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May 10, 2006

Kevin Parker Elected Deltek Chairman, Succeeding Ken deLaski

Outsider To Become Chairman Of Deltek
Co-Founder Exits; Firm Ponders IPO

Deltek Systems Inc., a Herndon company that makes software for government contractors, said yes­terday that president and chief ex­ecutive Kevin T. Parker would suc­ceed company co-founder Kenneth E. deLaski as chairman, continuing the company’s move away from its family roots and toward a possible initial public offering.

We’re focused as a management team and as a board on bringing the company to the next level,” Par­ker said. He noted that while the firm does not have a timetable for a public offering, such a move would represent “an opportunity.”

“Historically, Deltek has been a word-of-mouth business. Being a public company would give a larger sense of awareness of what our company is and what our expertise is,” he said. He also noted that more money would be available for acquisitions if the company were public. Deltek has made two signifi­cant acquisitions in the past seven months.

Parker’s addition of the chair­man title to his duties comes dur­ing an unprecedented boom for Washington area contractors. Companies are routinely recording record profits as they seek to meet the government’s growing demand for technology, and dozens of com­panies have been bought and sold in a wave of industry mergers.

Deltek made its name selling software that helps those contrac­tors account for their revenue and expenses. The firm has more than 11,000 clients, having expanded beyond contracting to engineering, construction and other fields in which companies need help track­ing large projects. Its customers in­clude construction giant Bechtel Corp., architecture firm Hellmuth, Obata & Kassabaum Inc. and Veri­zon Communications Inc.

Parker, 46, said there is more room for growth in Deltek’s tradi­tional business areas and in newer fields such as consulting and information technology.

Until last year, Deltek had been run by only two men in its history: deLaski and his father, Donald de­ Laski, an accountant who special­ized in the arcane rules of govern­ment contracting. Hoping to develop an accounting program de­signed around those rules, they co­founded Deltek in 1983 with $250,000 and two programmers.

When Kenneth deLaski took over from his father in 1996, the company had more than $30 mil­lion in revenue and about 300 em­ployees.

In the past year, Deltek has un­dergone major changes, and the de­Laski family’s role has increasingly diminished.

In April 2005, New York-based private equity firm New Mountain Capital LLC bought 75 percent of Deltek’s shares for $205 million. Two months later, the company an­nounced that Parker would replace deLaski as chief executive.

Parker had been chief financial officer and co-president of software company PeopleSoft Inc. before that company was acquired by Ora­cle Corp. His time so far at Deltek has been marked by the acquisition of two competitors: Wmd2 Soft­ware Inc. in October and Welcom Corp. in March.

Deltek was public once before. The firm had a successful IPO in 1997 and was a publicly traded company for the next five years. In 2000, it ranked 23rd on Business Week’s list of hot growth compa­nies. But within a year, the technol­ogy bubble had burst and the com­pany’s fortunes plummeted, with earnings down and the stock price in decline.

Kenneth deLaski took the com­pany private again. His family had kept 55 percent of the company’s shares and bought back much of the rest for $7.15 a share- about $4 lower than the IPO price in 1997.

In a 2003 interview, deLaski re­called Deltek’ s time as a public company with little fondness, cit­ing Wall Street’s demands for mak­ing the quarterly numbers. “You really can’t help yourself but be focused on scaring out every [earn­ings-per-share] penny,” he said then. uGod, please let it be 14 cents, not 13 cents.”

Since the company went back to being private, it has rebounded. In February, Deltek announced reve­nue of $150 million for 2005, the second straight year in which it rose more than 20 percent.

A company spokesman said de­Laski, 48, was not available for comment yesterday. In a written statement, he said: “Deltek is truly positioned for even greater future success. I am confident that under Kevin’s direction, Deltek will con­tinue to gain market share.”

The family will retain some in­volvement in Deltek’s future. The company said yesterday that Kenneth deLaski’s sister, Kathleen de­Laski, would join the board. She is president of the charitable Sallie Mae Fund and has also been senior vice president at Sallie Mae, group director at AOL LLC and a Penta­gon spokeswoman.

Also added to the board yester­day was Joseph Kampf, chief exec­utive of government IT provider Anteon International Corp. He led that company through an IPO in 2002.

Alok Singh, managing director of New Mountain Capital, will be­ come lead director of Deltek’s board.

Mark Amtower, a partner with the marketing consulting firm Am­tower & Co., said Deltek’s moves indicate that it is priming itself for future growth and, possibly, an IPO. In particular, Amtower said, Deltek may be seeking larger customers to boost its bottom line.

“They want to migrate their platform to the integrator level and go after the big boys,” Amtower said.