MANT » Topics » Nine months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

This excerpt taken from the MANT 10-K filed Mar 9, 2007.

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

Revenues

Revenues increased 18.5% to $980.3 million for the year ended December 31, 2005, compared to $826.9 million for the same period in 2004. This increase is partially attributable to forward deployment support in Iraq and Afghanistan and increased work in the Intelligence Community. Revenue increased approximately $65.2 million from our customer U.S. Army Lifecycle Management Command (LCMC-HQ) (formerly Communications-Electronic Command Headquarters—CECOM-HQ) which accounted for 19.7% and 15.4% of our revenues for the years ended December 31, 2005 and 2004, respectively. Also contributing to the increase was a full year of revenues from certain operations we acquired from Affiliated Computer Services, Inc. (ACS) on February 27, 2004 and June 1, 2004. Approximately $52.9 million of the increase in revenues is attributable to our acquisition of Gray Hawk on May 31, 2005.

Cost of services

Cost of services increased 19.0% to $805.9 million for the year ended December 31, 2005, compared to $677.2 million for the same period in 2004. This increase was largely attributable to the corresponding increases in revenues. As a percentage of revenues, cost of services increased from 81.9% to 82.2%, or 0.3% of revenues. For the year ended December 31, 2005, other direct costs increased by 23.1% over 2004, from $274.6 million to $338.1 million. This increase was attributable to an increase in pass-through costs in 2005 over 2004, a full year of results from costs incurred on contracts purchased from ACS as well as the addition of Gray Hawk in the second quarter of 2005. As a percentage of revenues, other direct costs increased to 34.5% for year ended December 31, 2005 from 33.2% for the same period in 2004. Direct labor costs increased by 16.2% primarily due to an increase in employee headcount as a result of the addition of Gray Hawk and the continued growth of our business. As a percentage of revenue, direct labor costs decreased 1.0% to 47.7% for the year ended December 31, 2005 compared to 48.7% for the same period in 2004.

General and administrative

General and administrative expenses increased 10.9% to $90.1 million for the year ended December 31, 2005, compared to $81.2 million for the same period in 2004, which is less then the growth of revenue for the same period. The increased expenses reflect additional management personnel and infrastructure, increased bid and proposal efforts, and expenses related to our acquisitions to support the continued growth of our business. As a percentage of revenues, general and administrative expenses decreased to 9.2% for the year ended December 31, 2005 from 9.8% for the same period in 2004.

 

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Gain on disposal of operations

On February 11, 2005, we sold our ManTech Environmental Technology, Inc (“METI”) subsidiary to Alion Science and Technology Corporation. The sale generated a pre-tax gain of $3.7 million in 2005. For additional information see “Gain on Disposal of Operations and Equity Method Investment,” below.

Interest expense, net

Interest expense, net increased 17.9% to $2.3 million for the year ended December 31, 2005, compared with $1.9 million for the same period in 2004. The increase in interest expense is a result of increased borrowing under our credit facility in the second quarter of 2005 to finance our acquisition of Gray Hawk and higher interest rates.

Gain on disposal of equity method investment

In December 2005, we sold our 40 percent interest in Vosper-ManTech joint venture in the United Kingdom, which resulted in a $1.6 million pre-tax gain. For additional information see “Gain on Disposal of Operations and Equity Method Investment,” below.

Loss from discontinued operations

In February 2005, we reached the determination to sell our MSM subsidiary after we concluded that the MSM business no longer furthered our long-term strategic objectives. At December 31, 2005, we recorded a loss accrual of $ 3.6 million on the valuation of these assets based on offers received from potential buyers in early 2006. The loss accrual reflects the write-off of intangible assets including goodwill, net of taxes. The loss also reflects a valuation allowance of $1.3 million for deferred state income tax assets related to net operating losses carried forward, which are not expected to be realized. Net losses from MSM were $8.8 million and $17.2 million for 2005 and 2004, respectively. For additional information see “Discontinued Operations,” below.

