-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PntyQECIfXt+ce5RcZAgjqdMHP6Dz1yCMzX29/BZHNw5NhNOtagzdKtNEcpl4Vb3 Zvtz/oY1rGqoYpVEsvzY4w== 0000016058-98-000004.txt : 19980218 0000016058-98-000004.hdr.sgml : 19980218 ACCESSION NUMBER: 0000016058-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980213 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CACI INTERNATIONAL INC /DE/ CENTRAL INDEX KEY: 0000016058 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 541345888 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-08401 FILM NUMBER: 98536812 BUSINESS ADDRESS: STREET 1: 1100 N GLEBE ST CITY: ARLINGTON STATE: VA ZIP: 22201 BUSINESS PHONE: 7038417800 MAIL ADDRESS: STREET 1: 1100 NORTH GLEBE ROAD CITY: ARLINGTON STATE: VA ZIP: 22201 FORMER COMPANY: FORMER CONFORMED NAME: CACI INC /DE/ DATE OF NAME CHANGE: 19870119 FORMER COMPANY: FORMER CONFORMED NAME: CONSOLIDATED ANALYSIS CENTERS INC DATE OF NAME CHANGE: 19730102 FORMER COMPANY: FORMER CONFORMED NAME: CALIFORNIA ANALYSIS CENTER INC DATE OF NAME CHANGE: 19680603 10-Q 1 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, 1997 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 31, 1997: CACI International Inc Common Stock, $0.10 par value, 10,763,000 shares. CACI INTERNATIONAL INC AND SUBSIDIARIES PART I: FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended December 31, 1997 and 1996 Unaudited Condensed Consolidated Statements of Operations for the Six Months Ended December 31, 1997 and 1996 Unaudited Condensed Consolidated Balance Sheets as of December 31, 1997 and June 30, 1997 Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 1997 and 1996 Notes to Unaudited Condensed Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II: OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings Item 5. Forward Looking Statements 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, 1997 1996 ------------------------------- Revenues $79,145 $68,821 Costs and expenses Direct costs 42,550 36,113 Indirect costs and selling expenses 29,151 26,093 Depreciation and amortization 2,341 1,556 ------ ------ Total operating expenses 74,042 63,762 ------ ------ Income from operations 5,103 5,059 Interest expense 472 277 ------ ------ Income before income taxes 4,631 4,782 Income taxes 1,759 1,936 ------ ------ Net income $ 2,872 $ 2,846 ====== ====== EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: Basic earnings per share $ 0.27 $ 0.27 ====== ====== Diluted earnings per share $ 0.26 $ 0.26 ====== ====== Average number shares outstanding 10,755 10,405 ====== ====== Average number shares and equivalent shares outstanding 11,127 10,978 ====== ====== See notes to condensed consolidated financial statements (unaudited). CACI INTERNATIONAL INC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (dollars in thousands, except per share data) Six Months Ended December 31, 1997 1996 ----------------------------- Revenues $149,814 $131,555 Costs and expenses Direct costs 80,587 68,197 Indirect costs and selling expenses 55,590 50,613 Depreciation and amortization 4,366 2,968 ------- ------- Total operating expenses 140,543 121,778 ------- ------- Income from operations 9,271 9,777 Interest expense 717 461 ------- ------- Income before income taxes 8,554 9,316 Income taxes 3,250 3,772 ------- ------- Net income $ 5,304 $ 5,544 ======= ======= EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: Basic earnings per share $ 0.49 $ 0.54 ======= ======= Diluted earnings per share $ 0.48 $ 0.51 ======= ======= Average number shares outstanding 10,730 10,352 ======= ======= Average number shares and equivalent shares outstanding 11,101 10,925 ======= ======= See notes to condensed consolidated financial statements (unaudited). CACI INTERNATIONAL INC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (dollars in thousands) ASSETS December 31, 1997 June 30, 1997 ----------------- ------------- Current assets Cash and equivalents $ 1,368 $ 2,015 Accounts receivable: Billed 73,717 59,294 Unbilled 10,943 11,549 ------- ------- Total accounts receivable 84,660 70,843 ------- ------- Income taxes receivable 148 2,984 Deferred income taxes 114 114 Prepaid expenses and other 2,980 3,576 Current portion of deferred contract costs 3,312 - ------- ------- Total current assets 92,582 79,532 ------- ------- Property and equipment, net 10,762 11,605 Accounts receivable, long term 7,429 7,015 Deferred contract costs, long term 1,001 - Goodwill 37,901 15,459 Other assets 5,663 4,486 Deferred income taxes 701 763 ------- ------- Total assets $156,039 $118,860 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable & accrued expenses $ 20,958 $ 19,854 Accrued compensation & benefits 14,211 12,527 Income taxes payable 446 - Deferred income taxes 5,387 5,137 ------- ------- Total current liabilities 41,002 37,518 ------- ------- Note payable, long-term 36,900 8,800 Deferred rent expenses 1,458 1,627 Deferred income taxes 140 141 Shareholders' equity Common stock - $.10 par value, 40,000,000 shares authorized, 14,289,000 & 14,215,000 shares issued 1,429 1,422 Capital in excess of par 11,304 10,595 Retained earnings 78,004 72,700 Cumulative currency translation adjustments (536) (281) Treasury stock, at cost (3,526,000 shares) (13,662) (13,662) ------- ------- Total shareholders' equity 76,539 70,774 ------- ------- Total liabilities & shareholders' equity $156,039 $118,860 ======= ======= 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, 1997 1996 ----------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 5,304 $ 5,544 Reconciliation of net income to net cash provided by operating activities Depreciation and amortization 4,366 2,968 Provision for deferred income taxes 312 703 Gain on sale of property & equipment (32) - Changes in operating assets & liabilities Accounts receivable (4,487) (3,829) Prepaid expenses & other assets 851 26 Accounts payable & accrued expenses (1,709) (2,393) Accrued compensation & benefits 1,172 (1,779) Deferred rent expense (455) (268) Income taxes receivable 3,307 144 ------- ------- Net cash provided by operating activities 8,629 1,116 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of property & equipment (2,207) (2,711) Purchase of businesses (36,154) (5,645) Proceeds from sale of property & equipment 382 - Other (105) (59) ------- ------- Net cash used in investing activities (38,084) (8,415) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds under line-of-credit 90,000 58,372 Payments under line-of-credit (61,900) (52,459) Proceeds from stock options 716 2,070 ------- ------- Net cash provided by financing activities 28,816 7,983 Effect of changes in currency rates on cash & equivalents (8) 117 ------- ------- Net (decrease) increase in cash & equivalents (647) 801 Cash & equivalents, beginning of period 2015 1,776 ------- ------- Cash & equivalents, end of period $ 1,368 $ 2,577 ======= ======= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash (received) paid during the period for income taxes, net $ (867) $ 1,659 ======= ======= Interest paid during the period $ 502 $ 362 ======= ======= See notes to condensed consolidated financial statements (unaudited). 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 condensed 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, 1997. B. Accounts Receivable - ---------------------- Total accounts receivable are net of allowance for doubtful accounts of $3,248,000 and $2,988,000 at December 31, 1997, and June 30, 1997, respectively. Accounts receivable are classified as follows: (Dollars in thousands) December 31, 1997 June 30, 1997 ----------------- ------------- Billed & billable receivables Billed receivables $66,751 $52,159 Billable receivables at end of period 6,966 7,135 ------ ------ Total billed receivables 73,717 59,294 Unbilled receivables Unbilled pending receipt of contractual documents authorizing billing 10,755 11,374 Unbilled retainages & fee withholds expected to be billed within the next 12 months 188 175 ------ ------ 10,943 11,549 Unbilled retainages & fee withholds expected to be billed beyond the next 12 months 7,429 7,015 ------ ------ Total unbilled receivables 18,372 18,564 ------ - ------ Total accounts receivable $92,089 $77,858 ====== ====== C. Deferred Contract Costs - --------------------------- Deferred contract costs include the cost of equipment acquired by the Company to provide communications services under contract. The costs are charged to expense as the associated service revenues are billed to the customer. Approximately $3.3 million is recorded as a current asset as this represents the amount to be recovered within the next twelve months. D. Earnings per Share - ---------------------- In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 (SFAS No. 128), "Earnings Per Share" (EPS) which simplifies the standards for computing EPS previously found in APB Opinion No. 15 and makes them comparable to international EPS standards. SFAS No. 128 became effective for this reporting period and therefore, all prior periods presented have been restated in conformity with this Statement. The table below reconciles the effect that potentially dilutive securities have on earnings per share.
