Caci International Cla Reports Operating Results (10-Q)
Caci International Cla has a market cap of $1.53 billion; its shares were traded at around $50.96 with a P/E ratio of 14.5 and P/S ratio of 0.4. Caci International Cla had an annual average earning growth of 16% over the past 10 years. GuruFocus rated Caci International Cla the business predictability rank of 4-star.CACI is in the portfolios of Westport Asset Management, Westport Asset Management, David Dreman of Dreman Value Management, Murray Stahl of Horizon Asset Management, Paul Tudor Jones of The Tudor Group, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations: Revenue from federal civilian agencies increased 2.7 percent, or $3.6 million, for the three months ended September 30, 2010, as compared to the same period a year ago. Of the federal civilian agency revenue growth, $2.5 million, or 68.4 percent, was attributable to existing operations and $1.1 million, or 31.6 percent, was attributable to acquisitions. Approximately 17.5 percent of the federal civilian agency revenue for the quarter was derived from DoJ, for whom we provide litigation support services. Revenue from DoJ was $23.8 million and $18.4 million for the three months ended September 30, 2010 and 2009, respectively.
Commercial and other revenue increased 30.3 percent, or $8.8 million, during the three months ended September 30, 2010, as compared to the same period a year ago. Commercial revenue is derived from both international and domestic operations. International operations accounted for 74.5 percent, or $28.2 million, of total commercial revenue, while domestic operations accounted for 25.5 percent, or $9.7 million. The increase in commercial revenue came primarily from acquisitions we completed subsequent to June 30, 2009.
As a percentage of revenue, direct costs were 70.7 percent and 69.1 percent for the three months ended September 30, 2010 and 2009, respectively. Direct costs include direct labor and ODCs, which include, among other costs, subcontractor labor and materials along with equipment purchases and travel expenses. ODCs, which are common in our industry, typically are incurred in response to specific client tasks and may vary from period to period. The single largest component of direct costs, direct labor, was $211.1 million and $196.7 million for the three months ended September 30, 2010 and 2009, respectively. This increase in direct labor was attributable primarily to organic growth. ODCs were $378.4 million and $313.8 million during the three months ended September 30, 2010 and 2009, respectively. This increase was primarily driven by an increased volume of tasking across C4ISR services within our Strategic Services Sourcing contract along with two acquisitions completed between September 30, 2009 and June 30, 2010.
At September 30, 2010, we had a $590.0 million credit facility (the Credit Facility), which included a $240.0 million revolving credit facility (the Revolving Facility) and a $350.0 million institutional term loan (the Term Loan). At September 30, 2010, $150.1 million was outstanding under the Term Loan, no amounts were outstanding under the Revolving Facility and we had no outstanding letters of credits. On October 21, 2010, the Credit Facility was terminated and replaced by a new facility (the 2010 Credit Facility). The 2010 Credit Facility consists of a $600 million revolver and a $150 million term loan. The new five-year secured credit agreement permits revolver borrowings of up to $600 million and has an accordion feature that will allow the facility to be expanded by an additional $200 million. The interest rates applicable to loans under the 2010 Credit Facility are floating interest rates that, at the Companys option, equal a base rate or a Eurodollar rate plus, in each case, an applicable margin based upon the Companys consolidated total leverage ratio. The 2010 Credit Facility is subject to affirmative, negative, and financial covenants that are customary for this type of credit agreement.
The contingently issuable shares that may result from the conversion of the Notes are not included in our diluted share count for the three month periods ended September 30, 2010 or 2009, because our average stock price during those periods was below the conversion price. Of total debt issuance costs of $7.8 million, $5.8 million is being amortized to interest expense over seven years. The remaining $2.0 million of debt issuance costs have been reclassified to shareholders equity. Upon closing of the sale of the Notes, $45.5 million of the net proceeds was used to concurrently repurchase one million shares of our common stock.
In connection with the issuance of the Notes, we purchased in a private transaction at a cost of $84.4 million call options (the Call Options) to purchase approximately 5.5 million shares of our common stock at a price equal to the conversion price of $54.65 per share. The Call Options allow us to receive shares of our common stock from the counterparties equal to the amount of common stock related to the excess conversion value that we would pay the holders of the Notes upon conversion. In addition, we sold warrants (the Warrants) to issue approximately 5.5 million shares of CACI common stock at an exercise price of $68.31 per share. The proceeds from the sale of the Warrants totaled $56.5 million.
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