ITEM 1. BUSINESS
BACKGROUND
CACI International Inc (the "Registrant") was organized as a Delaware corporation under the name of "CACI WORLDWIDE, INC." on October 8, 1985. By a merger effected on June 2, 1986, the Registrant became the parent of CACI, Inc., a Delaware corporation, and CACI N.V., a Netherlands corporation.
The Registrant is a holding company and its operations are conducted through wholly-owned subsidiaries which are located in the United States and Europe.
OVERVIEW
CACI is strategically positioned in the information technology ("IT") industry. With 1994 revenue of over $183 million, CACI serves clients in major segments of government and commercial markets throughout North America and Western Europe. Many of the Company's client relationships have existed for five years or more.
Founded in 1962, CACI provides computer-based information technology, systems, custom software, integration and operations, imaging and document management, simulation, and proprietary database and software products. The Company manufactures no equipment.
CACI's service and value has enabled the Company to sustain high rates of repeat business and continuing client support. The Company believes that its performance similarly enables it to compete effectively for new clients and new contracts. The Company is organized to seek competitive business opportunities and has designed its operations to support major programs.
CACI's primary markets - both domestic and international - are agencies of national governments, major corporations, state and local governments, and other business organizations. The client market for CACI's information systems and high technology services is created by the need for solutions to the complex systems and information environment in which the clients operate, be it governmentally mandated programs, or competitively driven needs in the commercial arena.
CACI has structured its new business development organization to respond to the globally competitive marketplace. The Company employs full-time marketing, sales, and proposal development specialists who support the Company's line operations' marketing and sales responsibilities.
The Company has continued to expand its portfolio of proprietary software and database products. The Company offers marketing systems software and database products, targeted to clients who need systems and analysis for retail sales of consumer products, direct mail campaigns, franchise or branch site location
projects, and similar requirements. In CACI's simulation technology business the Company offers both computer-based simulation languages and simulation packages (products) that provide clients with analysis and solutions for the manufacturing industry; for wide area communications networks (e.g., WANs, satellites, land lines); for local area computer networks (i.e., LANs); for the study of business processes; and for design of distributed computer systems architectures. CACI also offers a product line targeted to the needs of government procurement organizations and purchasing agents supporting large volume acquisition programs or activities (see General Description, below).
The Company operates through wholly-owned subsidiaries established to serve specific market segments, or conduct business in specific geopolitical jurisdictions.
CACI's major operating subsidiary in Europe, CACI Limited, is headquartered in London, England, and operates primarily in support of CACI information systems, marketing systems, and simulation technology lines of business in the United Kingdom and Western Europe.
CACI's American Legal Systems Corp. ("ALS") subsidiary specializes in providing litigation support services to law firms and major corporations in the United States, and complements the Company's other litigation support business with government clients.
CACI currently employs approximately 3,069 people. The corporation currently operates from its headquarters at Three Ballston Plaza, 1100 N. Glebe Road, Arlington, Virginia. CACI also has operating offices and facilities in 46 additional locations throughout the United States, Europe and Canada.
GENERAL DESCRIPTION OF CACI SYSTEMS, TECHNOLOGIES AND PRODUCTS
Representative Systems Applications include:
. Airport and airspace traffic planning . Ammunition management information systems . Automated documents and records management systems . Computer aided logistics/data information systems . Contracting and purchasing systems . Executive decision support systems for military planners . Imaging services . Inventory levels setting and allocation systems . Inventory management and control systems . Litigation support systems and services . Manufacturing requirements planning systems . Marketing and customer database management systems . Sales management and business support systems . Site location and analysis systems . Software reengineering . State motor vehicle registration and related management information systems . Weapon systems/equipment configuration management systems
CACI products are installed in over 4,000 locations worldwide, and many are designed to run on a variety of popular computers. Representative CACI software and database products include:
Simulation Technology:
SIMFACTORY II.5 A software product for factory planners to study alternative plant and equipment configurations. (SIMFACTORY II.5 is a trademark of CACI Products Company.)
COMNET II.5 A software product for communications engineers to study "wide area networks" of satellites, land lines, switching systems and protocols. (COMNET II.5 is a registered trademark of CACI Products Company.)
COMNET III An object-oriented software product for the prediction of local and wide area network performance. (COMNET III is a trademark of CACI Products Company.)
NETWORK II.5 A software product for engineers to study alternative combinations of computers and data storage devices. (NETWORK II.5 is a registered trademark of CACI Products Company.)
SIMSCRIPT II.5 A language designed especially for analysts to build computer-based representations ("models") of complex activities, eg. airways and airport traffic; maintenance procedures for fleets of ships; warfare studies of military equipment and tactics; and communications networks. (SIMSCRIPT is a registered trademark of CACI Products Company.)
SIMPROCESS An electronic prototyping tool for business process reengineering, with which a manager can model a current business operation, and then experiment with alternative approaches. (SIMPROCESS is a trademark of CACI Products Company.)
MODSIM II A computer programming and graphics environment that provides an object-oriented approach to structuring software. This approach provides an intuitive development framework to programmers, one that allows code to be re- used. (MODSIM II is a registered trademark of CACI Products Company.)
SIMOBJECT A software framework for the reduction of time and cost in building simulation models. (SIMOBJECT is a registered trademark of CACI Products Company.)
Marketing Systems Technology and Data and Information Systems Products:
InSite-USA (also InSite, UK version). A PC-based Geographic Information System (GIS) combining software, data, and mapping capabilities to enable planners to determine the location of retail outlets, branch networks, sales territories, potential customers and competitors. (InSite-USA and InSite are trademarks of CACI, INC.-FEDERAL and CACI Limited, respectively.)
ACORN (A Classification of Residential Neighborhoods) A tool that analyzes consumers according to the type of residential area in which they live and is used to identify the prime prospects for all types of consumer goods and services. (ACORN is a registered trademark of CACI, INC.-FEDERAL in the United States; and also a registered service mark of CACI, INC.- FEDERAL and CACI Limited in the United States, and in the United Kingdom and Northern Ireland, respectively.)
MARKET*MASTER A database marketing system that enables companies to analyze their customer files by product holding and usage for the purpose of cross selling other products and services. (MARKET*MASTER is a trademark of CACI, INC.-FEDERAL.)
SITE A detailed demographic and applied market research database for any geographic area such as county, zip code, TV broadcast area, congressional district or retail trade area. (SITE is a registered trademark of CACI Limited.)
Prophecy A financial accounting and business software product distributed by CACI in the United Kingdom under license from CSP Australia.
Miracle A financial accounting and business software product running on Data General proprietary systems. (Miracle is a trademark of CACI Limited.)
FEDERAL GOVERNMENT AGENCIES
CACI provides its entire range of information systems, technical services and proprietary products to defense and civilian agencies of the U.S. Federal Government. These activities require CACI's expert knowledge of agency policies and operations. These assignments most often combine the wide range of CACI's skills in information systems, systems engineering, logistics sciences, weapons systems, simulation, and automated document management systems. CACI also contracts with other national governments.
STATE AND LOCAL GOVERNMENT
CACI is a technological leader in the supply of automated information systems for state governments' management of vehicle registration, licensing, and wheeled vehicle revenue support. The Company also offers its broadly based software and systems integration services to this market segment.
MAJOR CORPORATIONS
CACI's commercial market base consists primarily of large corporations (nominally characterized as the "Fortune 1000"). This market is a primary target of CACI's proprietary software and database products in the Company's marketing systems and simulation technology lines of business. CACI also has target initiatives underway for the supply of reengineering of information systems (software and integration) and configuration management systems for manufacturers. While these latter two initiatives remain at modest investment levels at present, the Company intends to continue them, given the current state of the U.S. economy.
OTHER SERVICES
The Company operates electronic calibration facilities in the Norfolk, Virginia area, which support defense and related agencies. The Company also operates a language translation and interpreter services organization that provides support to the Defense Language Institute, civilian agencies of the
Federal Government, and in particular to the Company's major contracts with the U.S. Department of Justice ("DoJ").
FOUNDATION OF THE BUSINESS, CACI PEOPLE
CACI's business success is highly correlated with the Company's ability to attract, recruit, motivate, and retain exceptional people at all levels of the organization. The most valuable asset and resource the Company has is its people. The Company is in continuing competition for the recruitment and retention of highly skilled professionals.
For these reasons, the Company has endeavored to develop and maintain competitive salary structures, incentive compensation programs and benefits, and other individual recognition and award programs to highlight the Company's intense interest in the success of its people in their careers.
In order to compete effectively in attracting and retaining such personnel, the Company and its subsidiaries provide substantial benefits to their employees. These benefits vary among the Company and its subsidiaries, but generally include paid vacations and holidays, medical and life insurance, incentive bonuses, and other benefits under pension and stock purchase plans.
At the same time the Company has been forced by the current economic climate to scrutinize and recast several of its compensation and benefit programs to assure a competitive balance of compensation, incentives and benefits for the costs incurred.
The Company recruits people from various market populations including experienced industry professionals, university graduates, trade and technical school graduates, and seasoned technicians. The Company's professional profile includes a high percentage of college graduates, many with advanced degrees, including those at the masters and doctorate levels. The Company seeks professionals with academically certified credentials in computer-based information sciences, systems engineering, management systems, market research, economics, military sciences, the legal profession, and other scientific and research-oriented disciplines.
The Company has structured its promotion and advancement policies to meet the current competitively driven market environment. Individuals advance in relation to their abilities to perform as program managers, or to demonstrate exemplary leadership skills in technical endeavors, or managerial achievements against specified objectives, quotas or other defined targets.
CACI advancement criteria incorporate specific requirements to demonstrate a "client-service orientation", and the need to work synergistically within the Company, in response to the wide range of client technical and contractual requirements, or in development of solution approaches to new client projects.
This philosophy is consistent with CACI's current market, and is a catalyst for individuals to support Company objectives.
As of June 30, 1994, CACI had approximately 3,069 employees. This total includes 538 part-time employees.
The Company also requires all of its employees, consultants, officers and directors to subscribe annually to and affirm the Company's published Code of Ethics and Business Standards. The Company has published policies that set high standards for the conduct of all business with clients, suppliers, vendors, and the public at large.
