SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended December 31, 1995
Commission File Number 0-8401
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CACI International Inc
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
54-1345888
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(I.R.S. Employer Identification No.)
1100 North Glebe Road, Arlington, VA 22201
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(Address of principal executive offices)
(703) 841-7800
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
CACI International Inc Common Stock, $0.10 par value
----------------------------------------------------
(Title of each class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of December 31, 1995: CACI International Inc Common Stock,
$0.10 par value, 10,103,000 shares.
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CACI INTERNATIONAL INC AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION Page
- ------------------------------ ----
Item 1. Financial Statements
Unaudited Consolidated Balance Sheet
as of December 31, 1995 and June 30, 1995 3
Unaudited Consolidated Statement of Operations for the
Three Months Ended December 31, 1995 and 1994 5
Unaudited Consolidated Statement of Operations for the
Six Months Ended December 31, 1995 and 1994 6
Unaudited Consolidated Statement of Cash Flows for the
Six Months Ended December 31, 1995 and 1994 7
Notes to Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II: OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 15
INDEX TO EXHIBITS 18
SIGNATURES 19
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Item 1. Financial Statements
<TABLE>
<CAPTION>
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
ASSETS
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December 31, 1995 June 30, 1995
----------------- --------------
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $ 1,001,000 $ 1,996,000
Accounts receivable:
Billed 46,922,000 42,188,000
Unbilled 9,465,000 6,134,000
-------------- -------------
Total accounts receivable 56,387,000 48,322,000
-------------- -------------
Deferred income taxes 152,000 156,000
Acquisition escrow deposit 6,833,000 0
Prepaid expenses and other 3,917,000 3,860,000
-------------- -------------
TOTAL CURRENT ASSETS 68,290,000 54,334,000
-------------- -------------
PROPERTY AND EQUIPMENT, NET
Equipment and furniture 25,517,000 20,644,000
Leasehold improvements 2,728,000 1,809,000
-------------- -------------
Property and equipment, at cost 28,245,000 22,453,000
Accumulated depreciation
and amortization (19,283,000) (13,927,000)
-------------- -------------
TOTAL PROPERTY & EQUIPMENT, NET 8,962,000 8,526,000
-------------- -------------
ACCOUNTS RECEIVABLE, LONG TERM 7,585,000 4,489,000
GOODWILL, NET 7,548,000 5,413,000
OTHER ASSETS 1,158,000 1,182,000
DEFERRED INCOME TAXES 381,000 698,000
-------------- -------------
TOTAL ASSETS $93,924,000 $74,642,000
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</TABLE>
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Item 1. Financial Statements
<TABLE>
<CAPTION>
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
December 31, 1995 June 30, 1995
----------------- --------------
<S> <C> <C>
CURRENT LIABILITIES
Note payable $ 13,098,000 $ 0
Accounts payable
and accrued expenses 15,406,000 11,719,000
Accrued compensation & benefits 10,895,000 13,310,000
Deferred rent expense 749,000 561,000
Income taxes payable 1,512,000 1,944,000
Deferred income taxes 403,000 283,000
-------------- -------------
TOTAL CURRENT LIABILITIES 42,063,000 27,817,000
DEFERRED RENT EXPENSES 2,483,000 2,197,000
DEFERRED INCOME TAXES 143,000 143,000
SHAREHOLDERS' EQUITY
Common stock -
$.10 par value,
40,000,000 shares authorized,
13,629,000 & 13,568,000 shares issued 1,363,000 1,357,000
Capital in excess of par 5,455,000 5,053,000
Retained earnings 57,348,000 52,777,000
Cumulative currency
translation adjustments (1,269,000) (1,040,000)
Treasury stock, at cost
(3,526,000 shares & 3,526,000 shares) (13,662,000) (13,662,000)
-------------- ------------
TOTAL SHAREHOLDERS' EQUITY 49,235,000 44,485,000
-------------- -------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $93,924,000 $74,642,000
============== =============
See notes to consolidated financial statements (unaudited).
