42,628,278 42,480,059 Diluted weighted average shares 45,017,221 46,515,156 46,676,356 46,466,986 Dividends per share $ 0.05 - $ 0.15 $ 0.00 Summary of stock based compensation expense (benefit) Cost of services $ 55 $ (1,211) $ 229 $ (644) Cost of maintenance and subscription revenue 6 (168) 28 (106) ------------------------------ --------------------------------- Total cost of revenue 61 (1,379) 257 (750) Sales and marketing 38 (670) 182 (194) Research and development 22 (833) 119 (517) General and administrative 1,486 365 (3,271) 766 ------------------------------ --------------------------------- Total operating expense 1,546 (1,138) (2,970) 55 ------------------------------ --------------------------------- Total stock based compensation expense (benefit) $ 1,607 $ (2,517) $ (2,713) $ (695) ============================== =================================
BLACKBAUD, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS) NINE MONTHS ENDED SEPTEMBER 30, 2005 2004 ------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 27,114 $ 16,927 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 2,026 1,889 Provision for doubtful accounts and sales returns 711 32 Stock based compensation benefit (2,404) (695) Amortization of deferred financing fees 36 156 Deferred taxes 11,613 7,555 Benefit on exercise of stock options 6,033 - Changes in assets and liabilities, net of acquisition Accounts receivable (3,427) (2,365) Prepaid expenses and other assets (9,963) (267) Trade accounts payable 96 (230) Accrued expenses and other current liabilities (1,203) 2,353 Deferred revenue 8,452 8,040 ------------------------------------- Total adjustments 11,970 16,468 ------------------------------------- Net cash provided by operating activities 39,084 33,395 ------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (2,223) (1,616) Purchase of net assets of acquired company (938) (97) ------------------------------------- Net cash used in investing activities (3,161) (1,713) ------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Repayments on long-term debt and capital lease obligations (44) (5,105) Proceeds from exercise of stock options 5,475 642 Purchase of treasury stock (56,229) (161) Dividend payments to stockholders (6,380) - ------------------------------------- Net cash used in financing activities (57,178) (4,624) ------------------------------------- Effect of exchange rate on cash and cash equivalents (186) (384) ------------------------------------- Net increase in cash and cash equivalents (21,441) 26,674 Cash and cash equivalents, beginning of period 42,144 6,708 ------------------------------------- Cash and cash equivalents, end of period $ 20,703 $ 33,382 =====================================
BLACKBAUD, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands, except per share amounts) THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2005 2004 2005 2004 ------------------------------------- --------------------------------------- GAAP REVENUE $ 43,144 $ 36,410 $ 123,355 $ 103,397 ===================================== ======================================= GAAP GROSS MARGIN $ 30,582 $ 27,159 $ 87,021 $ 73,739 PRO FORMA ADJUSTMENTS: Amortization of deferred compensation expense (benefit) - options 61 (1,379) 257 (750) ------------------------------------- --------------------------------------- PRO FORMA GROSS PROFIT $ 30,643 $ 25,780 $ 87,278 $ 72,989 ===================================== ======================================= PRO FORMA GROSS MARGIN 71% 71% 71% 71% ===================================== ======================================= GAAP INCOME FROM OPERATIONS $ 10,717 $ 12,685 $ 37,007 $ 28,339 PRO FORMA ADJUSTMENTS: Amortization of deferred compensation e xpense (benefit) - options 1,569 (2,517) (2,713) (695) Amortization of deferred compensation expense (benefit) - restricted stock 38 - - - Costs of initial public offering - 805 - 2,455 Amortization of intangibles from business combinations 10 - 10 32 ------------------------------------- --------------------------------------- Total pro forma adjustments 1,617 (1,712) (2,703) 1,792 ------------------------------------- --------------------------------------- PRO FORMA INCOME FROM OPERATIONS $ 12,334 $ 10,973 $ 34,304 $ 30,131 ===================================== ======================================= PRO FORMA OPERATING MARGIN 29% 30% 28% 29% ===================================== ======================================= GAAP NET INCOME $ 7,720 $ 7,587 $ 27,114 $ 16,927 PRO FORMA ADJUSTMENTS: Total pro forma adjustments affecting income from operations 1,617 (1,712) (2,703) 1,792 Tax impact related to pro forma adjustments (1,725) 854 (3,060) (213) ------------------------------------- --------------------------------------- PRO FORMA NET INCOME $ 7,612 $ 6,729 $ 21,351 $ 18,506 ===================================== ======================================= GAAP SHARES USED IN COMPUTING DILUTED INCOME PER SHARE 45,017 46,515 46,676 46,467 PRO FORMA ADJUSTMENTS: Incremental shares related to stock options (433) (612) (694) (655) ------------------------------------- --------------------------------------- SHARES USED IN COMPUTING PRO FORMA EARNINGS PER DILUTED SHARE 44,584 45,903 45,982 45,812 ===================================== ======================================= PRO FORMA EARNINGS PER DILUTED SHARE $ 0.17 $ 0.15 $ 0.46 $ 0.40 ===================================== =======================================