Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

 

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

For the quarterly period ended September 30, 2011

OR

 

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

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   x .    No   ¨ .

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    Yes   x .    No   ¨ .

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

 

Large accelerated filer   x    Accelerated filer   ¨
Non-accelerated filer   ¨    Smaller reporting company   ¨

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

Indicate the number of shares outstanding of each of the Registrant’s classes of Common Stock, as of November 1, 2011: CACI International Inc Common Stock, $0.10 par value, 26,424,829 shares.

 

 

 


Table of Contents

CACI INTERNATIONAL INC

 

         PAGE  

PART I:

 

FINANCIAL INFORMATION

  

Item 1.

 

Financial Statements

  
 

Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended September  30, 2011 and 2010

     3   
 

Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2011 and June 30, 2011

     4   
 

Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended September  30, 2011 and 2010

     5   
 

Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months Ended September  30, 2011 and 2010

     6   
 

Notes to Unaudited Condensed Consolidated Financial Statements

     7   

Item 2.

 

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

     17   

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

     22   

Item 4.

 

Controls and Procedures

     23   

PART II:

 

OTHER INFORMATION

  

Item 1.

 

Legal Proceedings

     24   

Item 1A.

 

Risk Factors

     25   

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

     25   

Item 3.

 

Defaults Upon Senior Securities

     25   

Item 4.

 

[Removed and Reserved]

     25   

Item 5.

 

Other Information

     25   

Item 6.

 

Exhibits

     26   
 

Signatures

     27   

 

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PART I

FINANCIAL INFORMATION

Item  1. Financial Statements

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(amounts in thousands, except per share data)

 

     Three Months Ended
September 30,
 
     2011      2010  

Revenue

   $ 924,395       $ 833,971   
  

 

 

    

 

 

 

Costs of revenue:

     

Direct costs

     634,931         589,470   

Indirect costs and selling expenses

     200,282         179,322   

Depreciation and amortization

     13,528         13,082   
  

 

 

    

 

 

 

Total costs of revenue

     848,741         781,874   
  

 

 

    

 

 

 

Income from operations

     75,654         52,097   

Interest expense and other, net

     5,600         5,833   
  

 

 

    

 

 

 

Income before income taxes

     70,054         46,264   

Income taxes

     27,941         17,439   
  

 

 

    

 

 

 

Net income before noncontrolling interest in earnings of joint venture

     42,113         28,825   

Noncontrolling interest in earnings of joint venture

     27         (170
  

 

 

    

 

 

 

Net income attributable to CACI

   $ 42,140       $ 28,655   
  

 

 

    

 

 

 

Basic earnings per share

   $ 1.46       $ 0.95   
  

 

 

    

 

 

 

Diluted earnings per share

   $ 1.41       $ 0.92   
  

 

 

    

 

 

 

Weighted-average basic shares outstanding

     28,915         30,304   
  

 

 

    

 

 

 

Weighted-average diluted shares outstanding

     29,842         31,102   
  

 

 

    

 

 

 

See Notes to Unaudited Condensed Consolidated Financial Statements

 

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CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(amounts in thousands, except per share data)

 

     September 30,
2011
    June 30,
2011
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 28,582      $ 164,817   

Accounts receivable, net

     597,696        573,042   

Prepaid expenses and other current assets

     48,084        44,219   
  

 

 

   

 

 

 

Total current assets

     674,362        782,078   

Goodwill

     1,339,712        1,266,285   

Intangible assets, net

     126,440        108,102   

Property and equipment, net

     62,393        62,755   

Other long-term assets

     100,517        100,911   
  

 

 

   

 

 

 

Total assets

   $ 2,303,424      $ 2,320,131   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Current portion of long-term debt

   $ 7,500      $ 7,500   

Accounts payable

     112,927        98,893   

Accrued compensation and benefits

     154,147        173,586   

Other accrued expenses and current liabilities

     174,797        157,242   
  

 

 

   

 

 

 

Total current liabilities

     449,371        437,221   

Long-term debt, net of current portion

     528,496        402,437   

Deferred income taxes

     82,076        68,123   

Other long-term liabilities

     102,368        102,734   
  

 

 

   

 

 

 

Total liabilities

     1,162,311        1,010,515   
  

 

 

   

 

 

 

COMMITMENTS AND CONTINGENCIES

    

Shareholders’ equity:

    

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

     —          —     

Common stock $0.10 par value, 80,000 shares authorized, 40,446 and 40,273 shares issued, respectively

     4,045        4,027   

Additional paid-in capital

     506,068        504,156   

Retained earnings

     980,635        938,495   

Accumulated other comprehensive loss

     (6,049     (3,115

Noncontrolling interest in joint venture

     2,658        2,684   

Treasury stock, at cost (14,042 and 10,077 shares, respectively)

     (346,244     (136,631
  

 

 

   

 

 

 

Total shareholders’ equity

     1,141,113        1,309,616   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 2,303,424      $ 2,320,131   
  

 

 

   

 

 

 

See Notes to Unaudited Condensed Consolidated Financial Statements

 

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CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in thousands)

 

     Three Months Ended
September 30,
 
     2011     2010  

CASH FLOWS FROM OPERATING ACTIVITIES

    

Net income before noncontrolling interest in earnings of joint venture

   $ 42,113      $ 28,825   

Reconciliation of net income before noncontrolling interest to net cash provided by operating activities:

    

Depreciation and amortization

     13,528        13,082   

Non-cash interest expense

     2,934        2,742   

Amortization of deferred financing costs

     809        740   

Stock-based compensation expense

     3,212        4,906   

Deferred income tax expense

     8,555        2,969   

Undistributed earnings of unconsolidated joint ventures

     (264     (314

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

    

Accounts receivable, net

     (11,972     (14,925

Prepaid expenses and other assets

     (2,613     (10,192

Accounts payable and other accrued expenses

     16,826        (23,340

Accrued compensation and benefits

     (28,153     (22,247

Income taxes payable and receivable

     11,740        16,901   

Other liabilities

     (568     8,583   
  

 

 

   

 

 

 

Net cash provided by operating activities

     56,147        7,730   
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

    

Capital expenditures

     (3,096     (3,308

Cash paid for business acquisitions, net of cash acquired

     (104,768     (387

Investment in unconsolidated joint venture, net

     —          (4,965

Other

     (323     159   
  

 

 

   

 

 

 

Net cash used in investing activities

     (108,187     (8,501
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

    

Proceeds from borrowings under bank credit facilities

     328,000        —     

Payments made under bank credit facilities

     (204,875     (128,601

Proceeds from employee stock purchase plans

     1,325        1,507   

Proceeds from exercise of stock options

     1,337        253   

Repurchases of common stock

     (209,680     (17,767

Other

     155        139   
  

 

 

   

 

 

 

Net cash used in financing activities

     (83,738     (144,469
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (457     843   
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (136,235     (144,397

Cash and cash equivalents, beginning of period

     164,817        254,543   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 28,582      $ 110,146   
  

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

    

Cash paid (received) during the period for income taxes, net

   $ 7,361      $ (2,551
  

 

 

   

 

 

 

Cash paid during the period for interest

   $ 903      $ 1,291   
  

 

 

   

 

 

 

Non-cash financing and investing activities:

    

Landlord-financed leasehold improvements

   $ 982        504   
  

 

 

   

 

 

 

See Notes to Unaudited Condensed Consolidated Financial Statements

 

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CACI INTERNATIONAL INC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(amounts in thousands)

 

     Three Months Ended
September 30,
 
     2011     2010  

Net income before noncontrolling interest in earnings of joint venture

   $ 42,113      $ 28,825   

Change in foreign currency translation adjustment

     (2,934     4,873   
  

 

 

   

 

 

 

Comprehensive income

   $ 39,179      $ 33,698   
  

 

 

   

 

 

 

See Notes to Unaudited Condensed Consolidated Financial Statements

 

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CACI INTERNATIONAL INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of CACI International Inc and subsidiaries (CACI or the Company) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and include the assets, liabilities, results of operations and cash flows for the Company, including its subsidiaries and joint ventures that are more than 50 percent owned or otherwise controlled by the Company. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. All intercompany balances and transactions have been eliminated in consolidation.

Under ASC 855, Subsequent Events , the Company is required to assess the existence or occurrence of any events occurring after September 30, 2011 that may require recognition or disclosure in the financial statements as of and for the three months ended September 30, 2011. The Company has evaluated all events and transactions that occurred after September 30, 2011, and found that during this period it did not have any subsequent events requiring financial statement recognition.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and amounts included in other current assets and current liabilities that meet the definition of a financial instrument approximate fair value because of the short-term nature of these amounts. The fair value of the Company’s debt outstanding as of September 30, 2011 under its bank credit facility approximates its carrying value. The fair value of the Company’s debt under its bank credit facility was estimated using market data on companies with a corporate rating similar to CACI’s that have recently priced credit facilities. The fair value of the Company’s $300.0 million of 2.125 percent convertible senior subordinated notes issued May 16, 2007 and that mature on May 16, 2014 (the Notes) is based on quoted market prices. See Note 5.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments and reclassifications (all of which are of a normal, recurring nature) that are necessary for fair presentation for the periods presented. It is suggested that these unaudited consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s latest annual report to the SEC on Form 10-K for the year ended June 30, 2011. The results of operations for the three months ended September 30, 2011 are not necessarily indicative of the results to be expected for any subsequent interim period or for the full fiscal year.

Certain reclassifications have been made to the prior period’s financial statements to conform to the current presentation.

 

2. New Accounting Pronouncements

In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income (ASU 2011-05) which amends ASC Topic 220, Comprehensive Income . This accounting update requires companies to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 is effective for the Company beginning July 1, 2012. The adoption of ASU 2011-05 will impact disclosures only and will not impact the Company’s financial position or results of operations.

In September 2011, the FASB issued ASU No. 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment (ASU 2011-08), which simplifies how an entity tests goodwill for impairment. The amendments permit an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Accordingly, an entity will no longer be required to calculate the fair value of a reporting unit in the step one test unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The adoption of this ASU is not expected to significantly impact the Company’s consolidated financial statements.

 

3. Acquisitions

During the three months ended September 30, 2011, the Company completed the acquisitions of Pangia Technologies, LLC (Pangia) and Paradigm Holdings, Inc., the parent of Paradigm Solutions Corporation (Paradigm). Pangia is a

 

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CACI INTERNATIONAL INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

 

software engineering services company that provides technical solutions in the areas of computer network operations, information assurance, mission systems, software and systems engineering, and IT infrastructure support. Paradigm provides cybersecurity and enterprise IT solutions to clients in federal civilian agencies, the Department of Defense, and the Intelligence Community. The combined purchase consideration to acquire these two companies was $102.5 million. The Company has completed its valuation of the businesses acquired and has recognized fair values of the assets acquired and liabilities assumed. The Company has allocated $75.6 million to goodwill and $27.2 million to other intangible assets, primarily customer contracts. The acquired businesses generated $8.0 million of revenue from their dates of acquisition (July 1, 2011 for Pangia and September 1, 2011 for Paradigm) through September 30, 2011.

 

4. Intangible Assets

Intangible assets increased due to the acquisition of two businesses (see Note 3) and consisted of the following (in thousands):

 

     September 30,
2011
    June 30,
2011
 

Customer contracts and related customer relationships

   $ 317,741      $ 291,174   

Acquired technologies

     27,177        27,177   

Covenants not to compete

     3,401        3,070   

Other

     1,641        1,637   
  

 

 

   

 

 

 

Intangible assets

     349,960        323,058   

Less accumulated amortization

     (223,520     (214,956
  

 

 

   

 

 

 

Total intangible assets, net

   $ 126,440      $ 108,102   
  

 

 

   

 

 

 

Intangible assets are primarily amortized on an accelerated basis over periods ranging from 12 to 120 months. The weighted-average period of amortization for all customer contracts and related customer relationships as of September 30, 2011 is 8.6 years, and the weighted-average remaining period of amortization is 7.4 years. The weighted-average period of amortization for acquired technologies as of September 30, 2011 is 6.7 years, and the weighted-average remaining period of amortization is 6.0 years.

