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, 2000
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 the number of shares outstanding of each of the registrant's classes of common stock, as of December 29, 2000: CACI International Inc Common Stock, $0.10 par value, 11,290,572 shares.
CACI INTERNATIONAL INC AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
| Item 1. | Financial Statements |
| Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended December 31, 2000 and 1999 | |
| Condensed Consolidated Statements of Operations (Unaudited) for the Six Months Ended December 31, 2000 and 1999 | |
| Condensed Consolidated Balance Sheets as of December 31, 2000 (Unaudited) and June 30, 2000 | |
| Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2000 and 1999 | |
| Consolidated Financial Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended December 31, 2000 and 1999 | |
| Notes to Condensed Consolidated Financial Statements(Unaudited) | |
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
| PART II: OTHER INFORMATION | |
| Item 1. | Legal Proceedings |
| Item 4. | Submission of Matters to a Vote of Security Holders |
| Item 5. | Other Information |
| Item 6. | Exhibits & Reports on Form 8-K |
| SIGNATURES | |
| INDEX TO EXHIBITS | |
PART 1
FINANCIAL INFORMATION
Item 1. Financial Statements
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(dollars in thousands, except per share data)
| Three Months Ended December 31, | ||||||||
| 2000 | 1999 | |||||||
| Revenues | $ | 135,440 | $ | 121,071 | ||||
| Costs and expenses | ||||||||
| Direct costs | 81,887 | 71,516 | ||||||
| Indirect costs and selling expenses | 41,370 | 38,590 | ||||||
| Depreciation and amortization | 2,165 | 1,880 | ||||||
| Goodwill amortization | 1,275 | 915 | ||||||
| Total operating expenses | 126,697 | 112,901 | ||||||
| Operating income | 8,743 | 8,170 | ||||||
| Interest expense | 932 | 1,046 | ||||||
| Income before income taxes | 7,811 | 7,124 | ||||||
| Income taxes | 3,045 | 2,779 | ||||||
| Income from continuing operations | 4,766 | 4,345 | ||||||
| Discontinued operations | ||||||||
| Income (loss) from operations of discontinued COMNET products business (less applicable income tax benefit of $0 and $79, respectively) | - | (125 | ) | |||||
| Gain on disposal of COMNET products business including provision of $118 for operating losses during phase-out-period (less applicable income taxes of $0 and $13,512 respectively) | - | $ | 21,134 | |||||
| Net income | $ | 4,766 | $ | 25,354 | ||||
| Basic earnings per share | ||||||||
| Income from continuing operations | $ | 0.42 | $ | 0.38 | ||||
| Loss from discontinued operations of COMNET products business | 0.00 | (0.01 | ) | |||||
| Gain on disposal of COMNET products business | 0.00 | 1.87 | ||||||
| Net Income | $ | 0.42 | $ | 2.24 | ||||
| Average shares outstanding | 11,241 | 11,308 | ||||||
| Diluted earnings per share | ||||||||
| Income from continuing operations | $ | 0.42 | $ | 0.38 | ||||
| Loss from discontinued operations of COMNET products business | 0.00 | (0.01 | ) | |||||
| Gain on disposal of COMNET products business | 0.00 | 1.83 | ||||||
| Net Income | $ | 0.42 | $ | 2.20 | ||||
| Average shares and equivalent shares outstanding | 11,395 | 11,537 | ||||||
See notes to condensed consolidated financial statements (unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(dollars in thousands, except per share data)
| Six Months Ended December 31, | ||||||||
| 2000 | 1999 | |||||||
| Revenues | $ | 261,735 | $ | 239,760 | ||||
| Costs and expenses | ||||||||
| Direct costs | 157,848 | 141,257 | ||||||
| Indirect costs and selling expenses | 80,796 | 77,079 | ||||||
| Depreciation and amortization | 4,136 | 3,740 | ||||||
| Goodwill amortization | 2,426 | 1,829 | ||||||
| Total operating expenses | 245,206 | 223,905 | ||||||
| Operating income | 16,529 | 15,855 | ||||||
| Interest expense | 1,583 | 2,156 | ||||||
| Income before income taxes | 14,946 | 13,699 | ||||||
