CACI International Inc (NYSE: CACI), a leading professional
services and information technology solutions provider to the
federal government, announced results today for its first fiscal
quarter ended September 30, 2011.
First Quarter Results
The following table summarizes results computed in accordance
with Generally Accepted Accounting Principles (GAAP).
(in millions except per share data)
Q1, FY12 Q1, FY11
% Change Revenue $924.4
$834.0 10.8% Operating income
$75.7 $52.1
45.2% Net income $42.1
$28.7 47.1% Diluted earnings per share
$1.41 $0.92
53.3%
We are pleased to report record first quarter Fiscal Year 2012
(FY12) revenue of $924.4 million, an increase of 10.8 percent from
the first quarter of Fiscal Year 2011 (FY11). The revenue increase
was driven primarily by organic revenue growth of 8.3 percent.
Pro Forma First Quarter Results
In FY10, we completed two domestic acquisitions with
acquisition-related contingent consideration, or earn-outs, which
represent potential additional purchase consideration based on the
acquired company’s performance post-acquisition. The fair values of
the expected earn-outs were recorded as liabilities on the balance
sheet as of each acquisition date, and are re-measured each
quarter, with any change in the fair values of the liabilities
reflected in the income statement. In the first quarter of our
FY12, the liabilities decreased $0.6 million, with a corresponding
increase to operating income, due to reductions in the fair values
of the earn-out liabilities. In the first quarter of FY11, the
liabilities increased, and operating income decreased, by $1.4
million. To provide a comparison of our results excluding these
earn-out adjustments, pro forma results for the first quarter of
FY12 and FY11 are shown below.
(in millions except per share data)
Q1, FY12 Q1, FY11
% Change Revenue $924.4
$834.0 10.8% Pro forma operating
income, a non-GAAP measure $75.1
$53.5 40.3% Pro forma net income, a
non-GAAP measure $41.8
$29.5 41.6% Pro forma diluted earnings per
share, a non-GAAP measure $1.40
$0.95 47.5%
Pro forma operating income grew 40.3 percent over the prior year
period to $75.1 million, driven primarily by strong growth of 12.2
percent in direct labor. We also completed a large, one-time
commercial product sale this quarter that generated $12.0 million
in revenue and $6.1 million in net income. Pro forma net income for
the first quarter of FY12 was a record $41.8 million, or $1.40 pro
forma diluted earnings per share, an increase of 41.6 percent over
pro forma net income of $29.5 million, or $0.95 pro forma diluted
earnings per share, for the same period in FY11. Net cash provided
by operations in the quarter was $56.1 million. (See Reconciliation
of Operating Income, Net Income and Diluted Earnings Per Share to
Pro Forma Amounts on page 12.)
CEO Commentary and Outlook
Paul Cofoni, CACI's President and CEO, said, “Our record
performance in the first quarter of the fiscal year confirms CACI’s
strategy to position our solutions and services in support of our
client’s greatest challenges in national security. We are winning
business in our strategic focus areas of defense, intelligence,
homeland security, and IT modernization and government
transformation, where we continue to see growth opportunities.
Across our enterprise we are delivering operational excellence, and
we are agile in responding with innovative solutions to current and
emerging client needs.
“In 13 out of the last 15 quarters, we have delivered on our
financial goals of mid- to high-single-digit organic revenue growth
and double-digit earnings growth. This quarter we again achieved
our financial goals with record results in revenue, operating
income, and EPS, and received $1.6 billion in contract funding
orders in the quarter – the highest in CACI's history. We also
generated record operating cash flow in the quarter. Our over $2
billion of contract awards included $635 million of S3 awards
focused primarily in the C4ISR-related area, and approximately $350
million in intelligence contracts.”
Mr. Cofoni added, “Our mergers and acquisition program is
accelerating our momentum in the high-growth cyber arena, with our
recent strategic acquisitions of Pangia Technologies and Paradigm
Holdings. Pangia and Paradigm expand CACI’s capabilities for cyber
forensics and secure network operations, providing our clients with
unique capabilities to respond to national security threats. We
also completed the acquisition of Advanced Programs Group, a
leading provider of Oracle e-Business services, significantly
expanding our capabilities in the business systems and government
transformation market.
"We are raising our guidance for Fiscal Year 2012 based on
continued strength in our operating performance; the addition of
acquisitions in the cyber and business systems areas; and a large
commercial product sale. Our record performance in this first
quarter of our 50th year in business provides a solid foundation
and strong momentum for the rest of this fiscal year and
beyond.”