MARKETPLACE, DESCRIPTION AND SIGNIFICANT ACTIVITIES
CACI operates in an industry characterized by the presence of many highly competitive firms. At the same time, CACI enjoys a respected position as one of the larger public corporations in the segment of the information technology industry that does not manufacture equipment. Although the Company is a premier supplier of proprietary computer-based simulation technology products, and is a major supplier of proprietary marketing systems products and services in both the United States and the United Kingdom, CACI is not primarily a software product developer-distributor (See discussion following on Patents, Trademarks, Trade Secrets and Licenses).
Competition for new contracts centers on reputation, responsiveness to proposal requests, price, and many other factors. Competition for software products and services centers on reputation, applicability, quality, quality of product support and maintenance services, among other elements.
The Company has developed a special position, and continues to develop its position, in combining unique knowledge of client problems with the Company's significant expertise in the design, development and implementation of advanced information systems solutions. This industry niche orientation provides CACI with important opportunities to support large equipment manufacturers with the expert systems integration and software services they frequently require to compete for multi-million dollar contracts issuing from the U.S. Federal Government.
In this area, CACI has also taken active steps to develop longer-term, on- going relationships with those industry giants -- such as Microsoft, IBM, DEC, GE Information Systems, AT&T Global Information Solutions, Lotus Development Corporation, Oracle, Sybase -- that have compatible business perspectives and objectives to those of CACI. For these reasons, the Company intends to continue the active cultivation of these relationships wherever they support CACI's growth objectives.
The Company also seeks to expand its commercial markets for its information systems business through these relationships.
Marketing and new business development for the Company is conducted by all the officers and managers of the Company (the CEO, executive officers, vice presidents, division and department managers). CACI's proprietary software and data products are sold by full time salespeople. The Company has established several distributor-type sales agreements for the sale of its products in specified overseas markets. For its information systems and services markets, the Company employs several marketing professionals who support the Company's targeting of major contract opportunities, primarily in the U.S. Federal government market arena.
Nonetheless, CACI faces competition from a substantial number of firms, some
of which are larger in size and financial resources than CACI. The Company obtains much of its business on the basis of proposals submitted in response to requests for proposals from potential and current customers, who may also request proposals for similar services from other firms. Additionally, the Company may face indirect competition from certain government agencies which may perform services for themselves similar to those marketed by CACI. The Company knows of no single competitor which is dominant in its fields of technology. The Company has a relatively small share of the available worldwide market for its products and services and has a goal of achieving growth through increased market share.
CACI's sales of proprietary software and data products are characterized by either a purchase order sale, or a short-duration contract. The Company generally prices its products in catalog fashion. Most often, product prices are determined by the target computer that the product will run on, or by some form of multiple site volume discount arrangement, or by some frequency of usage arrangement, in the case of data products.
For CACI's information systems and professional services contracts, the Company submits bids for work and products to be delivered. Bids are frequently negotiated as to terms and conditions for schedules, specifications, deliveries, and payment. CACI's contracts and subcontracts take on a wide range of contractual agreement modes, including firm fixed price obligations, cost reimbursement contracts, labor hours and materials expense agreements, and variants thereof, including fixed unit price, performance and delivery contracts. In general, revenue for this work is accrued as a percentage of completion, which is based upon costs incurred, in proportion to total expected costs.
Often, the form of contract and terms will be specified by the client. This is especially the case with government contracts. In these latter situations, the Company may seek alternative arrangements, or choose not to bid in those cases where the contracting arrangement appears inappropriate to Company risk. By Company policy, fixed price contracts require the approval of a senior officer of the Company, and review and release approval by the Chief Executive Officer.
At any one time, the Company may have several hundred separate contract obligations being performed. In 1994, the ten top revenue producing contracts accounted for 42% of CACI's revenue, or $76.8 million. One contract for automated litigation support to the Civil Division of the U.S. Department of Justice ("DoJ"), accounted for 11.6% of total FY 1994 Company revenue.
In 1994, seventy-one percent (71%) of CACI's business volume stemmed from Federal Government contracts, the remaining twenty-nine percent (29%) coming from commercial contracts and proprietary products. Fifty-one percent (51%) of the Company's revenue came from U.S. Department of Defense ("DoD") contracts, sixteen percent (16%) came from contracts with DoJ, and four percent (4%) came from other civil agency government clients.
The Company is endeavoring to continue expansion of its diversified business portfolio. While desiring to decrease its dependence on DoD work per se, the Company will, nonetheless, aggressively seek additional work from this large client agency. In FY 1994, the DoD revenue grew by 20% ($15.5 million)
primarily as a result of the December 1993 acquisition of the Government Services business of SofTech, Inc.
The Company is expanding its contract support to DoJ, as illustrated by the award to the Company of new contracts to provide advanced automated litigation support services to DoJ's Environmental and Natural Resources Division and the Executive Office of the U.S. Attorneys. This work has demanded increasingly sophisticated project management processes and high technology infusions to keep pace with client caseloads. In view of this requirement, the Company developed the ADIIS automated document image indexing system which improves the productivity for high quality litigation support for the department's attorneys. (ADIIS is a trademark of CACI, INC.-FEDERAL.)
The Company believes it is the largest supplier of litigation support and related automation services to the U.S. Federal Government. The Company intends to seek additional work from the U.S. Federal Government and offer significant economies to the government through its specialization in this field.
During the first half of this fiscal year, the Company purchased the majority of contracts and assets from the Government Services business of SofTech, Inc., Pinpoint Analysis Ltd. ("Pinpoint"), and Miracle Products Ltd. ("Miracle"). The excess purchase price over the fair value of the net assets of the SofTech purchase totalled $3.3 million. The SofTech acquisition, completed on December 1, 1993, added approximately 210 people and approximately $13.8 million in FY 1994 revenue to CACI's government information technology business. The excess purchase price over the fair value of the net assets of the Pinpoint and Miracle purchase totalled $0.333 million. The excess for these acquisitions has been recorded as Goodwill and will be amortized for a period ranging from 3 to 15 years.
During the past fiscal year, the Company examined a number of other friendly acquisition opportunities. Analyses of industry values and interest rates continue to indicate favorable market timing for this strategy.
SEASONAL NATURE OF BUSINESS
The Company's business in general is not seasonal, although the summer and winter holiday seasons do affect both sales and revenue of the Company because of their impact on the Company's labor sales in its Federal business and on product sales by the Company's European operations. Variations also may occur at the expiration of major contracts until such contracts are renewed or new contracts obtained. Although the Company derives significant revenue from the Federal Government, the timing of the Federal budget cycle has historically not significantly impacted the Company's revenue.
RESEARCH AND DEVELOPMENT
During fiscal years 1994, 1993 and 1992, the Company spent of $1,094,000, $600,000, and $748,000 respectively, for research and development on current and anticipated products.
ENVIRONMENTAL PROTECTION REQUIREMENTS
There has been no significant adverse impact on the Company's business as a result of laws that have been enacted for the protection of the environment.
PATENTS, TRADEMARKS, TRADE SECRETS, AND LICENSES
The Company owns three United States patents. While the Company believes that its patent and patent applications are valid, it does not consider that its business is dependent on patent protection in any material way.
The Company does believe that its business is dependent to a significant extent on its technical and organizational knowledge, practices, and procedures, in some of which it claims proprietary interests.
The Company claims copyright, trademark, and proprietary rights in each of its proprietary computer software and data products and documentation.
The Company presently owns approximately 37 registered United States trademarks and service marks. All of the Company's registered United States trademarks and service marks may be renewed indefinitely. The Company is a party to agreements which give it the right to distribute computer software and other products owned by other companies, and receive income therefrom.
The Company has developed and holds proprietary rights in a number of computer software packages and databases, including, but not limited to: ACORN*, ADIIS, C-GATE,# CITYVIEWS, COMNET II.5*, COMNET III, COSTPRO*, DORIS*, EnterpriseView, FAR-TRIEVE*, GRID-MAP#, InSite-USA#, IRIS, L-NET#, MARKET- AMERICA#, MARKET*MASTER, MODSIM II*, NETOBJECT, NETWORK II.5*, OBJECT.MGR, Perfect-Mail*#, QuickBid*, renovate, SACONS-EDI, SACONS-FEDERAL*, SIDE, SIMANIMATION*, SIMBASE, SIMFACTORY*, SIMFACTORY II.5, SIMFLOW*, SIMGRAPHICS*, SIMLAB*, SIMOBJECT*, SIMPROCESS, SIMSCENARIO*, SIMSCRIPT II.5*, SIMSNIPS*, SIMSTRUCTOR*, SIMTrainer*, SIMVIDEO*, SITELINE*, SITE-POTENTIAL*#, SUPERSITE*, ULTRA RETRIEVE*, and ZIP-DEMOGRAPHICS*#.
[* The marks above indicated with an asterisk (*) are registered service marks or trademarks of CACI International Inc or its subsidiaries. All others are service marks or trademarks of CACI International Inc or its subsidiaries.]
[# The marks above indicated with a pound sign (#) contain a hyphen (-) to represent the bullet point which is an integral component of each mark and which cannot be printed due to electronic transmission limitations.]
In addition, subsidiaries of the Company claim foreign copyright, trademark, and proprietary rights in the Company's proprietary computer software products. These subsidiaries hold proprietary rights in computer software products and databases including, but not limited to, ACORN* (and the related Arts*ACORN, Change*ACORN, Custom*ACORN, Property*ACORN, Holiday*ACORN, Household*ACORN, Investor*ACORN, Property*ACORN,) CACI MARKET*MASTER*, CATALIST*, GEO-MARKETING*, GEOMATCH*, GEOREAD, GEOTRIEVE*, MONICA*, CACI NATIONAL MORTGAGE DATABASE, SITE*, SITE-POTENTIAL*, and SHOPPING CENTRE PLANNER. Some of these subsidiaries are parties to agreements pursuant to which they may have the right to distribute computer software products owned
by others and obtain income therefrom.
[* The marks above indicated with an asterisk (*) are registered service marks or trademarks of CACI International Inc or its subsidiaries. All others are service marks or trademarks of CACI International Inc or its subsidiaries.]
