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Section 1: 10-Q (10-Q)

caci-10q_20190331.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to          

Commission File Number 001-31400

 

CACI International Inc

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

54-1345888

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

1100 North Glebe Road, Arlington, VA 22201

(Address of principal executive offices)

(703) 841-7800

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes      No  

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).  Yes      No  

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No  

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

CACI

New York Stock Exchange

As of April 22, 2019, there were 24,870,769 shares outstanding of CACI International Inc’s common stock, par value $0.10 per share.

 

 

 

 

 


 

CACI INTERNATIONAL INC

 

 

 

PAGE

PART I:

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended March 31, 2019 and 2018

3

 

 

 

 

Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended March 31, 2019 and 2018

4

 

 

 

 

Consolidated Balance Sheets (Unaudited) as of March 31, 2019 and June 30, 2018

5

 

 

 

 

Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended March 31, 2019 and 2018

6

 

 

 

 

Consolidated Statements of Shareholder’s Equity (Unaudited) for the Three and Nine Months Ended March 31, 2019 and 2018

7

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

8

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

 

 

 

Item 4.

Controls and Procedures

33

 

 

 

 

 

 

PART II:

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

34

 

 

 

Item 1A.

Risk Factors

34

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

35

 

 

 

Item 3.

Defaults Upon Senior Securities

35

 

 

 

Item 4.

Mine Safety Disclosures

35

 

 

 

Item 5.

Other Information

35

 

 

 

Item 6.

Exhibits

35

 

 

 

 

Signatures

36

 

 

 

2


 

PART I

FINANCIAL INFORMATION

Item 1.  Financial Statements

CACI INTERNATIONAL INC

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(amounts in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

$

1,264,958

 

 

$

1,124,100

 

 

$

3,612,463

 

 

$

3,297,774

 

Costs of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct costs

 

 

824,024

 

 

 

728,444

 

 

 

2,397,633

 

 

 

2,195,282

 

Indirect costs and selling expenses

 

 

324,828

 

 

 

273,145

 

 

 

859,262

 

 

 

788,569

 

Depreciation and amortization

 

 

21,198

 

 

 

17,717

 

 

 

58,797

 

 

 

53,563

 

Total costs of revenue

 

 

1,170,050

 

 

 

1,019,306

 

 

 

3,315,692

 

 

 

3,037,414

 

Income from operations

 

 

94,908

 

 

 

104,794

 

 

 

296,771

 

 

 

260,360

 

Interest expense and other, net

 

 

13,466

 

 

 

10,566

 

 

 

31,773

 

 

 

32,769

 

Income before income taxes

 

 

81,442

 

 

 

94,228

 

 

 

264,998

 

 

 

227,591

 

Income tax expense (benefit)

 

 

13,297

 

 

 

29,729

 

 

 

49,424

 

 

 

(21,749

)

Net income

 

$

68,145

 

 

$

64,499

 

 

$

215,574

 

 

$

249,340

 

Basic earnings per share

 

$

2.74

 

 

$

2.62

 

 

$

8.69

 

 

$

10.14

 

Diluted earnings per share

 

$

2.69

 

 

$

2.56

 

 

$

8.50

 

 

$

9.88

 

Weighted-average basic shares outstanding

 

 

24,866

 

 

 

24,656

 

 

 

24,819

 

 

 

24,588

 

Weighted-average diluted shares outstanding

 

 

25,348

 

 

 

25,234

 

 

 

25,369

 

 

 

25,229

 

See Notes to Unaudited Consolidated Financial Statements


3


 

CACI INTERNATIONAL INC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(amounts in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income

 

$

68,145

 

 

$

64,499

 

 

$

215,574

 

 

$

249,340

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

3,059

 

 

 

5,779

 

 

 

(2,372

)

 

 

11,333

 

Change in fair value of interest rate swap agreements,

   net of tax

 

 

(2,075

)

 

 

3,344

 

 

 