| Income taxes | 5,828 | 5,343 | ||||||
| Income from continuing operations | 9,118 | 8,356 | ||||||
| Discontinued operations | ||||||||
| Income (loss) from operations of discontinued COMNET products business (less applicable income tax benefit of $0 and $280, respectively) | - | (320 | ) | |||||
| Gain on disposal of COMNET products business including provision of $118 for operating losses during phase-out-period (less applicable income taxes of $0 and $13,512 resepctively) | - | 21,134 | ||||||
| Net income | $ | 9,118 | $ | 29,170 | ||||
| Basic earnings per share | ||||||||
| Income from continuing operations | $ | 0.81 | $ | 0.75 | ||||
| Loss from discontinued operations of COMNET products business | 0.00 | (0.03 | ) | |||||
| Gain on disposal of COMNET products business | 0.00 | 1.90 | ||||||
| Net Income | $ | 0.81 | $ | 2.62 | ||||
| Average shares outstanding | 11,298 | 11,148 | ||||||
| Diluted earnings per share | ||||||||
| Income from continuing operations | $ | 0.80 | $ | 0.73 | ||||
| Loss from discontinued operations of COMNET products business | 0.00 | (0.03 | ) | |||||
| Gain on disposal of COMNET products business | 0.00 | 1.85 | ||||||
| Net Income | $ | 0.80 | $ | 2.55 | ||||
| Average shares and equivalent shares outstanding | 11,459 | 11,449 | ||||||
See notes to condensed consolidated financial statements (unaudited)
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
| December 31, 2000 | June 30, 2000 | ||||||||
| ASSETS | (unaudited) | ||||||||
| Current assets | |||||||||
| Cash and equivalents | $ | 6,874 | $ | 4,931 | |||||
| Accounts receivable: | |||||||||
| Billed | 118,859 | 103,504 | |||||||
| Unbilled | 20,045 | 14,400 | |||||||
| Total accounts receivable | 138,904 | 117,904 | |||||||
| Deferred income taxes | 369 | 235 | |||||||
| Deferred contract costs | 1,201 | 1,488 | |||||||
| Prepaid expenses and other | 7,715 | 7,372 | |||||||
| Total current assets | 155,063 | 131,930 | |||||||
| Property and equipment, net | 16,022 | 15,039 | |||||||
| Accounts receivable, long term | 5,355 | 3,814 | |||||||
| Goodwill | 90,595 | 75,402 | |||||||
| Other assets | 12,038 | 7,024 | |||||||
| Deferred income taxes | 2,453 | 2,788 | |||||||
| Total assets | $ | 281,526 | $ | 235,997 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
| Current liabilities | |||||||||
| Accounts payable | $ | 12,236 | $ | 7,087 | |||||
| Other accrued expenses | 22,506 | 28,258 | |||||||
| Accrued compensation and benefits | 25,764 | 20,043 | |||||||
| Income taxes payable | 4,881 | 1,707 | |||||||
| Deferred income taxes | 4,602 | 5,021 | |||||||
| Total current liabilities | 69,989 | 62,116 | |||||||
| Note payable, long-term | 63,724 | 28,263 | |||||||
| Deferred rent expenses | 1,167 | 1,025 | |||||||
| Deferred income taxes | 123 | 125 | |||||||
| Other long-term obligations | 1,004 | 2,500 | |||||||
| Shareholders' equity | |||||||||
| Common stock - $.10 par value, 40,000,000 shares authorized, 15,162,000 shares, and 15,007,000 shares issued | 1,516 | 1,501 | |||||||
| Capital in excess of par | 21,656 | 19,716 | |||||||
| Retained earnings | 146,115 | 136,997 | |||||||
| Cumulative currency translation adjustments | (2,907 | ) | (2,584 | ) | |||||
| Treasury stock, at cost (3,872,000 and 3,526,000 shares) | (20,861 | ) | (13,662 | ) | |||||
| Total shareholders' equity | 145,519 | 141,968 | |||||||
| Total liabilities & shareholders' equity | $ | 281,526 | $ | 235,997 | |||||
See notes to condensed consolidated financial statements (unaudited)
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(dollars in thousands)
| Six Months Ended December 31, | ||||||||
| 2000 | 1999 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 9,118 | $ | 29,170 | ||||
| Reconciliation of net income to net cash provided by (used in) operating activities | ||||||||
| Depreciation and amortization | 6,562 | 5,641 | ||||||
| Provision (benefit) for deferred income taxes | (81 | ) | 3,109 | |||||
