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 September 30, 2004
Commission File Number 0-8401
CACI International Inc
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
54-1345888
(I.R.S. Employer Identification No.)
1100 North Glebe Road, Arlington, VA 22201
(Address of principal executive offices)
(703) 841-7800
(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 by checkmark whether registrant is an accelerated filer (as defined in Rule 12b-2 of the Act.) Yes x. No ¨.
Indicate the number of shares outstanding of each of the Registrant’s classes of Common Stock, as of September 30, 2004: CACI International Inc Common Stock, $.10 par value, 29,228,317 shares.
CACI INTERNATIONAL INC AND SUBSIDIARIES
| PAGE | ||||
| PART I: FINANCIAL INFORMATION |
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| Item 1. |
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| 3 | ||||
| Consolidated Balance Sheets as of September 30, 2004 (Unaudited) and June 30, 2004 |
4 | |||
| 5 | ||||
| 6 | ||||
| Notes to Unaudited Condensed Consolidated Financial Statements |
7 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14 | ||
| Item 3. |
17 | |||
| Item 4. |
17 | |||
| PART II: OTHER INFORMATION |
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| Item 1. |
18 | |||
| Item 2. |
19 | |||
| Item 3. |
19 | |||
| Item 4. |
19 | |||
| Item 5. |
19 | |||
| Item 6. |
20 | |||
| 22 | ||||
2
FINANCIAL INFORMATION
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(amounts in thousands, except per share data)
| Three Months Ended September 30, |
|||||||
| 2004 |
2003 |
||||||
| Revenue |
$ | 388,653 | $ | 235,745 | |||
| Costs and expenses: |
|||||||
| Direct costs |
240,449 | 145,827 | |||||
| Indirect costs and selling expenses |
104,317 | 65,516 | |||||
| Depreciation and amortization |
8,298 | 3,837 | |||||
| Total costs and expenses |
353,064 | 215,180 | |||||
| Income from operations |
35,589 | 20,565 | |||||
| Interest expense (income), net |
3,473 | (348 | ) | ||||
| Income before income taxes |
32,116 | 20,913 | |||||
| Income taxes |
12,354 | 7,947 | |||||
| Net income |
$ | 19,762 | $ | 12,966 | |||
| Basic earnings per share |
$ | 0.68 | $ | 0.45 | |||
| Diluted earnings per share |
$ | 0.66 | $ | 0.44 | |||
| Average shares outstanding |
29,175 | 28,858 | |||||
| Average shares and equivalent shares outstanding |
29,997 | 29,720 | |||||
See notes to unaudited condensed consolidated financial statements.
3
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except per share numbers)
| September 30, 2004 (unaudited) |
June 30, 2004 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and equivalents |
$ | 63,238 | $ | 63,029 | ||||
| Marketable securities |
— | 515 | ||||||
| Accounts receivable, net: |
||||||||
| Billed |
326,467 | 320,041 | ||||||
| Unbilled |
26,705 | 28,326 | ||||||
| Total accounts receivable, net |
353,172 | 348,367 | ||||||
| Deferred income taxes |
4,290 | 3,392 | ||||||
| Prepaid expenses and other |
20,562 | 17,153 | ||||||
| Total current assets |
441,262 | 432,456 | ||||||
| Property and equipment, net |
25,686 | 25,489 | ||||||
| Accounts receivable, long term, net |
11,210 | 9,438 | ||||||
| Goodwill |
553,308 | 551,851 | ||||||
| Intangible assets, net |
94,680 | 99,624 | ||||||
| Other assets |
35,770 | 35,446 | ||||||
| Total assets |
$ | 1,161,916 | $ | 1,154,304 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Notes payable, current |
$ | 48,631 | $ | 20,829 | ||||
| Accounts payable |
34,727 | 37,662 | ||||||
| Income taxes payable |
17,104 | 7,120 | ||||||
| Accrued compensation and benefits |
64,231 | 72,387 | ||||||
| Other accrued expenses |
88,801 | 86,263 | ||||||
| Total current liabilities |
253,494 | 224,261 | ||||||
| Notes payable, long-term |
345,516 | 391,401 | ||||||
| Deferred rent expenses |
6,213 | 5,968 | ||||||
| Deferred income taxes |
11,479 | 12,307 | ||||||
| Other long-term obligations |
23,900 | 22,095 | ||||||
| Shareholders’ equity: |
||||||||
| Common stock - $.10 par value, 80,000 shares authorized, |
3,704 | 3,696 | ||||||
| Capital in excess of par |
219,007 | 215,645 | ||||||
| Retained earnings |
317,905 | 298,143 | ||||||
| Accumulated other comprehensive income |
3,570 | 3,660 | ||||||
| Treasury stock, at cost (7,815 shares) |
(22,872 | ) | (22,872 | ) | ||||
| Total shareholders’ equity |
521,314 | 498,272 | ||||||
| Total liabilities and shareholders’ equity |
$ | 1,161,916 | $ | 1,154,304 | ||||
See notes to unaudited condensed consolidated financial statements.