(5,636

)

 

 

6,465

 

Other comprehensive income (loss), net of tax

 

 

984

 

 

 

9,123

 

 

 

(8,008

)

 

 

17,798

 

Comprehensive income

 

$

69,129

 

 

$

73,622

 

 

$

207,566

 

 

$

267,138

 

See Notes to Unaudited Consolidated Financial Statements

 


4


 

CACI INTERNATIONAL INC

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(amounts in thousands, except per share data)

 

 

 

March 31,

 

 

June 30,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

93,806

 

 

$

66,194

 

Accounts receivable, net

 

 

889,662

 

 

 

806,871

 

Prepaid expenses and other current assets

 

 

99,586

 

 

 

58,126

 

Total current assets

 

 

1,083,054

 

 

 

931,191

 

Goodwill

 

 

3,322,982

 

 

 

2,620,835

 

Intangible assets, net

 

 

450,838

 

 

 

241,755

 

Property and equipment, net

 

 

136,212

 

 

 

101,140

 

Supplemental retirement savings plan assets

 

 

91,585

 

 

 

91,490

 

Accounts receivable, long-term

 

 

11,836

 

 

 

8,620

 

Other long-term assets

 

 

36,512

 

 

 

39,175

 

Total assets

 

$

5,133,019

 

 

$

4,034,206

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

46,920

 

 

$

46,920

 

Accounts payable

 

 

136,933

 

 

 

82,017

 

Accrued compensation and benefits

 

 

263,586

 

 

 

259,442

 

Other accrued expenses and current liabilities

 

 

255,035

 

 

 

150,602

 

Total current liabilities

 

 

702,474

 

 

 

538,981

 

Long-term debt, net of current portion

 

 

1,710,640

 

 

 

1,015,420

 

Supplemental retirement savings plan obligations, net of current portion

 

 

91,992

 

 

 

86,851

 

Deferred income taxes

 

 

204,331

 

 

 

200,880

 

Other long-term liabilities

 

 

92,099

 

 

 

85,187

 

Total liabilities

 

 

2,801,536

 

 

 

1,927,319

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock $0.10 par value, 10,000 shares authorized, no shares issued or

   outstanding

 

 

 

 

 

 

Common stock $0.10 par value, 80,000 shares authorized; 42,304 shares

   issued and 24,871 outstanding at March 31, 2019 and 42,139 shares

   issued and 24,704 outstanding at June 30, 2018

 

 

4,230

 

 

 

4,214

 

Additional paid-in capital

 

 

570,207

 

 

 

570,964

 

Retained earnings

 

 

2,360,134

 

 

 

2,126,790

 

Accumulated other comprehensive loss

 

 

(27,038

)

 

 

(19,030

)

Treasury stock, at cost (17,434 and 17,434 shares, respectively)

 

 

(576,185

)

 

 

(576,186

)

Total CACI shareholders’ equity

 

 

2,331,348

 

 

 

2,106,752

 

Noncontrolling interest

 

 

135

 

 

 

135

 

Total shareholders’ equity

 

 

2,331,483

 

 

 

2,106,887

 

Total liabilities and shareholders’ equity

 

$

5,133,019

 

 

$

4,034,206

 

See Notes to Unaudited Consolidated Financial Statements

 


5


 

CACI INTERNATIONAL INC

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in thousands)

 

 

 

Nine Months Ended

 

 

 

March 31,

 

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

 

$

215,574

 

 

$

249,340

 

Reconciliation of net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

58,797

 

 

 

53,563

 

Amortization of deferred financing costs

 

 

1,796

 

 

 

3,311

 

Stock-based compensation expense

 

 

18,351

 

 

 

18,183

 

Deferred income taxes

 

 

(1,193

)

 

 

(69,405

)

Changes in operating assets and liabilities, net of effect of business acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

85,995

 

 

 

(53,410

)

Prepaid expenses and other assets

 

 

(13,284

)

