Anteon Corporation

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Anteon Corporation

3211 Jermantown Road, Suite 700
Fairfax, Virginia 22030
U.S.A.
Telephone: (703) 246-0200
Fax: (703) 246-0294
Web site: http://www.anteon.com

Public Company
Incorporated: 1996
Employees: 7,200
Sales: $825.82 million (2002)
Stock Exchanges: New York
Ticker Symbol: ANT
NAIC: 541512 Computer Systems Design Services; 541330 Engineering Services; 511210 Software Publishers

Anteon Corporation provides information technology solutions and engineering services to government clients. Anteon designs, integrates, and maintains advance systems for national defense, intelligence, emergency response, and other government missions. The company contracts with virtually all military services, including the U.S. Army, Navy, and Marine Corps, as well as dozens of other civilian and defense organizations within the federal government.

Origins

Although Anteon traces its origins to the 1970s, the true core of the company was created in 1996 through an acquisitionan appropriate beginning for an enterprise whose greatest successes were on the acquisitive front. The company began as the professional services division of Ogden Corporation, a conglomerate whose core businesses were involved in providing concessions at sports venues and on-the-tarmac service to airlines at airports across the nation. Ogden Corporation purchased the professional services assets in the 1980s, forming what would become known as Ogden Professional Services. By the mid-1990s, Ogden Professional Services employed 1,200 programmers, engineers, and technical analysts who oversaw more than 200 computer contracts awarded by the federal government. The combination seemed an odd mix; a technically oriented, federal government-supported business owned by a company that sold beer and hot dogs. Ogden Professional Services was not Ogden Corporations only asset to appear out of place, however. Among other companies, Ogden Corporation also owned W.J. Schäfer Associates, a firm that provided scientific support to government agencies, including the Pentagons ballistic missile defense organization. The anomalies were the result of Ogden Corps strategic diversification, but by the mid-1990s the company had decided to shelve its strategy and focus on its core businesses. Ogden Professional Services, W.J. Schafer Associates, and other assets that diverted the companys attention were put up for sale.

There were a number of different suitors interested in Ogden Professional Services, and each submitted a bid. In January 1996, the winner was announced, a New York-based investment firm named Caxton Corp. A hedge-fund operator, Caxton paid $40 million for the Ogden division, which at the time was generating $109 million in annual revenue, a sum collected from serving 60 federal agencies. Caxton renamed its acquisition Anteon Corporation and announced ambitious plans for its new property. Caxton executives declared their intention to invest in Anteons growth by acquiring competitors, hoping to triple the companys size within the next few years. The professional services firm was considered to be too small to survive in the government contracting market, a market that analysts predicted would be dominated by large companies able to reap the benefits of efficiencies of scale and scope. The objective was aggressive growth, and to realize their goal Caxton officials appointed Joseph M. Kampf as Anteons new chief executive officer.

No individual had a greater influence on the strident growth achieved from 1996 forward than Kampf. Kampf received a B.A. in economics from the University of North Carolina, which he used to secure several operational and financial management positions in the United States and South America. After garnering praise in his early professional career, Kampf was hired as an executive by The Penn Central Corporation. First, Kampf served as senior vice-president of the companys 6,500-employee federal systems group. Next, he was named executive vice-president of a Penn Central subsidiary named Vitro Corp., a company that earned most of its income serving as a contractor for the U.S. Navy. From Vitro Corp, Kampf joined Anteon, where his experience and contacts as a senior executive for a Navy contractor would leave an indelible imprint on the newly formed Anteon.

The purchase of Ogden Professional Services by Caxton was completed in April 1996, marking the beginning of the companys bid to become a major player in the defense contracting industry. One month after being recast as Anteon, the company announced it had secured a $32 million contract to provide technical and managerial services to the Navy. In the years ahead, Anteon achieved the bulk of its growth through acquisitions, but the value of adding business such as the $32 million Navy contract was not to be underestimated. Anteon recorded impressive growth through internal means as well, averaging 15 percent annual growth during the late 1990s and early 21st centurya rate of growth calculated without the one-time surge in sales provided by an acquisition. The companys ability to achieve steady growth through internal, or organic, means spoke highly of the Kampf-led management team, whose expertise provided a sturdy foundation to support the acquisitions that soon would be absorbed into the companys operations.