</TABLE>
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<TABLE>
<CAPTION>
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Ended December 31,
-------------------------------
1995 1994
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<S> <C> <C>
REVENUE $ 59,332,000 $ 57,394,000
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COSTS AND EXPENSES:
Direct costs 31,211,000 31,333,000
Indirect costs & selling expenses 22,726,000 21,494,000
Depreciation and amortization 1,391,000 1,192,000
------------- --------------
Total Operating Expenses 55,328,000 54,019,000
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4,004,000 3,375,000
Interest expense 129,000 149,000
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INCOME BEFORE INCOME TAXES 3,875,000 3,226,000
INCOME TAXES 1,528,000 1,238,000
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NET INCOME $ 2,347,000 $ 1,988,000
============= ==============
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE: $ 0.22 $ 0.19
============= ==============
AVERAGE NUMBER OF SHARES AND
EQUIVALENT SHARES OUTSTANDING 10,675,000 10,600,000
============= ==============
Dividends paid per share NONE NONE
============= ==============
See notes to consolidated financial statements (unaudited).
</TABLE>
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<TABLE>
<CAPTION>
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Six Months Ended December 31,
--------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
REVENUE $ 116,942,000 $ 112,275,000
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COSTS AND EXPENSES:
Direct costs 62,680,000 60,990,000
Indirect costs & selling expenses 43,963,000 42,277,000
Depreciation and amortization 2,633,000 2,355,000
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Total Operating Expenses 109,276,000 105,622,000
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7,666,000 6,653,000
Interest expense 170,000 291,000
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INCOME BEFORE INCOME TAXES 7,496,000 6,362,000
INCOME TAXES 2,925,000 2,461,000
-------------- --------------
NET INCOME 4,571,000 3,901,000
============== ==============
EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE: $ 0.43 $ 0.37
============== ==============
AVERAGE NUMBER OF SHARES AND
EQUIVALENT SHARES OUTSTANDING 10,684,000 10,598,000
============== ==============
Dividends paid per share NONE NONE
============== ==============
See notes to consolidated financial statements (unaudited).
</TABLE>
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<TABLE>
<CAPTION>
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS(UNAUDITED)
Six Months Ended December 31,
----------------------------
1995 1994
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,571,000 $ 3,901,000
Reconciliation of net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,632,000 2,355,000
Provision for deferred income taxes 437,000 418,000
Loss on sale of property and equipment 62,000 0
Changes in operating assets and liabilities:
Accounts receivable (10,723,000) (8,366,000)
Prepaid expenses and other assets (313,000) (209,000)
Acquisition escrow deposit (6,833,000) 0
Accounts payable and accrued expenses 3,549,000 379,000
Accrued compensation and benefits (2,470,000) 263,000
Deferred rent expense 474,000 126,000
Income taxes payable (408,000) (450,000)
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Net cash used in operating activities (9,022,000) (1,583,000)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (2,464,000) (1,910,000)
Proceeds from sale of property & equipment 27,000 0
Acquisition (2,449,000) 0
Other, net (584,000) (57,000)
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Net cash used in investing activities (5,470,000) (1,967,000)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds under line-of-credit 51,656,000 49,605,000
Reductions under line-of-credit (38,558,000) (44,865,000)
Issuance of common stock 408,000 294,000
Purchase of common stock for treasury 0 (2,154,000)
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Net cash provided by financing activities 13,506,000 2,880,000
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EFFECT OF EXCHANGE RATES ON CASH & EQUIVALENTS: (9,000) 43,000
------------- ------------
Net decrease in cash and equivalents (995,000) (627,000)
Cash and equivalents, beginning of period 1,996,000 941,000
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Cash and equivalents, end of period $ 1,001,000 $ 314,000
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFO:
Cash paid during the year for:
Income taxes, net of refunds 3,863,000 2,627,000
============= ============
Interest 170,000 280,000
============= ============
See notes to consolidated financial statements (unaudited).
</TABLE>
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CACI INTERNATIONAL INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
A. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and note disclosures normally included in the
annual financial statements, prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to those rules
and regulations, although the Company believes that the disclosures made are
adequate to make the information presented not misleading.