Net income

Net income increased 78.9% to $44.2 million for the year ended December 31, 2005, compared to $24.7 million for the same period in 2004. The increase is a result of higher revenue, increased income from continuing operations, a reduced loss on discontinued operations of $9.0 million in 2005 versus a loss of $17.2 million for the same period in 2004, a $1.8 million after-tax gain on the sale of METI and $1.0 million after-tax gain on the sale of our interest in our Vosper-ManTech joint venture. Discontinued operations for the period ended December 31, 2004 contained an after-tax adjustment for a change in estimate for revenue earned of $13.2 million plus a pre-tax estimated contract loss of $4.7 million on our Defense Security Services contract. The results from discontinued operations are primarily due to our MSM subsidiary that was categorized as discontinued during the first quarter of 2005, as discussed in “Discontinued Operations” below. Our effective tax rate for years ended December 31, 2005 and 2004 was 39.2% and 38.0%, respectively.

This excerpt taken from the MANT 10-K filed Mar 10, 2006.

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

Revenues

Revenues increased 18.5% to $980.3 million for the year ended December 31, 2005, compared to $826.9 million for the same period in 2004. This increase is partially attributable to forward deployment support in Iraq and Afghanistan and increased work in the Intelligence Community. Revenue increased approximately $65.2 million from our customer U.S. Army Lifecycle Management Command (LCMC-HQ) (formerly Communications-Electronic Command Headquarters—CECOM-HQ) which accounted for 19.7% and 15.4% of our revenues for the years ended December 31, 2005 and 2004, respectively. Also contributing to the increase was a full year of revenues from certain operations we acquired from Affiliated Computer Services, Inc. (ACS) on February 27, 2004 and June 1, 2004. Approximately $52.9 million of the increase in revenues is attributable to our acquisition of Gray Hawk on May 31, 2005.

Cost of services

Cost of services increased 19.0% to $805.9 million for the year ended December 31, 2005, compared to $677.2 million for the same period in 2004. This increase was largely attributable to the corresponding increases in revenues. As a percentage of revenues, cost of services increased from 81.9% to 82.2%, or 0.3% of revenues. For the year ended December 31, 2005, other direct costs increased by 23.1% over 2004, from $274.6 million to $338.1 million. This increase was attributable to an increase in pass-through costs in 2005 over 2004, a full year of results from costs incurred on contracts purchased from ACS as well as the addition of Gray Hawk in the second quarter of 2005. As a percentage of revenues, other direct costs increased to 34.5% for year ended December 31, 2005 from 33.2% for the same period in 2004. Direct labor costs increased by 16.2% primarily due to an increase in employee headcount as a result of the addition of Gray Hawk and the continued growth of our business. As a percentage of revenue, direct labor costs decreased 1.0% to 47.7% for the year ended December 31, 2005 compared to 48.7% for the same period in 2004.

Gross profit

Gross profit increased 16.5% to $174.4 million for the year ended December 31, 2005, compared to $149.7 million for the same period in 2004. The increase in gross profit can be attributed to the growth of our business through recent acquisitions as well as expansion with our existing contract base. Gross profit margin decreased to 17.8% for the year ended December 31, 2005, compared to 18.1% for the same period in 2004. The decrease in gross profit margin is due to a less profitable mix of direct labor and other direct costs including subcontractors and material purchases partially offset by a reduction, as a percentage of revenue, in direct labor and overhead costs.

General and administrative

General and administrative expenses increased 9.0% to $82.9 million for the year ended December 31, 2005, compared to $76.0 million for the same period in 2004, which is less then the growth of revenue for the same period. The increased expenses reflect additional management personnel and infrastructure, increased bid and proposal efforts, and expenses related to our acquisitions to support the continued growth of our business. As a percentage of revenues, general and administrative expenses decreased to 8.5% for the year ended December 31, 2005 from 9.2% for the same period in 2004.

Depreciation and amortization

Depreciation and amortization expense increased 38.8% to $7.2 million for the year ended December 31, 2005, compared to $5.2 million for the same period in 2004. A majority of the increase resulted from additional amortization of intangibles from the Gray Hawk acquisition of $1.0 million.

 

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Income from continuing operations

Income from continuing operations increased 23.2% to $84.4 million for the year ended December 31, 2005, compared with $68.5 million for the same period in 2004. Operating margin increased to 8.6% for the year ended December 31, 2005 from 8.3% for the same period in 2004. The increase in margin is primarily due to reduced general and administrative expense, as a percentage of revenues.

Interest expense, net

Interest expense, net increased 17.9% to $2.3 million for the year ended December 31, 2005, compared with $1.9 million for the same period in 2004. The increase in interest expense is a result of increased borrowing under our credit facility in the second quarter of 2005 to finance our acquisition of Gray Hawk and higher interest rates.