 

 

(15,583

)

Accounts payable and other accrued expenses

 

 

101,473

 

 

 

68,505

 

Accrued compensation and benefits

 

 

(18,536

)

 

 

(12,047

)

Income taxes payable and receivable

 

 

(1,945

)

 

 

(572

)

Long-term liabilities

 

 

5,813

 

 

 

8,945

 

Net cash provided by operating activities

 

 

452,841

 

 

 

250,830

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(29,545

)

 

 

(31,810

)

Cash paid for business acquisitions, net of cash acquired

 

 

(1,071,023

)

 

 

(50,368

)

Other

 

 

1,875

 

 

 

3,629

 

Net cash used in investing activities

 

 

(1,098,693

)

 

 

(78,549

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from borrowings under bank credit facilities

 

 

2,109,500

 

 

 

397,000

 

Principal payments made under bank credit facilities

 

 

(1,414,690

)

 

 

(547,974

)

Payment of financing costs under bank credit facilities

 

 

(1,386

)

 

 

 

Payment of contingent consideration

 

 

(616

)

 

 

(11,553

)

Proceeds from employee stock purchase plans

 

 

4,265

 

 

 

3,673

 

Repurchases of common stock

 

 

(4,310

)

 

 

(3,802

)

Payment of taxes for equity transactions

 

 

(18,837

)

 

 

(20,692

)

Net cash provided by (used in) financing activities

 

 

673,926

 

 

 

(183,348

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(462

)

 

 

1,498

 

Net increase (decrease) in cash and cash equivalents

 

 

27,612

 

 

 

(9,569

)

Cash and cash equivalents at beginning of period

 

 

66,194

 

 

 

65,539

 

Cash and cash equivalents at end of period

 

$

93,806

 

 

$

55,970

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

Cash paid during the period for income taxes, net of refunds

 

$

55,967

 

 

$

45,771

 

Cash paid during the period for interest

 

$

31,083

 

 

$

30,346

 

Non-cash financing and investing activities:

 

 

 

 

 

 

 

 

Landlord sponsored tenant improvement

 

$

3,518

 

 

$

 

Accrued capital expenditures

 

$

3,557

 

 

$

818

 

See Notes to Unaudited Consolidated Financial Statements

 

6


 

CACI INTERNATIONAL INC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

(amounts in thousands)

 

 

 

Common Stock

Shares        Amount

 

 

Additional

Paid-in

Capital

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Treasury Stock

Shares        Amount

 

 

Total CACI

Shareholders’

Equity

 

 

Noncontrolling

Interest

 

 

Total

Shareholders’

Equity

 

BALANCE, December 31, 2018

 

 

42,296

 

 

$

4,230

 

 

$

564,586

 

 

$

2,291,989

 

 

$

(28,022

)

 

 

17,434

 

 

$

(576,185

)

 

$

2,256,598

 

 

$

135

 

 

 

2,256,733

 

Net income

 

 

 

 

 

 

 

 

 

 

 

68,145

 

 

 

 

 

 

 

 

 

 

 

 

68,145

 

 

 

 

 

 

68,145

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

6,304

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,304

 

 

 

 

 

 

6,304

 

Tax withholdings on restricted share vesting

 

 

8

 

 

 

 

 

 

 

(567

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(567

)

 

 

 

 

 

(567

)

Change in fair value of interest rate swap agreements, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,075

)

 

 

 

 

 

 

 

 

(2,075

)

 

 

 

 

 

(2,075

)

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,059

 

 

 

 

 

 

 

 

 

3,059

 

 

 

 

 

 

3,059

 

Repurchases of common stock

 

 

 

 

 

 

 

 

(116

)

 

 

 

 

 

 

 

 

11

 

 

 

(1,438

)

 

 

(1,554

)

 

 

 

 

 

(1,554

)

Treasury stock issued under stock purchase plans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11

)

 

 

1,438

 

 

 

1,438

 