In the opinion of management, the unaudited accompanying consolidated
financial statements reflect all necessary adjustments and reclassifications
(all of which are of a normal, recurring nature) that are necessary for fair
presentation for the periods presented. It is suggested that these
consolidated financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's latest
annual report to the Securities and Exchange Commission on Form 10-K for the
year ended June 30, 1995.
B. ACCOUNTS RECEIVABLE
Total accounts receivable are net of allowance for doubtful accounts of
$1,856,000 and $1,415,000 at December 31, 1995 and June 30, 1995,
respectively. Accounts Receivable are classified as follows:
December 31, 1995 June 30, 1995
----------------- -------------
BILLED AND BILLABLE RECEIVABLES:
Billed receivables $ 42,446,000 $ 35,960,000
Billable receivables at end of period 4,476,000 6,228,000
------------- -------------
TOTAL BILLED AND BILLABLE RECEIVABLES 46,922,000 42,188,000
UNBILLED RECEIVABLES:
Unbilled pending receipt of contractual
documents authorizing billing 9,313,000 5,799,000
Unbilled retainages and fee withholds
expected to be billed within
the next 12 months 152,000 335,000
------------- -------------
9,465,000 6,134,000
Unbilled retainages and fee withholds
expected to be billed beyond
the next 12 months 7,585,000 4,489,000
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TOTAL UNBILLED RECEIVABLES 17,050,000 10,623,000
------------- -------------
TOTAL ACCOUNTS RECEIVABLE $ 63,972,000 $ 52,811,000
============= =============
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Page 9
C. ACQUISITION ESCROW DEPOSIT
As a pre-requisite to the January 1, 1996 acquisition of IMS Technologies,
Inc. ("IMS"), on December 28, 1995 the Company made a $6,833,000 deposit to a
third party escrow account to cover the $6.5 million IMS purchase price with
the remaining $383,000 to be applied towards the four founders' first year
consulting fees (also see Note E).
D. ACQUISITION AND GOODWILL
On September 1, 1995, the Company purchased all of the outstanding stock of
Automated Sciences Group, Inc. ("ASG") for $4.9 million payable in cash over
four years. ASG provides information technology, engineering, and scientific
environmental services to the U.S. Department of Defense ("DoD") and the U.S.
Department of Energy ("DoE"). The purchase price is subject to a maximum
$500,000 holdback contingent on the collectability of certain receivables.
The transaction was financed primarily through bank borrowing under the
Company's existing line of credit. The Company accounted for this acquisition
by the purchase method of accounting. The purchase price was allocated to the
net tangible and intangible assets acquired based upon preliminary estimates
of their fair values at the date of acquisition. The excess of the purchase
price over the fair value of net assets acquired was $2,449,000. This excess
has been recorded as goodwill and will be amortized on a straight line basis
over 15 years. The preliminary purchase price allocation is subject to change
during the year ending June 30, 1996 as additional information concerning net
asset valuations is obtained. Therefore, the final allocation may differ from
the preliminary allocation.
E. EVENT SUBSEQUENT TO DECEMBER 31, 1995
On January 1, 1996, the Company purchased the outstanding common stock of IMS
Technologies, Inc. ("IMS") for $6.5 million in cash payable at closing, plus
$1.5 million in cash payable to the four founders of IMS over 3 years. IMS
provides a wide range of computer services including consulting, programming,
communications design and installation, software development and systems
integration for a variety of applications. Because this acquisition occurred
on January 1, 1996, it had no impact on the Company's results for the first
and second quarter of FY 1996. The acquisition was financed with bank
borrowings under existing lines of credit.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the relative percentages that the items of
expense and earnings bear to revenue for the three and six months ended
December 31, 1995 and 1994.
