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A
National Asset for National Priorities
1
Fourth Fiscal Quarter FY10
Earnings Conference Call
August 18, 2010
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A
National Asset for National Priorities
Q4 FY10
2
Forward-l=
ooking
Statements
There are statements made here=
in
which do not address historical facts, and therefore could be interpreted =
to
be forward-looking stateme=
nts
as that term is defined in the Private Securities Litigation Reform Act of
1995. Such statements are subject =
to
factors that could cause actual results to differ materially from anticipa=
ted
results. The f=
actors
that could cause actual results to differ materially from those anticipated
include, but are not limited to, the following: regional and national economic conditions in the United St=
ates
and the United Kingdom, including conditions that result from a prolonged recession; terrorist activiti=
es
or war; changes in interest rates; currency fluctuations; significant fluctuations in the equity
markets; changes in our effective tax rate; in connection with business combinations, including valuation of contin=
gent
consideration; failure to achieve contract awards in connection with recompetes for present business and/=
or
competition for new business; the risks and uncertainties associated with client interest in and purchases of =
new
products and/or services; continued funding of U.S. government or other public sector projects, based on=
a
change in spending patterns, or in the event of a priority <=
span
style=3D'position:absolute;top:46.75%;left:2.62%;width:103.74%;height:3.25=
%'>need for funds, such as homeland security, the war on
terrorism or rebuilding Iraq, or an economic stimulus package; government contract procurement (such as bid
protest, small business set asides, loss of work due to organizational conflicts of interest, etc.) and
termination risks; the results of government investigations into allegations of improper actions related to the provi=
sion
of services in support of U.S. military operations in Iraq; the results of government audits and reviews conducted by
the Defense Contract Audit Agency or other government entities with cognizant oversight; the insourcing of
contractor positions by the government; individual business =
decisions of our clients; paradigm shifts in technol=
ogy;
competitive factors such as pricing pressures and/or competition to hire and retain employees (particular=
ly
those with security clearances); market speculation regarding our continued independence; material chang=
es
in laws or regulations applicable to our businesses, particularly in connection with (i) government contr=
acts
for services, (ii) outsourcing of activities that have been =
performed by the government, and (iii) competition f=
or
task orders under Government Wide Acquisition Contracts (“GWACs”) and/or schedule contracts with=
the
General Services Administration; the ability to successfully integrate the operations of our recent acquisitions; our own
ability to achieve the objectives of near term or long range business plans; and other risks described in the
company’s Securities and Exchange Commission filings.<=
/div>
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A
National Asset for National Priorities
Q4 FY10
3
Participa=
nts
§ Participants for
today’s call:
—Paul Cofoni
President & Chief
Executive Officer&#=
13;
—Tom Mutryn
Chief Financial Officer
—Bill Fairl
President of U.S. Operatio=
ns
—Randy Fuerst
Chief Operating Officer, U=
.S.