Additional Financial Metrics
(in millions except per share data)
Q1, FY12 Q1, FY11
% Change Pro forma earnings before interest, taxes,
depreciation and amortization (EBITDA), a non-GAAP measure
$88.9 $66.7
33.2% Pro forma diluted adjusted earnings per share, a non-GAAP
measure $1.82 $1.37
32.8% Days sales outstanding
58 59
First Quarter Contract Funding Orders and Awards
- Contract funding orders in the first
quarter were $1.60 billion compared with $1.46 billion in the year
earlier quarter. Funded backlog at September 30, 2011 was $2.52
billion compared with $2.50 billion a year earlier. Total backlog
at September 30, 2011 was $7.95 billion compared with $7.47 billion
at the end of the year earlier quarter.
- During the first quarter, we received
contract awards with an estimated value of $2.04 billion.
Approximately 40 percent of these awards were for new business.
First quarter awards included:
- Approximately $635 million in awards on
our Strategic Services Sourcing (S3) contract. These awards are for
both new and recompete work. To date, we have received $4.17
billion in S3 task order awards.
- Approximately $350 million in
previously unannounced intelligence awards for both new and
recompete work.
- More than $160 million in awards to
provide healthcare IT support for both new and recompete work.
- A three-year, $139 million delivery
order to continue support of the U.S. Navy’s Naval Air Warfare
Center-Aircraft Division. This award involves designing, testing
and integrating mobile communications systems for the DoD and other
federal agencies.
- A five-year, $33.6 million task order
to provide information operations and other support for the U.S.
Navy’s Naval Surface Warfare Center Crane Division’s Irregular
Warfare Technologies Division. This award is for new work in our
cyber solutions area.
- Not included in the above estimated
value of awards in the quarter are:
- A prime position on a five-year,
multiple-award, indefinite delivery, indefinite quantity (IDIQ)
contract with a $273 million ceiling. This award is for new work
and includes services in support of recruiting and retention for
the Army and other DoD activities.
- A prime position on a five-year, IDIQ
contract with a $100 million ceiling. This award is for new work
and includes services in support of the federal government’s
analysis of threat finance as well as its development and
enforcement of sanctions.
Recent Strategic Mergers and Acquisitions
Our strategic mergers and acquisition program continues to be a
critical part of our long-term growth strategy, adding established
customer relationships and high demand capabilities to our existing
portfolio of company capabilities. Since the beginning of our FY12,
we have completed three strategic acquisitions that enhance our
positions in high growth segments of our addressable market:
- We acquired Pangia Technologies, LLC,
to expand our cybersecurity solutions with critical services in
cyber intelligence and computer network defense for the
Intelligence Community. Pangia’s expertise in threat analysis,
intrusion detection engineering, and information system
architecture services expands our capabilities to deliver secure
information systems infrastructure and ensure secure computer
network operations.
- The acquisition of Paradigm Holdings,
Inc. brings us leading experts in the emerging field of cyber
forensics and capabilities to monitor and protect critical
information systems. Paradigm also expands our computer network
defense customer base, adding new customers in the defense,
intelligence and federal civilian customer space.
- On October 3, 2011, we completed the
acquisition of Advanced Programs Group, LLC (APG), a leading
provider of Oracle e-Business services in the federal market. APG
is a leading provider of financial and asset management,
procurement, and business solutions, enabling enhanced productivity
with reduced costs. This acquisition significantly increases CACI's
already strong capabilities in the government transformation
market, expanding our customer presence in the federal civilian,
defense, and intelligence communities.
Other First Quarter Highlights
- In August 2011, we repurchased four
million shares of our stock under an accelerated share repurchase
program.
- We released Cyber Threats to National
Security: Keeping the Nation’s Industrial Base Safe from Cyber
Threats, a report co-sponsored by the U.S. Naval Institute and the
Center for Security Policy which publishes recommendations from the
fifth symposium in the Asymmetric Threat series on
cybersecurity.
First Quarter Recognition
- CACI was voted among ClearedJobs.net’s
Best Recruiters of 2011, which is the fourth year in a row CACI has
been recognized for its ongoing success in recruiting highly
sought-after jobseekers with security clearances.
- CACI was honored by the U.S. Navy
Reserve and the Employer Support of the Guard and Reserve (ESGR) as
a top employer of National Guard members and Navy Reservists.