| Gain on disposal of COMNET products business | - | (21,252 | ) | |||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (13,346 | ) | (5,469 | ) | ||||
| Prepaid expenses and other assets | (201 | ) | 859 | |||||
| Deferred contract costs | 24 | 582 | ||||||
| Accounts payable and accrued expenses | (3,226 | ) | (9,269 | ) | ||||
| Accrued compensation and benefits | 5,213 | (3,301 | ) | |||||
| Other long-term obligations | (1,496 | ) | 93 | |||||
| Deferred rent expense | 224 | 33 | ||||||
| Income taxes (receivable) payable | 3,058 | (2,605 | ) | |||||
| Net cash provided by (used in) operating activities | 5,849 | (2,409 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Acquisitions of property and equipment | (4,667 | ) | (4,354 | ) | ||||
| Purchase of businesses | (25,948 | ) | (600 | ) | ||||
| Proceeds from sale of division | - | 37,000 | ||||||
| Capitalized software cost and other | (3,455 | ) | (874 | ) | ||||
| Net cash provided by (used in) investing activities | (34,070 | ) | 31,172 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds under line-of-credit | 133,543 | 75,663 | ||||||
| Payments under line-of-credit | (98,082 | ) | (111,479 | ) | ||||
| Proceeds from stock options | 1,955 | 5,963 | ||||||
| Purchase of common stock for treasury | (7,200 | ) | 0 | |||||
| Net cash provided by (used in) financing activities | 30,216 | (29,853 | ) | |||||
| Effect of changes in currency rates on cash and equivalents | (52 | ) | 61 | |||||
| Net increase (decrease) in cash and equivalents | 1,943 | (1,029 | ) | |||||
| Cash and equivalents, beginning of period | 4,931 | 2,403 | ||||||
| Cash and equivalents, end of period | $ | 6,874 | $ | 1,374 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
| Cash paid during the period for income taxes, net | $ | 1,144 | $ | 2,380 | ||||
| Interest paid during the period | $ | 1,455 | $ | 2,646 | ||||
See notes to condensed consolidated financial statements (unaudited).
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(dollars in thousands)
| Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||
| 2000 | 1999 | 2000 | 1999 | ||||||||||
| Net income | $ | 4,766 | $ | 25,354 | $ | 9,118 | $ | 29,170 | |||||
| Currency translation adjustment | 226 | (581 | ) | (323 | ) | 324 | |||||||
| Comprehensive income | $ | 4,992 | $ | 24,773 | $ | 8,795 | $ | 29,494 | |||||
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 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 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 condensed consolidated financial statements be read in conjunction with the audited condensed 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, 2000. | |
| Certain reclassifications have been made to the prior period's financial statements to conform to the current presentation (see also Note C). | |
| B. | Accounts Receivable |
| Total accounts receivable are net of allowance for doubtful accounts of $3,631,000 and $2,817,000 at December 31, 2000 and June 30, 2000, respectively. Accounts receivable are classified as follows: | |
| (dollars in thousands) | December 31, 2000 | June 30, 2000 | ||||
| Billed receivables | ||||||
| Billed receivables | $ | 105,862 | $ | 90,491 | ||
| Billable receivables at end of period | 12,997 | 13,013 | ||||
| Total billed receivables | 118,859 | 103,504 | ||||
| Unbilled receivables | ||||||
| Unbilled pending receipt of contractual documents authorizing billing | 20,017 | 14,341 | ||||
| Unbilled retainages and fee withholds expected to be billed within the next 12 months | 28 | 59 | ||||
| 20,045 | 14,400 | |||||
| Unbilled retainages and fee withholds expected to be billed beyond the next 12 months | 5,355 | 3,814 | ||||
| Total unbilled receivables | 25,400 | 18,214 | ||||
| Total accounts receivable | $ | 144,259 | $ | 121,718 | ||
