EX-99 2 ci4591ex99.htm EXHIBIT 99

Exhibit 99

CACI Reports Record Second Quarter Results

Revenue Up 7.7 Percent to $419.5 million
Net Income Up 16.4 Percent to $22.3 million

          ARLINGTON, Va., Jan. 25 /PRNewswire-FirstCall/ -- CACI International Inc (NYSE: CAI), a leading information technology and network solutions provider to the federal government, announced today record results for its second fiscal quarter and first six months ending December 31, 2005.

          Second Quarter Results

          The results described in this release include the adoption of Financial Accounting Standards Board Statement No. 123R, “Share Based Payment” (FAS 123R) and the resulting non-cash charges.  The second quarter and first six months of Fiscal Year 2005 (FY05) have been restated as if FAS 123R was in effect as of July 1, 2004, the beginning of FY05.

          For the second quarter of fiscal year 2006 (FY06) the Company reported revenue of $419.5 million, up $29.8 million, or 7.7 percent, over FY05 second quarter revenue of $389.7 million. Organic growth in the quarter was 6.7 percent.  Operating income during the quarter was $39.2 million, 13.1 percent higher than the $34.7 million reported in the year earlier quarter.  The Company’s operating margin in the quarter was 9.4 percent compared with 8.9 percent in the year earlier quarter.  Net income for the second quarter was $22.3 million, or $0.72 per diluted share, 16.4 percent higher than net income of $19.1 million, or $0.63 per diluted share, for the second quarter of FY05.

          Had the Company not been required to adopt FAS 123R, operating income and net income would have been as follows:

 

 

(unaudited)
Quarter ended

 

 

 

 

 

 


 

 

 

 

(Amounts in thousands, except per share amounts)

 

 

12/31/2005

 

 

12/31/2004

 

 

% Growth

 


 


 

Income from operations, as reported

 

$

39,227

 

$

34,676

 

 

 

 

Stock option expense

 

 

1,620

 

 

2,232

 

 

 

 

 

 


 

 

 

 

Income from operations before stock option expense

 

$

40,847

 

$

36,908

 

 

10.7

%

 

 


 

 

 

 

Operating margin before stock  option expense

 

 

9.7

%

 

9.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, as reported

 

$

22,270

 

$

19,131

 

 

 

 

Stock option expense, net of tax

 

 

1,018

 

 

1,384

 

 

 

 

 

 


 

 

 

 

Net income before stock option expense

 

$

23,288

 

$

20,515

 

 

13.5

%

 

 


 

 

 

 

Net profit margin before stock  option expense

 

 

5.6

%

 

5.3

%

 

 

 

Diluted earnings per share before stock option expense

 

$

0.75

 

$

0.67

 

 

 

 

 

 


 

 

 

 




          As most of the Company’s industry peers adopted FAS 123R effective January 1st, the information presented above provides a better comparison to results of its competitors from a margin perspective.

          Second Quarter Highlights:

 

*

Increased Intelligence Community revenue by 26 percent during the quarter, which now represents 28 percent of CACI’s base of business

 

 

 

 

*

Closed the acquisition of National Security Research, Inc., a provider  of strategic policy analysis to the highest levels of the federal government

 

 

 

 

*

Signed a definitive agreement to acquire Information Systems Support, Inc. (ISS), a provider of information technology solutions primarily to the U.S. Government.  ISS’s revenue for calendar year ending December 31, 2005 is projected to be approximately $200 million

 

 

 

 

*

Reported a cash balance of $137.2 million at December 31, 2005.

          Other Operating Information

          The Company also reported that contract awards in the quarter totaled approximately $208 million.  For the first six months of FY06, contract awards totaled approximately $1,005 million compared with contract awards of $812 million reported for the first six months of FY05.

          Contract funding orders in the quarter were $294 million.  For the first six months of FY06, contract funding orders were $772 million compared with $903 million in the year earlier period.  The lower amount during FY06 is due to many of the Company’s federal government clients operating under a continuing resolution throughout the second fiscal quarter and, as a result, issuing shorter term contract funding orders pending approval of their respective appropriations for FY06.

          CEO’s Commentary

          Commenting on the results, Dr. J. P. London, CACI’s Chairman, President and Chief Executive Officer, said, “CACI delivered record results in the second quarter and the first half of our fiscal year. With the completion of the government’s FY06 appropriations, late in calendar 2005, we are now anticipating a more favorable market environment for the remainder of the government’s fiscal year, through September 30, 2006.