Gain on disposal of operations

On February 11, 2005, we sold our ManTech Environmental Technology, Inc (“METI”) subsidiary to Alion Science and Technology Corporation. The sale generated a pre-tax gain of $3.7 million in 2005. In December 2005, we sold our 40 percent interest in Vosper-ManTech joint venture in the United Kingdom of Great Britain, which resulted in a $1.6 million pre-tax gain. For additional information see “Gain on Disposal of Operations,” below.

Loss from discontinued operations

In February 2005, we reached the determination to sell our MSM subsidiary after we concluded that the MSM business no longer furthered our long-term strategic objectives. Currently, we intend to sell MSM as a going-concern and are in discussions with potential buyers. We expect to complete the sale or other disposition of the MSM operations by the end of the second quarter of 2006. At December 31, 2005, we recorded a loss accrual of $ 3.6 million on the valuation of these assets based on offers received from potential buyers in early 2006. The loss accrual reflects the write-off of intangible assets including goodwill, net of taxes. The loss also reflects a valuation allowance of $1.3 million for deferred state income tax assets related to net operating losses carried forward, which are not expected to be realized. Net losses from MSM were $8.8 million and $17.2 million for 2005 and 2004, respectively. In 2003, MSM had net income of $3.6 million. For additional information see “Discontinued Operations,” below.

Net income

Net income increased 78.9% to $44.2 million for the year ended December 31, 2005, compared to $24.7 million for the same period in 2004. The increase is a result of higher revenue, increased income from continuing operations, a reduced loss on discontinued operations of $9.0 million in 2005 versus a loss of $17.2 million for the same period in 2004, a $1.8 million after-tax gain on the sale of METI and $1.0 million after-tax gain on the sale of our interest in our Vosper-ManTech joint venture. Discontinued operations for the period ended December 31, 2004 contained an after-tax adjustment for a change in estimate for revenue earned of $13.2 million plus a pre-tax estimated contract loss of $4.7 million on our Defense Security Services contract. The results from discontinued operations are primarily due to our MSM subsidiary that was categorized as discontinued during the first quarter of 2005, as discussed in “Discontinued Operations” below. Our effective tax rate for years ended December 31, 2005 and 2004 was 39.2% and 38.0%, respectively.

This excerpt taken from the MANT 10-Q filed Nov 7, 2005.

Nine months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

 

Revenues

 

Revenues increased 19.5% to $719.3 million for the nine months ended September 30, 2005, compared to $602.2 million for the same period in 2004. This increase is partially attributable to forward deployment support in Iraq and Afghanistan and increased work in the Intelligence Community. Revenue increased approximately $51.7 million from our customer the U.S. Army Communications-Electronic Command Headquarters (CECOM-HQ) which accounted for 19.4% and 14.6% of our revenues for the nine months ended September 30, 2005 and September 30, 2004 respectively. Also contributing to the increase was three full quarters of revenues from certain operations we acquired from Affiliated Computer Services, Inc. (ACS) on February 27, 2004 and June 1, 2004. Over $30.2 million of the increase in revenue is attributable to our acquisition of Gray Hawk on May 31, 2005.

 

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Cost of services

 

Cost of services increased 20.2% to $592.1 million for the nine months ended September 30, 2005, compared to $492.7 million for the same period in 2004. This increase was largely attributable to the corresponding increases in revenue. As a percentage of revenues, cost of services increased from 81.8% to 82.3%, or 0.5% of revenue. For the nine months ended September 30, 2005, other direct costs increased by 26.7% over the first nine months of 2004, from $193.9 million to $245.5 million. This increase was attributable to an increase in pass-through costs in 2005 over 2004, full three quarters of results from costs incurred on contracts purchased from ACS as well as the addition of Gray Hawk in the second quarter 2005. As a percentage of revenues, other direct costs increased to 34.1% for the nine months ended September 30, 2005 from 32.2% for the same period in 2004. Direct labor costs increased by 16.0% primarily due to an increase in employee headcount as a result of the addition of Gray Hawk and the continued growth of our business. As a percentage of revenue, direct labor costs decreased 1.4% to 48.2% for the three months ended September 30, 2005 compared to 49.6% for the same period in 2004.