BACKLOG
The Company's backlog as of June 30, 1994 was $726.5 million, of which $77.2 million was for orders believed to be firm. Total backlog as of June 30, 1993 was $570 million, of which $53.0 million represented firm orders. The source of backlog is primarily contracts with the U.S. Government. It is presently anticipated that all of the firm backlog will be filled during the fiscal year ending June 30, 1995.
BUSINESS SEGMENTS, FOREIGN OPERATIONS, AND MAJOR CUSTOMER
The business segment, foreign operations, and major customer information provided in the Company's Consolidated Financial Statements contained in this Report are incorporated herein by reference. In particular, see Note 14, Segment Information, of the Notes to Consolidated Financial Statements.
The following information is provided about the amounts of revenue attributable to firm fixed price contracts (including proprietary software product sales), time and materials contracts, and cost reimbursable contracts of the Company during each of the last three fiscal years:
ITEM 2.
ITEM 2. PROPERTIES
As of June 30, 1994, CACI leased office space at 47 locations containing an aggregate of approximately 473,000 square feet of space located in 21 states of the United States. In four countries outside the United States, CACI leased seven offices containing about 29,000 square feet of space. CACI's leases expire primarily over the next eight years. In most cases, CACI anticipates that leases will be renewed or replaced by other leases.
All of CACI's offices are in modern and well-maintained buildings. The
facilities are substantially utilized and adequate for present operations.
As of June 30, 1994, CACI International Inc maintained its corporate headquarters in approximately 152,000 square feet of space at 1100 North Glebe Road, Arlington, Virginia. See Note 9, Lease Commitments, of the Notes to Consolidated Financial Statements, for additional information regarding the Company's lease commitments.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Pfirman and Chrysogelos Shareholder Litigation
Reference is made to Part II, Item 1, Legal Proceedings, in the Registrant's quarterly report on Form 10-Q for the quarter ended March 31, 1991 for a description of the two pending shareholder suits against the Registrant, and against the directors of the Registrant entitled "Pfirman v. London, et al" and "Chrysogelos v. London, et al".
Since the filing of the Registrant's quarterly reports on Form 10-Q, on which Part II, Item 1, Legal Proceedings, was current, the information reported therein on pending legal proceedings instituted against the Registrant has changed as set forth below and in the Registrant's current report on Form 8-K, dated August 5, 1994:
In July, 1994, the parties in both the "Chrysogelos" and "Pfirman" lawsuits filed with the Delaware Chancery Court a Stipulation and Agreement of Compromise and Settlement (hereinafter "Settlement Documents") which provides for settlement of both the "Chrysogelos" and "Pfirman" lawsuits, subject to Court approval. The Chancery Court has given preliminary approval of the Settlement and requested the parties to provide notice of the proposed Settlement to the plaintiff class. The Court has set November 15, 1994 as the date for a hearing regarding the proposed Settlement and any objections thereto that may be made by class members. If, after such hearing, the Chancery Court approves the settlement, the parties will then request the United States District Court for the District of Columbia to dismiss the "Pfirman" case. The District Court has approved this procedure for the "Pfirman" case.
The settlement is intended to resolve all claims which have been made or could have been asserted in the "Chrysogelos" and "Pfirman" lawsuits. If the settlement is approved as filed, its major components will be as follows:
First, subject to the specific terms of the Settlement Documents, if the average closing price for the Company's Common Stock for any twenty (20) consecutive trading days between July 22, 1994 and February 28, 1995 falls below Six Dollars ($6.00) per share, the Company has agreed to conduct a self- tender for 1.3 million shares of its Common Stock at Six Dollars ($6.00) per share (the Company's Common Stock has traded above Six Dollars ($6.00) per share since January, 1994).
Second, the settlement provides that the Company seek shareholder approval of an amendment to its By-laws increasing the size of the Board of Directors from seven (7), to a number between five (5) and nine (9) members as a majority of the Board plus one (1) may set. In anticipation of the settlement, the
shareholders approved such an amendment to the By-laws and elected six (6) new directors who are mutually-acceptable to the Company and the name plaintiffs at the Company's Annual Meeting of Shareholders held on December 17, 1993.
Third, the Company will establish a fund in an amount not to exceed Six Hundred Thousand Dollars ($600,000) to pay claims filed on behalf of class members who sold shares of Common Stock between April 26, 1990 and December 1, 1990 at a loss as defined by the terms of the Settlement Documents.
The settlement further provides that the defendants will not oppose an application to the Delaware Chancery Court for award of attorneys' fees in both cases in an aggregate total not to exceed Five Hundred Fifty Thousand Dollars ($550,000), and out-of-pocket expenses in both cases in an aggregate total not to exceed Forty-Eight Thousand Dollars ($48,000), provided that no other application for attorneys' fees or expenses is made in connection with the settlement.
In reaching the settlement, the Board of Directors did not acknowledge any wrongdoing. In its deliberations on these suits, the Board did not believe it was productive to continue to incur legal expenses and divert senior management's attention at a time when the Company's plan to enhance shareholder value was proving out and revenue and operating income were growing.
Pentagen Technologies International, Ltd. v. CACI International Inc, et al
Reference is made to Part I, Item 3, Legal Proceedings, in the Registrant's annual report on Form 10-K for the year ended June 30, 1993, for a description of the lawsuit filed July 1, 1993 against the Registrant by Pentagen Technologies International, Ltd. ("Pentagen") in the Supreme Court of the State of New York, alleging conversion of intellectual property and violation of statutory duties as to appropriation of computer software. Reference is also made to Part II, Item 1, Legal Proceedings, in the Registrant's quarterly report on Form 10-Q for the quarter ended December 31, 1993 for a description of the suit filed against the Registrant by Pentagen in the United States District Court for the Southern District of New York alleging copyright and trademark infringement and violation of the Major Fraud Against the United States Act. Since the filing of the Registrant's quarterly reports on Form 10-Q, on which Part II, Item 1, Legal Proceedings, was current, the information reported therein on pending legal proceedings instituted against the Registrant has changed as set forth below:
Pursuant to orders entered on May 27, 1994 and August 3, 1994, the United States District Court for the Southern District of New York has stayed both lawsuits (93 Civ. 8512 and 94 Civ. 0441), pending further proceedings in the matter of "CACI International Inc, et al v. Pentagen Technologies International, Ltd., et al" described below.
CACI International Inc, et al v. Pentagen Technologies International, Ltd., et al
Reference is made to Part II, Item 1, Legal Proceedings, in the Registrant's quarterly report on Form 10-Q for the quarter ended December 31, 1993 for a description of the suit filed by Registrant against Pentagen Technologies International, Ltd.; its subsidiary, Baird Technologies, Inc.; and Pentagen's directors and principal executive officers, John Baird and Mitchell Leiser. Since the filing of the Registrant's quarterly reports on Form 10-Q, on which Part II, Item 1, Legal Proceedings, was current, the information reported therein on pending legal proceedings has changed as set forth below and in the Registrant's current report on Form 8-K, dated June 23, 1994.
On June 16, 1994, the United States District Court for the Eastern District of Virginia issued an order in response to Registrant's Motion for Summary Judgment which (i) declared that CACI's marketing activity to the United States Army Material Command did not infringe Pentagen's copyright in certain intellectual property or infringe any trademark held by Pentagen; (ii) declared that CACI's reengineering software methodology does not infringe Pentagen's copyright of certain intellectual property; (iii) declared that CACI's work on the United States Army's Sustaining Base Information Services contract does not infringe Pentagen's copyright of certain intellectual property; (iv) held Pentagen liable for tortious interference with CACI's Sustaining Base Information Services contract; and (v) held Pentagen and defendants Baird and Leiser liable for defamation per se.
Defendants Pentagen, Baird and Leiser moved for reconsideration of the Court's order. On July 13, 1994, the Court denied that Motion for Reconsideration. Those defendants also moved for recusal of the District Court judge. That Motion, too, was denied on July 13, 1994, and a trial on damages was conducted.
On July 28, 1994, defendants Pentagen, Baird and Leiser filed a petition for a Writ of Mandamus with the United States Court of Appeals for the Fourth Circuit seeking recusal of the trial judge based on an alleged conflict of interest. That petition was denied by the Fourth Circuit on August 29, 1994.
By Order dated August 12, 1994, the Court awarded CACI attorney's fees of One Hundred Ten Thousand Five Hundred Fifty Dollars ($110,550), court costs of Sixty One Thousand Five Hundred Dollars ($61,500), compensatory damages for defamation per se of One Thousand Dollars ($1,000) and punitive damages for defamation per se of Ten Thousand Dollars ($10,000). The defendants have appealed the judgment to the Fourth Circuit. On the issue of tortious interference, the Court concluded that no real damages were sustained by CACI, vacated its earlier judgment in CACI's favor, and entered judgment in favor of the defendants on that count.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter of the Registrant's fiscal year ended June 30, 1994, through the solicitation of proxies or otherwise.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Registrant's Common Stock became publicly traded on June 2, 1986, replacing paired units of Common Stock of CACI, Inc. and beneficial interests in Common shares of CACI N.V. which had been traded in the over-the-counter market.
From July 1, 1992 to June 30, 1994, Common Shares of the Registrant have been quoted on the NASDAQ National Market System. The range of high and low sales prices for each quarter during this period are as follows:
Fiscal 1994 Fiscal 1993 - - -------------------------- ---------------------------
Quarter High Low Quarter High Low - - ------- ------ ----- ------- ------- ------
1st 5-1/16 4-1/4 1st 5 4-5/16 2nd 6 5 2nd 4-13/16 4 3rd 9-3/8 5-5/8 3rd 4-1/2 3-7/8 4th 10-3/8 7-7/8 4th 4-3/4 3-7/8
The Registrant has never paid a cash dividend. The present policy of the Registrant is to retain earnings to provide funds for the operation and expansion of its business. The Registrant does not intend to pay any cash dividends in the foreseeable future.
At August 31, 1994, the number of record holders of the Registrant's Common Stock was approximately 1,463.