Operations
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A
National Asset for National Priorities
Q4 FY10
4
CEO Overview
=
§Another year of meeting our major financial objectives:
<=
span
style=3D'font-family:Tahoma;font-size:125%;text-shadow:auto'>—Organic
revenue growth of mid- to high-single digits
<=
span
style=3D'font-family:Tahoma;font-size:125%;text-shadow:auto'>—Double-di=
git
earnings growth
<=
span
style=3D'font-family:Tahoma;font-size:150%;text-shadow:auto'>§Remain confident in our outlook
—Initiativ=
es
announced by Secretary Gates will present new opportunities for CACI
<=
span
style=3D'font-family:Tahoma;font-size:125%;text-shadow:auto;visibility:hid=
den'>—
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A
National Asset for National Priorities
Q4 FY10
§<=
/span>Excellent fourth quarter
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<=
span
style=3D'text-shadow:auto'>—Revenue grew over 16%; net income, nearly 9%=
<=
span
style=3D'text-shadow:auto'>—Record level of contract funding orders
=
<=
span
style=3D'text-shadow:auto'>—Strong operating cash flow
<=
span
style=3D'text-shadow:auto'>—DSOs at a record low level
§<=
/span>Exceptional fiscal year for CACI
<=
span
style=3D'text-shadow:auto'>—Grew in each of our core competencies
—Record
revenue, net income, diluted EPS, operating cash flow, and contract funding orders
<=
/b>
<=
span
style=3D'text-shadow:auto'>—Record year-end funded backlog
<=
span
style=3D'text-shadow:auto'>—Revenue above $3 billion
<=
span
style=3D'text-shadow:auto'>—Employee base over 13,000<=
/div>
5
CEO Overview
=
<=
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A
National Asset for National Priorities
Q4 FY10
6
CEO Overview
=
§Confident that execution of our strategy will generate results projected in FY11 guidance
<=
/div>
— CACI work=
at
BTA to be shifted to other organizations
<=
span
style=3D'font-family:Tahoma;font-size:125%;text-shadow:auto'>—Asymmetric
threat of global terrorism remains high
<=
span
style=3D'font-family:Tahoma;font-size:150%;text-shadow:auto'>§Secretary Gates initiatives and CACI:
—Negligible
impact by elimination of The Joint Forces Command, OSD NII and J-6 organizations
—Goal of
initiatives is to apply savings to force structure and modernization—same areas of CACI’s focus
<=
span
style=3D'font-family:Tahoma;font-size:125%;text-shadow:auto;visibility:hid=
den'>§
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A
National Asset for National Priorities
Q4 FY10
§Demand continues high for CACI services in C4ISR and Intelligence and Security Services=
3;
§Vulnerability to cyber attacks will lead to =
more demand for our cyber solutions
=
—CACI a recognized thought leader on cyber threats and solutions
§Improving efficiency and effectiveness of =
DoD’s IT infrastructure
—Aligns with CACI’s expertise in IT
modernization and
transformation of government
—Already working with DoD customers to consolidate and streamline architectures
=
—Consistent with other projects across the government
7
CEO Overview
=
§
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A
National Asset for National Priorities
Q4 FY10
§Demand drivers give us the confidence that =
FY11 will be another year of strong growth
=
—Level of pending awards is higher than ever&=
#13;
—Very full pipeline for next several years=
3;
—Open personnel requisitions at a two-year hi=
gh and
growing
=
;
§Achieved CMMI© L=
evel 3
rating across entire compa=
ny
§Operational excellence drives our financial =
performance
8
CEO Overview
=
§
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A
National Asset for National Priorities
Q4 FY10
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9
Financial
Overview
Revenue
Up 16.4%
Revenue increase in quarter driven by:
<=
/b>
•Organic revenue growth of 14.3%
•Direct labor growth of 9.0%
<=
/span>
•ODC grow=
th
of 25.8%
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Operating Income
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Up 2.7%
Positive effect of growth in direct labor and ODCs partially offset by
higher stock compensation expense and higher depreciation and amortization
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A
National Asset for National Priorities
Q4 FY10
§=
Non-cash stock compensation expense:
—Revised in 2009 to provide performance-based restricted stock
—Stock vesting ratably over three to four
years
—2009 and 2010 grants based on FY10 net incom=
e
•FY10 net income performance me=
trics
exceeded
—Expense for equity grants with performance metrics and graded vesting must be recorded on an accelerated basis
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•Expense previously recorded on
straight-line basis
—Impact on FY10:
•$14 million of additional
stock-based compensation in FY10 compared to FY09, $9 million in 4th quarter
•Reduced operating margin in qu=
arter
by 110 bps, full year by 45 bps
10
Financial Overview
=
§
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A