| The Company has a commercial relationship with Globalstar Communications, L.P. ("Globalstar"). Globalstar recently announced that it had stopped paying principal and interest on credit facility, vendor financing agreements and Senior Notes, as well as preferred dividends in an effort to prolong its liquidity so that it may extend its service offering. The accounts receivables due from Globalstar at December 31, 2000 were approximately $1.8 million. It is not clear, at this time, what the collectibility of these receivables would be if Globalstar were to file a reorganization plan at some later date. | |
| C. | Discontinued Operations |
| On November 2, 1999, the Company executed a letter of intent to sell its COMNET products business to Compuware Corporation. On December 15, 1999, the Company completed the sale of the net assets of the COMNET products business for $37 million in cash and $3 million in escrow to be received one year from the settlement date. This resulted in a net after tax gain for the Company of $21.1 million. Included in the gain was a net after tax loss from discontinued operations of $118 thousand for the period from November 3, 1999 to December 15, 1999. The consolidated statements of operations for prior periods have been restated for consistent presentation of discontinued operations. As of December 31, 2000, $2.2 million of the escrow principal had been received, plus interest. | |
| D. | Commitments and Contingencies |
| The Company is involved in various lawsuits, claims, and administrative proceedings arising in the normal course of business. Management is of the opinion that any liability or loss associated with such matters will not have a material adverse effect on the Company's operations and liquidity. | |
| E. | Acquisitions |
| On December 2, 2000, the Company completed its acquisition of the federal services business and related assets (the "Federal Services Business") of N.E.T. Federal, Inc., a subsidiary of Network Equipment Technologies, Inc., now doing business as net.com. The total consideration paid by the Company was $25.0 million in cash plus an additional $1.0 million to be held in an escrow fund for one year. Additional payments of up to $15 million may also be made based upon achievement of specific milestones. A royalty agreement also offers net.com an opportunity to earn approximately $10 million of additional consideration over a five-year period based on future performance. The purchase was financed from the Company's line of credit with a group of banks. The acquired business provides secure network services offerings including network engineering and design, implementation, installation and integration, as well as network maintenance and management. As part of this acquisition, approximately 185 employees transferred to CACI. Approximately $17.0 million of the purchase consideration has been allocated to goodwill, based upon the excess of the purchase price over the estimated fair value of net assets acquired, and is being amortized over 15 years. The Federal Services Businesses contributed revenue of $3.7 million for the period from December 2, 2000 to December 31, 2000. | |
| On October 6, 2000, the Company acquired the contracts and selected assets of the special projects division ("Special Projects") of Radian International, LLC ("Radian"), a subsidiary of URS Corporation, for $1.3 million in cash. The purchase was financed from the Company's line of credit with a group of banks. Approximately $0.6 million of the purchase price has been allocated to goodwill and is being amortized over 10 years. The Special Projects division, which provides services to the intelligence community, contributed revenue of $0.4 million for the period from October 6, 2000 to December 31, 2000. | |
| F. | Business Segment Information |
| The Company reports financial data in two segments: Information Systems Group ("ISG") and Marketing Systems Group ("MSG"). Operating results for the segments are as follows: | |
| (dollars in thousands) | ISG | MSG | Other | Total | |||||||||
| Quarter Ended December 31, 2000 | |||||||||||||
| Revenue from external customers | $ | 123,908 | $ | 11,370 | $ | 162 | $ | 135,440 | |||||