 

Gross profit

 

Gross profit increased 16.2% to $127.2 million for the nine months ended September 30, 2005, compared to $109.5 million for the same period in 2004. The increase in gross profit can be attributed to the growth of our business through recent acquisitions as well as expansion with our existing contract base. Gross profit margin decreased to 17.7% for the nine months ended September 30, 2005, compared to 18.2% for the same period in 2004. The decrease in gross profit margin is due to a less profitable mix of direct labor and other direct costs including subcontractors and material purchases partially offset by a reduction, as a percentage of revenue, in direct labor and overhead costs.

 

General and administrative

 

General and administrative expenses increased 14.7% to $62.5 million for the nine months ended September 30, 2005, compared to $54.5 million for the same period in 2004, which is less then the growth of revenue for the same period. The increased expenses reflect additional management personnel and infrastructure, increased bid and proposal efforts, and expenses related to our acquisitions to support the continued growth of our business. As a percentage of revenues, general and administrative expenses decreased to 8.7% for the nine months ended September 30, 2005 from 9.1% for the same period in 2004.

 

Depreciation and amortization

 

Depreciation and amortization expense increased 51.7% to $5.1 million for the nine months ended September 30, 2005, compared to $3.4 million for the same period in 2004. The increase resulted from additional amortization of intangibles from the Gray Hawk acquisition and facility improvements to support our workforce. In addition, the third quarter 2004 contained a favorable amortization adjustment related to a final valuation of intangibles from a previous acquisition of $0.7 million.

 

Income from continuing operations

 

Income from continuing operations increased 15.4% to $59.5 million for the nine months ended September 30, 2005, compared with $51.6 million for the same period in 2004. Operating margin decreased to 8.3% for the nine months ended September 30, 2005 from 8.6% for the same period in 2004. The decrease in margin is primarily due to a less favorable mix of direct labor and subcontractor or pass through sales.

 

Interest Expense, net

 

Interest expense, net increased 45.0% to $2.0 million for the nine months ended September 30, 2005, compared with $1.3 million for the same period in 2004. The increase in interest expense is a result of increased borrowing under our credit facility in the second quarter to finance our acquisition of Gray Hawk and higher interest rates. We expect interest expense, net to remain at higher levels throughout fiscal year 2005, as compared to the same periods in 2004.

 

Gain on Disposal of an Operation

 

On February 11, 2005, we sold our Mantech Environmental Technology, Inc (“METI”) subsidiary to Alion Science and Technology Corporation. The sale generated a pre-tax gain of $3.7 million in 2005. For additional information see “Gain on Disposal of an Operation,” below.

 

Net income

 

Net income increased 141.8% to $33.8 million for the nine months ended September 30, 2005, compared to $14.0 million for the same period in 2004. The increase is a result of higher revenue, increased income from continuing operations, a reduced loss

 

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on discontinued operations of ($3.6) million in 2005 versus a loss of ($16.1) million for the same period in 2004, and a $3.7 million gain on the sale of METI. Discontinued operations for the period ended September 30, 2004 contained a pre-tax adjustment for a change in estimate for revenue earned of $13.2 million plus a pre-tax estimated contract loss of $4.7 million on our Defense Security Services contract. The results from discontinued operations are primarily due to our MSM subsidiary that was categorized as discontinued during the first quarter of 2005, as discussed in “Discontinued Operations” below. Our effective tax rate for the nine months ended September 30, 2005 and September 30, 2004 was 39.2% and 40.8%, respectively.

 

This excerpt taken from the MANT 10-Q filed Aug 5, 2005.

Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004

 

Revenues

 

Revenues increased 15.7% to $456.9 million for the six months ended June 30, 2005, compared to $394.8 million for the same period in 2004. This increase is partially attributable to forward deployment support in Iraq and Afghanistan and increased work in the Intelligence Community. Revenue increased approximately $28 million from our customer the U.S. Army Communications-Electronic Command Headquarters (CECOM-HQ) which accounted for 18.3% and 13.9% of our revenues for the six months ending June 30, 2005 and June 30, 2004 respectively. Also contributing to the increase was two full quarters of revenues from certain operations we acquired from Affiliated Computer Services, Inc. (ACS) on February 27, 2004 and June 1, 2004. Over $7 million of the increase in revenue is attributable to our acquisition of Gray Hawk on May 31, 2005.