Expected amortization expense for the remainder of the fiscal year ending June 30, 2012, and for each of the fiscal years thereafter, is as follows (in thousands):

 

Fiscal year ending June 30,    Amount  

2012 (nine months)

   $ 24,668   

2013

     25,939   

2014

     21,643   

2015

     16,509   

2016

     11,814   

Thereafter

     25,867   
  

 

 

 

Total intangible assets, net

   $ 126,440   
  

 

 

 

 

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CACI INTERNATIONAL INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

 

5. Long-term Debt

Long-term debt consisted of the following (in thousands):

 

     September 30,
2011
    June 30,
2011
 

Convertible notes payable

   $ 300,000      $ 300,000   

Bank credit facility – Term Loan

     144,375        146,250   

Bank credit facility – Revolving Facility

     125,000        —     
  

 

 

   

 

 

 

Principal amount of long-term debt

     569,375        446,250   

Less unamortized discount

     (33,379     (36,313
  

 

 

   

 

 

 

Total long-term debt

     535,996        409,937   

Less current portion

     (7,500     (7,500
  

 

 

   

 

 

 

Long-term debt, net of current portion

   $ 528,496      $ 402,437   
  

 

 

   

 

 

 

Bank Credit Facility

The Company has a $750.0 million credit facility (the Credit Facility), which consists of a $600.0 million revolving credit facility (the Revolving Facility) and a $150.0 million term loan (the Term Loan). The Revolving Facility has subfacilities of $50.0 million for same-day swing line loan borrowings and $25.0 million for stand-by letters of credit. The Credit Facility was entered into on October 21, 2010 and replaced the Company’s then outstanding term loan and revolving credit facility.

The Revolving Facility is a secured facility that permits continuously renewable borrowings of up to $600.0 million, with an expiration date of October 21, 2015. As of September 30, 2011, the Company had $125.0 million outstanding under the Revolving Facility and no outstanding letters of credit. The Company pays a quarterly facility fee for the unused portion of the Revolving Facility.

The Term Loan is a five-year secured facility under which principal payments are due in quarterly installments of $1.9 million through December 31, 2013 and $3.8 million from January 1, 2014 through September 30, 2015, with the balance due in full on October 21, 2015.

At any time and so long as no default has occurred, the Company has the right to increase the Term Loan or Revolving Facility in an aggregate principal amount of up to $200.0 million with applicable lender approvals. The Credit Facility is available to refinance existing indebtedness and for general corporate purposes, including working capital expenses and capital expenditures.

The interest rates applicable to loans under the Credit Facility are floating interest rates that, at the Company’s option, equal a base rate or a Eurodollar rate plus, in each case, an applicable margin based upon the Company’s consolidated total leverage ratio. As of September 30, 2011, the effective interest rate, excluding the effect of amortization of debt financing costs, for the outstanding borrowings under the Credit Facility was 2.24 percent.

The Credit Facility requires the Company to comply with certain financial covenants, including a maximum senior secured leverage ratio, a maximum total leverage ratio and a minimum fixed charge coverage ratio. The Credit Facility also includes customary negative covenants restricting or limiting the Company’s ability to guarantee or incur additional indebtedness, grant liens or other security interests to third parties, make loans or investments, transfer assets, declare dividends or redeem or repurchase capital stock or make other distributions, prepay subordinated indebtedness and engage in mergers, acquisitions or other business combinations, in each case except as expressly permitted under the Credit Facility. Since the inception of the Credit Facility, the Company has been in compliance with all of the financial covenants. A majority of the Company’s assets serve as collateral under the Credit Facility.

The Company capitalized $6.0 million of debt issuance costs associated with the origination of the Credit Facility. All debt issuance costs are being amortized from the date incurred to the expiration date of the Credit Facility. The unamortized balance of $4.6 million at September 30, 2011 is included in other assets.

 

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CACI INTERNATIONAL INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

 

Convertible Notes Payable

Effective May 16, 2007, the Company issued the Notes in a private placement. The Notes were issued at par value and are subordinate to the Company’s senior secured debt. Interest on the Notes is payable on May 1 and November 1 of each year.

Holders may convert their notes at a conversion rate of 18.2989 shares of CACI common stock for each $1,000 of note principal (an initial conversion price of $54.65 per share) under the following circumstances: 1) if the last reported sale price of CACI stock is greater than or equal to 130 percent of the applicable conversion price for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter; 2) during the five consecutive business day period immediately after any ten consecutive trading day period (the note measurement period) in which the average of the trading price per $1,000 principal amount of convertible note was equal to or less than 97 percent of the average product of the closing price of a share of the Company’s common stock and the conversion rate of each date during the note measurement period; 3) upon the occurrence of certain corporate events constituting a fundamental change, as defined in the indenture governing the Notes; or 4) during the last three-month period prior to maturity. CACI is required to satisfy 100 percent of the principal amount of these notes solely in cash, with any amounts above the principal amount to be satisfied in common stock. As of September 30, 2011, none of the conditions permitting conversion of the Notes had been satisfied.

In the event of a fundamental change, as defined in the indenture governing the Notes, holders may require the Company to repurchase the Notes at a price equal to the principal amount plus any accrued interest. Also, if certain fundamental changes occur prior to maturity, the Company will in certain circumstances increase the conversion rate by a number of additional shares of common stock or, in lieu thereof, the Company may in certain circumstances elect to adjust the conversion rate and related conversion obligation so that these notes are convertible into shares of the acquiring or surviving company. The Company is not permitted to redeem the Notes.

The Company separately accounts for the liability and the equity (conversion option) components of the Notes and recognizes interest expense on the Notes using an interest rate in effect for comparable debt instruments that do not contain conversion features. The effective interest rate for the Notes excluding the conversion option was determined to be 6.9 percent.

The fair value of the liability component of the Notes was calculated to be $221.9 million at May 16, 2007, the date of issuance. The excess of the $300.0 million of gross proceeds over the $221.9 million fair value of the liability component, or $78.1 million, represents the fair value of the equity component, which was recorded, net of income tax effect, as additional paid-in capital within shareholders’ equity. This $78.1 million difference represents a debt discount that is amortized over the seven-year term of the Notes as a non-cash component of interest expense. The components of interest expense related to the Notes were as follows (in thousands):

 

     September 30,  
     2011      2010  

Coupon interest

   $ 1,594       $ 1,594   

Non-cash amortization of discount

     2,934         2,742   

Amortization of issuance costs

     205         205   
  

 

 

    

 

 

 

Total

   $ 4,733       $ 4,541   
  

 

 

    

 

 

 

The balance of the unamortized discount as of September 30, 2011 and June 30, 2011, was $33.4 million and $36.3 million, respectively. The discount will continue to be amortized as additional, non-cash interest expense over the remaining term of the Notes (through May 1, 2014) using the effective interest method as follows (in thousands):

 

Fiscal year ending June 30,    Amount Amortized
During Period
 

2012 (nine months)

   $ 9,089   

2013

     12,868   

2014

     11,422   
  

 

 

 
   $ 33,379   
  

 

 

 

 

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CACI INTERNATIONAL INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

 

The fair value of the Notes as of September 30, 2011 was $334.8 million based on quoted market values.

The contingently issuable shares were not included in CACI’s diluted share count for the three months ended September 30, 2011 or 2010 because CACI’s average stock price during those periods was below the conversion price. Of total debt issuance costs of $7.8 million, $5.8 million is being amortized to interest expense over seven years. The remaining $2.0 million of debt issuance costs attributable to the embedded conversion option was recorded in additional paid-in capital. Upon closing of the sale of the Notes, $45.5 million of the net proceeds was used to concurrently repurchase one million shares of CACI’s common stock.

In connection with the issuance of the Notes, the Company purchased in a private transaction at a cost of $84.4 million call options (the Call Options) to purchase approximately 5.5 million shares of its common stock at a price equal to the conversion price of $54.65 per share. The cost of the Call Options was recorded as a reduction of additional paid-in capital. The Call Options allow CACI to receive shares of its common stock from the counterparties equal to the amount of common stock related to the excess conversion value that CACI would pay the holders of the Notes upon conversion.

For income tax reporting purposes, the Notes and the Call Options are integrated. This created an original issue discount for income tax reporting purposes, and therefore the cost of the Call Options is being accounted for as interest expense over the term of the Notes for income tax reporting purposes. The associated income tax benefit of $32.8 million to be realized for income tax reporting purposes over the term of the Notes was recorded as an increase in additional paid-in capital and a long-term deferred tax asset. The majority of this deferred tax asset is offset in the Company’s balance sheet by the $30.7 million deferred tax liability associated with the non-cash interest expense to be recorded for financial reporting purposes.

In addition, the Company sold warrants (the Warrants) to issue approximately 5.5 million shares of CACI common stock at an exercise price of $68.31 per share. The proceeds from the sale of the Warrants totaled $56.5 million and were recorded as an increase to additional paid-in capital.

On a combined basis, the Call Options and the Warrants are intended to reduce the potential dilution of CACI’s common stock in the event that the Notes are converted by effectively increasing the conversion price of these notes from $54.65 to $68.31. The Call Options are anti-dilutive and are therefore excluded from the calculation of diluted shares outstanding. The Warrants will result in additional diluted shares outstanding if CACI’s average common stock price exceeds $68.31. The Call Options and the Warrants are separate and legally distinct instruments that bind CACI and the counterparties and have no binding effect on the holders of the Notes.

JV Bank Credit Facility

eVenture Technologies LLC (eVentures), a joint venture between the Company and ActioNet, Inc., entered into a $1.5 million revolving credit facility (the JV Facility). The JV Facility was a four-year, guaranteed facility that permited continuously renewable borrowings of up to $1.5 million with an expiration date of the earliest of September 14, 2011; the date of any restatement, refinancing, or replacement of the Credit Facility without the lender acting as the sole and exclusive administrative agent; or termination of the Credit Facility. The JV Facility expired on September 14, 2011. eVentures had no borrowings outstanding under the JV Facility during the three months ended September 30, 2011.

The aggregate maturities of long-term debt at September 30, 2011 are as follows (in thousands):

 

Twelve months ending September 30,

  

2012

   $ 7,500   

2013

     7,500   

2014

     313,125   

2015

     15,000   

2016

     226,250   
  

 

 

 
     569,375   

Less unamortized discount

     (33,379
  

 

 

 

Total long-term debt

   $ 535,996   
  

 

 

 

 

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CACI INTERNATIONAL INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

 

6. Commitments and Contingencies

General Legal Matters

The Company is involved in various 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, either individually or in the aggregate, will not have a material adverse effect on the Company’s operations and liquidity.

Iraq Investigations

On April 26, 2004, the Company received information indicating that one of its employees was identified in a report authored by U.S. Army Major General Antonio M. Taguba as being connected to allegations of abuse of Iraqi detainees at the Abu Ghraib prison facility. To date, despite the Taguba Report and the subsequently-issued Fay Report addressing alleged inappropriate conduct at Abu Ghraib, no present or former employee of the Company has been officially charged with any offense in connection with the Abu Ghraib allegations.

The Company does not believe the outcome of this matter will have a material adverse effect on its financial statements.

Government Contracting

Payments to the Company on cost-plus-fee and time-and-materials contracts are subject to adjustment upon audit by the Defense Contract Audit Agency (DCAA). The DCAA is currently in the process of auditing the Company’s incurred cost submissions for the year ended June 30, 2006. In the opinion of management, audit adjustments that may result from audits not yet completed or started are not expected to have a material effect on the Company’s financial position, results of operations, or cash flows as the Company has accrued its best estimate of potential disallowances. Additionally, the DCAA continually reviews the cost accounting and other practices of government contractors, including the Company. In the course of those reviews, cost accounting and other issues are identified, discussed and settled.

In December 2010, the Defense Contract Management Agency (DCMA) issued a letter to the Company with its determination that the Company improperly allocated certain legal costs incurred arising out of the Company’s work in Iraq from 2003 to 2005. The Company does not agree with the DCMA’s findings and, on March 9, 2011, filed a Notice of Appeal in the Armed Services Board of Contract Appeals. The Company’s appeal is pending. The Company has accrued its current best estimate of the potential outcome within its estimated range of zero to $2.9 million.

 

7. Stock-Based Compensation

Stock-based compensation expense recognized, together with the income tax benefits recognized, is as follows (in thousands):

 

     Three Months Ended
September 30,
 
     2011      2010  

Stock-based compensation included in indirect costs and selling expenses:

     

Non-qualified stock option and stock settled stock appreciation right (SSAR) expense

   $ 606       $ 1,387   

Restricted stock and restricted stock unit (RSU) expense

     2,606         3,519   
  

 

 

    

 

 

 

Total stock-based compensation expense

   $ 3,212       $ 4,906   
  

 

 

    

 

 

 

Income tax benefit recognized for stock-based compensation expense

   $ 1,281       $ 1,856   
  

 

 

    

 

 

 

Under the terms of its 2006 Stock Incentive Plan (the 2006 Plan), the Company may issue, among others, non-qualified stock options, restricted stock, RSUs, SSARs, and performance awards, collectively referred to herein as equity instruments. During the periods presented all equity instrument grants were made in the form of RSUs. Other than performance-based RSUs which contain a market-based element, the fair value of RSU grants were determined based on the closing price of a share of the Company’s common stock on the date of grant. The fair value of RSUs with market-based vesting features was also measured on the grant date, but was done so using a binomial lattice model.