Pursuant to the terms of its Charter, in October 1993, the Registrant's Common Stock ceased being classified as Class A Common Stock and Class B Common Stock, with all shares of both Class A and Class B Common Stock being automatically converted to an equal number of shares of Common Stock.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the relative percentages that certain items of expense and earnings bear to revenue for the fiscal years ended June 30, 1994, 1993 and 1992.
Percentage of Revenue ---------------------------- FY 1994 FY 1993 FY 1992 ------- ------- -------
Revenue 100.0% 100.0% 100.0% Costs and expenses Direct costs 53.1% 52.3% 53.3% Indirect costs & selling expenses 38.7% 39.8% 39.5% Depreciation and amortization 2.4% 2.3% 1.8% ------ ------ ------ Operating Expenses 94.2% 94.4% 94.6% ------ ------ ------ 5.8% 5.6% 5.4% Interest expense 0.2% 0.3% 0.3% Shareholder lawsuit & merger costs 0.0% 0.6% 0.0% Excess facilities & lease cancellation cost 0.0% 1.3% 0.0% ------ ------ ------ Earnings before income taxes 5.6% 3.4% 5.1% Income taxes 2.1% 1.3% 2.1% Extraordinary item: settlement of shareholder suits (net of tax) 0.2% 0.0% 0.0% ------ ------ ------ Net Income 3.3% 2.1% 3.0% ====== ====== ======
FY 1994 COMPARED WITH FY 1993
Revenue increased by 26.6% or $38.6 million to $183.7 million from last year's $145.1 million. The increase was the result of a $15.5 million (19.6%) increase in revenue from the U.S. Department of Defense ("DoD"), an $8.3 million increase (40.5%) in revenue from contracts with the U.S. Department of Justice ("DoJ"), an $8.7 million increase (22.7%) in revenue from commercial customers, a $4.0 million increase (139.0%) in revenue from Federal agencies other than DoD and DoJ, and a $2.1 million increase (47.8%) in revenue from state governments.
The $15.5 million (19.6%) increase in revenue from DoD contracts was primarily the result of the $4.2 million acquisition of the Government Services business of SofTech, Inc. on December 1, 1993 for $3.3 million of goodwill and $919,000 for the book value of assets used in the business (primarily fixed assets). This acquisition has added revenues of $13.8 million in FY 1994. The acquisition is expected to continue to add revenues of approximately $25 million per year and annual earnings of approximately $750,000. DoD-derived
revenue accounted for 51% of total revenue during the year, down from 55% of last year's total revenue. This percentage reduction is the result of the Company's focus on diversification which resulted in larger proportional increases in the other business areas discussed below.
The DoJ growth was a result of new contract awards for automated litigation support services which the Company won competitively in the spring and summer of 1993. For the year, DoJ revenue accounted for 15.7% of total company revenue versus last year's 14.2%. Although revenue from DoJ is dependent upon the level of DoJ litigation case load the Company is supporting at any period in time, the Company believes DoJ-derived revenue will continue to increase during the upcoming fiscal year.
The 22.7% ($8.7 million) increase in commercial revenue is the result of a 48% increase in revenue from the U.K. operation. The substantial growth in U.K. revenue is the result of (i) an increase in the size of the sales force; (ii) acquisitions in the first and second quarter of the year (see Liquidity and Capital Resources below); and (iii) an improvement in the U.K. economy which had been in a deep and lasting recession. In fact, in Pound Sterling, U.K. revenue for the year was up by 59%, but this growth was offset by a marginal (6.8%) depreciation of the Pounds Sterling against the U.S. Dollar. The Company expects the Pound Sterling sales to continue to increase relative to last year, but cannot predict the impact of currency fluctuations on the conversion of Pounds Sterling into U.S. Dollars for financial reporting purposes.
Direct contract costs grew by 29% ($21.8 million) from $75.8 million to $97.6 million. Direct labor, the principal driving component of contract revenue, was up $13.8 million, or 28%, while non-labor direct costs increased $8.0 million or 30%. Direct costs as a percentage of revenue were up slightly to 53.1% from 52.3%. This increase was primarily attributable to the increasing competition in Federal contracts which is driving down the markups over direct cost, and a relative increase in less profitable non-labor direct costs, which increased from 18.4% to 18.9% of revenue.
Indirect costs grew by $13.3 million or 23% to $71.1 million from $57.8 million but, as a percentage of revenue, declined to 38.7% from 39.8%. The decrease reflects the Company's continuing emphasis on reducing administrative indirect costs while increasing funds for marketing and bid and proposal ("B&P") efforts. As a result of this management emphasis and despite the 27% increase in revenue, indirect labor increased by only $0.6 million or 4% and, as a percentage of revenue, decreased from 9.6% to 7.9%.
Indirect costs also increased in B&P labor, incentive compensation and fringe benefits. B&P labor increased in response to increases in the volume of actual and planned proposals for the year. Incentive compensation (sales commission and other pay for performance) grew because of the increased revenue and profit, particularly in the commission-oriented U.K. operation.
Fringe benefits, the largest category of indirect expenses (32% of total), increased in proportion with the total payroll (direct labor, B&P labor, indirect labor and incentive compensation), and an increase in the overall payroll tax rates.
Depreciation and amortization increased by $974,000 to $4.3 million from $3.4 million. An increased level of fixed assets (primarily computing and network equipment), necessitated by internal growth and obtained through acquisitions, accounted for 75% of the growth. The other 25% of the growth was the result of the Goodwill amortization associated with the acquisitions discussed in Note 1 of the financial statements.
Income before interest, shareholder lawsuit and merger costs, and lease litigation settlement expenses grew $2.4 million or 29% from $8.2 million to $10.6 million. The increase results from the increase in revenue and a decrease in operating costs, principally indirect costs as discussed above.
Interest costs totalled $420,000 (0.2% of revenue) and were down $51,000 (11%) from last year's $471,000. The decrease reflects a 17% or $1.8 million decrease in average borrowings from $10.14 million down to $8.38 million. However, the effect of this decrease was partially offset by an increase in the effective interest rate.
Income before income taxes and extraordinary items rose to $10.23 million from last year's earnings of $4.89 million. As discussed in the FY 1993 vs. FY 1992 comparison below, last year's income before income taxes and extraordinary items included $0.9 million shareholder lawsuit and merger costs and $1.9 million excess facilities and lease termination costs. Excluding these costs from last year's results, the income before income taxes and extraordinary items would have been $7.7 million, an increase of $2.5 million (33%). This 33% increase was attributable to the growth in operating income, and the decline in interest expense.
The Company's effective tax rate decreased to 38% from 39% last year because of an increase in earnings from the Company's U.K. Subsidiary, where the Company enjoys a lower tax rate, coupled with realizing the tax benefits from the recent establishment of a Foreign Sales Corporation assigned to sell certain U.S.-developed computer software products abroad.
During the first quarter of the year, the Company recognized a provision for an extraordinary item to cover the costs of the outstanding shareholder lawsuits. The provision equates to a $494,000 pre-tax expense, and $300,000 net of tax. See Note 13 to the Consolidated Financial Statements. Also see comments under Liquidity below.
Earnings per share increased $0.28 (97%) for the reasons discussed above.
FY 1993 COMPARED WITH FY 1992
Revenue increased $5.3 million (3.8%) as a result of a $7.2 million (23.3%) increase in commercial revenue, a $3.2 million (4.2%) increase in DoD revenue, offset by a $5.1 million (18%) decline in revenue from non-DoD Federal agencies. The growth in commercial revenue came from the acquisition of American Legal Systems Corp. on July 30, 1992, which generated $5.6 million in
revenue, and from a $2.1 million (15.8%) growth in United Kingdom based marketing systems sales. The growth in U.K. based revenue would have increased by 25.7% but for a 8% decline in the Pound Sterling average value in U.S. Dollars this year compared to last year. The growth in revenue in the
U.K. is the result of a recovery in the U.K. economy coupled with an increase in sales staff and marketing resources. The decline in non-DoD Federal Government revenue is primarily in DoJ revenue. The Company provides automated litigation support services to DoJ, and the service level is dependent upon the litigation case load of the elements of DoJ which the Company supports. Such case loads were down in 1993 compared to 1992. The Company won two new contracts for automated litigation support services to elements of DoJ. The $3.2 million growth in DoD revenue was primarily from existing contracts; however, the Company was awarded several new DoD contracts in the last quarter of the year.
Direct costs increased $1.3 million (1.7%), but decreased from 53.3% to 52.3% as a function of revenue. The dollar increase was the result of the ALS acquisition, offset by a decrease in direct cost on U.S. Government contracts. The decrease as a percentage of revenue was primarily attributable to improved margins in both DoD contract revenue and the U.K.-based marketing systems revenue.
Indirect costs and selling expenses increased $2.5 million (4.5%), and as percent of sales grew from 39.5% to 39.8%. The dollar increase was primarily attributable to the ALS acquisition. The increase as a percentage of revenue was the result of a growth in sales, bid and proposal, and marketing resources applied in all areas of the Company, which offset a reduction in administrative costs.
Depreciation and amortization grew by $.9 million (31.7%) because of a growth in capital expenditures necessitated by the Company transformation to an Information Technology company, and an increase in the amortization of capitalized software enhancement costs as described in Note 3 to Consolidated Financial Statements.
Interest expense grew by $112,000 (31%) as a result of a $3.7 million increase in average borrowings offset by 15% decrease in the average effective interest rate. The increase in borrowings was attributable to the ALS acquisition including its purchase price and working capital needs. The decrease in borrowing rates was consistent with an overall market decline in short term rates.
In FY 1993, the Company spent $699,000 (0.5% of revenue) in outside legal fees and expenses to defend against two shareholder lawsuits that have been ongoing since FY 1991. Similar expenses totalling $470,000 incurred in FY 1992 and FY 1991 were reimbursed under the terms of a settlement of litigation between the Company and its Directors and Officer's liability insurance carrier. In September 1993, the Company announced a settlement agreement with the plaintiffs, subject to approval by the Courts. Under the terms of the settlement, the Company would (i) reimburse the plaintiff for certain legal fees and expenses; (ii) establish a "fund" to be available on a claims-made basis to cover certain defined losses suffered by shareholders who sold their stock during the covered period; and (iii) make a self-tender offer for a limited number of shares of the Company's Common Stock at a price described in the agreement. Certain legal fees and expenses of the settlement would be eligible for reimbursement from the Company's insurance carrier. As described previously in detail under Item 3, Legal Proceedings, an agreement was subsequently reached to amend the self-tender offer included in the settlement agreement.