Three Months Ended Six Months Ended December 31, December 31, 1997 1996 1997 1996 --------------------- - -------------------- Net Income $ 2,872 $ 2,846 $ 5,304 $ 5,544 ====== ====== ====== ====== Average shares outstanding 10,755 10,405 10,730 10,352 Basic earnings per share $ 0.27 $ 0.27 $ 0.49 $ 0.54 ====== ====== ====== ====== Net Income $ 2,872 $ 2,846 $ 5,304 $ 5,544 ====== ====== ====== ====== Average share outstanding 10,755 10,405 10,730 10,352 Dilutive effect of stock options after application of treasury stock method 372 573 371 573 ------ ------ - ------ ------ Average & equivalent shares outstanding 11,127 10,978 11,101 10,925 ====== ====== ====== ====== Diluted earnings per share $ 0.26 $ 0.26 $ 0.48 $ 0.51 ====== ====== ====== ======
E. 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. F. Acquisitions - ---------------- On November 1, 1997, the Company acquired the business and net assets of Government Systems, Inc. ("GSI"), a subsidiary of Infonet Services Corporation, a multinational communications network provider headquartered in El Segundo, California, for $28 million in cash, plus an additional $5.5 million to pay off existing debt of GSI, which has been recorded using the purchase method of accounting. GSI delivers international communications and network-related services to meet the data networking needs of the U.S. Government and other organizations. These services include full implementation of dedicated private networks, integrated public and private networks, network installation, maintenance, and management and operations. GSI's major customers include the Department of Defense, the Federal Aviation Administration and Globalstar Limited Partnership. GSI's annual revenues, prior to acquisition, approximated $36 million. Approximately $23 million of the purchase consideration has been preliminarily allocated to goodwill, based upon the excess purchase price over the estimated fair value of net assets acquired, and will be amortized over 20 years. The preliminary purchase price allocation may change during the year ending June 30, 1998 as additional information concerning the net asset valuation is obtained. GSI contributed revenues of $4.7 million for the period from November 1, 1997 to December 31, 1997. In order to meet the financing requirements of the above acquisition, on October 28, 1997, the Company amended its existing credit facility, extending its term from July 1, 1999 to July 1, 2000 and increasing the facility from $50 million to $70 million. All other significant terms and conditions remain the same. Also in November 1997, CACI Limited in London, England acquired 100% of the share capital of AnaData Limited ("AnaData"), which was recorded under the purchase method of accounting. The total consideration paid was $1.9 million in cash, which was financed from CACI Limited's working capital. AnaData develops and markets software products for managing marketing databases, and historically generated annual revenues of approximately $2.5 million. Based upon estimated fair values, $1 million of the purchase consideration has been allocated to software intellectual property rights which will be amortized over five years, and $0.4 million has been allocated to goodwill which will be amortized over 10 years. In November and December of FY 1998, the AnaData business contributed $0.3 million in revenue. G. Recent Pronouncements - ------------------------- In June 1997, the Financial Accounting Standards Board issued Statement of Financial Standards No. 130, "Reporting Comprehensive Income" (" SFAS No. 130") and Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("SFAS No. 131"). SFAS No. 130 establishes standards for the reporting and presenting of comprehensive income and its components (revenue, expenses, gains and losses) in a full set of general-purpose financial statements. SFAS No. 131 establishes standards for the manner in which public business enterprises report information about operating segments and the related disclosures about products and services, geographic area, and major customers. Both statements are effective for financial statements issued for fiscal years beginning after December 15, 1997. The Company is currently reviewing what effect the new standards will have on future reporting. 