 

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CACI INTERNATIONAL INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

 

Annual grants under the 2006 Plan are generally made to the Company’s key employees during the first quarter of the Company’s fiscal year and to members of the Company’s Board of Directors during the second quarter of the Company’s fiscal year. With the approval of its Chief Executive Officer, the Company also issues equity instruments to strategic new hires and to employees who have demonstrated superior performance. In September 2011, the Company made its annual grant to its key employees consisting of 721,540 Performance Restricted Stock Units (PRSUs), representing the maximum amount which could be earned. The PRSUs are subject to both performance and market conditions. No PRSUs will be earned if the Net After Tax Profit for the fiscal year ending June 30, 2012 is less than the Net After Tax Profit for the fiscal year ended June 30, 2011. The number of PRSUs earned by the grantee is dependent on the increase or decrease of the 90 calendar day average price per share of common stock of the Company for the period ended September 1, 2011 compared to the 90 calendar day average price per share of common stock of the Company for the period ending September 1, 2012. In addition to the performance and market conditions, there is a service vesting condition which stipulates that 50 percent of the award will vest on the third anniversary of the grant date and 50 percent of the award will vest on the fourth anniversary of the grant date, in both cases dependent upon continuing service by the grantee as an employee of the Company, unless the grantee is eligible for earlier vesting upon retirement, as defined.

The total number of shares authorized by shareholders for grants under the 2006 Plan is 10,950,000 as of September 30, 2011. The aggregate number of grants that may be made may exceed this approved amount as forfeited SSARs, stock options, restricted stock and RSUs, and vested but unexercised SSARs and stock options that expire, become available for future grants. As of September 30, 2011, cumulative grants of 12,229,684 equity instruments underlying the shares authorized have been awarded, and 2,476,399 of these instruments have been forfeited.

Activity related to SSARs/non-qualified stock options and RSUs/restricted shares issued under the 2006 Plan during the three months ended September 30, 2011 is as follows:

 

     SSARs/
Non-qualified
Stock  Options
    RSUs/
Restricted Shares
 

Outstanding, June 30, 2011

     2,110,304        1,322,101   

Granted

     —          741,193   

Exercised/Issued

     (34,330     (232,306

Forfeited/Lapsed

     (6,380     (183,725
  

 

 

   

 

 

 

Outstanding, September 30, 2011

     2,069,594        1,647,263   
  

 

 

   

 

 

 

Weighted average grant date fair value for RSUs/restricted shares

     $ 46.32   
    

 

 

 

As of September 30, 2011, there was $2.7 million of total unrecognized compensation cost related to SSARs and stock options scheduled to be recognized over a weighted average period of 1.3 years, and $32.4 million of total unrecognized compensation cost related to restricted shares and RSUs scheduled to be recognized over a weighted-average period of 2.8 years.

 

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CACI INTERNATIONAL INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

 

8. Earnings Per Share

ASC 260, Earnings Per Share (ASC 260) , requires dual presentation of basic and diluted earnings per share on the face of the income statement. Basic earnings per share exclude dilution and are computed by dividing income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Using the treasury stock method, diluted earnings per share include the incremental effect of SSARs, stock options, restricted shares, and those RSUs that are no longer subject to a market or performance condition. The PRSUs granted in September 2011 are excluded from the calculation of diluted earnings per share as the underlying shares are considered to be contingently issuable shares. These shares will be included in the calculation of diluted earnings per share beginning in the first reporting period in which the performance metric is achieved. The chart below shows the calculation of basic and diluted earnings per share (in thousands, except per share amounts):

 

     Three Months Ended
September 30,
 
     2011      2010  

Net income attributable to CACI

   $ 42,140       $ 28,655   
  

 

 

    

 

 

 

Weighted average number of basic shares outstanding during the period

     28,915         30,304   

Dilutive effect of SSARs/stock options and RSUs/restricted shares after application of treasury stock method

     927         798   
  

 

 

    

 

 

 

Weighted average number of diluted shares outstanding during the period

     29,842         31,102   
  

 

 

    

 

 

 

Basic earnings per share

   $ 1.46       $ 0.95   
  

 

 

    

 

 

 

Diluted earnings per share

   $ 1.41       $ 0.92   
  

 

 

    

 

 

 

On August 29, 2011, we entered into an accelerated share repurchase agreement with Bank of America N.A. (BofA), under which we paid $209.7 million for 4 million shares of our common stock. Our effective per share purchase price will be based generally on the average of the daily volume weighted average prices per share of our common stock, less a discount, calculated during an averaging period which began August 25, 2011 and will last up to eleven months.

The total amount ultimately paid for these shares will not be known until the averaging period ends and a final settlement occurs. Upon final settlement, we will either receive a settlement amount or be required to remit a settlement amount, in cash or common stock, at our option. We recorded the $209.7 million payment to BofA as treasury stock in our consolidated balance sheet as of September 30, 2011.

Shares outstanding during the three months ended September 30, 2011, reflect the repurchase of shares of CACI’s common stock under the accelerated share repurchase agreement described above and other share repurchase programs approved by the Company’s Board of Directors. Shares outstanding during the three months ended September 30, 2010 reflect the repurchase of shares under other approved share repurchase programs.

 

9. Income Taxes

The Company is subject to income taxes in the U.S. and various state and foreign jurisdictions. Tax statutes and regulations within each jurisdiction are subject to interpretation and require the application of significant judgment. The Company is currently under examination by three state jurisdictions and one foreign jurisdiction for years ended June 30, 2003 through June 30, 2009. The Company does not expect the resolution of these examinations to have a material impact on its results of operations, financial condition or cash flows.

The Company’s total liability for unrecognized tax benefits as of September 30, 2011 and June 30, 2011 was $6.1 million and $5.9 million, respectively. Of the $6.1 million unrecognized tax benefit at September 30, 2011, $2.2 million, if recognized, would impact the Company’s effective tax rate.

 

10. Business Segment Information

The Company reports operating results and financial data in two segments: domestic operations and international operations. Domestic operations provide professional services and information technology solutions to its customers. Its customers are primarily U.S. federal government agencies. The Company does not measure revenue or profit by its

 

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CACI INTERNATIONAL INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

 

major service offerings, either for internal management or external financial reporting purposes, as it would be impractical to do so. In many cases more than one offering is provided under a single contract, to a single customer, or by a single employee or group of employees, and segregating the costs of the service offerings in situations for which it is not required would be difficult and costly. The Company also serves customers in the commercial and state and local government sectors and, from time to time, serves a number of agencies of foreign governments. The Company places employees in locations around the world in support of its clients. International operations offer services to both commercial and non-U.S. government customers primarily through the Company’s data information and knowledge management services, business systems solutions, and enterprise IT and network services lines of business. The Company evaluates the performance of its operating segments based on net income. Summarized financial information concerning the Company’s reportable segments is as follows (in thousands):

 

     Domestic      International      Total  

Three Months Ended September 30, 2011

        

Revenue from external customers

   $ 896,721       $ 27,674       $ 924,395   

Net income attributable to CACI

     40,395         1,745         42,140   

Three Months Ended September 30, 2010

        

Revenue from external customers

   $ 805,735       $ 28,236       $ 833,971   

Net income attributable to CACI

     27,105         1,550         28,655   

 

11. Fair Value of Financial Instruments

ASC 820, Fair Value Measurements and Disclosures , defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability between market participants in an orderly transaction. The market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability is known as the principal market. When no principal market exists, the most advantageous market is used. This is the market in which the reporting entity would sell the asset or transfer the liability with the price that maximizes the amount that would be received or minimizes the amount that would be paid. Fair value is based on assumptions market participants would make in pricing the asset or liability. Generally, fair value is based on observable quoted market prices or derived from observable market data when such market prices or data are available. When such prices or inputs are not available, the reporting entity should use valuation models.

The Company’s financial assets and liabilities recorded at fair value on a recurring basis are categorized based on the priority of the inputs used to measure fair value. The inputs used in measuring fair value are categorized into three levels, as follows:

 

   

Level 1 Inputs – unadjusted quoted prices in active markets for identical assets or liabilities.

 

   

Level 2 Inputs – unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

 

   

Level 3 Inputs – amounts derived from valuation models in which unobservable inputs reflect the reporting entity’s own assumptions about the assumptions of market participants that would be used in pricing the asset or liability.

 

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CACI INTERNATIONAL INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

 

As of September 30, 2011, the Company’s financial instruments measured at fair value included non-corporate owned life insurance (COLI) money market investments and mutual funds held in the Company’s supplemental retirement savings plan (the Supplemental Savings Plan) and contingent consideration in connection with business combinations completed during the year ended June 30, 2010. The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2011 and June 30, 2011, and the level they fall within the fair value hierarchy (in thousands):

 

Description of Financial Instrument

   Financial Statement
Classification
   Fair Value
Hierarchy
   September 30,
2011
     June 30,
2011
 
         Fair Value  

Non-COLI assets held in connection with the Supplemental Savings Plan

   Long-term asset    Level 1    $ 6,738       $ 6,514   

Contingent Consideration

   Current liability    Level 3    $ 20,174       $ 20,839   

Changes in the fair value of the assets held in connection with the Supplemental Savings Plan are recorded in indirect costs and selling expenses.

All three acquisitions completed during the year ended June 30, 2010 contained provisions requiring that the Company pay contingent consideration in the event the acquired businesses achieved certain specified earnings results during the two year periods subsequent to each acquisition. The Company determined the fair value of the contingent consideration as of each acquisition date using a valuation model which included the evaluation of all possible outcomes and the application of an appropriate discount rate. At the end of each reporting period, the fair value of the contingent consideration is remeasured and any changes are recorded in indirect costs and selling expenses. During the three months ended September 30, 2011, this remeasurement resulted in a $0.7 million decrease in the liability recorded. For the three months ended September 30, 2010, this remeasurement resulted in a $1.7 million increase in the liability recorded.

 

12. Subsequent Events

Acquisitions

On October 3, 2011, the Company acquired 100 percent of the outstanding membership units of Advanced Programs Group, LLC (APG), a provider of Oracle e-Business services in the federal market. The purchase consideration to acquire APG was approximately $66.0 million.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

There are statements made herein which do not address historical facts and, therefore, could be interpreted to be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. The factors that could cause actual results to differ materially from those anticipated include, but are not limited to, the following: regional and national economic conditions in the United States and globally (including the impact of uncertainty regarding U.S. debt limits and actions taken related thereto); terrorist activities or war; changes in interest rates; currency fluctuations; significant fluctuations in the equity markets; changes in our effective tax rate; valuation of contingent consideration in connection with business combinations; failure to achieve contract awards in connection with re-competes for present business and/or competition for new business; the risks and uncertainties associated with client interest in and purchases of new products and/or services; continued funding of U.S. government or other public sector projects, based on a change in spending patterns, or in the event of a priority need for funds, such as homeland security, the war on terrorism, or an economic stimulus package; government contract procurement (such as bid protest, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks; the results of government investigations into allegations of improper actions related to the provision of services in support of U.S. military operations in Iraq; the results of government audits and reviews conducted by the Defense Contract Audit Agency, the Defense Contract Management Agency, or other governmental entities with cognizant oversight; individual business decisions of our clients; paradigm shifts in technology; competitive factors such as pricing pressures and/or competition to hire and retain employees (particularly those with security clearances); market speculation regarding our continued independence; material changes in laws or regulations applicable to our businesses, particularly in connection with (i) government contracts for services, (ii) outsourcing of activities that have been performed by the government, and (iii) competition for task orders under Government Wide Acquisition Contracts (GWACs) and/or schedule contracts with the General Services Administration; the ability to successfully integrate the operations of our recent and any future acquisitions; our own ability to achieve the objectives of near term or long range business plans; and other risks described in our Securities and Exchange Commission filings.

Overview

The following discussion and analysis of our financial condition and results of operations is provided to enhance the understanding of, and should be read together with, our unaudited condensed consolidated financial statements and the notes to those statements that appear elsewhere in this Quarterly Report on Form 10-Q.

We are a leading provider of professional services and information technology solutions to the U.S. government. We derived 93.8 percent and 95.1 percent of our revenue during the three months ended September 30, 2011 and 2010, respectively, from contracts with U.S. government agencies. These were derived through both prime and subcontractor relationships. We also provide services to state and local governments and commercial customers. Our major service offerings are as follows:

 

 

Enterprise IT and network services – We support our clients’ critical networked operational missions by providing tailored end-to-end enterprise information technology services for the design, establishment, management, security and operations of client infrastructure. Our operational, analytic, consultancy and transformational services effectively use industry best practices and standards to enable and optimize the full life cycle of the networked environment, improve customer service, improve efficiency, and reduce total cost and complexity of large, geographically dispersed operations.