During the fourth quarter of the year, the Company spent $201,000 in outside fees and expenses to pursue a potential merger with COMARCO Inc. of Anaheim, California. By mutual agreement, the companies decided it was not in their best interest to merge, and discussions were terminated in August 1993.
During the second quarter of the year, the Company paid a former landlord $1.7 million and incurred outside legal fees of $221,000 to settle litigation resulting from the Company's cancellation of a facility lease. The payment resolved all outstanding issues surrounding the lease and the Company has no further liability.
Earnings before income taxes fell $2.25 million because an increase from the earnings generated by the Company's contracts and sales of software and services was offset by the cost of shareholder lawsuits, a potential merger, and settlement of the facility lease litigation.
The Company's effective tax rate decreased to 39% from 41% last year because of an increase in earnings from the Company's U.K. subsidiary, where the Company enjoys a lower effective tax rate.
Earnings per share decreased $.11 (27.5%) as a result of the expenses of the shareholder lawsuits, the potential merger, and the lease litigation settlement. These expenses in the aggregate reduced earnings per share by $.16. Accordingly, in the absence of these expenses earnings per share would have increased by $.05 (12.5%).
LIQUIDITY AND CAPITAL RESOURCES
The Company's excess cash is primarily in CACI Limited, a wholly-owned U.K. subsidiary. The Company's principal source of cash for U.S. operations is from operating activities and bank borrowings. The Company's primary requirement for working capital is to carry billed and unbilled receivables, a majority of which are due under prime contracts with the U.S. Federal Government, or subcontracts thereunder.
In addition, the Company is pursuing a policy of small, synergistic, niche acquisitions designed to broaden its client and product base in its Information Technology business portfolio. In July 1992, the Company purchased all of the outstanding common stock of American Legal Systems Corp. for an initial purchase price of approximately $2.8 million (also see Note 12 to Consolidated Financial Statements). ALS provides litigation support to commercial customers and its acquisition was for the purpose of providing a commercial outlet for the technologies and capabilities developed by the Company in support of its DoJ contracts. In September 1993, the Company's U.K. subsidiary purchased the Pinpoint geodemographic business for approximately $750,000. Pinpoint is a $1.5 million revenue per year U.K.- based market analysis business and was a competitor of the Company's U.K. operations. In October 1993, the Company's U.K. subsidiary purchased the Miracle accounting system for approximately $640,000. Miracle is a U.K.-based accounting system and associated client base which complements certain of the Company's existing product offerings in the U.K. On December 1, 1993, the Company acquired the Government Services business of SofTech, Inc. for $4.2 million. The Company did not purchase receivables in this SofTech transaction, and will utilize approximately $3.0 million of additional working capital to
support receivables net of payables generated by the acquired business.
As discussed in Note 13 to the Consolidated Financial Statements, under the terms of the shareholder litigation settlement agreement the Company agreed to initiate a contingent self-tender for 1.3 million of its common shares at a price of $6.00 per share in the event that the average closing price for the Company's shares for twenty consecutive trading days, between July 22, 1994 and February 28, 1995, is below $6.00 per share. If the Company's shares do not trade below $6.00 per share in twenty consecutive days prior to February 28, 1995, the offer to self-tender will expire. If the tender is accomplished as announced and fully subscribed, the Company's debt will increase by approximately $7.8 million, and its shareholder equity will decrease by a like amount. Hence, the Company's capital structure will be significantly changed if the self-tender is fully subscribed. As of August 31, 1994, the Company's stock price was substantially above the $6.00 per share tender price. Under the terms of the agreement, the Company is under no obligation to increase the tender price and has no current plans to do so. Moreover, in view of (i) the substantial difference between the present price of the Company's stock and the $6.00 per share contingent tender price, and (ii) the fact that the reviewing Court must approve a settlement including a proposed contingent self-tender on the terms set forth above, the Company cannot at this time predict with assurance that a self-tender will be part of the final, court- approved settlement. Accordingly, the Company cannot now predict how many shares, if any, it will obtain through the tender, or whether a tender will occur.
As discussed in Note 4 to the Consolidated Financial Statements, the Company's principal source of cash, other than from operations, is its $20 million unsecured line of credit with Signet Bank. On January 31, 1994, this line was renewed for one year and expires on January 1, 1995. Under the agreement, interest is charged at lower of the bank's prime lending rate, or the Federal Funds rate plus 1.25%. In addition, a commitment fee is paid on the unused portion of the line of credit. The Company believes the line can be amended as necessary to cover the self tender, albeit at an increased rate. Accordingly, the Company believes that the combination of internally generated funds, available bank credit and cash on hand will provide the required liquidity and capital resources for the foreseeable future.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
On the following pages are the Consolidated Financial Statements and Financial Statement Schedules of CACI International Inc and subsidiaries for the years ended June 30, 1994, 1993 and 1992, and Independent Auditors' Report.
Independent Auditor's Report
To the Board of Directors and Shareholders of CACI International Inc Arlington, Virginia
We have audited the accompanying consolidated balance sheets of CACI International Inc and subsidiaries as of June 30, 1994 and 1993, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended June 30, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of CACI International Inc and subsidiaries as of June 30, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 1994 in conformity with generally accepted accounting principles.
/s/ - - ----------------------------- Deloitte & Touche
Washington, D.C. August 11, 1994
CACI INTERNATIONAL INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
ASSETS
June 30 ------------------------- 1994 1993 ----------- ---------- CURRENT ASSETS
Cash and equivalents $ 941,000 $ 2,725,000 Accounts receivable: Billed 35,668,000 30,209,000 Unbilled 14,420,000 9,434,000
Prepaid expenses and other 5,067,000 4,591,000 ---------- ---------- TOTAL CURRENT ASSETS 56,096,000 46,959,000 ---------- ----------
PROPERTY AND EQUIPMENT, NET Equipment and furniture 18,476,000 16,036,000 Leasehold improvements 1,648,000 1,276,000 ---------- ---------- Property and equipment, at cost 20,124,000 17,312,000 Less accumulated depreciation and amortization (12,369,000) ( 9,625,000) ---------- ---------- TOTAL PROPERTY AND EQUIPMENT, NET 7,755,000 7,687,000 ---------- ----------
OTHER ASSETS 1,001,000 1,084,000
GOODWILL 5,921,000 2,687,000 INCOME TAXES 226,000 0 ---------- ----------
TOTAL ASSETS $70,999,000 $58,417,000 ========== ==========
See notes to Consolidated Financial Statements
CACI INTERNATIONAL INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (cont'd) LIABILITIES AND SHAREHOLDERS' EQUITY
June 30 ----------------------- 1994 1993 ----------- ----------
CURRENT LIABILITIES Note payable $ 2,745,000 $ 7,223,000 Accounts payable & accrued expenses 14,848,000 8,878,000 Accrued compensation & benefits 10,712,000 7,139,000 Deferred rent expense 454,000 324,000 Income taxes payable 1,829,000 1,135,000 Deferred income taxes 181,000 323,000 ---------- ---------- TOTAL CURRENT LIABILITIES 30,769,000 25,022,000 ---------- ----------
DEFERRED RENT EXPENSES 2,353,000 2,509,000
DEFERRED INCOME TAXES 139,000 389,000
SHAREHOLDERS' EQUITY Common Stock 1,349,000 0 $.10 par value, 13,490,000 shares issued Common Stock - Class A $.10 par value, 13,130,000 shares issued 0 1,313,000 Common Stock - Class B $.10 par value, 115,000 shares issued 0 12,000 Capital in excess of par 4,591,000 3,454,000 Retained earnings 44,621,000 38,585,000 Cumulative currency translation adjustments (1,315,000) (1,516,000) Treasury stock, at cost (3,251,000 shares and 3,233,000 shares) (11,508,000) (11,351,000) ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 37,738,000 30,497,000 ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $70,999,000 $58,417,000 ========== ==========
See notes to Consolidated Financial Statements. CACI INTERNATIONAL INC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS
CACI INTERNATIONAL INC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
CACI INTERNATIONAL INC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (cont'd)
CACI INTERNATIONAL INC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
CACI INTERNATIONAL INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1994, 1993 AND 1992
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activities
The Company is an international information systems and high technology services corporation. It is a world leader in computer-based information technology systems, custom software, integration and operations, imaging and document management, simulation, and proprietary database and software products. The Company provides worldwide services in support of United States national defense and civilian agencies, state governments and commercial enterprises.
Principles of Consolidation
The consolidated financial statements include the statements of CACI International Inc and its wholly-owned subsidiaries (the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation.
Revenue Recognition
Revenue on cost-plus-fee contracts is recognized to the extent of costs incurred plus a proportionate amount of the fee earned. Revenue on fixed- price contracts is recognized on the percentage of completion method based on costs incurred in relation to total estimated costs. Revenue on time and materials contracts is recognized to the extent of billable rates times hours delivered plus materials expense incurred. Revenue from software license sales is recognized upon delivery when there is no significant obligation to perform after the sale, but is recognized under the percentage-of-completion method when there is significant obligation for production, modification or customization after the sale. Revenue from maintenance support services on these products is nonrefundable and generally recognized on a straight-line basis over the term of the service agreement. Provisions for estimated losses on uncompleted contracts are recorded in the period such losses are determined.
The Company's United States Government contracts (approximately 71% of total revenue) are subject to subsequent government audit of direct and indirect costs. All such incurred cost audits have been completed through June 30, 1989. Management does not anticipate any material adjustment to the consolidated financial statements for later periods.
Property and Equipment
Property and equipment is recorded at cost. Depreciation of equipment has been provided over the estimated useful lives of three to ten years of the respective assets, using primarily the straight-line method. Leasehold improvements are generally amortized over the respective remaining lease term using the straight-line method.