Percentage of Revenue
-------------------------------------
Three Months Six Months
----------------- -----------------
FY 1996 FY 1995 FY 1996 FY 1995
------- ------- ------- -------
Revenue 100.0% 100.0% 100.0% 100.0%
Costs and Expenses
Direct Costs 52.6% 54.6% 53.6% 54.3%
Indirect Costs and Selling Expenses 38.3% 37.4% 37.6% 37.7%
Depreciation and Amortization 2.4% 2.1% 2.3% 2.1%
------- ------- ------- -------
Operating Expenses 93.3% 94.1% 93.5% 94.1%
------- ------- ------- -------
Operating Income 6.7% 5.9% 6.5% 5.9%
Interest Expense 0.2% 0.3% 0.1% 0.3%
------- ------- ------- -------
Income Before Income Taxes 6.5% 5.6% 6.4% 5.6%
Income Taxes 2.5% 2.2% 2.5% 2.2%
------- ------- ------- -------
Net Income 4.0% 3.4% 3.9% 3.4%
======= ======= ======= =======
THREE MONTHS ENDED 12/31/95 COMPARED WITH THREE MONTHS ENDED 12/31/94
Revenue for the current quarter was up $1.9 million or 3.4% to $59.3 million
from $57.4 million in last year's second fiscal quarter. The increase was the
result of a $2.0 million (6.7%) increase in the U.S. Department of Defense
("DoD"), a $0.7 million (45%) increase in revenue from other Federal Agencies,
offset by a $0.6 million (31%) decrease in revenue from State governments and
a $0.16 million (1.3%) decrease in revenue from DoJ. Revenue from Commercial
Sales remained stable at $11.7 million.
The $2.0 million DoD revenue increase was primarily the result of internal
growth and the September 1, 1995 acquisition of Automated Sciences Group
("ASG"), partially offset by the give back to the prime contractor of a DoD
contract by the Company on April 1, 1995. This subcontract generated
approximately $2.0 million in revenue in last year's second fiscal quarter,
but was breakeven in terms of it's profitability. DoD accounted for 53.1% of
the total revenue for the current quarter compared to 51.4% of total revenue
during last year's second quarter.
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The $0.7 million increase in revenue from other Federal Agencies was primarily
the result of internal growth and the September 1, 1995 acquisition of ASG.
Revenue from other Federal Agencies accounted for 4% of the total revenue for
the current quarter compared to 2.9% of total revenue during last year's
second quarter.
The slight revenue decline ($0.16 million) in the DoJ arena was the result of
a reduction to the on-going DoJ litigation, for which the Company provides
automated litigation support services. Revenue from DoJ is dependent upon the
level of DoJ litigation (cases and projects) that the Company is supporting at
any period in time and can fluctuate from quarter to quarter. The Company
believes that due to anticipated reductions to certain DoJ support efforts,
revenue for the remainder of this fiscal period will diminish by approximately
$3.0 million. However, this decline is anticipated to be offset by the
January 1, 1996 acquisition of IMS and its revenue from the DoJ (See Note E).
DoJ accounted for 20.7% of total revenue during the current quarter, compared
to 21.6% of total revenue during the last year's second fiscal quarter.
The $0.6 million revenue decline from State governments was the result of an
early termination of a state support effort that was slated for completion at
the end of this fiscal quarter. While the Company has recently received
certain new contract awards from State governments, the full impact of these
awards will not materialize until next fiscal year. Accordingly, the State
government sales for the remainder of this fiscal period are projected to be
approximately $3.0 million versus $4.5 million during last year's second half.
State government revenue accounted for 2.4% of total revenue during the
current quarter, compared to 3.6% of total revenue during the last year's
second fiscal quarter.
For the quarter, Commercial revenue remained stable; however, as a percentage
of total revenue, decreased to 19.8% versus last year's 20.5%. Management
believes that the recent launch in the current quarter of its InSite 95 market
analysis product to run under Microsoft's Windows 95 [InSite 95 is a trademark
of CACI, Inc.-Federal; Windows 95 is a trademark of the Microsoft
Corporation.] will result in increased sales in the United Kingdom for the
balance of this fiscal period. Management believes that sales from its
network and telecommunications simulation product, COMNET III [COMNET III is a
trademark of CACI Products Company], will continue to show steady growth
performance in the remainder of the fiscal year. Revenue from the Company's
Commercial litigation support division declined. The nature of the Company's
proprietary software products business, primarily its simulation products line
and its market analysis products, is inherently less predictable than the
Company's longer-term contract project work with the Federal Government and
may fluctuate significantly from quarter to quarter. This is also the case,
but to a lesser degree, for the company's short-term Commercial contract
projects and State government contract projects.