| Pre-tax income (loss) from continuing operations | 7,229 | 1,238 | (656 | ) | 7,811 | ||||||||
| Quarter Ended December 31, 1999 | |||||||||||||
| Revenue from external customers | $ | 109,600 | $ | 11,471 | $ | - | $ | 121,071 | |||||
| Pre-tax income (loss) from continuing operations | 6,667 | 1,338 | (881 | ) | 7,124 | ||||||||
| Six Months Ended December 31, 2000 | |||||||||||||
| Revenue from external customers | $ | 239,980 | $ | 21,560 | $ | 195 | $ | 261,735 | |||||
| Pre-tax income (loss) from continuing operations | 14,362 | 2,385 | (1,801 | ) | 14,946 | ||||||||
| Six Months Ended December 31, 1999 | |||||||||||||
| Revenue from external customers | $ | 217,008 | $ | 22,752 | $ | - | $ | 239,760 | |||||
| Pre-tax income (loss) from continuing operations | 12,848 | 2,463 | (1,612 | ) | 13,699 | ||||||||
| The "Other" column represents the elimination of intersegment revenue and corporate related items. | |||||||||||||
| G. | Subsequent Event |
| On January 8, 2001, the Company entered into an interest rate swap agreement with the Bank of America with a notional amount of $25 million under which the Company will pay a fixed rate of interest and receive a floating rate of interest over the two year term of the interest rate swap agreement without the exchange of the underlying notional amounts. The interest rate swap agreement converted a portion of the line of credit facility debt from a floating rate obligation to a fixed rate obligation and will be accounted for as a hedge under SFAS 133, Accounting for Derivative Instruments and Hedging Activities. |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations For the Three and Six Months Ended December 31, 2000 and 1999.
Revenues. The table below sets forth revenues by customer segment with related percentages of total revenues for the three and six months ended on December 31, 2000, (FY2001) and December 31, 1999 (FY2000), respectively:
| (dollars in thousands) | Second Quarter | First Six Months | |||||||||||||||||||||
| FY2001 | FY2000 | FY2001 | FY2000 | ||||||||||||||||||||
| Department of Defense | $ | 76,465 | 56.4 | % | $ | 62,330 | 51.5 | % | $ | 143,750 | 54.9 | % | $ | 122,590 | 51.1 | % | |||||||
| Federal Civilian Agencies | 34,298 | 25.3 | % | 31,010 | 25.6 | % | 71,346 | 27.2 | % | 63,846 | 26.6 | % | |||||||||||
| Commercial | 16,874 | 12.5 | % | 16,567 | 13.7 | % | 33,396 | 12.8 | % | 32,853 | 13.7 | % | |||||||||||
| State & Local Governments | 7,803 | 5.8 | % | 11,164 | 9.2 | % | 13,243 | 5.1 | % | 20,471 | 8.6 | % | |||||||||||
| Total | $ | 135,440 | 100.0 | % | $ | 121,071 | 100.0 | % | $ | 261,735 | 100.0 | % | $ | 239,760 | 100.0 | % | |||||||
Revenue. For the three months and six months ended December 31, 2000, the Company's total revenue increased by 12%, or $14.4 million and by 9% or $22.0 million, respectively, over the same periods last year. Revenue growth in the quarter and six month periods came primarily from both Department of Defense ("DoD") and Federal Civilian Agencies, but was offset by the absence of almost $9.5 million of Y2K revenue from the State and Local Governments business. The April 1, 2000 acquisition of substantially all the assets of Century Technologies, Incorporated (CENTECH) ("CENTECH") contributed $6.4 million and $13.1 million, and XEN Corporation ("XEN"), acquired February 1, 2000, contributed $2.1 million and $4.3 million in revenues over the three and six month periods ended December 31, 2000. The acquisition of the Federal Services Buisness on December 2, 2000, contributed $3.7 million in revenue. The acquisition of the Special Projects division on October 6, 2000 contributed $0.4 million in revenue.
DoD revenue increased 23% or $14.1 million for the quarter and 17% or $21.2 million for the first six months of FY2001. This growth was due in part to higher levels of systems integration and managed network services business as well as increased use of the GSA schedule contracts.