CACI Raises Its FY12 Guidance
We are raising our FY12 guidance due to our stronger operating
performance, the first quarter commercial product sale, and the
completion of the Paradigm Holdings and APG acquisitions, both of
which closed after we issued our previous guidance in August. This
guidance also reflects the accelerated share repurchase
transaction. The table below summarizes the new guidance ranges for
FY12 based on expected GAAP results:
(In
millions except for earnings per share)
New
FY 2012 Guidance
Previous
FY 2012 Guidance
Revenue $3,850 - $4,050
$3,750 - $3,950 Net income $157-$163
$147 - $153 Effective corporate tax rate
39.9% 39.5% Diluted earnings per
share $5.55-$5.80 $4.70 -
$4.90 Diluted weighted average shares 28.2
31.3
This guidance represents our views as of November 2, 2011.
Investors are reminded that actual results may differ for the
reasons described herein and in our filings with the Securities and
Exchange Commission.
Conference Call Information
We have scheduled a conference call for 8:30 AM Eastern Time
Thursday, November 3, 2011 during which members of our senior
management team will be making a brief presentation focusing on
first quarter results and operating trends followed by a
question-and-answer session. You can listen to the conference call
and view the accompanying exhibits over the Internet by logging on
to our homepage, www.caci.com, at the scheduled time, or you
may dial 877-303-9143 and enter the confirmation code 11443802. A
replay of the call will also be available over the Internet
beginning at 1:00 PM Eastern Time Thursday, November 3, 2011 and
can be accessed through our homepage (www.caci.com) by
clicking on the CACI Investor Info button.
About CACI
Celebrating our 50th year in business, CACI sustains an
exceptional record of success by providing professional services
and IT solutions needed to prevail in the areas of defense,
intelligence, homeland security, and IT modernization and
government transformation. We deliver enterprise IT and network
services; data, information, and knowledge management services;
business system solutions; logistics and material readiness; C4ISR
solutions and services; cyber solutions; integrated security and
intelligence solutions; and program management and SETA support
services. CACI solutions help federal clients provide for national
security, improve communications and collaboration, secure
information systems and networks, enhance data collection and
analysis, and increase efficiency and mission effectiveness. A
member of the Fortune 1000 Largest Companies and the Russell 2000
index, CACI provides dynamic careers for approximately 14,300
employees working in over 120 offices in the U.S. and Europe. Visit
CACI on the web at www.caci.com and www.asymmetricthreat.net.
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: economic conditions in the United States
and globally (including the impact of uncertainty regarding U.S.
debt limits and actions taken related thereto); terrorist
activities or war; changes in interest rates; currency
fluctuations; significant fluctuations in the equity markets;
changes in our effective tax rate; valuation of contingent
consideration in connection with business combinations; 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, based on a change in spending
patterns, or in the event of a priority need for funds, such as
homeland security, the war on terrorism, or an economic stimulus
package; government contract procurement (such as bid protest,
small business set asides, loss of work due to organizational
conflicts of interest, 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; the results of government audits and reviews
conducted by the Defense Contract Audit Agency, the Defense
Contract Management Agency, or other government entities with
cognizant oversight; 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); market speculation
regarding our continued independence; 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; the ability to successfully
integrate the operations of our recent and any future acquisitions;
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.
(Financial Tables follow)
CACI-Financial
Selected Financial Data CACI International
Inc Condensed Consolidated Statements of Operations
(Unaudited) (Amounts in thousands, except per share amounts)
Quarter Ended
9/30/2011 9/30/2010 % Change Revenue $
924,395 $ 833,971 10.8 % Costs of revenue Direct
costs 634,931 589,470 7.7 % Indirect costs and selling expenses
200,282 179,322 11.7 % Depreciation and amortization 13,528
13,082 3.4 % Total costs of revenue
848,741 781,874 8.6 % Operating income 75,654
52,097 45.2 % Interest expense, net 5,600
5,833 -4.0 % Income before income taxes 70,054 46,264 51.4 %
Income taxes 27,941 17,439 60.2 %
Net income before noncontrolling interest
in earnings of joint venture
42,113 28,825 46.1 %
Noncontrolling interest in earnings of
joint venture
27 (170 ) Net income attributable to CACI $
42,140 $ 28,655 47.1 % Basic earnings per
share $ 1.46 $ 0.95 54.1 % Diluted earnings per share $ 1.41 $ 0.92
53.3 % Weighted average shares used in per share
computations: Basic 28,915 30,304 Diluted 29,842 31,102
Statement of Operations Data (Unaudited)
Quarter Ended 9/30/2011 9/30/2010 % Change
Operating income margin 8.2 % 6.2 % Tax rate 39.9 % 37.8 % Net
income margin 4.6 % 3.4 % Pro forma EBITDA* $ 88,881 $
66,737 33.2 % Pro forma EBITDA margin 9.6 % 8.0 % Pro forma
adjusted net income* $ 54,220 $ 42,552 27.4 %
Pro forma diluted adjusted earnings per
share
$ 1.82 $ 1.37 32.8 %
*See Reconciliation of Net Income to Pro Forma Earnings before
Interest, Taxes, Depreciation and Amortization and to Pro Forma
Adjusted Net Income on page 11.