 

 

Data, information and knowledge management services – We deliver a full spectrum of solutions and services that automate the knowledge management life cycle from data capture through information analysis and understanding. We provide commercially-based products, custom solutions development, and operations and maintenance services that facilitate information sharing. Our information technology solutions are complemented by a suite of analytical expertise support offerings for our U.S. government Intelligence Community, Department of Defense (DoD), Department of Justice (DoJ), and Homeland Security customers.

 

 

Business system solutions – We provide solutions that address the full spectrum of requirements in the financial, procurement, human resources, healthcare, supply chain and other business domains. Our solutions employ an integrated cross-functional approach to maximize investments in existing systems, while leveraging the potential of advanced technologies to implement new, high payback solutions. Our offerings include services, consulting and software development/integration that support the full life cycle of commercial technology implementation from blueprint through application sustainment.

 

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Logistics and material readiness services – We offer a full suite of solutions and service offerings that plan for, implement, and control the efficient and effective flow and storage of goods, services, and information in support of U.S. government agencies. We develop and manage logistics information systems, specialized simulation and modeling toolsets, and provide logistics engineering services. Our operational capabilities span the supply chain, including advance logistics planning, demand forecasting, total asset visibility (including the use of Radio Frequency Identification technology), and life cycle support for weapons systems. Our logistics services are a critical enabler in support of defense readiness and combat sustainability objectives.

 

 

C4ISR solutions and services – We provide rapid response services in support of military missions in a coordinated and controlled operational setting. We support the military efforts to ensure delivery and sustainment of integrated, enterprise-wide, Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) programs. We integrate sensors, mission applications, and systems that connect with DoD data networks.

 

 

Cyber security – Our solutions and services support the full life cycle of preparing for, protecting against, detecting, reacting to and actively responding to the full range of cyber threats. We achieve this through comprehensive and consistently managed risk-based, cost-effective controls and measures to protect information and systems operated by the U.S. government. We proactively support the operational use and availability/reliability of information.

 

 

Integrated security and intelligence solutions – The United States, its partners and its allies around the world face state, non-state, and transnational adversaries that do not recognize political boundaries; do not recognize international law; and will seek, through asymmetric and irregular means, ways to strike at seams in our national security. We assist clients in developing integrated solutions that close gaps between security, intelligence, and law enforcement in order to address complex threats to our national security.

 

 

Program management and system engineering and technical assistance (SETA) services – We support U.S. government Program Executive Offices and Program Management Offices via subject matter experts and comprehensive technical management processes that optimize program resources. This includes translating operational requirements into configured systems, integrating technical inputs, characterizing and managing risk, transitioning technology into program efforts, and verifying that designs meet operational needs, through the application of internationally recognized and accepted standards. Additionally, we provide SETA and advisory and assistance services that include contract and acquisition management, operations support, architecture and system engineering services, project and portfolio management, strategy and policy support, and complex trade analyses.

We face some uncertainties due to the current business environment and we continue to experience a number of protests of major contract awards. In addition, many of our federal government contracts require us to have security clearances and employ personnel with specific levels of education and work experience. Depending on the level of clearance, security clearances can be difficult and time-consuming to obtain and competition for skilled personnel in the information technology services industry is intense. In addition, a shift of expenditures away from programs that we support could cause federal government agencies to reduce their purchases under contracts, to exercise their right to terminate contracts at any time without penalty, or to decide not to exercise options to renew contracts. Among the factors that could affect our federal government contracting business are the continued demand and priority of funding for combat operations in Afghanistan, an increase in set-asides for small businesses, and budgetary priorities limiting or delaying federal government spending in general.

Our operations are also affected by local, national and worldwide economic conditions. The consequences of a prolonged global economic downturn or a continued weak U.S. economy and large federal budget deficits may include a lower level of government spending in the areas in which we provide our services. In addition, future gains or losses on assets invested in corporate-owned life insurance policies could cause fluctuations in our income tax expense.

 

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Results of Operations for the Three Months Ended September 30, 2011 and 2010

Revenue . The table below sets forth revenue by customer type with related percentages of total revenue for the three months ended September 30, 2011 and 2010, respectively:

 

     Three Months Ended September 30,     Change  
(dollars in thousands)    2011     2010     $     %  

Department of Defense (DoD)

   $ 733,267         79.3   $ 656,525         78.7   $ 76,742        11.7

Federal civilian agencies

     134,009         14.5        136,549         16.4        (2,540     (1.9

Commercial and other

     52,982         5.7        37,878         4.5        15,104        39.9   

State and local governments

     4,137         0.5        3,019         0.4        1,118        37.0   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

Total

   $ 924,395         100.0   $ 833,971         100.0   $ 90,424        10.8
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

For the three months ended September 30, 2011, total revenue increased by 10.8 percent, or $90.4 million, over the same period a year ago. This increase in revenue resulted primarily from organic growth. In addition, during the three months ended September 30, 2011 we had a commercial product sale that generated $12.0 million in revenue.

Revenue generated from the date a business is acquired through the first anniversary of that date is considered acquired revenue. Our acquired revenue in the three months ended September 30, 2011 was $21.5 million.

Revenue from existing operations increased by 8.3 percent, or $68.9 million, for the three months ended September 30, 2011. This organic growth was driven by both an increase in our direct labor and an increase in other direct costs (ODCs). ODCs include work which we subcontract to third parties to meet customer needs.

DoD revenue increased 11.7 percent, or $76.7 million, for the three months ended September 30, 2011, as compared to the same period a year ago. The aforementioned acquisitions accounted for 20.4 percent of this total growth, contributing $15.7 million. DoD revenue includes services provided to the U.S. Army, our largest customer, where our services focus on supporting readiness, tactical military intelligence, and communications of the commands in Iraq and Afghanistan. DoD revenue also includes work with the U.S. Navy and other DoD agencies across all of our major service offerings.

Revenue from federal civilian agencies decreased 1.9 percent, or $2.5 million, for the three months ended September 30, 2011, as compared to the same period a year ago. This decrease is primarily attributable to revenue earned on projects that were substantially completed prior to June 30, 2011 and the timing of fees on certain contracts where we recognize a portion of the fees upon customer approval. Approximately 18.6 percent of the federal civilian agency revenue for the quarter was derived from DoJ, for whom we provide litigation support services. Revenue from DoJ was $24.9 million and $23.8 million for the three months ended September 30, 2011 and 2010, respectively.

Commercial and other revenue increased 39.9 percent, or $15.1 million, during the three months ended September 30, 2011, as compared to the same period a year ago. Commercial revenue is derived from both international and domestic operations. International operations accounted for 52.2 percent, or $27.7 million, of total commercial revenue, while domestic operations accounted for 47.8 percent, or $25.3 million. Acquisitions accounted for 23.9 percent of this growth or $3.6 million. The remaining increase in commercial revenue came from a single product sale.

Revenue from state and local governments increased by 37.0 percent, or $1.1 million, for the three months ended September 30, 2011, as compared to the same period a year ago. Revenue from state and local governments represented less than one percent of our total revenue for both the three months ended September 30, 2011 and 2010.

 

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Income from Operations . The following table sets forth the relative percentage that certain items of expense and earnings bore to revenue for the three months ended September 30, 2011 and 2010, respectively.

 

     Dollar Amount     Percentage of Revenue              
     Three Months Ended
September 30,
    Three Months Ended
September 30,
    Change  
(dollars in thousands)    2011      2010     2011     2010     $     %  

Revenue

   $ 924,395       $ 833,971        100.0     100.0   $ 90,424        10.8
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

Costs of revenue

             

Direct costs

     634,931         589,470        68.7        70.7        45,461        7.7   

Indirect costs and selling expenses

     200,282         179,322        21.7        21.5        20,960        11.7   

Depreciation and amortization

     13,528         13,082        1.4        1.6        446        3.4   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

Total costs of revenue

     848,741         781,874        91.8        93.8        66,867        8.6   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

Income from operations

     75,654         52,097        8.2        6.2        23,557        45.2   

Interest expense and other, net

     5,600         5,833        0.6        0.7        (233     (4.0
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

Income before income taxes

     70,054         46,264        7.6        5.5        23,790        51.4   

Income taxes

     27,941         17,439        3.0        2.1        10,502        60.2   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

Net income before noncontrolling interest in earnings of joint venture

     42,113         28,825        4.6        3.4        13,288        46.1   

Noncontrolling interest in earnings of joint venture

     27         (170     —          —          197     
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

Net income attributable to CACI

   $ 42,140       $ 28,655        4.6     3.4   $ 13,485        47.1
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

Income from operations for the three months ended September 30, 2011 was $75.7 million. This was an increase of $23.6 million, or 45.2 percent, from income from operations of $52.1 million for the three months ended September 30, 2011. Our operating margin of 8.2 percent for the period ended September 30, 2011 increased from 6.2% during the period ended September 30, 2010. This growth in operating margin was driven primarily by our growth in direct billable labor. In addition, during the three months ended September 30, 2011 we had a single commercial product sale that generated $6.1 million in net income.

As a percentage of revenue, direct costs were 68.7 percent and 70.7 percent for the three months ended September 30, 2011 and 2010, respectively. Direct costs include direct labor and ODCs, which include, among other costs, subcontractor labor and materials along with equipment purchases and travel expenses. ODCs, which are common in our industry, typically are incurred in response to specific client tasks and may vary from period to period. The single largest component of direct costs, direct labor, was $236.8 million and $211.1 million for the three months ended September 30, 2011 and 2010, respectively. This increase in direct labor was attributable to both acquisitions and organic growth. ODCs were $398.2 million and $378.4 million during the three months ended September 30, 2011 and 2010, respectively. This increase was primarily driven by an increased volume of tasking across C4ISR services within our Strategic Services Sourcing contract along with acquisitions completed subsequent to September 30, 2010.

Indirect costs and selling expenses include fringe benefits, marketing and bid and proposal costs, indirect labor, and other discretionary expenses. As a percentage of revenue, indirect costs and selling expenses were 21.7 percent and 21.5 percent for the three months ended September 30, 2011 and 2010, respectively. Total stock compensation expense, a component of indirect costs, was $3.2 million and $4.9 million for the three months ended September 30, 2011 and 2010, respectively. The decrease in stock compensation expense is primarily attributable to increased forfeitures and performance RSUs issued in FY09 and FY10 requiring stock compensation expense to be recorded on an accelerated basis.

Depreciation and amortization expense was $13.5 million and $13.1 million for the three months ended September 30, 2011 and 2010, respectively. The increase of $0.4 million, or 3.4 percent, was primarily attributable to depreciation and amortization of both tangible and intangible assets.

Interest expense and other, net decreased $0.2 million, or 4.0 percent, during the three months ended September 30, 2011 as compared to the same period a year ago. The decrease was primarily attributable to a decrease in amortization of deferred financing costs.

 

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The effective tax rate was 39.9 percent and 37.8 percent during the three months ended September 30, 2011 and 2010, respectively. The tax rate reported during the first quarter of FY2012 was negatively impacted by non-deductible losses on assets invested in corporate-owned life insurance (COLI) policies to date while the tax rate reported in the first quarter of FY2011 was favorably impacted by non-taxable gains on assets invested in COLI policies. If gains or losses on these investments throughout the rest of the current fiscal year vary from our estimates, our effective tax rate will fluctuate in future quarters of the year ending June 30, 2012.

Liquidity and Capital Resources

Historically, our positive cash flow from operations and our available credit facilities have provided adequate liquidity and working capital to fund our operational needs.

The Credit Facility is a $750.0 million credit facility, which includes a $600.0 million revolving credit facility (the Revolving Facility), and a $150.0 million term loan (the Term Loan). The Revolving Facility has subfacilities of $50.0 million for same-day swing line borrowings and $25.0 million for stand-by letters of credit. At September 30, 2011, $144.4 million was outstanding under the Term Loan, $125.0 million was outstanding under the Revolving Facility and we had no letters of credit outstanding. The Credit Facility has an accordion feature that will allow the facility to be expanded by an additional $200.0 million with applicable lender approvals.

The Term Loan is a five-year secured facility under which principal payments are due in quarterly installments of $1.9 million through December 31, 2013 and $3.8 million from January 1, 2014 through September 30, 2015, with the balance due in full on October 21, 2015.

The interest rates applicable to loans under the Credit Facility are floating interest rates that, at our option, equal a base rate or a Eurodollar rate plus, in each case, an applicable margin based upon our consolidated total leverage ratio.