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, 1997 and 1996. - -------------------------------------------------------------------------- Revenues - -------- The table below sets forth the customer mix in revenues with related percentages of total revenues for the three months ended on December 31, 1997 (FY 1998) and December 31, 1996 (FY 1997), respectively:
(Dollars in thousands, except as percents) Second Quarter First Six Months FY98 FY97 FY98 FY97 ---------------- ---------------- - ----------------- ----------------- Department of Defense $39,200 49.5% $35,671 51.8% $ 75,547 50.4% $ 68,485 52.1% Federal Civilian Agencies 21,280 26.9% 16,327 23.7% 39,627 26.5% 32,390 24.6% Commercial 16,850 21.3% 14,822 21.6% 31,113 20.8% 26,601 20.2% State & Local Governments 1,815 2.3% 2,001 2.9% 3,527 2.3% 4,079 3.1% ------ ------ ------ ------ - ------- ------ ------- ------ Total $79,145 100.0% $68,821 100.0% $149,814 100.0% $131,555 100.0%
For the three months ("quarter") and six months ended December 31, 1997, the Company's total revenues increased by 15%, or $10.3 million, and by 14%, or $18.3 million, respectively, over the same periods last year. The increases were primarily the result of the acquisitions described below and increases in sales to commercial customers and to Federal civilian agencies. On November 1, 1997, the Company acquired the business and net assets of Government Systems, Inc. ("GSI") which contributed approximately $4.7 million of incremental revenues for the three and six months ended December 31, 1997. In the prior year, the Company purchased the net assets of Sunset Resources, Inc. ("SRI") on October 1, 1996, which generated incremental revenues of $4.4 million for the first three months of FY 1998. Revenues from the Department of Defense ("DoD") increased 10%, or $3.5 million, for the quarter, and 10.3%, or $7.0 million, for the first six months. The GSI and SRI acquisitions accounted for $2.1 million and $4.3 million of the growth, respectively. The additional increase in revenues is due to higher-volume task orders for logistic services, software integration and testing services to DoD customers. Federal civilian agencies revenue is primarily derived from the Department of Justice ("DoJ") litigation support efforts. These services are dependent on the level of DoJ litigation that the Company is supporting at any period of time and have fluctuated from quarter to quarter. DoJ revenue for the second quarter of FY 1998 increased approximately 24% to $14.6 million versus $11.8 million for the same period last year due to greater volume on several large cases. For the first six months of FY 1998, revenue from DoJ was $29.6 million compared to $23.7 million for the same period last year. In addition, revenues from Federal civilian agencies rose $2.2 million as a result of the GSI acquisition. During the quarter and six months ended December 31, 1997, commercial revenues increased by 14%, or $2.0 million, and 17%, or $4.5 million, respectively, over the same periods last year. These increases are primarily the result of growth in sales of territory optimization and marketing analysis software products and services in the United Kingdom coupled with growth in Year 2000 software renovation services. The nature of the Company's proprietary software products business is inherently less predictable than the Company's longer-term contract work with the Federal Government and may fluctuate from quarter to quarter. The following table sets forth the relative percentage that certain items of expense and earnings bear to revenues for the quarter and six months ended December 31, 1997 and December 31, 1996, respectively.