The addition of ASG and the recent acquisition of IMS (See Note E) are
anticipated to generate revenue of approximately $17 million for the remainder
of this fiscal year.
For the quarter, direct costs remained stable; however, as a percentage of
total revenue, declined to 52.6% from 54.6%. Direct labor, the principal
driving component of contract revenue, was up by $0.6 million or 2.7%, while
non-labor direct costs decreased by $0.6 million or 5.6%.
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Indirect costs grew by $1.2 million or 5.7% to $22.7 million from $21.5
million, and as a percentage of revenue, increased to 38.3% from 37.4%.
Indirect costs increased in labor, fringe and Bid and Proposal ("B&P"). The
increase in indirect labor costs were largely due to the increased sales in
the U.K. this quarter. Fringe benefits, the largest category of indirect
expenses (33% of total), increased in proportion to the increase in total
payroll (direct labor, B&P labor and incentive compensation). B&P labor
increased in response to increases in volume of actual and planned proposals
for the year.
Depreciation and amortization increased by $199,000 to $1.391 from $1.192
million. An increased level of fixed assets (primarily from purchases of
computing and network equipment coupled with the addition of ASG fixed assets)
accounted for $157,000 or 79% of the growth. The other $42,000, or 21% of
the growth was primarily the result of ASG Goodwill amortization.
Income before interest and income taxes grew by $629,000 or 18.6% to $4.0
million from $3.4 million. This increase resulted from i) an increase in more
profitable direct labor revenue and ii) a replacement of the non-profit-
generating revenue associated with the DoD give back contract discussed above.
Interest costs totalled $129,000 (0.2% of revenue) down $20,000 (13%) from
last year's $149,000. The decrease is a result of an $0.7 million or 8%
decrease in average borrowings from $8.4 million to $7.8 million.
Income before income taxes rose to $3.9 million from last year's earnings of
$3.2 million. The $649,000 (20%) increase was attributable to the growth in
operating income and the decrease in interest expense.
Income tax expense of $1,528,000 is consistent with the growth in income
before income tax as the effective tax rate has remained constant from year to
year.
SIX MONTHS ENDED 12/31/95 COMPARED WITH SIX MONTHS ENDED 12/31/94
Revenue grew $4.6 million (4%) to $116.9 million from $112.3 million. DoD
revenue for the first six months grew $2.6 million (4.4%) of which
approximately $4.7 million is a result of the acquisition of ASG on September
1, 1995, offset by $3.9 million DoD revenue associated with the give back
contract discussed earlier, with the remainder derived from new contracts and
additions to existing contracts. A $2.7 million (12%) increase in DoJ revenue
was the result of new cases and an expansion of support to existing cases
brought by DoJ in the first quarter of this fiscal period. Commercial revenue
decreased $1.7 million (7%) as a result of the first quarter's downturn in
U.K. and U.S. data marketing sales. Revenue from other Federal Agencies grew
by $1.4 million (45%) due largely to the acquisition of ASG, and revenue from
State governments decreased by $0.2 million or 5%.
Direct contract costs grew by $1.7 million (3%) to $62.7 million from $61.0
million. Direct labor, the principal driving component of contract revenue,
was up $2.1 million or 5%, while non-labor direct costs decreased $0.4 million
or 2%. Direct costs, as a percentage of revenue, decreased to 53.6% from
54.3%.
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Indirect costs grew by $1.7 million or 4% to $44.0 million from $42.3 million
and, as a percentage of revenue, remained stable at 38%. This reflects the
Company's continuing emphasis on minimizing administrative indirect costs
while increasing funds for marketing and bid and proposal (B&P) efforts.