The Credit Facility requires us to comply with certain financial covenants, including a maximum senior secured leverage ratio, a maximum total leverage ratio and a minimum fixed charge coverage ratio. The Credit Facility also includes customary negative covenants restricting or limiting our ability to guarantee or incur additional indebtedness, grant liens or other security interests to third parties, make loans or investments, transfer assets, declare dividends or redeem or repurchase capital stock or make other distributions, prepay subordinated indebtedness and engage in mergers, acquisitions or other business combinations, in each case except as expressly permitted under the Credit Facility. Since the inception of the Credit Facility, we have been in compliance with all of the financial covenants. A majority of our assets serve as collateral under the Credit Facility.

Effective May 16, 2007, we issued the Notes, which mature on May 1, 2014, in a private placement pursuant to Rule 144A of the Securities Act of 1933. The Notes are subordinate to our senior secured debt, and interest on the Notes is payable on May 1 and November 1 of each year.

Holders may convert their notes at a conversion rate of 18.2989 shares of CACI common stock for each $1,000 of note principal (an initial conversion price of $54.65 per share) under the following circumstances: 1) if the last reported sale price of CACI stock is greater than or equal to 130 percent of the conversion price for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter; 2) during the five consecutive business day period immediately after any ten consecutive trading day period (the note measurement period) in which the average of the trading price per $1,000 principal amount of convertible note was equal to or less than 97 percent of the average product of the closing price of a share of our common stock and the conversion rate of each date during the note measurement period; 3) upon the occurrence of certain corporate events, as defined; or 4) during the last three-month period prior to maturity. We are required to satisfy 100 percent of the principal amount of these notes solely in cash, with any amounts above the principal amount to be satisfied in common stock. As of September 30, 2011, none of the conditions permitting conversion of the Notes had been satisfied.

In the event of a fundamental change, as defined, holders may require us to repurchase the Notes at a price equal to the principal amount plus any accrued interest. Also, if certain fundamental changes occur prior to maturity, we will in certain circumstances increase the conversion rate by a number of additional shares of common stock or, in lieu thereof, we may in certain circumstances elect to adjust the conversion rate and related conversion obligation so that these notes are convertible into shares of the acquiring or surviving company. We are not permitted to redeem the Notes.

In connection with the issuance of the Notes, we purchased in a private transaction at a cost of $84.4 million call options (the Call Options) to purchase approximately 5.5 million shares of our common stock at a price equal to the conversion price of $54.65 per share. The Call Options allow us to receive shares of our common stock from the counterparties equal to the

 

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amount of common stock related to the excess conversion value that we would pay the holders of the Notes upon conversion. In addition, we sold warrants (the Warrants) to issue approximately 5.5 million shares of CACI common stock at an exercise price of $68.31 per share. The proceeds from the sale of the Warrants totaled $56.5 million. On a combined basis, the Call Options and the Warrants are intended to reduce the potential dilution of CACI’s common stock in the event that the Notes are converted by effectively increasing the conversion price of these notes from $54.65 to $68.31. The Call Options and the Warrants are separate and legally distinct instruments that bind us and the counterparties and have no binding effect on the holders of the Notes.

Cash and cash equivalents were $28.6 million and $164.8 million as of September 30, 2011 and June 30, 2011, respectively. The decrease in cash and cash equivalents was primarily attributable to cash used for acquisitions, and the repurchase of company stock pursuant to an accelerated share repurchase plan. Working capital was $225.0 million and $334.9 million as of September 30, 2011 and June 30, 2011, respectively. Our operating cash flow was $56.1 million for the three months ended September 30, 2011 compared to $7.7 million for the same period a year ago. The current year increase in operating cash flow results from profits earned during the current year and our strong operational processes. Days-sales outstanding improved to 58 at September 30, 2011, compared to 59 for the same period a year ago.

We used cash in investing activities of $108.2 million and $8.5 million for the three months ended September 30, 2011 and 2010, respectively. This increase for the three months ended September 30, 2011 as compared to the same period a year ago was primarily attributable to the two acquisitions completed during the quarter.

Cash used in financing activities was $83.7 million in the three months ended September 30, 2011 as compared to $144.5 million in the three months ended September 30, 2010. During the three months ended September 30, 2010, we prepaid $128.2 million of our Term Loan and used $16.8 million to repurchase 0.4 million shares of our common stock. As of September 30, 2011 we had net borrowings of $125.0 million under the Revolving Facility. These borrowings along with our available cash balance funded our repurchase of four million shares of company stock for $209.7 million.

Cash flows from financing activities include proceeds received from the exercise of stock options and purchases of stock under our Employee Stock Purchase Plan totaling $2.7 million and $1.8 million during the three months ended September 30, 2011 and 2010, respectively.

We believe that the combination of internally generated funds, available bank borrowings and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund on-going operations, customary capital expenditures, debt service obligations, and other working capital requirements over the next twelve months. Over the longer term, our ability to generate sufficient cash flows from operations necessary to fulfill the obligations under the Credit Facility and the Notes will depend on our future financial performance which will be affected by many factors outside of our control, including worldwide economic and financial market conditions.

Off-Balance Sheet Arrangements and Contractual Obligations

We use off-balance sheet arrangements to finance the lease of operating facilities. We have financed the use of all of our current office and warehouse facilities through operating leases. Operating leases are also used to finance the use of computers, servers, phone systems, and to a lesser extent, other fixed assets, such as furnishings, that are obtained in connection with business acquisitions. We generally assume the lease rights and obligations of companies acquired in business combinations and continue financing equipment under operating leases until the end of the lease term following the acquisition date. We generally do not finance capital expenditures with operating leases, but instead finance such purchases with available cash balances. For additional information regarding our operating lease commitments, see Note 14 in the Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended June 30, 2011. The Credit Facility provides for stand-by letters of credit aggregating up to $25.0 million that reduce the funds available under the Revolving Facility when issued. As of September 30, 2011, we had no outstanding letters of credit. We have no other material off-balance sheet financing arrangements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The interest rates on both the Term Loan and the Revolving Facility are affected by changes in market interest rates. We have the ability to manage these fluctuations in part through interest rate hedging alternatives in the form of interest rate swaps and caps. We have maintained hedging relationships with various counterparties in recent years, including two interest rate swap agreements that expired in December 2009. These agreements allowed us to exchange a portion of our variable rate debt for fixed rate debt. We have not entered into new interest rate swaps at this time due to the relatively favorable interest rate environment. Accordingly, all outstanding balances under our Term Loan, and any amounts that may be borrowed under our Revolving Facility, are subject to interest rate fluctuations. With every one percent fluctuation in the applicable interest rates, interest expense on our variable rate debt for the three months ended September 30, 2011 would have fluctuated by approximately $0.5 million.

 

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Approximately 3.0 percent and 3.4 percent of our total revenue in three months ended September 30, 2011 and 2010, respectively, was derived from our international operations in the U.K. Our practice in the U.K. is to negotiate contracts in the same currency in which the predominant expenses are incurred, thereby mitigating the exposure to foreign currency exchange fluctuations. It is not possible to accomplish this in all cases; thus, there is some risk that profits will be affected by foreign currency exchange fluctuations. As of September 30, 2011, we held a combination of euros and pounds sterling in the U.K. equivalent to approximately $17.8 million. This allows us to better utilize our cash resources on behalf of our foreign subsidiaries, thereby mitigating foreign currency conversion risks.

 

Item 4. Controls and Procedures

As of the end of the three month period covered by this report, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. The effectiveness of a system of disclosure controls and procedures is subject to various inherent limitations, including cost limitation, judgments used in decision making, assumptions about the likelihood of future events, the soundness of internal controls, and fraud. Due to such inherent limitations, there can be only reasonable, and not absolute, assurance that any system of disclosure controls and procedures will be successful in preventing all errors or fraud, or in making all material information known in a timely manner to appropriate levels of management.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level at September 30, 2011.

The Company reports that no changes in its internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended September 30, 2011.

 

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PART II

OTHER INFORMATION

 

Item 1. Legal Proceedings

Saleh, et al. v. Titan Corp., 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, 2011 for the most recently filed information concerning the suit filed in the United States District Court for the Southern District of California, and transferred to the United States District Court for the District of Columbia, against CACI International Inc, CACI, INC.–FEDERAL, CACI N.V., and former CACI employee Stephen A. Stefanowicz, among other defendants, seeking a permanent injunction, declaratory relief, compensatory and punitive damages, treble damages and attorney’s fees arising out of defendants’ alleged acts against plaintiffs, who were detainees at Abu Ghraib prison and elsewhere in Iraq.

Since the filing of Registrant’s report described above, on August 31, 2011, the Clerk of the District Court entered final judgment in favor of CACI.

Al Shimari, et al. v. L-3 Services, Inc. et al.

Reference is made to Part I, Item 3, Legal Proceeding in the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2011 for the most recently filed information concerning the suit filed in the United States District Court for the Southern District of Ohio. The lawsuit names CACI International Inc, CACI Premier Technology, Inc. and former CACI employee Timothy Dugan as Defendants, along with L-3 Services, Inc. Plaintiffs seek, inter alia, compensatory damages, punitive damages, and attorney’s fees.

Since the filing of Registrant’s report described above, on September 21, 2011, the United States Court of Appeals for the Fourth Circuit reversed the decision of the United States District Court for the Eastern District of Virginia and remanded the action with instructions to dismiss the action. On October 5, 2011, the plaintiffs filed a petition for a rehearing en banc, which CACI has opposed. The plaintiffs’ petition remains pending.

Abbas, et al. v. L-3 Services, Inc. et al.

Reference is made to Part I, Item 3, Legal Proceeding in the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2011 for the most recently filed information concerning the suit filed in the United States District Court for the District of Columbia. The lawsuit names CACI Premier Technology, Inc. and L-3 Services, Inc. as defendants. Plaintiffs seek, inter alia, compensatory damages, punitive damages and costs.

Since the filing of the Registrant’s report described above, on September 19, 2011, the plaintiffs voluntarily dismissed the action without prejudice.

We are vigorously defending the above-described legal proceedings, and, based on our present knowledge of the facts, believe the lawsuits are completely without merit.

 

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Item 1A. Risk Factors

Reference is made to Part I, Item 1A, Risk Factors, in the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2011. There have been no material changes from the risk factors described in that report.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides certain information with respect to our purchases of shares of CACI International Inc’s common stock:

 

Period

   Total Number
of Shares
Purchased(1)
     Average Price
Paid Per Share
     Total Number of Shares
Purchased As Part of
Publicly Announced
Programs(1)
     Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs(1)
 

July 2011

     —         $ —           —           —     

August 2011

     4,000,000         52.42         4,000,000         —     

September 2011

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     4,000,000       $ 52.42         4,000,000         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) In May 2011, our Board of Directors authorized a stock repurchase program under which we could repurchase up to 2.5 million shares of our common stock, where the total expenditure for the purchase of shares under this repurchase program did not exceed $175.0 million. In August 2011, our Board of Directors rescinded the May 2011 authorization and adopted a resolution authorizing the repurchase of up to 4.0 million shares of the Company’s common stock. On August 29, 2011, the Company announced its agreement with Bank of America, N.A. to repurchase 4.0 million shares of its common stock under an accelerated share repurchase program.

 

Item 3. Defaults Upon Senior Securities

None

 

Item 4. [Removed and Reserved]

None

 

Item 5. Other Information

None

 

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Item 6. Exhibits

 

               Incorporated by Reference

Exhibit
No.

  

Description

  

Filed with
this Form
10-Q

  

Form

  

Filing Date

  

Exhibit
No.

    3.1    Certificate of Incorporation of CACI International Inc, as amended to date       10-K    September 13, 2006    3.1
    3.2    Amended and Restated By-laws of CACI International Inc, amended as of March 5, 2008       8-K    March 7, 2008    3.1
    4.1    Clause FOURTH of CACI International Inc’s Certificate of Incorporation incorporated above as Exhibit 3.1       10-K    September 13, 2006    4.1
    4.2    The Rights Agreement dated July 11, 2003 between CACI International Inc and American Stock Transfer & Trust Company       8-K    July 11, 2003    4.1
  10.1    Severance Compensation Agreement between CACI International Inc and Daniel D. Allen dated October 3, 2011    X         
  10.2    Confirmation from Bank of America, N.A. to CACI International Inc dated August 24, 2011, regarding Issuer Forward Repurchase Transaction*    X         
  31.1    Section 302 Certification Paul M. Cofoni    X         
  31.2    Section 302 Certification Thomas A. Mutryn    X         
  32.1    Section 906 Certification Paul M. Cofoni    X         
  32.2    Section 906 Certification Thomas A. Mutryn    X         
101    The following materials from the CACI International Inc Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Cash Flows (iv) Consolidated Statements of Comprehensive Income, and (v) Notes to Condensed Consolidated Financial Statements.**            

 

* Portions of this Exhibit have been omitted pursuant to a request for confidential treatment.
** Submitted electronically herewith.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  CACI International Inc
 

 

  Registrant
Date: November 7, 2011   By:  

/s/ Paul M. Cofoni

    Paul M. Cofoni
    President,
    Chief Executive Officer and Director
    (Principal Executive Officer)
Date: November 7, 2011   By:  

/s/ Thomas A. Mutryn

    Thomas A. Mutryn
    Executive Vice President,
    Chief Financial Officer and Treasurer
    (Principal Financial Officer)
Date: November 7, 2011   By:  

/s/ Carol P. Hanna

    Carol P. Hanna
    Senior Vice President, Corporate Controller and Chief Accounting Officer
    (Principal Accounting Officer)

 

27

Exhibit 10.1

SEVERANCE COMPENSATION AGREEMENT

THIS AGREEMENT is made as of the 3 rd day of October, 2011, between CACI International Inc, a Delaware corporation headquartered at 1100 North Glebe Road, Arlington, Virginia, and Daniel D. Allen (the “Executive”) residing at 20250 Island View Court, Potomac Falls, VA 20165.