Dollar Amount (in thousands) Percentage of Revenue Second Quarter First Six Months Second Quarter First Six Months FY98 FY97 FY98 FY97 FY98 FY97 FY98 FY97 ------- ------- -------- - -------- ------ ------ ------ ------ Revenues $79,145 $68,821 $149,814 $131,555 100.0% 100.0% 100.0% 100.0% Costs & expenses: Direct costs 42,550 36,113 80,587 68,197 53.8% 52.5% 53.8% 51.8% Indirect costs 29,151 26,093 55,590 50,613 36.8% 37.9% 37.1% 38.5% Depreciation & amortization 2,341 1,556 4,366 2,968 3.0% 2.3% 2.9% 2.3% ------ ------ ------- - ------- ------ ------ ------ ------ Total operating expenses 74,042 63,762 140,543 121,778 93.6% 92.7% 93.8% 92.6% ====== ====== ======= ======= ====== ====== ====== ====== Income from operations 5,103 5,059 9,271 9,777 6.4% 7.3% 6.2% 7.4% Interest expense 472 277 717 461 0.6% 0.4% 0.5% 0.3% ------ ------ ------- - ------- ------ ------ ------ ------ Earnings before income taxes 4,631 4,782 8,554 9,316 5.8% 6.9% 5.7% 7.1% Income taxes 1,759 1,936 3,250 3,772 2.2% 2.8% 2.2% 2.9% ------ ------ ------- - ------- ------ ------ ------ ------ Net income $ 2,872 $ 2,846 $ 5,304 $ 5,544 3.6% 4.1% 3.5% 4.2% ====== ====== ======= ======= ====== ====== ====== ======
Income From Operations - ---------------------- Income from operations decreased $0.5 million for the first six months of FY 1998 as compared to the same period in FY 1997. The higher earnings a year ago were the result of a $0.5 million pretax gain from a favorable settlement of prior indirect cost rate that had been subject to routine audit by the U.S. Government. As a percentage of revenues, income from operations decreased for the quarter and for the first six months ended December 31, 1997, as compared to the same periods in the previous year. This decrease was due to the favorable rate settlement, discussed above, as well as additional depreciation and amortization charges incurred on both capital expenditures and the goodwill recorded as a result of the GSI acquisition. Direct costs, as a percentage of revenues, increased to 53.8% for the second quarter of FY 1998 as compared to 52.5% for the same period in the prior year. This was directly attributable to the GSI acquisition, which contributed revenues earned on a higher proportion of other direct costs to total direct costs. For the six months ended December 31, 1997, GSI and SRI operations contributed $5.4 million of incremental other direct costs which accounts for the 2% increase, as a percentage of revenues, for the first six months of FY 1998 versus FY 1997. Indirect costs include fringe benefits, indirect labor, marketing, and bid and proposal costs, and other discretionary costs. The increases in indirect costs in FY 1998 have been in proportion to increases in direct labor and the revenues associated with the direct labor. Indirect costs have declined as a percentage of total revenues because of the effect on total revenues of higher other direct costs as noted above. The increase in depreciation and amortization of $0.8 million for both the quarter and the six months, is primarily attributable to the acquisitions discussed above which resulted in additional goodwill of $26.4 million. In addition, the Company has purchased $6.0 million of property and equipment since January 1, 1997, in order to support the increased number of professionals within the Company. Interest Expense - ---------------- Interest expense has increased by $0.2 million and $0.3 million for the quarter and six months ended December 31, 1997, respectively, as compared to the same periods in the previous year. This is directly attributable to the increased borrowings of $33.5 million necessary to complete the GSI acquisition. Income Taxes - ------------ The effective income tax rate for the quarter and the six months ended December 31, 1997 was 38% versus 40.5% for the same periods last year. The decrease is primarily the result of a lower effective state income tax rate. Net Income - ---------- Net income increased slightly to $2.8 million for the quarter and decreased 4% to $5.3 million for the six months of FY 1998, as compared to the same periods in the previous year for the various reasons discussed above. 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 the acquisition activities. Working capital was $51.6 million and $42.0 million as of December 31, and June 30, 1997, respectively. The increase in working capital in the first six months of FY 1998 is primarily related to the GSI acquisition. Operating activities provided cash of $8.6 million and $1.1 million for the six months ended December 31, 1997 and 1996, respectively. The increase in cash provided by operating activities is primarily due to the receipt of $3.3 million in income tax refunds, $2.9 million less in the timing of funds disbursed for accrued compensation and $0.6 million less in timing requirements for disbursements to vendors in the ordinary course of business. The Company used $38.1 million in investing activities for the six months ended December 31,1997, versus $8.4 million for the same period a year ago. This is due primarily to the GSI acquisition for $33.5 million. The Company financed its investing activities from operating cash flows and from a net increase in borrowings under its line of credit of $28.1 million. On October 