Anteons acquisition campaign followed a methodical, calculated course. The process of identifying competitors to acquire involved screening hundreds of candidates, from which the company pared down the list to no more than a half-dozen targets. Although the companys revenue volume swelled considerably on an annual basis following the appointment of Kampf, it did so by rarely acquiring more than one company in a single calendar year. The first year of the Kampf era ended without any acquisitions completed, but Kampf hailed the first year of new ownership as a dynamic year, highlighted by a 30 percent growth in revenue, according to an April 24, 1997 company press release. Kampf used the occasion to explain his bold plans for the future, which he described as aggressive but achievable, in the Anteon press release. Largely through acquisitions, Kampf planned to reach the $500 million-in-sales mark in 36 months. Kampf planned to hit his financial target by branching out into new technological fields and by broadening the companys customer base to include more federal clients.

Acquisitions Beginning in 1997

The first addition to the company arrived more than a year after the Caxton-led buyout. In late August 1997, Anteon pai $19 million to acquire Vector Data Systems, Inc., a $35 million-in-sales supplier of information systems and services for the collection, analysis, and distribution of military intelligence data. Next, in May 1998, the company paid $45.9 million to acquire Techmatics, Inc., a $56.7 million-in-sales company based in the same community as Anteon, Fairfax, Virginia. Founded in 1982, Techmatics recorded robust growth during the 1990s, increasing its sales at an annual rate of 20 percent to become one of the fastest growing technology companies in the federal service industry. Techmatics largest customer was the Department of Defense, for which the company provided engineering services for numerous programs. Techmatics engineering and program management services were used in large-scale military system development, such as the Navys surface ship fleet, on-ship combat systems, and missile defense programs. With the addition of Vector Data and Techmatics, Anteons workforce eclipsed 2,300 employees, having roughly doubled in size within two years. Sales for the year fell just shy of $250 million, halfway towards Kampfs target of $500 million by 2000.

Anteon acquired its third company a little more than a year after purchasing Techmatics. In June 1999, the company purchased Analysis & Technology, Inc., the largest acquisition in the first seven years of Anteons existence. Analysis & Technology, which generated $170.4 million in sales before its acquisition, provided a full range of engineering and information technology services to federal and commercial customers, relying heavily, like Techmatics, on business with the Department of Defense. Anteon paid $155.6 million to complete the deal, gaining 1,700 Analysis & Technology employees and a number of offices scattered across the country. As Anteon exited the 1990s, its payroll comprised more than 4,000 employees in 70 offices. Sales in 1999 inched past $400 million.

As Anteon grew, both through external and internal means, its stature within the industry increased as well. In 1999, Defense News published its list of the Worlds Top 100 Defense Firms. On the list was Anteon, earning 85th place in the rankings, which were derived using data from survey responses submitted by companies throughout the world. Defense News was not the only publication to acknowledge Anteons resolute rise within the industry. Federal Computer Week, among other independent sources, recognized the company as a leading information technology integrator, giving Kampf and his executives further incentive to actualize their expansion plan. By this point, with the half-billion-dollar goal in reach, Kampf was setting his sights higher, making reference to Anteon becoming a multibillion-dollar company. The companys progress in the next several years suggested that Kampfs objective was not farfetched, as the company continued to perform admirably, both in its efficient absorption of other companies and in its ability to record strong organic growth.

Company Perspectives

We make a practice of hiring outstanding individuals and providing an exceptional working environment. The projects we undertake and the goals of this corporation surpass the abilities and talents of any one individual. That is why we work very hard to make cooperative team efforts, not competition, the cornerstone of our corporate culture. We call this Team Anteon.

After the acquisition of Analysis & Technology, nearly a year-and-a-half passed before Anteon completed another acquisition. In October 2000, the company acquired Chantilly, Virginia-based Sherikon, Inc., paying roughly $35 million for the $65 million-in-sales company. Privately held Sherikon, with 750 employees and 14 offices, provided technology services to federal, state, and local clients. Founded in 1984, the company operated in 21 states and internationally as well, with offices in Puerto Rico, Germany, and Italy.

In 2000, Kampf easily reached the sales goal he set three years earlier. Anteon generated $542.8 million in sales for the year, and dramatically increased its industry ranking. When Defense News published its annual list of rankings, Anteon occupied the 58th position, leaping into the mid-tier of defense contractors worldwide. In the months leading up to the companys next acquisition, internal growth drove it forward, as Anteon registered an organic growth rate of more than 20 percent during the first six months of 2001. The acquisitions get the headlines, Kampf explained in an August 7, 2001 company press release, but it is the organic growth that demonstrates a companys ability to win new business and provide high quality services to its customers.