Revenue from Federal Civilian Agencies increased 11% or $3.3 million for the quarter and 12% or $7.5 million for the first six months of FY2001 as compared to the same periods a year ago. Approximately 50% of Federal Civilian Agencies revenue is derived from the Department of Justice ("DoJ"), for whom the Company provides litigation support services and is developing an automated debt collection system.
Revenue for DoJ was $16.3 million and $34.9 million for the quarter and six months ended December 31, 2000, as compared to $17.9 million and $36.8 for the same periods in FY2000. The decrease stems primarily from the movement of major litigation from the discovery phase to trial and pre-trial phases. The level of effort is anticipated to return to the historical run rate during the second half of the year. The overall increase in Federal Civilian Agency revenue was mainly generated from continued growth in managed network services and GSA schedule contracts.
Commercial revenue, which is primarily derived from the Marketing Systems Group in the United Kingdom, increased slightly for both the quarter and six months over the same periods a year ago. The slower than anticipated growth rate was primarily due to the impact of foreign exchange rate fluctuations during the year.
Revenue from State and Local Governments decreased 30% or $3.4 million and 35% or $7.2 million for the three and six months ended December 31, 2000, respectively, over the same periods a year ago. This is primarily due to the reduced level of Y2K business.
The following table sets forth the relative percentage that certain items of expense and earnings bore to revenues for the quarter and six months ended December 31, 2000 and December 31, 1999, respectively.
| Dollar Amount (in thousands) | Percentage of Revenue | ||||||||||||||||||||
| Second Quarter | First Six Months | Second Quarter | First Six Months | ||||||||||||||||||
| FY01 | FY00 | FY01 | FY00 | FY01 | FY00 | FY01 | FY00 | ||||||||||||||
| Revenue | $ | 135,440 | $ | 121,071 | $ | 261,735 | $ | 239,760 | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||
| Costs and expenses: | |||||||||||||||||||||
| Direct costs | 81,887 | 71,516 | 157,848 | 141,257 | 60.5 | % | 59.1 | % | 60.3 | % | 58.9 | % | |||||||||
| Indirect costs & selling expenses | 41,370 | 38,590 | 80,796 | 77,079 | 30.5 | % | 31.9 | % | 30.9 | % | 32.2 | % | |||||||||
| Depreciation & amortization | 2,165 | 1,880 | 4,136 | 3,740 | 1.6 | % | 1.6 | % | 1.6 | % | 1.6 | % | |||||||||
| Goodwill amortization | 1,275 | 915 | 2,426 | 1,829 | 0.9 | % | 0.7 | % | 0.9 | % | 0.7 | % | |||||||||
| Total operating expenses | 126,697 | 112,901 | 245,206 | 223,905 | 93.5 | % | 93.3 | % | 93.7 | % | 93.4 | % | |||||||||
| Operating income | 8,743 | 8,170 | 16,529 | 15,855 | 6.5 | % | 6.7 | % | 6.3 | % | 6.6 | % | |||||||||
| Interest expense | 932 | 1,046 | 1,583 | 2,156 | 0.7 | % | 0.8 | % | 0.6 | % | 0.9 | % | |||||||||
| Earnings before income taxes | 7,811 | 7,124 | 14,946 | 13,699 | 5.8 | % | 5.9 | % | 5.7 | % | 5.7 | % | |||||||||
| Income taxes | 3,045 | 2,779 | 5,828 | 5,343 | 2.3 | % | 2.3 | % | 2.2 | % | 2.2 | % | |||||||||
| Income from continuing operations | 4,766 | 4,345 | 9,118 | 8,356 | 3.5 | % | 3.6 | % | 3.5 | % | 3.5 | % | |||||||||
| Discontinued operations | |||||||||||||||||||||
| Loss from operations of discontinued COMNET products business | - | (125 | ) | - | (320 | ) | - | (0.1 | ) | % | - | (0.1 | ) | % | |||||||
| Gain of disposal of COMNET products business | - | 21,134 | - | 21,134 | - | 17.4 | % | - | 8.8 | % | |||||||||||
| Net Income | $ | 4,766 | 25,354 | 9,118 | 29,170 | 3.5 | % | 20.9 | % | 3.5 | % | 12.2 | % | ||||||||
| |||||||||||||||||||||
Income from Operations. Operating income increased 7% and 4% for the quarter and six months ended December 31, 2000 as compared to the same periods a year ago. This is due to the 12% and 9% growth in revenue for the second quarter and first half of FY2001, respectively, along with the Company's ability to control its indirect costs and selling expenses.
