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Caci International Cla Reports Operating Results (10-Q)

November 05, 2009 | About:
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10qk

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Caci International Cla (CACI) filed Quarterly Report for the period ended 2009-09-30.

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. Company's 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 International Cla has a market cap of $1.44 billion; its shares were traded at around $47.91 with a P/E ratio of 14.8 and P/S ratio of 0.5.

Highlight of Business Operations:

Commercial revenue increased 17.7 percent, or $4.4 million, during the three months ended September 30, 2009, as compared to the same period a year ago. Commercial revenue is derived from both international and domestic operations. International operations accounted for 95.5 percent, or $27.8 million, of total commercial revenue, while domestic operations accounted for 4.5 percent, or $1.3 million. The increase in commercial revenue came from operations within the U.K. and was primarily caused by acquisitions we completed subsequent to June 30, 2008 and the improved performance of our U.K. operations.

As a percentage of revenue, direct costs were 69.1 percent and 67.8 percent for the three months ended September 30, 2009 and 2008, 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 $196.7 million and $181.7 million for the three months ended September 30, 2009 and 2008, respectively. This increase in direct labor was attributable primarily to organic growth. ODCs were $313.8 million and $261.8 million during the three months ended September 30, 2009 and 2008, respectively. This increase was primarily driven by an increased volume of tasking across C4ISR integration services within our Strategic Services Sourcing contract.

Depreciation and amortization expense was $11.2 million and $12.0 million for the three months ended September 30, 2009 and 2008, respectively. The decrease of $0.9 million, or 7.2 percent, was primarily the result of reduced amortization expense attributable to previously acquired intangibles and a decrease in software amortization on externally marketed software.

We maintain a $590.0 million credit facility (the Credit Facility), which includes a $240.0 million revolving credit facility (the Revolving Facility) and a $350.0 million institutional term loan (the Term Loan). At September 30, 2009, $280.9 million was outstanding under the Term Loan, no amounts were outstanding under the Revolving Facility and we had no outstanding letters of credit. The outstanding balance under the Term Loan at September 30, 2009 reflects the $50.0 million prepayment we made on July 8, 2009. We may make further prepayments based on cash flows, working capital requirements and other capital needs.

The contingently issuable shares are not included in our diluted share count for the three month periods ended September 30, 2009 or 2008, 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 in accordance with Accounting Standards Codification 470-20, Debt with Conversion and Other Options (ASC 470-20) (formerly FSP APB 14-1, Accounting for Convertible Debt Instruments that May be Settled in Cash Upon Conversion (Including Partial Cash Settlement)). 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.

Read the The complete ReportCACI is in the portfolios of David Dreman of Dreman Value Management.

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