4
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(amounts in thousands)
| Three Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net income |
$ | 19,762 | $ | 12,966 | ||||
| Reconciliation of net income to net cash provided by operating activities: |
||||||||
| Amortization of deferred financing costs |
336 | — | ||||||
| Stock-based compensation expense |
1,024 | — | ||||||
| Depreciation and amortization |
8,298 | 3,837 | ||||||
| Benefit for deferred income taxes |
(1,727 | ) | (366 | ) | ||||
| Changes in operating assets and liabilities, net of effects of acquisitions |
||||||||
| Accounts receivable |
(9,960 | ) | (6,914 | ) | ||||
| Prepaid expenses and other assets |
48 | (2,675 | ) | |||||
| Accounts payable and other accrued expenses |
(1,195 | ) | 4,847 | |||||
| Accrued compensation and benefits |
(8,557 | ) | (4,686 | ) | ||||
| Deferred compensation and other long term liabilities |
2,142 | 2,112 | ||||||
| Income taxes payable |
10,886 | (1,867 | ) | |||||
| Net cash provided by operating activities |
21,057 | 7,254 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Capital expenditures |
(2,822 | ) | (1,275 | ) | ||||
| Cash paid for purchase of businesses, net of cash acquired |
(3,111 | ) | — | |||||
| Purchase of marketable securities |
— | (68 | ) | |||||
| Proceeds from sale of marketable securities |
515 | — | ||||||
| Other assets |
342 | 412 | ||||||
| Net cash used in investing activities |
(5,076 | ) | (931 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Payments under lines of credit |
(17,200 | ) | — | |||||
| Payments under term loan |
(875 | ) | — | |||||
| Proceeds from employee stock purchase plans |
2,008 | — | ||||||
| Proceeds from exercise of stock options |
1,544 | 2,857 | ||||||
| Purchase of common stock for treasury |
(1,240 | ) | (1,241 | ) | ||||
| Net cash (used in) provided by financing activities |
(15,763 | ) | 1,616 | |||||
| Effect of changes in currency rates on cash and equivalents |
(9 | ) | 84 | |||||
| Net increase in cash and equivalents |
209 | 8,023 | ||||||
| Cash and equivalents, beginning of period |
63,029 | 73,735 | ||||||
| Cash and equivalents, end of period |
$ | 63,238 | $ | 81,758 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
||||||||
| Cash paid for income taxes |
$ | 3,175 | $ | 10,170 | ||||
| Cash paid for interest |
$ | 3,736 | $ | 28 | ||||
See notes to unaudited condensed consolidated financial statements.
5
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
UNAUDITED
(amounts in thousands)
| Three Months Ended September 30, | |||||||
| 2004 |
2003 | ||||||
| Net income |
$ | 19,762 | $ | 12,966 | |||
| Currency translation adjustment |
(90 | ) | 225 | ||||
| Comprehensive income |
$ | 19,672 | $ | 13,191 | |||
See notes to unaudited condensed consolidated financial statements.
6
CACI INTERNATIONAL INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
| A. | Basis of Presentation |
The accompanying unaudited condensed 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 U.S. generally accepted accounting principles (“GAAP”), 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 accompanying unaudited condensed 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 unaudited consolidated financial statements be read in conjunction with the audited 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, 2004. The results of operations for the three months ended September 30, 2004 are not necessarily indicative of the results to be expected for any subsequent interim period or for the full fiscal year.
Certain reclassifications have been made to the prior period’s financial statements to conform to the current presentation.
| B. | Cash and Equivalents and Marketable Securities |
The Company considers all investments with an original maturity of three months or less to be cash equivalents. The Company classifies investments with a maturity of more than three months but less than twelve months as short-term marketable securities. To date, marketable securities have been classified as available-for-sale and have been carried at fair value with any unrealized gains and losses reported as a separate component of comprehensive income. The fair value of marketable securities was determined based on quoted market prices for those instruments at the reporting date. The cost of securities sold is based on specific identification. Premiums and discounts are amortized over the period from acquisition to maturity and are included in investment income, along with interest and dividends. During the year ended June 30, 2004 and the three-month period ended September 30, 2004, there were no realized or unrealized gains or losses. The Company’s cash and equivalents and short-term marketable securities at September 30, 2004, and June 30, 2004, consisted of the following (cost approximated fair value):
| September 30, 2004 |
June 30, 2004 | ||||||||
| (amounts in thousands)
|
Cash and Cash Equivalents |
Cash and Cash |
Short-term Marketable Securities | ||||||
| Money Market Funds |
$ | 55,819 | $ | 48,499 | $ | — | |||
| Stock |
— | — | 515 | ||||||
| Cash |
7,419 | 14,530 | |||||||