W I T N E S S E T H:

WHEREAS, the Executive is employed by CACI International Inc and/or one or more of its wholly-owned subsidiaries (“the Company”), and the services of the Executive, his managerial experience, and his knowledge of the affairs of the Company are of great value to the Company; and

WHEREAS, the Board of Directors of CACI International Inc has determined that it is in the best interests of the Company and the Executive to enter into this agreement setting forth the obligations of the Company and the Executive upon the Executive’s termination of employment.

NOW, THEREFORE, in consideration of the mutual promises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. At-Will Employment . The Company and the Executive agree that the Executive is employed on an at-will basis. Unless otherwise specifically provided in a written agreement signed by both the Company and the Executive, the parties understand that the Executive is employed for no fixed term or period, that either the Company or the Executive may terminate the Executive’s employment with the Company at any time with or without a reason, and that this Agreement creates no contract of employment between the Company and the Executive.

 

2. Term . The term of this Agreement shall be for the period from October 3, 2011 through June 30, 2012, and shall automatically renew itself from year-to-year thereafter, unless the Company provides to the Executive written notice of the Company’s intent to amend the Company’s severance policy with respect to its senior executives and to apply the amended policy to the Executive. In the event the Company provides such notice to the Executive, this Agreement shall expire by its terms at the end of the full term year that begins on the next July 1 following the date such notice is received by the Executive.

 

3.

Death or Disability . The Executive’s employment shall terminate (without severance) automatically upon the death of the Executive. The Company shall have the right to terminate the Executive’s employment without payment of severance on thirty (30) days written notice in the event of the Executive’s Disability. For purposes of this Agreement, “Disability” shall mean (i) if the Executive is subject to a legal decree of incompetency (the date of such decree being deemed the date on which such disability occurred), (ii) the

 

Page 1


  written determination by a physician selected by the Company that, because of a medically determinable disease, injury or other physical or mental disability, the Executive is unable substantially to perform all of the services required of his position with the Company, and that such disability has lasted for the immediately preceding ninety (90) days and is, as of the date of determination, reasonably expected to last an additional ninety (90) days or longer after the date of determination, in each case based upon medically available reliable information, or (iii) Executive’s qualifying for benefits under the Company’s long-term disability coverage, if any. The Company’s right to terminate the Executive’s employment without payment of severance under this Paragraph shall not limit or reduce in anyway the Executive’s right to receive benefits under any disability insurance or plan maintained by the Company for the benefit of the Executive.

 

4. Voluntary Separation (Other Than For Good Reason) . The Executive shall have the right to terminate his employment with the Company on thirty (30) days written notice to the Company at any time on written notice to the Company indicating the Executive’s desire to retire or to resign from the Company’s employment.

 

5. Termination For Cause .

 

  (a) The Board of Directors of the Company may terminate this Agreement for “Cause.” For the purposes of this Agreement “Cause” shall be defined as:

 

  (i) Gross negligence, willful misconduct or willful malfeasance by the Executive in connection with the performance of any material duty for the Company;

 

  (ii) The Executive’s continued failure, after being provided notice specifying the nature of such failure, to comply with a direction of the President and Chief Executive Officer or the Board with respect to an act, omission or failure to act on the part of the Executive;

 

  (iii) A breach of the Executive’s fiduciary obligations to the Company;

 

  (iv) A violation by the Executive of any legal requirement or obligation relating to the Company that the Board of Directors, acting in good faith, reasonably determines is likely to have a material adverse impact on the Company (unless the Executive had a reasonable good faith belief that the act, omission or failure to act in question was not a violation of such legal requirement or obligation);

 

  (v) The Executive’s indictment for, conviction of, or plea of guilty or nolo contendere to a felony involving theft, embezzlement, fraud, dishonesty, or any similar offense;

 

  (vi) Theft, embezzlement or fraud by the Executive in connection with the performance of his duties for the Company;

 

Page 2


  (vii) A material failure to comply with any lawful direction of the Executive Chairman, Chief Executive Officer or Board of Directors of the Company;

 

  (viii) A breach of any material obligation imposed on the Executive by this Agreement or the Employee Agreement dated January 5, 2005;

 

  (ix) A material violation of the Company’s Code of Ethics and Business Conduct Standard or any other published Company policy;

 

  (x) Any act, omission or failure to act on the part of the Executive (including an act, omission or failure to act prior to the commencement of the Executive’s employment with the Company) that results in the inability of the Executive to secure or maintain security clearances necessary or appropriate to Executive’s position with the Company and the conduct of the Company’s business; and

 

  (xi) The misappropriation of any material business opportunity.

“Cause” shall be based only on material matters and not on matters of minor importance.

 

  (b) The Executive may be terminated for Cause only in accordance with a resolution duly adopted by an absolute majority of the entire number of the non-management directors of the Company finding that, in the good faith opinion of the Board of Directors, the Executive engaged in conduct justifying a termination for Cause as that term is defined above and specifying the particulars of the conduct motivating the Board’s decision to terminate the Executive for Cause. Such resolution may be adopted by the Board only after the Board has provided to the Executive (i) advance written notice of a meeting of the Board called for the purpose of determining Cause for termination of the Executive, (ii) a statement setting forth the alleged grounds for termination, and (iii) an opportunity for the Executive, and, if the Executive so desires, the Executive’s counsel to be heard before the Board. Prior to such meeting of the Board, the Executive shall be given a reasonable opportunity to cure any act or omission which the Board, in its reasonable judgment, determines is susceptible of cure. The action required to cure the act or omission, and the time period in which cure must be effected, shall be communicated to the Executive in writing.

 

6. Termination Payment (Not In Connection With A Change In Control) . If, prior to, or more than twelve (12) months following a Change in Control Date (as defined in Paragraph 7 below), the Executive’s employment is terminated by the Company for any reason other than those set forth in Paragraphs 3, 4 or 5 above, or the Executive resigns for “Good Reason” (as defined in Paragraph 7 below) within six (6) months following the initial existence of such Good Reason, then the following provisions shall apply:

 

  (a) The Company shall pay to the Executive an amount equal to twelve (12) months of the Executive’s “Current Base Salary.” For this purpose, the Executive’s “Current Base Salary” shall be deemed to be the amount of base salary being paid to the Executive at the time of termination.

 

Page 3


  (b) The Executive shall continue to participate in, and be covered under, the Company’s health care coverage for a period of six (6) months following the Executive’s termination of employment (the “Medical Benefits Continuation Period”) on the same basis as other senior executives of the Company. Notwithstanding the foregoing, if the Executive accepts post-employment with another entity that provides health care coverage during the Medical Benefits Continuation Period, the Company shall not provide the Executive with health care coverage under this Paragraph (but the Executive shall retain any rights to continuation coverage that he may have under applicable law). For purposes of the Executive’s continuation coverage rights under Section 601 et. seq. of the Employee Retirement Income Security Act, Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”), or any similar state or local law, the continuation period shall be deemed to have commenced as of the beginning of the period for which the Company has agreed to continue benefits following the Executive’s termination of employment. To the extent that the coverage provided to the Executive is taxable for federal income tax purposes, then the Executive shall pay the full cost of coverage during the Medical Benefits Continuation Period and the Company shall pay the Executive an amount equal to (i) the cost of such coverage, less any amount that would have been payable by the Executive if he were actively employed by the Company, plus (ii) an additional amount designed to cover all estimated applicable local, state and federal income and payroll taxes imposed on the Executive with respect to such additional payment.

 

  (c) Before the Executive may resign for Good Reason, the Executive must provide the Company at least thirty (30) days’ prior written notice of his intent to resign for Good Reason and specify in reasonable detail the Good Reason upon which such resignation is based. The Company shall have a reasonable opportunity to cure any such Good Reason (that is susceptible of cure) within thirty (30) days after the Company’s receipt of such notice. The Executive’s delay in providing such notice shall not be deemed to be a waiver of any such Good Reason, nor does the failure to resign for one Good Reason prevent any later Good Reason resignation for a similar or different reason.

 

7. Termination Payment (In Connection With A Change In Control) .

 

  (a) For purposes of this Agreement:

 

  (i) A “Change of Control” occurs whenever there is a change in control of the Company within the meaning of the CACI International, Inc 2006 Stock Incentive Plan.

 

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  (i) The “Change of Control Date” shall be the date on which a Change of Control event is legally consummated and legally binding upon the parties.

 

  (ii) Prior to a Change in Control Date, “Good Reason” for the Executive’s resignation shall mean the occurrence of any of the following circumstances without the Executive’s prior written consent:

 

  (1) A material reduction in the Executive’s total compensation and benefit opportunity (other than a reduction made by the Board, acting in good faith, based upon the performance of the Executive, or to align the compensation and benefits of the Executive with that of comparable executives, based on market data); or

 

  (2) A substantial adverse alteration in the conditions of the Executive’s employment.

 

  (iii) Following a Change in Control Date, “Good Reason” for the Executive’s resignation shall also include the occurrence of any of the following circumstances without the Executive’s prior written consent:

 

  (1) A substantial adverse alteration in the nature or status of the Executive’s position or responsibilities from those in effect on the day before the Change in Control Date; or

 

  (2) A change in the geographic location of the Executive’s job more than fifty (50) miles from the place at which such job was based on the day before the Change in Control Date.

 

  (b) If, within twelve (12) months of the Change in Control Date, the Executive resigns for Good Reason, or the Executive’s employment is terminated for any reason other than the reasons set forth in Paragraphs 3, 4 or 5 above, then the Company shall pay to the Executive the following amounts:

 

  (i) An amount equal to eighteen (18) months of the Executive’s Current Base Salary (as defined in Paragraph 6 above).

 

  (ii)

A prorated portion of the cash incentive (including, for this purpose, the annual component and any partial quarterly component) otherwise payable to the Executive for the fiscal year of termination under the annual incentive or bonus plan maintained by the Company for its senior executives (the “Annual Incentive Plan”) (or any replacement bonus or incentive arrangement covering the Executive). Such amount shall be determined based on Company performance consistent with the cash incentive paid under the Annual Incentive Plan to comparable active executives in good standing who meet expectations and remained on the

 

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  payroll and eligible for a bonus. The amount payable shall be determined by multiplying the cash incentive that the Executive would have received had his employment not terminated, by a fraction, the numerator of which is the number of months in the fiscal year (in the case of the annual component) or fiscal quarter (in the case of the quarterly component) during which Executive was employed (including the month in which the termination occurs) and the denominator of which is twelve (in the case of the annual component) or three (in the case of the quarterly component).

 

  (iii) A cash lump sum amount equal to the average cash incentive (including, for this purpose, any quarterly and annual components) actually paid to the Executive under the Annual Incentive Plan for up to the five (5) fiscal years immediately preceding the year of termination in which the Executive was in the position that existed on the day before the Change in Control Date.

 

  (c) In addition, the Executive shall continue to participate in, and be covered under, the Company’s health care coverage in accordance with (and subject to the limitations imposed by) Paragraph 6(b).

 

  (d) The ability of the Executive to resign for Good Reason shall be subject to the notice and opportunity to cure provisions contained in Paragraph 6(c).

 

8. Payment of Other Compensation . In addition to any payment due the Executive pursuant to Paragraphs 6 or 7 above, at the time of termination of the Executive’s employment, the Executive shall be paid all other compensation and benefits that may be due or provided to the Executive in accordance with the terms and conditions of any applicable plan, policy or arrangement governing the payment of such compensation or benefits.

 

9. Timing of Payment .

 

  (a) The compensation payable in accordance with Paragraph 6(a) or 7(b)(i) and (iii) shall be paid in a lump sum within thirty days following the Executive’s termination of employment.

 

  (b)

The compensation payable in accordance with Paragraph 7(b)(ii) shall be paid in a lump sum on the date on which the Company pays bonuses for the fiscal year of termination to actively employed senior executives; provided, however, in no event shall such payment be made more than 2  1 / 2 months following the close of the fiscal year of the Company to which such bonus relates.