          “In the quarter CACI continued to meet the mission critical needs of its clients particularly in the company’s intelligence sector business which grew 26 percent, and now constitutes 28 percent of CACI’s revenue base.  This growth trend continues in the current quarter with the recent award we received for the Engineering, Technical and Operations Support Services (ETOSS) contract, a major program for intelligence services for the U.S. Army. The selection of CACI assures the Army of proven expertise and uninterrupted support for systems and solutions vital to the Army’s role in the global war on terrorism. Additionally, the pending acquisition of ISS will be an important driver for growth in our intelligence sector support.  Mergers and acquisitions (M&A) is a proven core competency of CACI demonstrated over the past 15 years. As the leading strategic consolidator in our market space, we will continue to pursue transactions that add to our capabilities and accelerate our growth going forward.”

          Dr. London continued, “Our FY06 will be a record year for CACI.  Our first half volume of contract awards, at $1 billion, was up 24 percent over the first half of FY05, and is another record performance for us.  Our merger and acquisition transactions year-to-date will generate over $220 million in acquired annual revenue, which includes the pending close of ISS. Another positive indicator going forward is the robust pipeline of qualified opportunities we are pursuing that continues to exceed $10 billion.  With this pace of business in our market niche, we anticipate exiting FY06 at a revenue run rate of greater than $2 billion annually.  We believe that the federal government services and IT market will remain strong for years to come. Overall, our close alignment with national priorities, and our strong legacy offerings, especially in defense, intelligence, and homeland security firmly positions us to grow and meet our long-term objectives in the years ahead.”

2



          Six Months FY06 Results

          For the first six months of FY06, revenue increased 8.3 percent to $842.6 million versus $778.3 million of revenue for FY05.  Operating income for the first six months was $72.7 million, 7.0 percent higher than the $68.0 million reported a year earlier. The Company’s operating margin was 8.6 percent for the first six months of FY06 compared with 8.7 percent for the first six months of FY05.  Net income for the first six months was $41.4 million, or $1.34 per diluted share, 10.5 percent higher than net income of $37.5 million, or $1.23 per diluted share, for the first half of FY05.  Operating cash flow for the first six months was $47.1 million compared with $21.1 million in the first six months of FY05.

          Again, had we not been required to record stock option expense under FAS 123R, operating income and net income for the first six months would have been as follows:

 

 

(unaudited)
Six months ended

 

 

 

 

 

 


 

 

 

(Amounts in thousands, except per share amounts)

 

12/31/2005

 

12/31/2004

 

Growth %

 


 


 

Income from operations, as reported

 

$

72,715

 

$

67,952

 

 

 

 

Stock option expense

 

 

7,401

 

 

4,545

 

 

 

 

 

 


 

 

 

 

Income from operations before stock option expense

 

$

80,116

 

$

72,497

 

 

10.5

%

 

 


 

 

 

 

Operating margin before stock option expense

 

 

9.5

%

 

9.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, as reported

 

$

41,393

 

$

37,471

 

 

 

 

Stock option expense, net of tax

 

 

4,718

 

 

2,806

 

 

 

 

 

 


 

 

 

 

Net income before stock option expense 

 

$

46,111

 

$

40,277

 

 

14.5

%

 

 


 

 

 

 

Net profit margin before stock option expense

 

 

5.5

%

 

5.2

%

 

 

 

Diluted earnings per share before stock option expense

 

$

1.49

 

$

1.33

 

 

 

 

 

 


 

 

 

 

          Acquisition of Information Systems Support, Inc.

          The Company anticipates that the acquisition of ISS will be effective February 1, 2006.  The transaction will be funded through a combination of cash and borrowings under CACI’s existing revolving credit facility.