Capitalized Software Costs
The Company capitalizes certain product-related software development costs after technological feasibility and marketability have been demonstrated. These costs are amortized on a product-by-product basis over their estimated economic useful lives, which range from 3 to 5 years.
Income Taxes
The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 109 "Accounting for Income Taxes", effective July 1, 1993. This accounting standard requires the use of the asset and liability approach for financial accounting and reporting for income taxes. There was no material cumulative effect on income in the financial statements from the adoption of SFAS 109 for the twelve month period ended June 30, 1994. The provision for income taxes includes taxes currently payable and those deferred because of the differences between the financial statements and tax bases of assets and liabilities.
U.S. income taxes have not been provided on $14,854,000 in undistributed earnings of foreign subsidiaries that have been permanently reinvested outside the United States.
Currency Translation
The assets and liabilities of the Company's foreign subsidiaries whose functional currency is other than the U.S. Dollar are translated at the exchange rates in effect on the reporting date, and income and expenses are translated at the weighted average exchange rate during the period. The net effect of such translation gains and losses are not included in determining net income but are accumulated as a separate component of shareholders' equity. Foreign currency transaction gains and losses are included in determining net income.
Earnings per Share
Earnings per share is computed by dividing net earnings by the weighted average number shares and equivalent shares outstanding during each of the years ended June 30, 1994, 1993 and 1992 of 10,615,000, 10,361,000, and 10,604,000, respectively. The weighted averages include the number of shares issuable upon exercise of stock options granted under the employee stock incentive plan after the assumed repurchase of shares with the related proceeds.
Statement of Cash Flows
Short-term investments with an original maturity of three months or less are considered cash equivalents.
Goodwill
The excess costs over fair market value of net assets acquired is being amortized, using the straight line method, for a period ranging from 3 to 15 years. Accumulated amortization was $529,000 and $143,000 at June 30, 1994 and June 30, 1993, respectively.
Statement Presentation
Certain prior period amounts have been reclassified to conform with the current year's presentation.
NOTE 2. ACCOUNTS RECEIVABLE
Unbilled accounts receivable consist of unbilled costs and estimated profits on uncompleted contracts which include retainage and other amounts arising from contracts with long-term completion and realization periods.
The components of unbilled accounts receivable are as follows:
June 30, ---------------------------- 1994 1993 ----------- ---------- Amounts currently billable $11,099,000 $6,977,000 Long-term completion contracts 1,490,000 1,119,000 Retainages 1,831,000 1,338,000 ---------- --------- Total Unbilled Accounts Receivable $14,420,000 $9,434,000 ========== =========
Contracts with long-term completion periods are billable upon completion, which is generally estimated to be within one year. Generally, retainages will not be billed within one year; consistent with industry practice, however, these receivables are classified as current.
Billed accounts receivable are net of allowance for doubtful accounts of $1,664,000 and $2,312,000 at June 30, 1994 and June 30, 1993, respectively.
NOTE 3. CAPITALIZED SOFTWARE DEVELOPMENT COSTS
The costs capitalized and amortized for the years ended June 30, 1994, 1993, and 1992 were as follows:
Annual Activity Year Ended June 30, - - --------------- ------------------------------------ 1994 1993 1992 --------- --------- -------- Balance beginning of year $ 775,000 $ 555,000 $ 18,000 Capitalized during year 332,000 412,000 559,000 Amortized during year (242,000) (192,000) (22,000) -------- -------- -------- Balance, end of year $ 865,000 $ 775,000 $555,000 ======== ======== ======= Amounts included in: Current assets $275,000 $254,000 $192,000 Other assets $590,000 $521,000 $363,000
NOTE 4. NOTE PAYABLE
The Company has a $20 million revolving credit agreement with Signet Bank which expires on January 31, 1995. Under this agreement, the Company had outstanding borrowings of $2,745,000 at June 30, 1994 and $7,223,000 at June 30, 1993. Interest is charged on the outstanding borrowings at the lower of the bank's daily prime commercial lending rate or the Federal Funds rate plus 1.25%. The applicable interest rate on the loan balance was 7.21% and 5.17% at June 30, 1994 and 1993, respectively. The credit agreement requires, among other provisions, the maintenance of certain levels of net worth and working capital and places certain restrictions on cash dividends and additional debt. Throughout FY 1994 and FY 1993, the Company was in compliance with all bank covenants.
NOTE 5. INCOME TAXES
The provision (benefit) for income taxes consists of:
State Year End and June 30 Federal Local Foreign Total - - ------- ---------- -------- ---------- ---------- Current $1,894,000 $696,000 $1,151,000 $3,741,000 Deferred 97,000 21,000 34,000 152,000 --------- ------- --------- --------- $1,991,000 $717,000 $1,185,000 $3,893,000 ========= ======= ========= ========= Current $2,311,000 $260,000 $ 610,000 $3,181,000 Deferred (1,042,000) (85,000) (147,000) (1,274,000) ---------- ------- --------- --------- $1,269,000 $175,000 $ 463,000 $1,907,000 ========= ======= ========= ========= Current $2,434,000 $501,000 $ 199,000 $3,134,000 Deferred (296,000) (67,000) 157,000 (206,000) --------- ------- --------- --------- $2,138,000 $434,000 $ 356,000 $2,928,000 ========= ======= ========= =========
A reconciliation of the income tax provision (benefit) and the amount computed by applying the statutory U.S. income tax rate of 34% is as follows:
Year Ended June 30, -------------------------------------- 1994 1993 1992 ---------- ---------- ---------- Amount at statutory U.S. rate $3,478,000 $1,662,000 $2,427,000 Other taxes, net of U.S. income tax benefit 450,000 116,000 287,000 Other expenses not deductible for tax purposes 80,000 76,000 6,000 Taxes on foreign earnings at different effective rates 209,000 48,000 191,000 Extraordinary item (194,000) 0 0 Other (130,000) 5,000 17,000 --------- --------- --------- Income taxes (benefit) $3,893,000 $1,907,000 $2,928,000 ========= ========= =========
The net current and non-current components of the deferred income tax accounts as shown on the consolidated balance sheet at June 30, 1994 are:
Total -------- Current deferred tax liability $181,000 Net non-current deferred tax asset (87,000) ------- Net deferred tax liability $ 94,000 =======
The deferred tax assets and tax liabilities at June 30, 1994 are:
Assets: 1994 ---------- Accrued vacation & other expenses $ 2,314,000 Deferred rent 1,084,000 Foreign currency conversion 182,000 Pension 168,000 --------- Total deferred assets $ 3,748,000 --------- Liabilities: Unbilled revenue $(2,745,000) Foreign transactions (613,000) Depreciation (435,000) Other (49,000) ---------- Total deferred liabilities $(3,842,000) ----------
Net deferred tax liability: $ (94,000) ==========
Commencing July 1, 1987, the Company adopted the accrual net of unbillable revenue method of accounting for tax purposes. Under this method, only revenue that is contractually billable is used to compute taxable income while certain expenses are not currently deductible.
The Company adopted SFAS No. 109 "Accounting for Income Taxes" effective July 1, 1993. Prior years financial statements were not restated. There was no material cumulative effect on the financial statements as the result of adoption of this standard.
NOTE 6. COMMON STOCK
At June 30, 1993, the Company's common stock consisted of Class A and Class B Common Stock, each with a $.10 par value, and each with 40,000,000 shares authorized. There were 13,130,000 Class A shares and 115,000 Class B shares outstanding at June 30, 1993, of which 3,194,000 Class A shares and 39,000 Class B shares were carried in Treasury at their acquisition cost. In October 1993, by the provisions of the Company's Charter, the Class B shares automatically converted to Class A Common Stock on a one-for-one basis, after which the Company had only one class of Common Stock. As of June 30, 1994, there were 13,490,000 shares of Common Stock outstanding of which 3,251,000 shares are held in Treasury and are carried at their acquisition cost.
NOTE 7. STOCK INCENTIVE PLAN
The Company has an employee stock incentive plan (the "Plan") which provides that key employees may be awarded some or all of the following: nonqualified stock options; incentive stock options within the meaning of the Internal Revenue Code; and the option to purchase Common Stock. The stock option exercise prices would generally be at fair market value on the date of grant. The period during which each option is exercisable is determined when granted, but in no event are they exercisable later than ten years from the date of grant or after December 31, 2000. Any debt securities awarded under the Plan would be subordinate to existing and future secured debt of the Company and would be offered to the employees for purchase at their fair market value. The maximum number of shares which may be issued under the Plan is 5,200,000. As discussed in Note 6 above, the Class B Common Stock was converted automatically to Common Stock in 1993, and no further options for Class B will be issued.
Stock option activity and price information regarding the Plan follows:
Number Exercise of shares Price --------- -----------
Shares Under Option, July 1, 1991 2,056,000 $1.87-$3.34 Granted 380,000 $3.50-$5.09 Exercised (778,000) $1.87-$2.56 Forfeited (28,000) $1.87-$3.34 --------- Shares Under Option, June 30, 1992 1,630,000 $1.87-$5.09 Granted 28,000 $4.44-$4.75 Exercised (41,000) $1.87-$2.59 Forfeited (98,000) $1.87-$5.09 --------- Shares Under Option, June 30, 1993 1,519,000 $1.87-$5.03 Granted 108,000 $5.875-$5.94 Exercised (244,000) $1.875-$4.75 Forfeited (2,000) $3.50 ---------- Shares Under Option, June 30, 1994 1,381,000 $1.87-$5.94 ========== Options Exercisable, June 30, 1994 766,000 $1.87-$5.94 ==========
Exercise prices are based on the market price of the Company's Common Stock at the date the options are granted.
NOTE 8. PENSION PLAN
The Company has a defined contribution pension plan covering approximately 60% of its employees. The total consolidated pension expense for each of the years ended June 30, 1994, 1993, and 1992 was $1,939,000, $1,690,000, and $1,537,000 respectively. The Company funds current pension costs as they accrue annually. The plan is qualified under the United States Internal Revenue Code, as determined by the United States Internal Revenue Service.
NOTE 9. LEASE COMMITMENTS
The Company conducts its operations from leased office facilities, all of which are classified as operating leases and expire primarily over the next eight years.