Selected Financial Data (Continued) CACI
International Inc Condensed Consolidated Balance Sheets
(Unaudited) (Amounts in thousands)
9/30/2011 6/30/2011 ASSETS:
Current assets Cash and cash equivalents $ 28,582 $ 164,817
Accounts receivable, net 597,696 573,042 Prepaid expenses and other
current assets 48,084 44,219 Total current assets
674,362 782,078 Goodwill and intangible assets, net
1,466,152 1,374,387 Property and equipment, net 62,393 62,755 Other
long-term assets 100,517 100,911 Total assets $
2,303,424 $ 2,320,131
LIABILITIES AND SHAREHOLDERS'
EQUITY: Current liabilities Current portion of long-term debt $
7,500 $ 7,500 Accounts payable 112,927 98,893 Accrued compensation
and benefits 154,147 173,586 Other accrued expenses and current
liabilities 174,797 157,242 Total current liabilities
449,371 437,221 Long-term debt, net of current portion
528,496 402,437 Other long-term liabilities 184,444
170,857 Total liabilities 1,162,311 1,010,515
Shareholders' equity 1,141,113 1,309,616 Total
liabilities and shareholders' equity $ 2,303,424 $ 2,320,131
Selected Financial Data (Continued)
CACI International Inc Condensed
Consolidated Statements of Cash Flows (Unaudited) (Amounts in
thousands)
Three Months Ended 9/30/2011
9/30/2010 CASH FLOWS FROM OPERATING ACTIVITIES:
Net income before noncontrolling interest
in earnings of joint venture
$ 42,113 $ 28,825
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 13,528 13,082 Non-cash interest
expense 2,934 2,742 Amortization of deferred financing costs 809
740 Stock-based compensation expense 3,212 4,906 Provision for
deferred income taxes 8,555 2,969 Undistributed earnings of
unconsolidated joint ventures (264 ) (314 )
Changes in operating assets and
liabilities, net of effect of business acquisitions:
Accounts receivable, net (11,972 ) (14,925 ) Prepaid expenses and
other assets (2,613 ) (10,192 ) Accounts payable and accrued
expenses 16,826 (23,340 ) Accrued compensation and benefits (28,153
) (22,247 ) Income taxes receivable and payable 11,740 16,901 Other
liabilities (568 ) 8,583 Net cash provided by
operating activities 56,147 7,730
CASH FLOWS FROM INVESTING ACTIVITIES: Capital
expenditures (3,096 ) (3,308 ) Purchases of businesses, net of cash
acquired (104,768 ) (387 ) Investment in unconsolidated joint
ventures - (4,965 ) Other (323 ) 159 Net cash
used in investing activities (108,187 ) (8,501 )
CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds
(repayments) under credit facilities 123,125 (128,601 ) Proceeds
from employee stock purchase plans 1,325 1,507 Proceeds from
exercise of stock options 1,337 253 Repurchases of common stock
(209,680 ) (17,767 ) Other 155 139 Net
cash used in financing activities (83,738 ) (144,469
) Effect of exchange rate changes on cash and cash equivalents
(457 ) 843 Net decrease in cash and cash
equivalents (136,235 ) (144,397 ) Cash and cash equivalents,
beginning of period 164,817 254,543
Cash and cash equivalents, end of period $ 28,582 $ 110,146
Selected Financial Data (Continued)
Revenue by Customer Type (Unaudited)
Quarter Ended
(dollars in thousands)
9/30/2011
9/30/2010
$ Change
% Change Department of Defense $ 733,267
79.3 % $ 656,525 78.7 %
$ 76,742 11.7 % Federal Civilian
Agencies 134,009 14.5 % 136,549 16.4 % (2,540 ) -1.9 % Commercial
52,982 5.7 % 37,878 4.5 % 15,104 39.9 % State and Local Governments
4,137 0.5 % 3,019
0.4 % 1,118 37.0 %
Total $ 924,395 100.0 % $ 833,971
100.0 % $ 90,424
10.8 %
Revenue by Contract Type (Unaudited)
Quarter Ended
(dollars in thousands)
9/30/2011
9/30/2010
$ Change
% Change Time and materials $ 292,603 31.7 % $
380,348 45.6 % $ (87,745 ) -23.1 % Cost reimbursable 374,613 40.5 %
263,773 31.6 % 110,840 42.0 % Fixed price 257,179
27.8 % 189,850 22.8 %
67,329 35.5 % Total $
924,395 100.0 % $ 833,971
100.0 % $ 90,424 10.8 %
Revenue Received as a Prime versus Subcontractor (Unaudited)