Direct costs for the second quarter and first half of FY2001 increased 15% and 12%, respectively, as compared to the same periods a year ago. Direct costs include direct labor and other direct costs such as equipment purchases, subcontractor costs and travel expenses. The largest component of direct costs, direct labor, was $41.1 million and $34.4 million for the second quarter of FY2001 and FY2000, respectively. For the six months ended December 31, 2000 and 1999, direct labor was $80.7 million and $68.8 million, respectively. Other direct costs were $40.8 million and $37.1 million for the second quarters of FY2001 and FY2000, respectively, and $77.2 million versus $72.4 million for the first six months of FY2001 and FY2000, respectively.
Indirect costs and selling expenses include fringe benefits, marketing, bid and proposal costs, indirect labor, and other discretionary costs, most of which are highly variable. As a percentage of revenue, indirect costs have decreased due to the impact of higher other direct costs on revenue for the second quarter and first six months of FY2001, as well as the Company's ability to contain indirect costs.
Depreciation and amortization rose 15% or $285 thousand for the quarter and 11% or $396 thousand for the six months ended December 31, 2000, as compared to a year ago. This growth was primarily due to the purchases of computer equipment and software licenses. As a percentage of revenue, depreciation and amortization has remained constant as compared to a year ago.
Goodwill amortization expense has increased $360 thousand for the second quarter and $597 thousand for the first half of FY2001 as compared to the same periods a year ago, due primarily to the XEN and CENTECH acquisitions in the prior fiscal year and the acquisitions in the current year of the Federal Services Business and the Special Projects division.
Interest Expense. Interest expense decreased $114 thousand for the quarter and $573 thousand for the first six months of FY2001 as compared to the same periods in FY2000. This decrease was due primarily due to the reduction of the Company's line of credit using the proceeds from the sale of the COMNET products business in December 1999. For the six months of FY2001, average borrowings were $41.7 million as compared to $65.3 million in FY2000. In the second quarter of FY2001, average borrowings were $50.1 as compared to $65.2 million a year ago.
Income Taxes. The effective income tax rate for both the quarter and six months ended FY2001 and FY2000 has remained constant at 39%.
Liquidity and Capital Resources
Historically, the Company's positive cash flow from operations and available credit facilities provided adequate liquidity and working capital to fully fund the Company's operational needs and support its acquisition activities. Working capital was $85.1 million and $69.8 million as of December 31, 2000 and June 30, 2000, respectively. The increase in working capital in the first six months is due primarily to the Company borrowing under its line of credit for acquisition activities which resulted in higher current asset balances. Operating activities provided cash of $5.8 million for the first six months of FY2001 versus using cash of $2.4 million for the same period in FY2000. The increase in cash provided by operating activities since the prior year is primarily related to the timing of cash disbursements. Also, tax payments normally applied on a quarterly basis have been deferred to the later quarters.
The company used $34.1 million in cash from investing activities for the six months ended December 31, 2000 versus generating $31.2 million for the same period a year ago. The cash used in investing activities for FY2001 was primarily for the acquisition of the Federal Services Business and Special Projects. The cash generated in FY2000 was due primarily to the sale of the COMNET products business.
During the six months ended December 31, 2000, the Company's financing activities provided cash of approximately $30.2 million. This was primarily from an increase of $35.4 million in borrowings under the Company's revolving line of credit, net of the purchase of 345,000 shares of treasury stock for $7.2 million. Over the same period last year, the Company used the cash from the sale of the COMNET products business to pay down its line of credit.
The Company maintains an unsecured revolving line of credit which expires on June 19, 2003. The agreement permits borrowings of up to $125 million with annual sublimits on amounts borrowed for acquisitions. The Company also maintains a 500,000 British pound sterling unsecured line of credit in London, England, which expires in November 2001. At December 31, 2000, the Company has approximately $62.0 million available under its lines of credit.