Indirect labor increased by $0.7 million or 5.6%. As a percentage of revenue,
indirect labor costs remained stable at 11%.
Indirect costs also increased in B&P labor, incentive compensation and fringe
benefits. B&P labor increased in response to increases in the volume of
actual and planned proposals for the year. Fringe benefits, the largest
category of indirect expenses (34.5% of total), increased in proportion to the
increase in total payroll (direct labor, B&P labor, indirect labor and
incentive compensation).
Depreciation and amortization increased by $278,000 to $2.633 million from
$2.355 million. An increased level of fixed asset acquisitions (primarily
purchases of computing and network equipment coupled with the addition of ASG
fixed assets) accounted for 74% of the growth. The other 21% of the growth
was the result of Goodwill amortization.
Interest costs decreased by $121,000 to $170,000 from $291,000. The decrease
is a result of a $4.4 million or 50% decrease in average borrowings from $8.8
million to $4.4 million, offset by the 6% increase in effective interest rates
from 6.5% to 6.9%. As discussed previously, the increased borrowings were the
result of the recent acquisitions discussed under "Liquidity and Capital
Resources" (see below).
Income before income taxes rose to $7.5 million from last year's $6.4 million.
The $1.1 million (18%) increase was primarily attributable to the growth in
operating income and augmented by the decrease in interest expense.
Income tax expense of $2.9 million is consistent with the growth in income
before income tax as the effective tax rate has remained constant from year to
year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of cash is from operating activities and bank
borrowings. The Company's primary requirement for working capital is to carry
billed and unbilled receivables, a majority of which are due under prime
contracts with the U.S. Government, or subcontracts thereunder.
On January 1, 1996, the Company increased its unsecured line of credit with
Signet Bank from $20 million to $25 million and extended its credit agreement
through March 31, 1997. The Company also maintains a 500,000 pounds sterling
unsecured line of credit with the National Westminster Bank in London, England
which expires in November, 1996 (See Note 4 to the Consolidated Financial
Statements for the year ended June 30, 1995). The Company believes it can
renew and increase as necessary it's lines of credit to cover working capital
or future acquisition requirements. Accordingly, the Company believes that
the combination of internally generated funds, available bank credit and cash
on hand will provide the required liquidity and capital resources for the
foreseeable future.
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Page 14
As discussed in Note E, on January 1, 1996, the Company purchased all the
outstanding common stock of IMS Technologies, Inc. for $6.5 million in cash
payable at closing, plus $1.5 million in cash payable to four founders of IMS
over 3 years. As discussed in Note C, on December 28, 1995, the Company made
a $6.8 deposit to the IMS escrow account to execute the purchase transaction
on January 1, 1996. The acquisition was financed with bank borrowings under
the existing line of credit. This acquisition is expected to add $22 million
in annual revenue, and at least $500,000 in net income in the first full year
of operations. In addition, the Company projects to add approximately $2.5
million of goodwill, to be amortized over 15 years.
As discussed above, on September 1, 1995, as part of its continuing strategy
of acquiring small, synergistic companies within the same niche to broaden its
client and product base, the Company purchased all of the outstanding stock of
Automated Sciences Group, Inc. for $4.9 million payable in cash over four
years. The purchase price is subject to a maximum $500,000 holdback
contingent on the collectability of certain receivables. The transaction was
financed primarily through bank borrowing under the Company's existing line of
credit.
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Page 15
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
PENTAGEN TECHNOLOGIES INTERNATIONAL, LTD. V. CACI INTERNATIONAL INC, ET AL.
Reference is made to Part II, Item 1, Legal Proceedings, in the Registrant's
Quarterly Report on Form 10-Q for the period ending September 30, 1995 for the
most recently filed information concerning the lawsuit filed on July 1, 1993,
against the Registrant by Pentagen Technologies International, Ltd.
("Pentagen") in the Supreme Court for the State of New York alleging
conversion of intellectual property and violation of statutory duties as to
appropriation of computer software, and the lawsuit filed December 10, 1993
against the Registrant in the United States District Court for the Southern
District of New York alleging copyright and trademark infringement and
violation of the Major Fraud Against the United States Act. Since the filing
of the Registrant's report indicated above, the information reported therein
has changed as set forth below.