3



          CACI Guidance

          During the quarter, the abnormal delay and the unpredictability of when the FY06 DoD appropriations would be signed into law resulted in a constrained spending environment and uncertainty on the part of the Company’s defense customers concerning the full-funding of their programs for FY06.  These factors have resulted in lower contract funding orders in the quarter, delays in forecasted contract awards, and the slower initiation of new work during the government’s fiscal year.  As such, the Company’s guidance in the second half of its fiscal year reflects lower revenue and income from on-going business.  The guidance further reflects a higher percentage of the Company’s revenue in the second half now expected to be coming from subcontractors and other material costs, which yields lower margins.  The guidance update also includes the anticipated acquisition of ISS.  Projected revenue for the remaining quarters and all of FY06, and projected earnings per share shown with and without stock option expense, are as follows:

(In millions except for earnings per share)

 

3rd
Quarter

 

4th
Quarter

 

Total
Year

 


 





Revenue

 

$465 - $475

 

$502 - $517

 

$1,810 - $1,835

 

Diluted earnings per share, exclusive of effect of stock option expense

 

$0.73 - $0.76

 

$0.75 - $0.82

 

$2.97 - $3.07

 

Stock option expense

 

$(0.04)

 

$(0.04)

 

$(0.24)

 

Diluted earnings per share, inclusive of effect of stock option expense

 

$0.69 - $0.72

 

$0.71 - $0.78

 

$2.73 - $2.83

 

Diluted weighted average shares

 

31.0

 

31.1

 

31.0

 

          The total stock compensation expense, which includes both the expense of stock options as shown above and the expense of restricted stock units granted by the Company, is a non-cash expense that has no effect on the Company’s total cash flow.

          This guidance represents our views as of January 25, 2006.  Investors are reminded that actual results may differ from these estimates for the reasons described below and in our filings with the Securities and Exchange Commission.

          Conference Call Information

          The company has scheduled a conference call for 8:30 AM Eastern time Thursday, January 26th, during which management will be making a brief presentation focusing on second quarter results, operating trends and its expectations. A question-and-answer session will follow to allow further discussion of the results and the company’s future expectations. Interested parties can listen to the conference call and view the accompanying exhibits over the Internet by logging on to CACI’s Internet site at http://www.caci.com at the scheduled time. A replay of the call will also be available over the Internet beginning at 1:00 PM Eastern time Thursday, January 26th, and can be accessed through CACI’s homepage (http://www.caci.com) by clicking on the CACI Investor Info button.

          About CACI

          CACI International Inc provides the IT and network solutions needed to prevail in today’s new era of defense, intelligence, and e-government. From systems integration and managed network solutions to knowledge management, engineering, simulation, and information assurance, we deliver the IT applications and infrastructures our federal customers use to improve communications and collaboration, secure the integrity of information systems and networks, enhance data collection and analysis, and increase efficiency and mission effectiveness. Our solutions lead the transformation of defense and intelligence, assure homeland security, enhance decision-making, and help government to work smarter, faster, and more responsively. CACI, a member of the Russell 1000 and S&P SmallCap 600 indices, provides dynamic careers for approximately 9,300 employees working in over 100 offices in the U.S. and Europe. CACI is the IT provider for a networked world. Visit CACI on the web at http://www.caci.com.

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          There are statements made herein which do 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 the United Kingdom, including conditions that result from terrorist activities or war; 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, such as homeland security, the war on terrorism or rebuilding Iraq; government contract procurement (such as bid protest, small business set asides, etc.) and termination risks; the results of government investigations into allegations of improper actions related to the provision of services in support of U.S. military operations in Iraq; individual business decisions of our clients; paradigm shifts in technology; competitive factors such as pricing pressures and/or competition to hire and retain employees (particularly those with security clearances); our ability to complete and successfully integrate acquisitions appropriate to achievement of our strategic plans; material changes in laws or regulations applicable to our businesses, particularly in connection with (i) government contracts for services, (ii) outsourcing of activities that have been performed by the government, and (iii) competition for task orders under Government Wide Acquisition Contracts (“GWACs”) and/or schedule contracts with the General Services Administration; our own ability to achieve the objectives of near term or long range business plans; changes that could result from accounting adjustments; and other risks described in the company’s Securities and Exchange Commission filings.