28, 1997, the Company increased its unsecured revolving credit agreement from $50 million to $70 million and extended the term to July 1, 2000. The Company also maintains a 500,000 pound sterling unsecured line of credit in London, England, which expires in November 1998. At December 31, 1997, the Company had approximately $33.9 million available for borrowings under its lines of credit. Accordingly, the Company believes that the combination of internally generated funds, available credit and cash on hand will provide the required liquidity and capital resources for the foreseeable future. PART II OTHER INFORMATION - ----------------- ITEM 1. LEGAL PROCEEDINGS Ceridian Corporation v. CACI Systems Integration Inc. - ----------------------------------------------------- Reference is made to Part I, Item 3, Legal Proceedings, in the Registrant's Quarterly Report on Form 10-Q for the period ending September 30, 1997, for the most recently filed information concerning the suit field on October 6, 1995 by Ceridian Corporation ("Ceridian") 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 system. In January 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. Since the filing of the Registrant's report indicated above, the case was settled pursuant to a confidential settlement agreement on terms satisfactory to the Company. CACI, INC.-FEDERAL v. Arizona Department of Transportation - ---------------------------------------------------------- Reference is made to Part I, Item 3, Legal Proceedings, in the Registrant's Quarterly Report on Form 10-Q for the period ending September 30, 1997, for the most recently filed information concerning the lawsuit filed on June 25, 1996, by CACI, INC.-FEDERAL ("CACI"), the Registrant's wholly-owned subsidiary, in Superior Court for Maricopa County, Arizona, against the Arizona Department of Transportation ("ADOT"). This suit seeks the following: (i) a declaratory judgment that the disputes procedure mandated by the Arizona Procurement Code is unconstitutional; (ii) a declaratory judgment that ADOT cannot assert claims against CACI under the mandated disputes procedure; (iii) a declaratory judgment that ADOT is not entitled to recover consequential damages in connection with the dispute; (iv) $2,938,990 plus interest in breach of contract damages; (v) the return of CACI property seized by ADOT in connection with the termination of the contract; and (vi) lawyers' fees. Since the filing of Registrant's report indicated above, the parties have been conducting discovery and exploring the possibility of settlement. ITEM 5. OTHER INFORMATION-FORWARD LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain statements included in "Liquidity and Capital Resources" and information contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission, which should be read in conjunction with this Quarterly Report, may be considered forward-looking. The Company cautions investors that there can be no assurance that actual results will not differ materially from those projected or suggested in such forward-looking statements. Factors which could cause a material difference in results include, but are not limited to, the following: changes in government spending policies and/or decisions concerning specific programs, individual business decisions of customers and clients; developments in technology; competitive factors and pricing pressures; changes in government laws or regulations; unusually intense competition for employees with cutting-edge technical skills; and our ability to manage the business to achieve forecast results. CACI INTERNATIONAL INC AND SUBSIDIARIES INDEX TO EXHIBITS Exhibit Number Title - ------- --------------------------------------------------- 11 Computation of Basic and Diluted Earnings Per Share 27 Financial Data Schedule 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 13, 1998 By: /s/ ------------------------------------- Dr. J.P. London Chairman of the Board, Chief Executive Officer, and Director (Principal Executive Officer) Date: February 13, 1998 By: /s/ ------------------------------------- James P. Allen Executive Vice President, Chief Financial Officer, and Treasurer (Principal Financial and Accounting Officer) EX-11 2 EXHIBIT 11 CACI INTERNATIONAL INC AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE Three Months Ended Six Months Ended December 31, December 31, 1997 1996 1997 1996 ------- ------- ------- ------- Net income $ 2,872 $ 2,846 5,304 5,544 Average shares outstanding during the period 10,755 10,405 10,730 10,352 Dilutive effect of stock options after application of treasury stock method 372 573 371 573 Average number of shares outstanding during the period 11,127 10,978 11,101 10,925 Basic earnings per share $ 0.27 $ 0.27 $ 0.49 $ 0.51 Diluted earnings per share $ 0.26 $ 0.26 $ 0.48 $ 0.51 EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q FOR THE PERIOD ENDING DECEMBER 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS JUN-30-1998 DEC-31-1997 1,368,000 0 81,412,000 (3,248,000) 0 92,582,000 36,353,000 (25,591,000) 156,039,000 41,002,000 36,900,000 0 0 1,429,000 75,110,000 156,039,000 0 149,814,000 0 80,587,000 59,196,000 760,000 717,000 8,554,000 3,250,000 5,304,000 0 0 0 5,304,000 $0.48 $0.48
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