As a result of the decision of the Fourth Circuit Court of Appeals in the case
of "CACI International Inc., et al v. Pentagen Technologies, Ltd., et al"
issued November 16, 1995 affirming the decision of the United States District
Court for the Eastern District of Virginia, on December 8, 1995, Judge Mukasey
of the United States District Court for the Southern District of New York
established schedules for submission of briefs on (1) the defendants' motions
to dismiss, and (2) the plaintiff's motion for summary judgment in both cases.
The Registrant believes that these cases are appropriate for dismissal by the
Court in New York, or for transfer to the Eastern District of Virginia for
dismissal.
CACI INTERNATIONAL INC, ET AL. V. PENTAGEN TECHNOLOGIES, LTD., ET AL.
Reference is made to Part II, Item 1, Legal Proceedings, in the Registrant's
Quarterly Report on Form 10-Q for the period ending September 30, 1995 for the
most recently filed information concerning the lawsuit filed on December 22,
1993, in the United States District Court for the Eastern District of Virginia
against Pentagen Technologies International, Ltd., Baird Technologies, Inc.,
John C. Baird and Mitchell R. Leiser (principals of Pentagen and Baird).
As previously reported, the Court granted Summary Judgment in favor of CACI
holding that: (i) CACI's marketing of certain work to the United States Army
Materiel Command did not infringe Pentagen's MENTIX copyright or infringe any
trademark held by Pentagen; (ii) CACI's proprietary RENovate software
reengineering methodology does not infringe Pentagen's MENTIX copyright;
(iii) CACI's work on the Army's Sustaining Base Information Services ("SBIS")
contract does not infringe Pentagen's MENTIX copyright; and (iv) Pentagen and
its principals, John C. Baird and Mitchell R. Leiser, are liable for both
compensatory and punitive damages for defamation per se.
Since the filing of CACI's report indicated above, the information reported
therein on pending legal proceedings has changed as follows.
<PAGE>
Page 16
By Per Curiam Opinion dated November 16, 1995, the Fourth Circuit Court of
Appeals affirmed the decision of the United States District Court for the
Eastern District of Virginia in all respects.
The parties continue to engage in proceedings associated with Registrant's
efforts to enforce the monetary awards affirmed by the Fourth Circuit. A
hearing on charges of criminal contempt of court against defendant Mitchell R.
Leiser is scheduled for February 29, 1996.
UNITED STATES OF AMERICA, EX REL., PENTAGEN TECHNOLOGIES INTERNATIONAL, LTD.
V. CACI INTERNATIONAL INC ET AL.
Reference is made to Part II, Item 1, Legal Proceedings, in the Registrant's
Quarterly Report on Form 10-K for the period ending September 30, 1995 for the
most recently filed information concerning the lawsuit filed on April 21,
1994, in the U.S. District Court for the Southern District of New York against
CACI International Inc and its wholly-owned subsidiaries, CACI Systems
Integration, Inc. and CACI, INC.-FEDERAL, International Business Machines
Corporation ("IBM"), Loral Corporation ("Loral"), American Telephone and
Telegraph Company ("AT&T"), PRC, Inc., I-Net, Inc., and Statistica, Inc.
asserting the same factual allegations that Pentagen asserted against CACI in
the cases described above, and alleging that the defendants violated the False
Claims Act, 31 USC Section 3732, in connection with the performance of the
SBIS contract and certain marketing efforts to the Army Materiel Command.
After the Government declined to intervene in the case, and after the U.S.
District Court for the Eastern District of Virginia ruled against Pentagen on
the factual allegations which underlie the case, the case was unsealed and
Pentagen served an Amended Complaint on June 5, 1995, which changed the
wording but not the substance of the allegations of the original Complaint.
Since the filing of Registrant's report indicated above, the information
therein on pending legal proceedings has changed as follows.