The Company believes that the combination of internally generated funds, available bank borrowings and cash on hand will provide the required liquidity and capital resources for the foreseeable future.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
John Chrysogelos v. V.L. Salvatori, et al
Reference is made to Part II, Item 1, Legal Proceedings, in the Registrant's Report on Form 10-Q for the quarter ended September 30, 2000, for the most recent information concerning this lawsuit filed in the Chancery Court for the State of Delaware on September 3, 1999. The suit sets forth both class and derivative claims alleging that the Registrant's Directors breached their fiduciary and other duties to the Registrant and its stockholder actions by (i) adopting by-law amendments specifying procedures for stockholder actions by consent and calling of special meetings; and (ii) failing to evaluate and fairly respond to a premium cash offer to purchase the stock of the Registrant
Since the filing of Registrant's report indicated above, the parties have filed a joint motion to dismiss the case and are awaiting the Court's final order of dismissal.
Parsow Partnership, Ltd., de al v. J.P. London, et al
Reference is made to Part II, Item 1, Legal Proceedings, in the Registrant's Report on Form 10-Q for the quarter ended September 30, 2000, for the most recent information concerning the lawsuit filed in the Chancery Court for the State of Delaware on November 10, 1999. The suit alleges that the Board of Directors and senior management of the Registrant had solicited proxies in violation of Section 14 (a) and 20 (2) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 14 (a-9) promulgated thereunder.
Since the filing of the Registrant's report indicated above, the parties have reached agreement on a settlement and are awaiting the Court's final dismissal of the action.
Item 4. Submission of Matters to a Vote of Security Holders
On November 14, 2000, the Company held its Annual Meeting of Stockholders. At the meeting, all management nominees were elected to serve as directors; the stockholders approved an amendment to the Company's 1996 Stock Incentive Plan adding 500,000 shares for possible award under the plan; and the appointment of Deloitte & Touche, LLP as independent auditors for the current fiscal year was ratified.
Item 5. Other Information
Forward Looking Statements
There are statements made herein which may not address historical facts and, therefore, could be interpreted to be forward looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. The factors that could cause actual results to differ materially from those anticipated include, but are not limited to, the following: regional and national economic conditions in the United States and United Kingdom; changes in interest rates; currency fluctuations; failure to achieve contract awards in connection with recompetes for present business and/or competition for new business; the risks and uncertainties associated with client interest in and purchases of new products and/or services; continued funding of U.S. Government or other public sector projects in the event of a priority need for funds; government contract procurement (such as bid protest) and termination risks; individual business decisions of our clients; paradigm shifts in technology; competitive factors such as pricing pressures and competition to hire and retain employees; our ability to complete acquisitions appropriate to achievement of our strategic plans; material changes in laws or regulations applicable to our businesses including, but not limited to the application of new OSHA Ergonomic Standards; our own ability to achieve the objectives of near term or long range business plans; and other risks described in the Company's Securities and Exchange Commission filings.
Item 6. Exhibits and Reports on Form 8-K
The Registrant filed a Current Report on Form 8-K on December 15, 2000, in which the Registrant reported that it had completed its acquisition of the Federal Services Business and related assets of N.E.T. Federal, Inc.
CACI INTERNATIONAL INC AND SUBSIDIARIES
INDEX TO EXHIBITS
| Exhibit Number | Title | |
| 11 | Computation of Basic and Diluted Earnings Per Share | |
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 hereunto duly authorized.
| CACI International Inc | ||||
| Registrant | ||||
| By: | /s/ | |||
| Date: | February 8, 2001 | Dr. J. P. London Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer) | ||
| By: | /s/ | |||
| Date: | February 8, 2001 | Stephen L. Waechter Chief Financial Officer and Treasurer> (Principal Financial Officer) | ||
| By: | /s/ | |||
| Date: | February 8, 2001 | Michael J. McDermott Corporate Controller (Principal Accounting Officer) | ||