 

  (c)

Any additional amount payable in accordance with Paragraph 6(b) shall be paid to the Executive in cash (less required withholding), on a monthly basis, at the same time that the underlying medical coverage benefit is provided to the Executive. In determining the amount of such payment the Executive shall be deemed to pay

 

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  federal income tax at the highest marginal rate applicable to individuals in the calendar year in which the payment is made and to pay state and local income taxes at the highest effective rate in the state or locality in which such payment is taxable. All payments made under Paragraph 6(b) shall be made in accordance with the provisions of Treas. Reg. §1.409A-3(i)(1).

 

10. Employee Agreement . This agreement incorporates by reference the Employee Agreement between the Executive and the Company, a copy of which is attached hereto. The payments and benefits provided to the executive under this Agreement are further consideration for the Executive’s compliance with each and every term of the Employee Agreement and such compliance is a condition precedent to the Executive’s entitlement to any payment or benefit hereunder. The covenants, restrictions and terms of this Agreement are intended to supplement, and do not supersede, the covenants, restrictions and terms of the Employee Agreement. To the extent any covenant, restriction or term of this Agreement is more restrictive than a similar covenant, restriction or term of the Employee Agreement, the covenant, restriction or term of this Agreement shall control. To the extent any covenant, restriction or term of the Employee Agreement is more restrictive than a similar covenant, restriction or term of this Agreement, the covenant, restriction or term of the Employee Agreement shall control.

 

11. Non-Competition . The terms of this Paragraph are intended to supplement (and are in addition to) the non-compete provisions contained in the Employee Agreement.

 

  (a) The Executive understands and agrees that this non-compete restriction is aimed at protecting CACI’s relationship with its current and prospective clients, as such clients are specifically named in written proposals, contracts and task orders (collectively, these are referred to as “CACI Clients”). The Executive understands and agrees that the definition of CACI Clients as used in this Agreement is intended to cover the specific program offices or activities which CACI pursues, or for which CACI performs work, within large governmental departments, such as the Department of the Navy or the Army, not the greater department in general.

 

  (b) The Executive agrees that CACI may reasonably protect its relationships with CACI Clients by prohibiting the Executive from competing with CACI for work with: (i) any CACI Clients while the Executive is employed by CACI, and (ii) certain CACI Clients for a reasonable period of time following termination of the Executive’s CACI employment.

 

  (c) During the Executive’s employment with CACI, the Executive will not directly or indirectly sell, market or otherwise provide goods or services to any CACI Clients in competition with CACI.

 

  (d)

For a period of eighteen (18) months following termination of the Executive’s employment if in connection with a Change In Control, or twelve (12) months if not in connection with a Change in Control, the Executive will not directly or

 

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  indirectly provide goods or services to CACI Clients when such goods or services are in competition with those goods or services (i) provided within the year prior to termination of the Executive’s employment under contract or task order, or (ii) offered pursuant to a formal or informal proposal, to CACI Clients by any CACI organizational unit for which the Executive worked or for which the Executive had responsibility within one (1) year prior to the termination of the Executive’s employment.

 

  (e) During the Executive’s employment with CACI and for a period of eighteen (18) months following termination of the Executive’s employment if in connection with a Change In Control, or twelve (12) months if not in connection with a Change in Control, the Executive will not participate in competition for the award of any contract or task order for which any CACI organizational unit for which the Executive worked or for which the Executive had responsibility within one (1) year prior to the end of the Executive’s CACI employment is competing.

 

  (f) During the Executive’s employment with CACI and for a period of eighteen (18) months following termination of the Executive’s employment if in connection with a Change In Control, or twelve (12) months if not in connection with a Change in Control, the Executive will not, directly or indirectly interfere with, disparage or damage, or attempt to interfere with, disparage or damage, the Company’s reputation, or any relationship between the Company or its affiliated or subsidiary companies and any other entity.

 

  (g) The Executive agrees not to hire or solicit for hiring, directly or indirectly any person now or hereafter employed by, or providing services as a subcontractor or consultant to, CACI and its affiliate companies, for a period of eighteen (18) months following termination of the Executive’s employment if in connection with a Change In Control, or twelve (12) months if not in connection with a Change in Control.

 

  (h) The Executive understands and agrees that the payments made under this Agreement constitute additional consideration for the Executive’s performance of the covenants set forth in this Paragraph 11 and in the Employee Agreement.

 

12. No Disparaging Comments . During his period of employment and at all times thereafter, the Executive shall refrain from making any disparaging remarks about the businesses, services and products of the Company, its subsidiaries and affiliates, as well as their respective officers, directors, executives, managers, stockholders, employees, agents, or representatives.

 

13. Release . In consideration of any payment made to the Executive pursuant to this Agreement (and as a condition precedent to the Executive’s right to any such payment), the Executive agrees to release the Company and its subsidiaries, affiliates, officers, directors, stockholders, employees, agents, representatives, and successors from and against any and all claims that the Executive may have against any such person or entity relating to the Executive’s employment by the Company and the termination thereof, such release to be in form and substance reasonably satisfactory to the Company.

 

Page 8


14. Assignment . By reason of the special and unique nature of the obligations hereunder, it is agreed that neither party hereto may assign any interests, rights or duties which the party may have in this Agreement without the prior written consent of the other party, except that upon any “Change in Control,” this Agreement shall inure to the benefit of and be binding upon the Executive and the purchasing, surviving or resulting entity, company or corporation in the same manner and to the same extent as though such entity, company or corporation were the Company.

 

15. Dispute Resolution .

 

  (a) Except as provided in subsection (b) below, the Company and the Executive agree that any controversy or claim arising out of or relating to this Agreement, or its breach by the Company shall be resolved by arbitration. This arbitration shall be held in Arlington, Virginia in accordance with the model employment arbitration procedures of the American Arbitration Association. Judgment upon award rendered by the arbitrator shall be binding upon both parties and may be entered and enforced in any court of competent jurisdiction.

 

  (b) The Executive acknowledges and agrees that notwithstanding subsection (a) above, if the Executive breaches any of the provisions of Paragraph 11 hereof, the Company will suffer immediate and irreparable harm for which monetary damages alone will not be a sufficient remedy, and that, in addition to all other remedies that the Company may have, the Company shall be entitled to seek injunctive relief, specific performance or any other form of equitable relief to remedy a breach or threatened breach of Paragraph 11 by the Executive and to enforce the provisions of this Agreement. The existence of this right shall not preclude or otherwise limit the applicability or exercise of any other rights and remedies which the Company may have at law or in equity.

 

16. Amendments. No provision of this Agreement may be amended, modified, waived or discharged unless such amendment, waiver, modification or discharge is agreed to in a writing signed by the Executive and the Company. No waiver by either party of any breach or failure to comply with any condition or provision of this Agreement by the other party at any time shall be deemed a waiver of any other breach or failure to comply with the conditions or provisions of this Agreement. No agreements or representations, oral or otherwise, expressed or implied, concerning the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

 

17.

Entire Agreement . This Agreement constitutes the entire understanding and agreement between the Company and the Executive with regard to all matters herein. It supersedes and replaces any and all prior agreements written or oral between the Company and the Executive concerning the severance benefits that may be payable to the Executive.

 

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  However, this Agreement does not affect or supersede the terms of the Employee Agreement dated January 5, 2005 or the Indemnification Agreement between the Company and the Executive to be entered into within thirty (30) days, which shall remain in full force and effect.

 

18. Compliance with Section 409A . Paragraphs 6(a) and 7(b)(i), (ii) and (iii) of this Agreement are intended to constitute a separation pay arrangement that does not provide for the deferral of compensation subject to Section 409A of the Code (under the short-term deferral exception contained in Treas. Reg. §1.409A-1(b)(4)) and, if any provision of Paragraphs 6 and 7(b)(i), (ii) or (iii) are subject to more than one interpretation or construction, such ambiguity shall be resolved in favor of that interpretation or construction which is consistent with such provisions not being subject to the provisions of Section 409A. The provisions of Paragraphs 6(b) are intended to comply with the provisions of Section 409A of the Code (to the extent applicable) and, to the extent that Section 409A applies to Paragraph 6(b) (or any provision of this Agreement) and such provision is subject to more than one interpretation or construction, such ambiguity shall be resolved in favor of that interpretation or construction which is consistent with the provision complying with the provisions of Section 409A of the Code (including, but not limited to the requirement that any payment made on account of the Executive’s separation from service (within the meaning of Section 409A(a)(2)(A)(i) of the Code and the regulations issued thereunder) (“Separation from Service”), shall not be made earlier than the first business day of the seventh month following the Executive’s Separation from Service, or if earlier the date of death of the Executive. Any payment that is delayed in accordance with the foregoing sentence shall be made on the first business day following the expiration of such six (6) month period.

 

19. Tax Consequences of Payments . The Executive understands and agrees that the Company makes no representations as to the tax consequences of any compensation or benefits provided hereunder (including, without limitation, under Section 409A of the Code, if applicable). Executive is solely responsible for any and all income, excise or other taxes imposed on Executive with respect to any and all compensation or other benefits provided to Executive.

 

20. Governing Law . This Agreement shall be construed and enforced in accordance with the laws of the Commonwealth of Virginia without regard to its principles of conflicts of laws.

 

Page 10


21. Notices . For purposes of this Agreement, notices and communications hereunder shall be in writing and shall be deemed properly given and effective when received, if sent by facsimile or telecopy, or by postage prepaid by registered or certified mail, return receipt requested, or by other delivery service which provides evidence of delivery, as follows:

If to the Company:

CACI International Inc

1100 N. Glebe Road

16th Floor

Arlington, Virginia 22201

Attention: Chief Legal Officer

If to the Executive:

Daniel D. Allen

20250 Island View Court

Potomac Falls, VA 20165

or such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

22. Enforceability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

23. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

24. Initials . Each page of this Agreement shall be initialed and dated by the Executive and the official signing for and on behalf of the Company.

IN WITNESS WHEREOF the parties have executed this Agreement to be effective the day and year first above written.

 

CACI International Inc     Daniel D. Allen
By:  

/s/ Jerry A. Reece, Jr.

   

/s/ Daniel D. Allen

 

Page 11

Exhibit 10.2

 

     August 24, 2011
To:   

CACI International Inc

1100 North Glebe Road

Arlington, VA 22201

   Attn: Thomas A. Mutryn, CFO and Treasurer
   Telephone: (703) 841-4488
From    Bank of America, N.A.
   c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
   Bank of America Tower at One Bryant Park
   New York, NY 10036
   Attn: John Servidio
   Telephone: 646-855-6770
   Facsimile: 704-208-2869
Re:    Issuer Forward Repurchase Transaction
   (BofAML Reference Number: 118359165)

Ladies and Gentlemen:

The purpose of this communication (this “ Confirmation ”) is to confirm the terms and conditions of the Transaction entered into between Bank of America, N.A. (“ BofA ”) and CACI International Inc (“ Counterparty ”) on the Trade Date specified below (the “ Transaction ”). The terms of the Transaction shall be set forth in this Confirmation. This Confirmation shall constitute a “Confirmation” as referred to in the ISDA Master Agreement specified below.

1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (including the Annex thereto) (the “ 2006 Definitions ”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “ Equity Definitions ”, and together with the 2006 Definitions, the “ Definitions ”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ ISDA ”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern.

This Confirmation evidences a complete and binding agreement between BofA and Counterparty as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “ Agreement ”) in the form of the 2002 ISDA Master Agreement (the “ ISDA Form ”) as if BofA and Counterparty had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation; provided, however, that no transaction now existing or hereafter entered into between BofA and Counterparty shall constitute a Specified Transaction for purposes of the Agreement). The Transaction shall be the only Transaction under the Agreement and shall not constitute a “Transaction” (as such term is defined in the ISDA Form) under any other agreement, including any ISDA Master Agreement currently existing or entered into from time to time between BofA and Counterparty

All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. The Transaction is a Share Forward Transaction within the meaning set forth in the Equity Definitions.

2. The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:

Trade Date:

   August 24, 2011

 

Pursuant to Rule 24b-2 under the Securities and Exchange Act of 1934, as amended, portions of Annex B to this Confirmation have been omitted from the version filed, pursuant to Item 601(b)(10) of Regulation S-K, as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011.


Seller:

   BofA

Buyer:

   Counterparty

Shares:

   The common stock of Counterparty, par value USD 0.10 per share (Ticker Symbol: “CACI”)

Prepayment:

   Applicable

Prepayment Amount:

   As provided in Annex B to this Confirmation.

Prepayment Date:

   As provided in Annex B of this Confirmation.