The following is a schedule of future minimum lease payments under non- cancelable leases with a remaining term greater than one year as of June 30, 1994:
Year Ending Operating June 30, Leases - - ----------- ---------
1995 $8,658,000 1996 7,626,000 1997 6,027,000 1998 4,966,000 1999 3,507,000 Later Years 8,246,000 ---------
Total minimum lease payments $39,030,000 ==========
Operating leases reflect the minimum lease payments for office facilities net of a minimal amount of sublease income. The Company has no significant long- term operating leases for office equipment.
Rent expense incurred from operating leases of real estate for 1994, 1993 and 1992 amounted to $6,708,000, $8,132,000, and $7,295,000 respectively. Rent expense arising from operating leases of equipment amounted to approximately $494,000, $466,000, and $429,000 in 1994, 1993, and 1992, respectively.
NOTE 10. EXCESS FACILITIES AND LEASE TERMINATION COST
The excess facilities and lease termination costs incurred during the year ended June 30, 1993 consisted of the lease termination cost of $1.921 million. In April, 1991, the Company entered into a new lease agreement in an effort to consolidate various operations into one location. In connection with this agreement, the Company canceled an existing lease for its office space located in Fairfax, Virginia and, as a result, paid a lease termination penalty of $1,418,000. The lessor of the new facility reimbursed the Company for the termination penalty. The Company was required to expense the termination cost in 1991 and allocate the benefit of the reimbursement as a reduction in the rent expense over the future life of the new lease. The Company moved to their new location in fiscal year 1992. The unamortized balance of this amount is included in deferred rent in the accompanying consolidated balance sheets.
As a result of the Company's cancellation of the office lease in Fairfax, Virginia discussed above, the landlord sued the Company for breach of the lease. To settle this litigation, the Company paid the landlord $1.7 million and incurred legal fees of $221,000 during the FY93 Second Quarter.
NOTE 11. CONTINGENCIES AND LITIGATION
Pentagen Technologies International, Ltd. ("Pentagen") filed two suits against CACI International Inc and two of its subsidiaries (collectively, "CACI"). One suit sought damages of $8 million and the other sought damages of $78 million and punitive damages of $234 million. In order to provide an expeditious redress of Pentagen's unfounded allegations and to compensate the
Company for any damage it may have suffered, the Company subsequently filed suit against Pentagen. In March 1994, the United States District Court for the Southern District of New York granted the Company's request that Pentagen's pending suit against the Company that had been previously removed from the New York Supreme Court be combined with the suit pending in the Southern District and be designated as "related" suits. Subsequently, these suits were both stayed pending further proceedings in the Company's suit in the Virginia Court. In June 1994, the Virginia Court issued an order declaring among other things, that CACI had not infringed Pentagen's copyright nor any trademark held by Pentagen, that Pentagen is liable for damages for tortious interference with CACI's business, and that Pentagen and the two Pentagen and Baird principals are liable for damages for defamation. In a subsequent order by the Virginia Court, CACI was awarded attorneys' fees of $110,550, court costs of $61,500, compensatory damages for defamation of $1,000, and punitive damages for defamation of $10,000. While the New York cases are still pending, it is expected that they will be resolved in the Company's favor. In any event, management is of the opinion that the ultimate resolution of this matter will not have a material adverse effect on the Company's financial statements.
The Company is involved in various other 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 Consolidated Financial Statements.
NOTE 12. ACQUISITIONS
SofTech, Inc.
On December 1, 1993, the Company purchased certain contracts and assets consisting of the Government Services business of SofTech, Inc. for an initial purchase price of $4.2 million which has been allocated as $0.9 million for the fair value of fixed assets acquired and $3.3 million to Goodwill. The results of this acquisition have been included in the Company's operating results beginning December 1, 1993. If the acquisition had occurred at the beginning of fiscal 1994, revenues would have increased by approximately $10 million and $0.3 million in net income, which would have increased earnings per share by $0.03. Given that this acquisition represents only a limited number of contracts and assets of SofTech, Inc., it is impractical to impute accurately the comparable revenues and/or earnings this acquisition would have had on the Company's 1993 fiscal period.
American Legal Systems Corp.
On July 30, 1992, the Company acquired all of the outstanding stock of ALS for an initial purchase price of approximately $2.8 million. ALS is a service company providing litigation support to commercial customers. The transaction was accounted for as a purchase. The Company financed the transaction with bank borrowings under its existing unsecured line of credit. ALS's financial statements have been consolidated beginning August 1, 1992. Had the acquisition occurred at the beginning of 1993 or 1992 fiscal periods, the effect on the Company's financial statements would not have been material.
The purchase price is subject to an increase of up to $3 million provided significant performance objectives are reached during each of the three measurement years beginning October 1, 1992. Management is of the opinion that the Company has adequately provided for any contingent payments.
Other Acquisitions
During the first half of this fiscal period, the Company purchased a majority of the contracts and assets from Pinpoint Analysis Ltd. and Miracle Products Ltd. The excess purchase price over the net book value of the net assets acquired from these acquisitions equaled $330,000. This excess has been recorded as Goodwill and will be amortized for periods ranging from 3 to 15 years. Had the acquisitions occurred at the beginning of 1993 or 1992 fiscal periods, the effect on the Company's financial statements would not have been material.
NOTE 13. SETTLEMENT OF SHAREHOLDER LAWSUITS
In September 1993, the Company announced an agreement, subject to approval by the courts, to settle its outstanding shareholder lawsuits. Under the terms of the agreement, the Company would reimburse the plaintiffs for certain legal fees and expenses. The Company would also establish a "fund" which would be available on a claims-made basis to cover certain defined losses by shareholders who sold their stock during the covered period. The Company also agreed to make a self-tender offer for a limited number of shares of its Common Stock at a price determined in the agreement.
The Company and the plaintiffs subsequently agreed to amend the terms of the self-tender because of the increase in the price of the Company's Common Stock since the original agreement was announced. Under the amended terms, the Company will offer a contingent self-tender for 1.3 million shares of Common Stock at $6.00 per share in the event that the average closing price for the Company's shares for twenty consecutive trading days during an approximate seven month period is below $6.00 per share. If the average closing price of the Company's shares does not fall below $6.00 per share for twenty consecutive trading days prior to February 28, 1995, the offer to self-tender will expire.
In July 1994, all parties to both suits filed with the Delaware Chancery Court a Stipulation and Agreement of Compromise and Settlement which provides for the settlement of both suits, subject to court approval. The Delaware Chancery Court has scheduled a hearing in November 1994 to consider the proposed settlement and any objection thereto that might be filed by a member of the plaintiff class.
Since January 1994, the Company's Common Stock has traded above the $6.00 per share tender price. Under the terms of the agreement, the Company is under no obligation to increase the tender price and has no current plans to do so. Accordingly, the Company cannot now predict how many shares, if any, it will obtain through the tender.
The Company accrued $300,000 (net of $194,000 tax benefit) as of September 30, 1993 to cover the estimated future costs of the settlement after reimbursement
of certain costs by the Company's liability insurance carrier. This charge was reported as an extraordinary item in the first quarter of FY 1994.
In reaching the settlement, the Board of Directors did not acknowledge any wrongdoing. In its deliberations on these suits, the Board did not believe it was productive to continue to incur legal expenses and divert senior managements' attention at a time when the Company's revenue and operating income was growing.
NOTE 14. SEGMENT INFORMATION
Revenue from contracts with the United States government for 1994, 1993, and 1992 amounted to approximately $130,000,000 (71% of revenues), $103,000,000 (71% of revenues), and $103,000,000 (74% of revenues), respectively.
Information about operations in the United States and foreign countries (primarily in Western Europe), after the elimination of intercompany transactions, consists of:
Earnings Before Identifiable Income Net Assets at Revenue Taxes * Earnings** Year End ------------ ---------- ---------- ------------ - - ---- United States $156,775,000 $6,651,000 $4,137,000 $56,568,000 Foreign 26,925,000 3,084,000 1,899,000 14,431,000 ----------- --------- --------- ---------- Combined $183,700,000 $9,735,000 $6,036,000 $70,999,000 =========== ========= ========= ==========
- - ---- United States $127,413,000 $3,639,000 $2,195,000 $48,826,000 Foreign 17,735,000 1,248,000 785,000 9,591,000 ----------- --------- --------- ---------- Combined $145,148,000 $4,887,000 $2,980,000 $58,417,000 =========== ========= ========= ==========
- - ---- United States $124,070,000 $6,505,000 $3,933,000 $45,757,000 Foreign 15,808,000 633,000 277,000 10,078,000 ----------- --------- --------- ---------- Combined $139,878,000 $7,138,000 $4,210,000 $55,835,000 =========== ========= ========= ==========
* 1994 includes extraordinary loss of $494,000.
** Contributions to consolidated net earnings after income tax effects.
NOTE 15. QUARTERLY FINANCIAL DATA (UNAUDITED)
The above quarterly financial data is unaudited, but in the opinion of management, all adjustments necessary for a fair presentation of the selected data for these interim periods have been included.
CACI INTERNATIONAL INC AND SUBSIDIARIES
SCHEDULES TO BE INCLUDED IN FORM 10-K
JUNE 30, 1994, 1993 AND 1992
SCHEDULE V
CACI INTERNATIONAL INC AND SUBSIDIARIES PROPERTY, PLANT AND EQUIPMENT FOR YEARS ENDED JUNE 30, 1994, 1993 AND 1992
SCHEDULE VI
CACI INTERNATIONAL INC AND SUBSIDIARIES ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT FOR YEARS ENDED JUNE 30, 1994, 1993 AND 1992
SCHEDULE VIII
CACI INTERNATIONAL INC AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS FOR YEARS ENDED JUNE 30, 1994, 1993 AND 1992
SCHEDULE IX
CACI INTERNATIONAL INC AND SUBSIDIARIES SHORT-TERM BORROWINGS FOR YEARS ENDED JUNE 30, 1994, 1993 AND 1992
ITEM 9.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
The Company had no disagreements with its independent accountant on accounting principles, practices or financial statement disclosure during the two years prior to the date of the most recent financial statements included in this Report.
