CACI International Inc. 10-K Summary (Fiscal Year Ended June 30, 2009)
Business Context and Reporting Period
This Annual Report on Form 10-K covers the fiscal year ended June 30, 2009. CACI International Inc. is a leading provider of professional services and information technology solutions, primarily to U.S. government agencies. The company operates through two segments: Domestic Operations (U.S. government focus) and International Operations (primarily U.K. commercial and government focus). As of June 30, 2009, the company employed approximately 12,400 people.
Key Financial Metrics
| Metric | FY 2009 | FY 2008 |
|---|---|---|
| Revenue | $2.73 billion | $2.42 billion |
| Net Income | $95.5 million | $83.3 million |
| Earnings Per Share (Diluted) | $3.14 | $2.72 |
| Operating Margin | 6.7% | 6.7% |
| Cash Flow from Operations | $151.1 million | $160.1 million |
| Total Assets | $2.01 billion | $1.90 billion |
| Working Capital | $406.9 million | $312.6 million |
| Long-Term Debt | $628.1 million | $639.1 million |
| Backlog (Total) | $7.8 billion | $7.0 billion |
| Backlog (Funded) | $1.6 billion | Filing text does not provide a clear value |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 12.8% ($309.6 million) compared to FY 2008. Approximately 9.9% of this growth was organic, driven by increased services to DoD and federal civilian agencies. The remaining 2.9% was attributed to acquisitions.
- Customer Mix: Revenue from the Department of Defense (DoD) grew 15.0% to $2.08 billion (76.1% of total revenue). Revenue from federal civilian agencies increased 10.3% to $542.1 million. Conversely, commercial revenue declined 13.4% to $88.2 million, primarily due to unfavorable exchange rates impacting U.K. operations.
- Profitability: Operating income increased 13.1% to $184.1 million. Net income rose 14.6% to $95.5 million. The effective income tax rate increased to 41.0% from 39.5% in the prior year, largely due to non-deductible losses on corporate-owned life insurance policies.
- Cost Structure: Direct costs as a percentage of revenue increased to 68.6% from 67.1%, driven by higher subcontractor usage. Indirect costs and selling expenses decreased as a percentage of revenue to 23.0% from 24.2%.
Guidance, Outlook, Risks, and Unusual Items
- Outlook: Management anticipates that the majority of the funded backlog ($1.6 billion) will result in revenue during the fiscal year ending June 30, 2010. The company expects federal government contracts to remain the primary revenue source.
- Accounting Changes: The company noted the upcoming adoption of FSP 14-1 (effective July 1, 2009) regarding convertible debt. This change is expected to increase interest expense by approximately $9.5 million and reduce diluted EPS by $0.19 in the subsequent fiscal year, though it will have no direct effect on cash flow.
- Legal Proceedings: The company is involved in multiple lawsuits related to interrogation services in Iraq (e.g., Saleh v. Titan Corp., Ibrahim v. Titan Corp.). While no charges have been brought against the company or its employees to date, the outcomes could materially affect relationships with clients and financial results.
- Risks: Key risks include dependence on federal government contracts (96% of revenue), potential contract terminations, delays due to contract protests, and the impact of global economic conditions on commercial operations. The company also faces risks related to the impairment of goodwill ($1.1 billion recorded) and the ability to service substantial debt.
Investor Verification Checklist
- Backlog Realization: Verify the conversion rate of the $6.2 billion unfunded backlog into actual revenue, given the reliance on future Congressional appropriations.
- Legal Exposure: Monitor the status of the Abu Ghraib-related litigation and any potential financial settlements or debarment risks.
- Debt Covenants: Confirm continued compliance with financial covenants under the $590 million Credit Facility, particularly the leverage and fixed-charge coverage ratios.
- Commercial Segment Performance: Assess the recovery of the U.K. commercial segment, which declined due to the global economic slowdown and currency fluctuations.
- Accounting Impact: Review the impact of the new FSP 14-1 standard on reported interest expense and net income in the next fiscal year.