National Asset for National Priorities
Q4 FY10
§Treatment of acquisition-related contingent =
consideration (earnouts):
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—In FY10, acquired three companies, all with 2 year earnouts
—New accounting rules require:
=
•Determination of fair value of
expected earnout as of acquisition date; record on balance sheet
<=
span
class=3DB2B style=3D'position:absolute;left:-3.06%;top:.3em'>•Re-evaluation of fair value of
expected earnout each quarter; reflect changes in income statement
=
—Earnout reduced by $3 million in 4th quarter
•Reflected as a reduction in in=
direct
costs and selling expenses
11
Financial Overview
=
§
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A
National Asset for National Priorities
Q4 FY10
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12
Financial
Overview
CACI Net Income
Effective tax rate—37.8% for the quart=
er, 36.5% for the year
Diluted EPS =
Up 6.5%
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$0.91
$0.96
Up 8.8%
•UK
operations:
•Revenue up 41.8% in quarter, 47.1% for the
year
•Net income up 42.0% in quarter, 59.7% for th=
e year
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A
National Asset for National Priorities
Q4 FY10
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13
§Cash flow from operations at $209
million for the year, $86 million for the quarter
§Free cash flow (operating cash fl=
ow
– capital expenditures) =3D $187 million
§Diluted adjusted EPS in FY10 of $=
5.39
vs diluted GAAP EPS OF $3.47
̵=
2;Diluted adjusted EPS in 4<=
/span>th quarter of $1.55 vs diluted GAAP E=
PS of $0.96
Financial
Overview
DSOs
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A
National Asset for National Priorities
Q4 FY10
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14
CACI Guid=
ance
for FY11
(As of August 17, 2010)
(As of August 17, 2010)
This
guidance represents our views as of August 17, 2010. Investors are reminded that actual
results may differ from these estimates for reasons described in=
our
Safeharb=
or
Statement and our filings with the SEC.
=
; FY11 Guidance
Revenue
(millions) $3,250 - $3,=
400
Net Income (millions) $11=
6 -
$122
Diluted EPS =
; $3.70
- $3.90
=
Diluted shares (millions)<=
span
style=3D'mso-spacerun:yes'>
31.3
FY11 revenue expected to b=
e 3
– 8% over ’10
FY11 net income expected t=
o be
9 – 15% over ’10
FY11 dilu=
ted
EPS expected to be 7 - 12% over ’10
=
;
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A
National Asset for National Priorities
Q4 FY10
15
Operations
Overview
§
§Contra=
ct
funding orders grew 16% in the quarter;
14% for the year
—80% of projected FY11 business to come from =
contracts already held; 20% from recompetes =
and new business
§Receiv=
ed
approximately $293 million in awards;
$2 billion for the year
—Won
all major recompetes in FY10
—Recompete win rate equal to FY09; best rate =
over the past 6 years
§Prime
position on $2.6 billion in estimated ceiling value on other multiple-award IDIQ =
contracts won in FY10
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A
National Asset for National Priorities
Q4 FY10
Operations Overview
§U.S. Operations achieved CMMI© Level 3 rating
<=
/div>
—Norfolk
division achieved CMMI Level 5 rating
—High-level CMMI recognition assures our clie=
nts of
high qualit=
y and
best practices in software and systems engineering
§Intell=
igence
business grew 20.4% in the quarter,
21.2% for the year
—Represents
39.8% of our revenue
§At the end of June:
—$5
billion in proposals submitted for evaluation
•Majority currently scheduled f=
or
award by the end of December
—Expect to submit > $8 billion in new prop=
osals
by the end of Dece=
mber
16
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A
National Asset for National Priorities
Q4 FY10
Operations Overview
§Open hiring requisitions > 400
§Total =
of
approximately 20 employees working at JFCOM, OSD NII and J-6
§Approximately 160 people at BTA
—Will
see no negative impact as a result of closure
§FY10 voluntary attrition rate lowest in 6 years=
17
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A
National Asset for National Priorities
Q4 FY10
Operations Overview
§Perfor=
mance
metrics of U.S. Operations point in
right direction:
—Contract
funding orders and funded backlog
—Recompete
win rate
—Opportunity
pipeline
—Hiring
—Retention
18
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A
National Asset for National Priorities
Q4 FY10
19
CEO Closi=
ng
Comments
§Expect to deliver another year of strong financial performance in FY11
§Our services and solutions are vital to the most =
critical missions
§Our services are aligned with funding priorities =
of proposed FY11 budget
<=
span
style=3D'font-family:Tahoma;font-size:125%;text-shadow:auto'>—Will supp=
ort
government’s transformation efforts
§Confident that we can meet our major financial goals for FY11 and beyond
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