 

Cost of services

 

Cost of services increased 16.6% to $375.9 million for the six months ended June 30, 2005, compared to $322.5 million for the same period in 2004. As a percentage of revenues, cost of services increased from 81.7% to 82.3%, or 0.6% of revenue. Direct labor costs increased by 14.8% due to an increase in personnel, primarily related to our acquisitions. For the six months ended June 30, 2005, other direct costs increased by 19.7% over the first six months of 2004, from $128.8 million to $154.2 million. This increase was attributable to an increase in pass-through costs in 2005 over 2004, full first and second quarter results from costs incurred on contracts purchased from ACS as well as the addition of Gray Hawk in the second quarter 2005. As a percentage of revenues, other direct costs increased to 33.7% for the six months ended June 30, 2005 from 32.6% for the same period in 2004.

 

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Gross profit

 

Gross profit increased 12.1% to $81.0 million for the six months ended June 30, 2005, compared to $72.3 million for the same period in 2004. The increase in Gross Profit can be attributed to the growth of our business through recent acquisitions as well as expansion with our existing contract base. Gross profit margin decreased to 17.7% for the six months ended June 30, 2005, compared to 18.3% for the same period in 2004. The decrease in gross profit margin is due to a less profitable mix of direct labor and other direct costs including subcontractors and material purchases partially offset by a reduction in employee benefit costs as a percentage of revenue.

 

General and administrative

 

General and administrative expenses increased 12.8% to $40.2 million for the six months ended June 30, 2005, compared to $35.6 million for the same period in 2004, which is less then the growth of revenue for the same period. The increased expenses reflect additional management personnel and infrastructure, increased bid and proposal efforts, and expenses related to our acquisitions to support the continued growth of our business. As a percentage of revenues, general and administrative expenses decreased to 8.8% for the six months ended June 30, 2005 from 9.0% for the same period in 2004.

 

Depreciation and amortization

 

Depreciation and amortization expense increased 20.2% to $3.1 million for the six months ended June 30, 2005, compared to $2.6 million for the same period in 2004. The increase resulted from capital expenditures to support our infrastructural requirements including additional secure facilities required for our specialized workforce and contract base as well as additional amortization from acquisition related intangibles.

 

Income from continuing operations

 

Income from continuing operations increased 10.7% to $37.7 million for the six months ended June 30, 2005, compared with $34.0 million for the same period in 2004. Operating margin decreased to 8.3% for the six months ended June 30, 2005 from 8.6% for the same period in 2004. The decrease in margin is primarily due to a less favorable mix of direct labor and subcontractor or pass through sales partially offset by decreased employee benefit costs.

 

Gain on Disposal of an Operation

 

On February 11, 2005, we sold our METI subsidiary to Alion Science and Technology Corporation. The sale generated a pre-tax gain of $3.7 million in 2005. For additional information see “Gain on Disposal of an Operation,” below.

 

Net income

 

Net income increased 258.9% to $22.1 million for the six months ended June 30, 2005, compared to $6.2 million for the same period in 2004. The increase is a result of a reduced loss on discontinued operations of ($2.3) million in 2005 versus a loss of ($13.7) million for the same period in 2004. Discontinued operations for the period ending June 30, 2004 contained a pre-tax adjustment for a change in estimate for revenue earned of $13.2 million plus a pre-tax estimated contract loss of $4.7 million on our Defense Security Services contract. The results from discontinued operations are due to our MSM subsidiary that was categorized as discontinued during the first quarter of 2005, as discussed in “Discontinued Operations” below. Our effective tax rate for the six months ended June 30, 2005 and June 30, 2004 was 40.0% and 40.8%, respectively.

 

This excerpt taken from the MANT 10-Q filed May 9, 2005.

Three Months Ended March 31, 2005 Compared to the Three Months Ended March 31, 2004

 

We experienced an increase in revenue in the first quarter of 2005, compared to the first quarter of 2004, due to an increase in our defense system support for activities in Iraq, Europe and the United States and the overall increased spending for national and homeland security, as well as our prior acquisitions.

 

Revenues

 

Revenues increased 14.7% to $217.5 million for the three months ended March 31, 2005, compared to $189.6 million for the same period in 2004. This increase is partially attributable to forward deployment support in Iraq and Afghanistan and increased

 

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work in the Intelligence Community contributed to our increase in revenue for the first quarter of 2005. Also contributing to the increase was a full quarter of revenues from our acquisitions of certain operations from Affiliated Computer Services, Inc. (ACS) on February 27, 2004 and June 1, 2004. We anticipate that quarterly revenues will continue at this level, or slightly higher levels, largely because of the United States continuing focus on national security and its efforts in the war on terrorism.