Quarter Ended
(dollars in thousands)
9/30/2011
9/30/2010
$ Change
% Change Prime $ 811,233 87.8 % $ 711,083 85.3
% $ 100,150 14.1 % Subcontractor 113,162 12.2
% 122,888 14.7 %
(9,726 ) -7.9 % Total $ 924,395
100.0 % $ 833,971 100.0 %
$ 90,424 10.8 %
Contract
Funding Orders Received (Unaudited)
Quarter Ended
(dollars in thousands)
9/30/2011
9/30/2010
$ Change
% Change Contract Funding Orders $ 1,603,929
$ 1,457,295 $ 146,634
10.1 %
Direct Costs by Category (Unaudited)
Quarter Ended (dollars in thousands)
9/30/2011
9/30/2010
$ Change
% Change Direct labor $ 236,765
37.3 % $ 211,078 35.8 % $
25,687 12.2 % Other direct costs 398,166
62.7 % 378,392
64.2 % 19,774 5.2 % Total direct
costs $ 634,931 100.0 % $ 589,470
100.0 % $ 45,461 7.7 %
Reconciliation of Total Revenue Growth and
Organic Revenue Growth(Unaudited)
We are presenting organic revenue growth to reflect the effect
of acquisitions on total revenue growth. Revenue generated from the
date a business is acquired through the first anniversary of that
date is considered acquired revenue growth. All remaining revenue
growth is considered organic. We believe that this non-GAAP
financial measure provides investors with useful information to
evaluate the growth rate of our core business. This non-GAAP
measure should not be considered in isolation or as a substitute
for performance measures prepared in accordance with GAAP.
Quarter Ended Twelve
Months Ended (dollars in thousands)
9/30/2011
9/30/2010 % Change
9/30/2011 9/30/2010 %
Change Revenue, as reported $ 924,395 $ 833,971 10.8 % $
3,668,203 $ 3,243,584 13.1 % Less: Acquired revenue 21,554
70,759
Organic revenue $ 902,841 $ 833,971
8.3 % $ 3,597,444 $
3,243,584 10.9 %
Selected Financial Data
(Continued)Reconciliation of Net Income to Pro Forma
Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) and to Pro Forma Adjusted Net
Income(Unaudited)
The Company views EBITDA, EBITDA margin, Adjusted Net Income and
Diluted Adjusted Earnings Per Share as important indicators of
performance, consistent with the manner in which management
measures and forecasts the Company’s performance. EBITDA is a
commonly used non-GAAP measure when comparing our results with
those of other companies. We believe Adjusted Net Income is a
significant driver of long-term value and is used by investors to
measure our performance. This measure in particular assists readers
in further understanding our results and trends from
period-to-period by removing certain non-cash items that do not
impact the cash flow performance of our business. We are presenting
EBITDA, EBITDA margin, Adjusted Net Income and Diluted Adjusted
Earnings Per Share on a pro forma basis, to remove the impact of
the earn-out adjustments as we believe these pro forma measures are
a better indicator of our ongoing, recurring operations. Pro forma
EBITDA is defined by us as GAAP net income plus net interest
expense, income taxes, and depreciation and amortization, and less
the earn-out adjustment described on page 1. Pro forma EBITDA
margin is pro forma EBITDA divided by revenue. Pro forma Adjusted
Net Income is defined by us as GAAP net income plus stock-based
compensation expense, depreciation and amortization, and
amortization of financing costs, and less the earn-out adjustment
described on page 1; net of related tax effects computed using an
assumed marginal tax rate of 39.3 percent. Pro forma Diluted
Adjusted Earnings Per Share is Pro forma Adjusted Net Income
divided by diluted weighted-average shares, as reported. Pro forma
EBITDA and Pro forma Adjusted Net Income as defined by us may not
be computed in the same manner as similarly titled measures used by
other companies. These non-GAAP measures should not be considered
in isolation or as a substitute for performance measures prepared
in accordance with GAAP.