(Financial tables follow)

5



Summary Financial Tables

CACI International Inc
Consolidated Statements of Operations (Unaudited)
(Amounts in thousands, except per share amounts)

 

 

Quarter Ended

 

Six Months Ended

 

 

 





 

 

12/31/05

 

12/31/04
(As restated)

 

12/31/05

 

12/31/04
(As restated)

 

 

 









Revenue

 

$

419,530

 

$

389,685

 

$

842,636

 

$

778,338

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct costs

 

 

270,740

 

 

241,006

 

 

541,617

 

 

481,455

 

Indirect costs and selling  expenses

 

 

101,621

 

 

106,304

 

 

212,827

 

 

212,934

 

Depreciation and amortization

 

 

7,942

 

 

7,699

 

 

15,477

 

 

15,997

 

 

 













Total costs and expenses

 

 

380,303

 

 

355,009

 

 

769,921

 

 

710,386

 

Operating income

 

 

39,227

 

 

34,676

 

 

72,715

 

 

67,952

 

Interest expense, net

 

 

3,777

 

 

3,820

 

 

7,390

 

 

7,293

 

 

 













Income before income taxes

 

 

35,450

 

 

30,856

 

 

65,325

 

 

60,659

 

Income taxes

 

 

13,180

 

 

11,725

 

 

23,932

 

 

23,188

 

 

 













Net income

 

$

22,270

 

$

19,131

 

$

41,393

 

$

37,471

 

 

 













Basic earnings per share

 

$

0.74

 

$

0.65

 

$

1.38

 

$

1.27

 

Diluted earnings per share

 

$

0.72

 

$

0.63

 

$

1.34

 

$

1.23

 

Weighted average shares used in per share computations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

30,130

 

 

29,660

 

 

30,102

 

 

29,415

 

Diluted

 

 

30,985

 

 

30,574

 

 

30,999

 

 

30,345

 

Statement of Operations Margin Data

 

 

(Unaudited)
Quarter Ended

 

(Unaudited)
Six Months Ended

 

 

 





 

 

12/31/05

 

12/31/04

 

12/31/05

 

12/31/04

 

 

 









 

 

 

 

(As restated)

 

 

 

(As restated)

 

Gross profit margin

 

 

35.5

%

 

38.2

%

 

35.7

%

 

38.1

%

Operating profit margin

 

 

9.4

%

 

8.9

%

 

8.6

%

 

8.7

%

Net profit margin

 

 

5.3

%

 

4.9

%

 

4.9

%

 

4.8

%

6



CACI International Inc
Condensed Consolidated Balance Sheets (Unaudited)
(Amounts in thousands)

 

 

12/31/2005

 

6/30/2005

 

 

 


 


 

 

 

 

 

 

(as restated)

 

ASSETS:

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

Accounts receivable, net

 

$

137,158

 

$

132,965

 

Billed

 

 

311,105

 

 

311,046

 

Unbilled

 

 

26,075

 

 

27,009

 

 

 



 



 

Total accounts receivable, net

 

 

337,180

 

 

338,055

 

Other current assets

 

 

20,042

 

 

21,910

 

 

 



 



 

Total current assets

 

 

494,380

 

 

492,930

 

Property and equipment, net

 

 

25,985

 

 

24,261

 

Goodwill & intangible assets, net

 

 

657,788

 

 

636,606

 

Other

 

 

58,295

 

 

52,842

 

 

 



 



 

Total assets

 

$

1,236,448

 

$

1,206,639

 

 

 



 



 

LIABILITIES & SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Notes payable

 

$

3,541

 

$

3,641

 

Accounts payable

 

 

37,797

 

 

36,900

 

Accrued compensation & benefits

 

 

82,787

 

 

91,663

 

Other current liabilities

 

 

58,003

 

 

76,540

 

 

 



 



 

Total current liabilities

 

 

182,128

 

 

208,744

 

Notes payable, long-term

 

 

341,089

 

 

342,861

 

Supplemental retirement savings plan obligations

 

 

29,772

 

 

25,059

 

Other long-term liabilities

 

 

10,136

 

 

8,941

 

Shareholders’ equity

 

 

673,323

 

 

621,034

 

 

 



 



 

Total liabilities & shareholders’ equity

 

$

1,236,448

 

$

1,206,639

 

 

 



 



 

7



CACI International Inc
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Amounts in thousands)

 

 

Six Months Ended

 

 

 


 

 

 

12/31/2005

 

12/31/2004

 

 

 


 


 

 

 

 

 

 

(as restated)

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income

 

$

41,393

 

$

37,471

 

Reconciliation of net income to net cash provided by operating activities

 

 

 

 

 

 

 

Depreciation and amortization

 

 

15,477

 

 

15,996

 

Amortization of deferred financing costs

 

 

710

 

 

672

 

Stock-based compensation expense

 

 

9,683

 

 

6,010

 

Deferred income tax expense (benefit)

 

 

379

 

 

(749

)

Changes in operating assets and liabilities

 