Anteons fifth acquisition was the smallest of the companys purchases, but its addition added meaningfully to the breadth of its services. In July 2001, Anteon acquired the training systems division of SIGCOM, Inc. Referred to as SIGCOM Training, the $12.5 million-in-sales division was acquired for $11 million. SIGCOM Training provided advanced simulations systems for military and government organizations such as the U.S. Army, U.S. Marine Corps, U.S. Navy Seals, the Federal Bureau of Investigation, the British Special Forces, and North Atlantic Treaty Organization troops. SIGCOM Trainings specialty was in simulating combat conditions in urban areas.

Initial Public Offering of Stock in 2002

When Caxton acquired Ogden Professional Services, the consensus among analysts was that the hedge-fund firm would either sell the company or take it public. The latter option was the course taken, ending Anteons existence as a privately held concern. In March 2002, the company completed its initial public offering (IPO) of stock, raising $270 million that was used to pay down the companys debt. Anteon ended the year with $825 million in sales, and a contract backlog of $4.3 billion.

As Anteon embarked on a new era as a publicly traded concern, it exuded considerable strength, holding sway as a company of far greater stature than the professional services division inherited by Kampf and his executive team. Its debt significantly reduced by the proceeds of the IPO, the company enjoyed the financial freedom to continue its aggressive rise as a defense contractor. In May 2003, the company grabbed the business press headlines again, completing the sixth acquisition since Kampf was appointed chief executive officer. The acquisition of Information Spectrum Inc. (ISI), a maker of optical security cards for the U.S. State Department, was driven, in part, by the business created in the aftermath of the attacks on September 11, 2001. Seeking to bolster its ability to secure business from the Homeland Security Department, Anteon significantly increased its chances to secure a contract with the potential to be worth hundreds of millions of dollars by purchasing ISI. Anteons executive vice-president for corporate development explained the reasoning behind the acquisition in an April 24, 2003 interview with Knight Ridder/Tribune Business News. ISI is unique in that it is the only company making optical cards for the U.S. government, he said. Were hoping to combine those technologies with our own integrated-circuits technology to win the contract.

The addition of ISI added $130.5 million in sales, 1,200 employees, and 27 U.S.-based offices to Anteons ever expanding operations. In the years ahead, the company promised to figure prominently in the billions of dollars being awarded by a host of federal agencies. With Kampf leading the companys charge, Anteon promised to be a prominent player in the defense contracting market for years to come.

Principal Subsidiaries

Vector Data Systems, Inc.; Techmatics, Inc.; Analysis & Technology, Inc.; Sherikon, Inc.; Information Spectrum, Inc.

Principal Competitors

Booz Allen Hamilton Inc.; Electronic Data Systems Corporation; Raytheon Company.

Key Dates

1996:
Caxton Corp. acquires Ogden Professional Services and renames the company Anteon Corporation.
1997:
Anteon acquires Vector Data Systems, Inc.
1998:
Anteon acquires Techmatics, Inc., lifting annual sales to $250 million.
1999:
Anteon acquires Analysis & Technology, Inc.
2000:
Anteon acquires Sherikon, Inc.
2002:
Anteon converts to public ownership.
2003:
Anteon acquires Information Spectrum, Inc.

Further Reading

Anteon Awarded Major Contract to Support Army Units, EDP Weeklys IT Monitor, March 31, 2003, p. 8.

Anteon Looks to Bank on Federal Spending, IPO Reporter, January 7, 2002.

Bonasia, J., Defense Contractor Anteon Timed Its IPO Just Right, Investors Business Daily, March 13, 2002, p. A06.

Fairfaxs Anteon to Buy Annandales ISI; $90.7 Million Acquisition to Help Bigger Firm Get Homeland-Security Business, Washington Times, April 24, 2003, p. C14.

Higgins, Marguerite, Fairfax, Va.-Based Firm Anteon Aims to Ramp Up Homeland-Security Business, Knight Ridder/Tribune Business News, April 24, 2003.

Pearlstein, Steven, Surviving the Sale at Ogden, Panic Turns to Promise at a Divested Division, Washington Post, May 6, 1996, p. F19.

Woodard, Christopher, Anteon Corp., Investors Business Daily, June 28, 2002, p. A06.

Jeffrey L. Covell

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Anteon Corporation

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