Quarter Ended
(dollars in thousands)
9/30/2011
9/30/2010 % Change Net income, as
reported $ 42,140 $ 28,655 47.1 % Income taxes 27,941 17,439 60.2 %
Interest income and expense, net 5,864 6,147 -4.6 % Depreciation
and amortization 13,528 13,082 3.4 % Earn-out adjustment
(592 ) 1,414
Pro forma EBITDA $ 88,881 $ 66,737
33.2 %
Quarter Ended (dollars in
thousands)
9/30/2011 9/30/2010
% Change Revenue, as reported $ 924,395 $ 833,971
10.8 % Pro forma EBITDA $ 88,881 $ 66,737
33.2 % Pro forma EBITDA margin 9.6 %
8.0 %
Quarter Ended (dollars in thousands)
9/30/2011
9/30/2010 % Change Net income,
as reported $ 42,140 $ 28,655 47.1 % Stock-based compensation 3,212
4,906 -34.5 % Depreciation and amortization 13,528 13,082 3.4 %
Amortization of financing costs 809 740 9.3 % Non-cash interest
expense 2,934 2,742 7.0 % Earn-out adjustment (592 ) 1,414 Related
tax effect (7,811 ) (8,987 )
-13.1 % Pro forma adjusted net income $ 54,220
$ 42,552 27.4 %
Quarter
Ended (shares in thousands)
9/30/2011
9/30/2010 % Change Diluted weighted
average shares, as reported 29,842 31,102 Diluted earnings per
share, as reported $ 1.41 $ 0.92
53.3 % Pro forma diluted adjusted earnings per share $ 1.82
$ 1.37 32.8 %
Selected Financial Data
(continued)Reconciliation of Operating Income, Net Income
and Diluted Earnings Per Share to Pro Forma
Amounts(Unaudited)
As described on page 1, the Company is presenting pro forma
Operating Income, Net Income and Diluted Earnings per Share to
present results excluding the impact of earn-out adjustments
recorded during the three month periods ended September 30, 2011
and 2010. During its fiscal year ended June 30, 2010, the Company
completed two domestic acquisitions with acquisition related
contingent consideration, or earn-outs, which represent additional
purchase consideration based on the acquired company's performance
post-acquisition. The fair values of the expected earn-outs were
recorded as liabilities on the balance sheet as of each acquisition
date, and are remeasured each quarter, with any change in the fair
value of the liabilities reflected in the income statement. During
the three month period ended September 30, 2011, the estimated
earn-out liability was reduced, resulting in an increase to net
income. This increase to net income was recorded in the income
statement as a reduction in indirect costs and selling expenses.
During the three month period ended September 30, 2010, the
estimated earn-out liability was increased, resulting in a decrease
to net income. This decrease to net income was recorded in the
income statement as an increase in indirect costs and selling
expenses. The change in the earn-out liability in each period
presented is reflected in the tables below as the "Earn-out
adjustment." The Company believes that presenting the key measures
of Operating Income, Net Income, and Diluted Earnings per Share
without the impact of these changes on indirect costs and selling
expenses provides readers a better indicator of our ongoing,
recurring operations. These non-GAAP measures should not be
considered in isolation or as a substitute for performance measures
prepared in accordance with GAAP.
Quarter Ended (dollars in thousands)
9/30/2011 9/30/2010 %
Change Operating income, as reported $ 75,654 $
52,097 45.2 % Earn-out adjustment (592 )
1,414 Pro
forma operating income $ 75,062 $ 53,511
40.3 %
Quarter Ended
(dollars in thousands)
9/30/2011
9/30/2010 % Change Net income, as
reported $ 42,140 $ 28,655 47.1 % Earn-out adjustment (592 ) 1,414
Related tax effect* 233 (556 )
Pro forma net income $ 41,781
$ 29,513 41.6 %
Quarter Ended (shares in thousands)
9/30/2011
9/30/2010 % Change
Diluted weighted average shares, as
reported
29,842 31,102 Diluted earnings per share, as reported $ 1.41
$ 0.92 53.3 % Pro forma diluted
earnings per share $ 1.40 $ 0.95
47.5 % * Computed using an assumed marginal tax rate
of 39.3 percent.
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