 

 

 

 

 

1,438

 

BALANCE, March 31, 2019

 

 

42,304

 

 

 

4,230

 

 

 

570,207

 

 

 

2,360,134

 

 

 

(27,038

)

 

 

17,434

 

 

 

(576,185

)

 

 

2,331,348

 

 

 

135

 

 

 

2,331,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, December 31, 2017

 

 

42,059

 

 

 

4,206

 

 

 

568,646

 

 

 

2,010,460

 

 

 

(20,441

)

 

 

17,434

 

 

 

(576,186

)

 

 

1,986,685

 

 

 

135

 

 

 

1,986,820

 

Net income

 

 

 

 

 

 

 

 

 

 

 

64,499

 

 

 

 

 

 

 

 

 

 

 

 

64,499

 

 

 

 

 

 

64,499

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

5,794

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,794

 

 

 

 

 

 

5,794

 

Tax withholdings on restricted share vesting

 

 

68

 

 

 

7

 

 

 

(8,043

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,036

)

 

 

 

 

 

(8,036

)

Change in fair value of interest rate swap agreements, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,344

 

 

 

 

 

 

 

 

 

3,344

 

 

 

 

 

 

3,344

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,779

 

 

 

 

 

 

 

 

 

5,779

 

 

 

 

 

 

5,779

 

Repurchases of common stock

 

 

 

 

 

 

 

 

(125

)

 

 

 

 

 

 

 

 

9

 

 

 

(1,214

)

 

 

(1,339

)

 

 

 

 

 

(1,339

)

Treasury stock issued under stock purchase plans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9

)

 

 

1,214

 

 

 

1,214

 

 

 

 

 

 

1,214

 

BALANCE, March 31, 2018

 

 

42,127

 

 

$

4,213

 

 

$

566,272

 

 

$

2,074,959

 

 

$

(11,318

)

 

 

17,434

 

 

$

(576,186

)

 

$

2,057,940

 

 

$

135

 

 

$

2,058,075

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, June 30, 2018

 

 

42,139

 

 

$

4,214

 

 

$

570,964

 

 

$

2,126,790

 

 

$

(19,030

)

 

 

17,434

 

 

$

(576,186

)

 

$

2,106,752

 

 

$

135

 

 

$

2,106,887

 

Net income

 

 

 

 

 

 

 

 

 

 

 

215,574

 

 

 

 

 

 

 

 

 

 

 

 

215,574

 

 

 

 

 

 

215,574

 

Cumulative effect adjustment of ASC 606, net of taxes

 

 

 

 

 

 

 

 

 

 

 

17,770

 

 

 

 

 

 

 

 

 

 

 

 

17,770

 

 

 

 

 

 

17,770

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

18,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,351

 

 

 

 

 

 

18,351

 

Tax withholdings on restricted share vesting

 

 

165

 

 

 

16

 

 

 

(18,812

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,796

)

 

 

 

 

 

(18,796

)

Change in fair value of interest rate swap agreements, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,636

)

 

 

 

 

 

 

 

 

(5,636

)

 

 

 

 

 

(5,636

)

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,372

)

 

 

 

 

 

 

 

 

(2,372

)

 

 

 

 

 

(2,372

)

Repurchases of common stock

 

 

 

 

 

 

 

 

(301

)

 

 

 

 

 

 

 

 

26

 

 

 

(4,009

)

 

 

(4,310

)

 

 

 

 

 

(4,310

)

Treasury stock issued under stock purchase plans

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

(26

)

 

 

4,010

 

 

 

4,015

 

 

 

 

 

 

4,015

 

BALANCE, March 31, 2019

 

 

42,304

 

 

 

4,230

 

 

 

570,207

 

 

 

2,360,134

 

 

 

(27,038

)

 

 

17,434

 

 

 

(576,185

)

 

 

2,331,348

 

 

 

135

 

 

 

2,331,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, June 30, 2017

 

 

41,896