 

 

 

 

 

 

Accounts receivable, net

 

 

5,231

 

 

(5,731

)

Other current assets

 

 

(1,153

)

 

(491

)

Accounts payable and accrued expenses

 

 

(9,204

)

 

(14,713

)

Accrued compensation & benefits

 

 

(10,131

)

 

(4,701

)

Income taxes payable

 

 

(9,564

)

 

(16,964

)

Other current liabilities

 

 

4,278

 

 

4,341

 

 

 



 



 

Net cash provided by operating activities

 

 

47,099

 

 

21,141

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Capital expenditures

 

 

(6,569

)

 

(4,055

)

Purchases of businesses, net of cash acquired

 

 

(36,879

)

 

(7,349

)

Net redemptions of marketable securities

 

 

—  

 

 

515

 

Other assets

 

 

(2,119

)

 

289

 

 

 



 



 

Net cash used in investing activities

 

 

(45,567

)

 

(10,600

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Net payments under credit facilities

 

 

(1,870

)

 

(43,950

)

Proceeds from employee stock transactions

 

 

4,506

 

 

3,568

 

Proceeds from exercise of stock options

 

 

3,860

 

 

13,949

 

Repurchase of common stock

 

 

(4,651

)

 

(3,704

)

Other

 

 

1,243

 

 

9,464

 

 

 



 



 

Net cash provided by (used in) financing activities

 

 

3,088

 

 

(20,673

)

Effect of exchange rates on cash and equivalents

 

 

(427

)

 

915

 

 

 



 



 

Net increase (decrease) in cash and equivalents

 

 

4,193

 

 

(9,218

)

Cash and equivalents, beginning of period

 

 

132,965

 

 

63,029

 

 

 



 



 

Cash and equivalents, end of period

 

$

137,158

 

$

53,811

 

 

 



 



 

8



Revenue by Customer Type
(Unaudited)

 

 

Quarter Ended

 

 

 

 

 

 

 

 

 





             

(dollars in thousands)

 

12/31/2005

 

12/31/2004

 

$ Change

 

% Change

 


 








 

Department of Defense

 

$

307,328

 

 

73.2

%

$

284,625

 

 

73.0

%

$

22,703

 

 

8.0

%

Federal Civilian Agencies

 

 

88,010

 

 

21.0

%

 

81,883

 

 

21.0

%

 

6,127

 

 

7.5

%

Commercial

 

 

18,380

 

 

4.4

%

 

16,359

 

 

4.2

%

 

2,021

 

 

12.4

%

State and Local Government

 

 

5,812

 

 

1.4

%

 

6,818

 

 

1.8

%

 

(1,006

)

 

-14.8

%

 

 


















 

Total

 

$

419,530

 

 

100.0

%

$

389,685

 

 

100.0

%

$

29,845

 

 

7.7

%

 

 


















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

 

 

 





             

(dollars in thousands)

 

12/31/2005

 

12/31/2004

 

$ Change

 

% Change

 


 









Department of Defense

 

$

614,536

 

 

72.9

%

$

562,401

 

 

72.3

%

$

52,135

 

 

9.3

%

Federal Civilian Agencies

 

 

181,070

 

 

21.5

%

 

172,200

 

 

22.1

%

 

8,870

 

 

5.2

%

Commercial

 

 

34,889

 

 

4.2

%

 

32,322

 

 

4.2

%

 

2,567

 

 

7.9

%

State and Local Government

 

 

12,141

 

 

1.4

%

 

11,415

 

 

1.4

%

 

726

 

 

6.4

%

 

 


















 

Total

 

$

842,636

 

 

100.0

%

$

778,338

 

 

100.0

%

$

64,298

 

 

8.3

%

 

 


















 

For investor information contact:

For other information contact:

David Dragics, Vice President,

Jody Brown, Executive Vice President,

Investor Relations

Public Relations

(703) 841-7835, ddragics@caci.com

(703) 841-7801, jbrown@caci.com

SOURCE  CACI International Inc
          -0-                                                            01/25/2006
          /CONTACT:  Investor information: David Dragics, Vice President, Investor Relations, +1-703-841-7835, ddragics@caci.com, or for other information: Jody Brown, Executive Vice President, Public Relations, +1-703-841-7801, jbrown@caci.com, both of CACI International Inc/
          /Web site:  http://www.caci.com /

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