By Opinion and Order dated November 21, 1995 (and amended on January 4, 1996
to correct certain scrivener errors), Judge Carter of the United States
District Court for the Southern District of New York granted defendants'
motions to dismiss all counts of the case on the grounds that Pentagen failed
to meet the subject matter jurisdiction requirements for the case under the
False Claims Act. The court also denied defendants' requests for sanctions
against Pentagen.
On December 7, 1995, in an effort to avoid final dismissal of its case,
Pentagen filed a motion to reconsider the decision, grant relief from the
final judgment dismissing the case, amend its complaint for the second time,
and to add a party to the lawsuit. On December 21, 1995, Registrant filed its
response providing the court with a firm basis on which to deny such motion.
CACI views this case as being entirely without legitimate factual or legal
basis, as evidenced in part by fact that the assertions which underlie the
case already have been litigated and decided against Pentagen and in part by
the Court's dismissal of all counts for lack of subject matter jurisdiction.
<PAGE>
Page 17
CERIDIAN CORPORATION V. CACI SYSTEMS INTEGRATION, INC.
On October 6, 1995, Ceridian Corporation ("Ceridian") filed suit in the
District Court for Hennepin County Minnesota against Registrant's wholly-owned
subsidiary, CACI Systems Integration, Inc. ("CACI"), alleging breach of
contract, breach of warranty and repudiation by CACI in connection with a
contract for the development of a manufacturing software system. On January
26, 1996 CACI filed its Answer and Counterclaims, denying Ceridian's
allegations and seeking damages from Ceridian for breach of contract,
intentional and negligent misrepresentation, and tortious interference with
contract.
<PAGE>
Page 18
CACI INTERNATIONAL INC AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit
Number Title
11 Computation of Earnings per Common and
Common Equivalent Share
27 Financial Data Schedule
<PAGE>
Page 19
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 thereunto duly authorized.
CACI International Inc
(Registrant)
Date: February 9, 1996 By: /s/
---------------------------------
Dr. J.P. London
Chairman of the Board,
President, and Director
(Principal Executive Officer)
Date: February 9, 1996 By: /s/
---------------------------------
Milan J. Bogdanovic
Vice President & Corporate Controller
(Principal Accounting Officer)
EXHIBIT 11
CACI INTERNATIONAL INC AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON
AND COMMON EQUIVALENT SHARE
<TABLE>
<CAPTION>
Three Months Ended December 31, Six Months Ended December 31,
1995 1994 1995 1994
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Income $2,347,000 $1,988,000 $4,571,000 $3,901,000
Average shares outstanding
during the period 10,102,000 10,007,000 10,094,000 10,002,000
Dilutive effect of stock
options after application
of treasury stock method 573,000 593,000 590,000 596,000
---------- ---------- ---------- ----------
Average number of shares
outstanding during the period 10,675,000 10,600,000 10,684,000 10,598,000
========== ========== ========== ==========
Earnings per common and
common equivalent share: $ 0.22 $ 0.19 $ 0.43 $ 0.37
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-Q FOR FY 1996 QUARTER ENDED DECEMBER 31, 1995, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 1,001,000
<SECURITIES> 0
<RECEIVABLES> 65,828,000
<ALLOWANCES> (1,856,000)
<INVENTORY> 0
<CURRENT-ASSETS> 68,290,000
<PP&E> 28,245,000
<DEPRECIATION> (19,283,000)
<TOTAL-ASSETS> 93,924,000
<CURRENT-LIABILITIES> 42,063,000
<BONDS> 0
0
0
<COMMON> 1,363,000
<OTHER-SE> 47,872,000
<TOTAL-LIABILITY-AND-EQUITY> 93,924,000
<SALES> 0
<TOTAL-REVENUES> 116,942,000
<CGS> 0
<TOTAL-COSTS> 62,680,000
<OTHER-EXPENSES> 46,481,000
<LOSS-PROVISION> 115,000
<INTEREST-EXPENSE> 170,000
<INCOME-PRETAX> 7,496,000
<INCOME-TAX> 2,925,000
<INCOME-CONTINUING> 4,571,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,571,000
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.43
</TABLE>