 

Cost of services

 

Cost of services increased 16.7% to $179.2 million for the three months ended March 31, 2005, compared to $153.6 million for the same period in 2004. As a percentage of revenues, cost of services increased 1.4%, to 82.4% for the three months ended March 31, 2005, compared to 81.0% for the same period in 2004. Direct labor costs increased by 16.4% primarily due to an increase in personnel, a higher direct labor utilization rate, and increased benefit costs. For the three months ended March 31, 2005, other direct costs increased by 18.6% over first quarter 2004, from $59.4 million to $70.4 million. As a percentage of revenues, other direct costs increased from 31.3% for the three months ended March 31, 2004 to 32.4% for the same period in 2005, due to increased subcontractor usage. For the three months ended March 31, 2005, overhead personnel and facilities costs decreased 0.3% as a percentage of revenue, compared to the same period in 2004.

 

Gross profit

 

Gross profit increased 6.1% to $38.3 million for the three months ended March 31, 2005, compared to $36.1 million for the same period in 2004. Gross profit margin was 17.6% for the three months ended March 31, 2005, compared to 19.0% for the same period in 2004. The decrease in gross profit margin is due to higher labor costs including employee benefits, and higher other direct costs including subcontractors as a percentage of sales. These increases were partly offset by lower growth in overhead expenses.

 

General and administrative

 

General and administrative expenses increased 14.4% to $19.3 million for the three months ended March 31, 2005, compared to $16.9 million for the same period in 2004. The increased expense primarily relates to an increase in bid and proposal spending as well as an effort to increase our management strength and infrastructure. As a percentage of revenues, general and administrative expenses remained consistent at 8.9% for the three months ended March 31, 2005 and 2004.

 

Depreciation and amortization

 

Depreciation and amortization expense increased 16.0% to $1.4 million for the three months ended March 31, 2005, compared to $1.2 million for the same period in 2004. This increase resulted from an additional $0.2 million of depreciation expense related to the acquisition of additional property, plant and equipment.

 

Income from operations

 

Income from operations decreased 2.5% to $17.5 million for the three months ended March 31, 2005, compared with $17.9 million for the same period in 2004. This decrease was primarily a result of the increased pass-through sales and costs of direct labor.

 

Interest Expense, net

 

Interest expense decreased 37.1% to $0.3 million for the three months ended March 31, 2005, compared with $0.5 million for the same period in 2004. The decrease in interest expense is a result of decreased borrowing under lines of credit during the quarter. The average levels of indebtedness were approximately $25.3 million and $29.5 million, in the three months ended March 31, 2005 and 2004, respectively. In addition, strong collections of receivables and proceeds from the disposal of an operation, $7 million, have led to an improved cash balance of $64.6 million as of March 31, 2005 compared to $4.5 million at March 31, 2004. Interest income increased due to investing the additional cash during the quarter.

 

Gain on Disposal of an Operation

 

On February 11, 2005, one of our subsidiaries, Mantech Environmental Technology, Inc (METI), was sold to Alion Science and Technology Corporation. The sale generated a pre-tax gain of $3.9 million in the first quarter of 2005. For additional information see “Gain on Disposal of an Operation,” below.

 

Other Income (Expense)

 

Other income for the first quarter of 2005 consisted primarily of income from an investment in a joint venture accounted for under the equity method, partially offset by foreign currency conversion loss for the period. Other income in the first quarter of 2004 consisted of comparable investment income from a joint venture and foreign currency conversion gains.

 

Net income

 

Net income increased 5.2% to $11.9 million for the three months ended March 31, 2005, compared to $11.3 million for the same period in 2004. The increase resulted from a $2.3 million after-tax gain on the sale of METI, partially offset by a $1.7 million reduction in net income from discontinued operations; which declined from $0.8 million of net income in the first quarter

 

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of 2004 to a net loss of $0.9 million in 2005. The results from discontinued operations are due to our MSM subsidiary that was categorized as discontinued during the first quarter of 2005, see comments below. Our effective tax rate for the three months ended March 31, 2005 and 2004 was 40.0% and 40.7%, respectively.

 

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