PART III
The Information required by Items 10, 11, 12, and 13 of Part III of Form 10-K has been omitted in reliance on General Instruction G(3) and is incorporated herein by reference to the Company's definitive proxy statement to be filed with the SEC pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements (Refer to Item 8 above) Independent Auditors' Report Consolidated Balance Sheet as of June 30, 1994 and 1993 Consolidated Statement of Operations for the Years Ended June 30, 1994, 1993 and 1992 Consolidated Statement of Cash Flows for the Years Ended June 30, 1994, 1993 and 1992 Consolidated Statement of Shareholders' Equity for the Years Ended June 30, 1994, 1993 and 1992 Notes to Consolidated Financial Statements
(a)(2) Financial Statement Schedules (Refer to Item 8 above) Schedule V: Property, Plant, and Equipment for the Years Ended June 30, 1994,1993 and 1992 Schedule VI: Accumulated Depreciation and Amortization of Property, Plant, and Equipment for the Years Ended June 30, 1994, 1993 and 1992 Schedule VIII: Valuation and Qualifying Accounts for the Years Ended June 30, 1994, 1993 and 1992 Schedule IX: Short-Term Borrowings for the Years Ended June 30, 1994, 1993 and 1992
(a)(3) Exhibits and Exhibit Index (listed by numbers corresponding to the exhibit table of Item 601 regulation S-K)
(3) Articles of Incorporation and By-laws:
3.1 Certificate of Incorporation of the Registrant, as amended December 17, 1993.
3.2 By-laws of CACI International Inc, as amended to date (incorporated by reference from Exhibit 3.2 of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1993).
(4) Instruments Defining the Rights of Security Holders:
4.1 Clause FOURTH of the Registrant's Certificate of Incorporation, incorporated above as Exhibit 3.1.
4.2 Shareholders' Agreement dated as of December 1, 1985 (incorporated herein by reference to Appendix D to the Proxy Statement included in the S-4).
(10) Material Contracts:
10.1 The 1986 Employee Stock Incentive Plan of the Registrant is
incorporated by reference to the Registration Statement on Form S- 8 filed with the Commission on October 13, 1987 (File No. 33- 17864).
10.2 The CACI Monthly Stock Investment Plan is incorporated by reference to the Registration Statement on Form S-8 filed with the Commission on June 24, 1988 (File No. 33-22766).
10.3 Employment Agreement between the Registrant and Dr. J. P. London (incorporated herein by reference from Exhibit 10.3 of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1992).
10.4 Stock Purchase Agreement between the Registrant and Executor of the Estate of Herbert W. Karr (incorporated herein by reference from Exhibit 10.3 of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1992).
10.5 Form of Stock Option Agreement between the Registrant and certain employees (incorporated herein by reference from Exhibit 10.3 of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1992).
10.6 Merger Agreement dated July 30, 1992 between the Registrant, American Legal Systems Corporation, Michael McIntosh, A. Martin Erim and certain other parties (incorporated herein by reference from Exhibit 10.7 of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1992).
10.7 Letter of Intent dated September 1, 1993 to settle shareholder litigation denominated "Pfirman v. London, et al" and "Chrysogelos v. London, et al" (incorporated herein by reference from Exhibit 10.7 of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1993).
(11) Computation of Earnings per Common and Common Equivalent Share
(21) Significant subsidiaries of the Registrant, as defined in Section 1- 02(v) of regulation S-X.
(27) Financial Data Schedule
(b) . Form 8-K as of September 9, 1993, in which the Registrant reported the termination, by mutual consent, of continued exploratory discussions to merge a subsidiary of the Registrant and COMARCO, Inc.
. The Registrant filed a Current Report on Form 8-K as of November 30, 1993, in which the Registrant reported plans for a self-tender of shares of its Common Stock and settlement of shareholder lawsuits.
. The Registrant filed a Current Report on Form 8-K as of June 23,
1994, in which the Registrant reported the decision by the United States District Court for the Eastern District of Virginia which exonerated the Registrant of infringement allegations and found liability against the accusers for defamation and interference with business. SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on the 23th day of September, 1994.
CACI International Inc
By /s/ ------------------------------------- J. P. London Chairman of the Board and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in capacities and on the dates indicated.
Signature Title Date --------- ----- ----
/s/ September 23, 1994 - - ------------------------ ------------------ J.P. London Chairman of the Board, President, and Director (Principal Executive Officer)
/s/ September 23, 1994 - - ------------------------ Executive Vice President, Chief ------------------ Samuel R. Strickland Financial Officer, and Treasurer (Chief Financial and Accounting Officer)
/s/ September 23, 1994 - - ------------------------ Director ------------------ Paul J. Coleman, Jr.
/s/ Director September 23, 1994 - - ------------------------ ------------------ Alan S. Parsow
/s/ Director September 23, 1994 - - ------------------------ ------------------ Larry L. Pfirman
/s/ Director September 23, 1994 - - ------------------------ ------------------ Warren R. Phillips
/s/ Director September 23, 1994 - - ------------------------ ------------------ Charles P. Revoile
/s/ Director September 23, 1994 - - ------------------------ ------------------ William K. Sacks
/s/ Director September 23, 1994 - - ------------------------ ------------------ John M. Toups
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements (Refer to Item 8 above) Independent Auditors' Report Consolidated Balance Sheet as of June 30, 1994 and 1993 Consolidated Statement of Operations for the Years Ended June 30, 1994, 1993 and 1992 Consolidated Statement of Cash Flows for the Years Ended June 30, 1994, 1993 and 1992 Consolidated Statement of Shareholders' Equity for the Years Ended June 30, 1994, 1993 and 1992 Notes to Consolidated Financial Statements
(a)(2) Financial Statement Schedules (Refer to Item 8 above) Schedule V: Property, Plant, and Equipment for the Years Ended June 30, 1994,1993 and 1992 Schedule VI: Accumulated Depreciation and Amortization of Property, Plant, and Equipment for the Years Ended June 30, 1994, 1993 and 1992 Schedule VIII: Valuation and Qualifying Accounts for the Years Ended June 30, 1994, 1993 and 1992 Schedule IX: Short-Term Borrowings for the Years Ended June 30, 1994, 1993 and 1992
(a)(3) Exhibits and Exhibit Index (listed by numbers corresponding to the exhibit table of Item 601 regulation S-K)
(3) Articles of Incorporation and By-laws:
3.1 Certificate of Incorporation of the Registrant, as amended December 17, 1993.
3.2 By-laws of CACI International Inc, as amended to date (incorporated by reference from Exhibit 3.2 of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1993).
(4) Instruments Defining the Rights of Security Holders:
4.1 Clause FOURTH of the Registrant's Certificate of Incorporation, incorporated above as Exhibit 3.1.
4.2 Shareholders' Agreement dated as of December 1, 1985 (incorporated herein by reference to Appendix D to the Proxy Statement included in the S-4).
(10) Material Contracts:
10.1 The 1986 Employee Stock Incentive Plan of the Registrant is
incorporated by reference to the Registration Statement on Form S- 8 filed with the Commission on October 13, 1987 (File No. 33- 17864).
10.2 The CACI Monthly Stock Investment Plan is incorporated by reference to the Registration Statement on Form S-8 filed with the Commission on June 24, 1988 (File No. 33-22766).
10.3 Employment Agreement between the Registrant and Dr. J. P. London (incorporated herein by reference from Exhibit 10.3 of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1992).
10.4 Stock Purchase Agreement between the Registrant and Executor of the Estate of Herbert W. Karr (incorporated herein by reference from Exhibit 10.3 of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1992).
10.5 Form of Stock Option Agreement between the Registrant and certain employees (incorporated herein by reference from Exhibit 10.3 of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1992).
10.6 Merger Agreement dated July 30, 1992 between the Registrant, American Legal Systems Corporation, Michael McIntosh, A. Martin Erim and certain other parties (incorporated herein by reference from Exhibit 10.7 of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1992).
10.7 Letter of Intent dated September 1, 1993 to settle shareholder litigation denominated "Pfirman v. London, et al" and "Chrysogelos v. London, et al" (incorporated herein by reference from Exhibit 10.7 of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1993).
(11) Computation of Earnings per Common and Common Equivalent Share
(21) Significant subsidiaries of the Registrant, as defined in Section 1- 02(v) of regulation S-X.
(27) Financial Data Schedule
(b) . Form 8-K as of September 9, 1993, in which the Registrant reported the termination, by mutual consent, of continued exploratory discussions to merge a subsidiary of the Registrant and COMARCO, Inc.
. The Registrant filed a Current Report on Form 8-K as of November 30, 1993, in which the Registrant reported plans for a self-tender of shares of its Common Stock and settlement of shareholder lawsuits.
. The Registrant filed a Current Report on Form 8-K as of June 23,
1994, in which the Registrant reported the decision by the United States District Court for the Eastern District of Virginia which exonerated the Registrant of infringement allegations and found liability against the accusers for defamation and interference with business. SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on the 23th day of September, 1994.
CACI International Inc
By /s/ ------------------------------------- J. P. London Chairman of the Board and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in capacities and on the dates indicated.
Signature Title Date --------- ----- ----
/s/ September 23, 1994 - - ------------------------ ------------------ J.P. London Chairman of the Board, President, and Director (Principal Executive Officer)
/s/ September 23, 1994 - - ------------------------ Executive Vice President, Chief ------------------ Samuel R. Strickland Financial Officer, and Treasurer (Chief Financial and Accounting Officer)
/s/ September 23, 1994 - - ------------------------ Director ------------------ Paul J. Coleman, Jr.
/s/ Director September 23, 1994 - - ------------------------ ------------------ Alan S. Parsow
/s/ Director September 23, 1994 - - ------------------------ ------------------ Larry L. Pfirman
/s/ Director September 23, 1994 - - ------------------------ ------------------ Warren R. Phillips
/s/ Director September 23, 1994 - - ------------------------ ------------------ Charles P. Revoile
/s/ Director September 23, 1994 - - ------------------------ ------------------ William K. Sacks
/s/ Director September 23, 1994 - - ------------------------ ------------------ John M. Toups