Exchange:

   New York Stock Exchange

Related Exchange(s):

   All Exchanges

Calculation Agent:

   Bank of America, N.A., which shall make all calculations, adjustments and determinations required pursuant to this Transaction in accordance with Section 1.40 of the Equity Definitions. The Calculation Agent shall provide, upon request of Counterparty, a schedule of all calculations, adjustments and determinations in reasonable detail in a spreadsheet or other customary numerical format and in a timely manner, it being understood that the Calculation Agent shall not be obligated to disclose any proprietary models used by it for any such calculation, adjustment or determination or any information that the Calculation Agent is required by applicable law, regulation or contract to keep confidential.
Valuation Terms:   

Averaging Dates:

   Each of the consecutive Exchange Business Days commencing on, and including, the Initial Averaging Date and ending on, and including, the Final Averaging Date.

Initial Averaging Date:

   As provided in Annex B of this Confirmation.

Final Averaging Date:

   The Scheduled Final Averaging Date; provided that BofA shall have the right, in its absolute discretion, at any time to accelerate the Final Averaging Date to any date that is on or after the Scheduled Earliest Acceleration Date by written notice to Counterparty no later than 9:00 P.M., New York City time, on the Exchange Business Day immediately following the accelerated Final Averaging Date.

Scheduled Final Averaging Date:

   As provided in Annex B to this Confirmation.

Scheduled Earliest Acceleration Date:

   As provided in Annex B to this Confirmation.

Valuation Date:

   The Final Averaging Date.

Averaging Date Disruption:

   Modified Postponement, provided that notwithstanding anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Averaging Date, the Calculation Agent may, if appropriate in light of market conditions, regulatory considerations or otherwise, take any or all of the following actions: (i) postpone the Scheduled Final Averaging Date in accordance with Modified Postponement (as modified herein) and/or (ii) determine that such Averaging Date is a Disrupted Day only in part, in which case the Calculation Agent shall (x) determine the VWAP Price for such Disrupted Day based on Rule 10b-18 eligible transactions in the

 

2


     Shares on such Disrupted Day taking into account the nature and duration of such
Market Disruption Event and (y) determine the Settlement Price based on an
appropriately weighted average instead of the arithmetic average described under
“Settlement Price” below. Any Exchange Business Day on which, as of the date hereof,
the Exchange is scheduled to close prior to its normal close of trading shall be deemed
not to be an Exchange Business Day; if a closure of the Exchange prior to its normal
close of trading on any Exchange Business Day is scheduled following the date hereof,
then such Exchange Business Day shall be deemed to be a Disrupted Day in full. Section
6.6(a) of the Equity Definitions is hereby amended by replacing the word “shall” in the
fifth line thereof with the word “may,” and by deleting clause (i) thereof, and Section
6.7(c)(iii)(A) of the Equity Definitions is hereby amended by replacing the word “shall”
in the sixth and eighth line thereof with the word “may.”

Market Disruption Events:

   Section 6.3(a) of the Equity Definitions is hereby amended (A) by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be” in clause (ii) thereof, and (B) by replacing the words “or (iii) an Early Closure.” therein with “(iii) an Early Closure, or (iv) a Regulatory Disruption.”
   Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.

Regulatory Disruption:

   Any event that BofA, in its reasonable discretion, based on the advice of counsel, determines makes it appropriate with regard to any legal, regulatory or self-regulatory requirements or related policies and procedures for BofA to refrain from or decrease any market activity in connection with the Transaction. BofA shall notify Counterparty as soon as reasonably practicable that a Regulatory Disruption has occurred and the Averaging Dates affected by it.
Settlement Terms:   

Initial Shares:

   As provided in Annex B to this Confirmation.

Initial Share Delivery:

   On the Initial Share Delivery Date, BofA shall deliver to Counterparty the Initial Shares.

Initial Share Delivery Date:

   As provided in Annex B of this Confirmation.

Initial Price:

   As provided in Annex B of this Confirmation.

Settlement Date:

   The date that falls three Exchange Business Days following the Valuation Date.

Settlement:

   On the Settlement Date (x) if the True-Up Amount is a negative number, Counterparty shall make a cash payment to BofA in an amount equal to the absolute value of the True-Up Amount, subject to the provisions opposite the caption “Counterparty Share Settlement” below, (y) if the True-Up Amount is a positive number, BofA shall make a cash payment to Counterparty in an amount equal to the True-Up Amount, subject to the provisions opposite the caption “BofA Share Settlement” below, and (z) if the True-Up Amount is zero, neither Counterparty nor BofA shall be required to make any payment or delivery to the other.

 

3


Counterparty Share Settlement:

   If the True-Up Amount is a negative number, Counterparty may elect, in lieu of making
a cash payment to BofA in an amount equal to the True-Up Amount for the “Net Share
Settlement Provisions” set forth in paragraphs 1 through 4 of Annex A to apply to the
entire True-Up Amount, so long as Counterparty notifies BofA in writing of such
election on or prior to the Settlement Notice Date.

BofA Share Settlement:

   If the True-Up Amount is a positive number, Counterparty may elect to receive from BofA, in lieu of any cash payment from BofA equal to the True-Up Amount, a number of Shares equal to the True-Up Share Amount, so long as:
  

(x)     Counterparty makes the “Election Representations” below in writing to BofA as of the date of, and in connection with, such election by Counterparty to receive Shares in settlement of the Transaction;

  

(y)     at the time of such election, Counterparty provides to BofA a written statement that the representations contained in Section 7(a)(i) and Section 7(a)(vii) of this Confirmation are true and correct as of (and as if made on) the date of such election; and

  

(z)     Counterparty notifies BofA in writing of such election on or prior to the Settlement Notice Date.

   If Counterparty validly so elects to receive from BofA, in lieu of any cash payment from BofA equal to the True-Up Amount, a number of Shares equal to the True-Up Share Amount, such Shares shall be delivered to Counterparty by BofA on the Exchange Business Day immediately following the last True-Up Valuation Date.

Election Representations:

   As of the date of an election by Counterparty to receive a Share delivery from BofA pursuant to the provisions opposite the caption “BofA Share Settlement” above, (x) Counterparty represents to BofA that it has all necessary corporate power and authority to make such election and to perform its obligations upon such election, and (y) Counterparty represents to BofA that such election, and any payment or receipt of delivery in connection therewith, have been duly authorized by all necessary corporate action on Counterparty’s part.

Settlement Notice Date:

   The date that falls two Exchange Business Days following the Valuation Date.

True-Up Amount:

   An amount equal to (i) the Prepayment Amount minus (ii) the Initial Shares multiplied by the Settlement Price.

True-Up Share Amount:

   True-Up Amount divided by the True-Up Valuation Price.

True-Up Valuation Price:

   The arithmetic average of the VWAP Prices for all True-Up Valuation Dates plus USD 0.02, and subject to Averaging Date Disruption, determined as if each True-Up Valuation Date were an Averaging Date (with Averaging Date Disruption applying as if the last True-Up Valuation Date were the Final Averaging Date and the True-Up Valuation Price were the Settlement Price).

True-Up Valuation Dates:

   Up to five (5) Scheduled Trading Days beginning on the Settlement Date; provided that BofA shall take into account market conditions at the time (including, but not limited to, liquidity) and any applicable regulatory considerations in a good faith commercially reasonable manner. BofA may, based on the advice of counsel, extend the dates noted above in a commercially reasonable manner.

 

4


Settlement Price:

   The arithmetic average of the VWAP Prices for all Averaging Dates minus the Discount.

VWAP Price:

   For any Averaging Date, the Rule 10b-18 dollar volume weighted average price per Share for such day based on transactions executed during such day, as reported on Bloomberg Page “CACI.Q <Equity> AQR SEC” (or any successor thereto) or, in the event such price is not so reported on such day for any reason or is manifestly incorrect, as reasonably determined by the Calculation Agent using a volume weighted method.

Discount:

   As provided in Annex B to this Confirmation.

Excess Dividend Amount:

   For the avoidance of doubt, all references to the Excess Dividend Amount in Section 9.2(a)(iii) of the Equity Definitions shall be deleted.

Other Applicable Provisions:

   To the extent either party is obligated to deliver Shares hereunder, the provisions of the last sentence of Section 9.2 and Sections 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the Issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
Dividends:   

Dividend:

   Any dividend or distribution on the Shares other than any dividend or distribution of the type described in Sections 11.2(e)(i), 11.2(e)(ii)(A) or 11.2(e)(ii)(B) of the Equity Definitions.
Share Adjustments:   

Method of Adjustment:

   Calculation Agent Adjustment; provided that the declaration or payment of Dividends shall not be a Potential Adjustment Event.
   It shall constitute an additional Potential Adjustment Event if the Scheduled Final Averaging Date is postponed pursuant to “Averaging Date Disruption” above, in which case the Calculation Agent may, in its commercially reasonable discretion, adjust any relevant terms of the Transaction as the Calculation Agent determines appropriate to account for the economic effect on the Transaction of such postponement.
Extraordinary Events:     

Consequences of Merger Events:

  

(a) Share-for-Share:

   Modified Calculation Agent Adjustment

(b) Share-for-Other:

   Cancellation and Payment

(c) Share-for-Combined:

   Component Adjustment

Tender Offer:

   Applicable

Consequences of Tender Offers:

  

(a) Share-for-Share:

   Modified Calculation Agent Adjustment

 

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(b) Share-for-Other:

   Modified Calculation Agent Adjustment

(c) Share-for-Combined:

   Modified Calculation Agent Adjustment

Composition of Combined Consideration:

   Not Applicable

Consequences of Announcement Events:

   Modified Calculation Agent Adjustment as set forth in Section 12.3(d) of the Equity Definitions; provided that references to “Tender Offer” shall be replaced by references to “Announcement Event” and references to “Tender Offer Date” shall be replaced by references to “Announcement Date.” An Announcement Event shall be an “Extraordinary Event” for purposes of the Equity Definitions, to which Article 12 of the Equity Definitions is applicable.

Announcement Event:

   The occurrence of an Announcement Date in respect of a potential Acquisition Transaction (as defined in Section 9 below).

Announcement Date:

   The date of the first public announcement in relation to an Acquisition Transaction, or any publicly announced change or amendment to the announcement giving rise to an Announcement Date.

Provisions applicable to Merger Events and Tender Offers:

   The consequences set forth opposite “Consequences of Merger Events” and “Consequences of Tender Offers” above shall apply regardless of whether a particular Merger Event or Tender Offer relates to an Announcement Date for which an adjustment has been made pursuant to Consequences of Announcement Events, without duplication of any such adjustment.

New Shares:

   In the definition of New Shares in Section 12.1(i) of the Equity Definitions, the text in clause (i) thereof shall be deleted in its entirety (including the word “and” following such clause (i)) and replaced with “publicly quoted, traded or listed on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors)”.

Nationalization, Insolvency or Delisting:

   Cancellation and Payment (Calculation Agent Determination); provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Market or The NASDAQ Global Select Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.

Additional Disruption Events:

  

Change in Law:

   Applicable; provided that (i) any determination as to whether (A) the adoption of or any change in any applicable law or regulation (including, for the avoidance of doubt andwithout limitation, (x) any tax law or (y) adoption or promulgation of new regulations authorized or mandated by existing statute) or (B) the promulgation of or any change in the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law

 

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     or regulation (including any action taken by a taxing authority), in each case, constitutes
a “Change in Law” shall be made without regard to Section 739 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 or any similar legal certainty
provision in any legislation enacted, or rule or regulation promulgated, on or after the
Trade Date, and (ii) Section 12.9(a)(ii) of the Equity Definitions is hereby amended by
replacing the parenthetical beginning after the word “regulation” in the second line
thereof the words “(including, for the avoidance of doubt and without limitation, (x) any
tax law or (y) adoption or promulgation of new regulations authorized or mandated by
existing statute)”.

Failure to Deliver:

   Applicable

Insolvency Filing:

   Applicable

Hedging Disruption:

   Applicable

Increased Cost of Hedging:

   Applicable

Loss of Stock Borrow:

   Applicable

Maximum Stock Loan Rate:

   As provided in Annex B to this Confirmation.

Increased Cost of Stock Borrow:

   Applicable

Initial Stock Loan Rate:

   As provided in Annex B to this Confirmation.

Hedging Party:

   For all applicable Potential Adjustment Events and Extraordinary Events, BofA

Determining Party:

   For all Extraordinary Events, BofA

Non-Reliance:

   Applicable

Agreements and Acknowledgments Regarding Hedging Activities:

   Applicable

Additional Acknowledgments:

   Applicable

3. Account Details :

 

(a) Account for delivery of Shares to Counterparty:

   To be provided upon request.

(b) Account for payments to Counterparty:

   To be provided upon request.

(c) Account for payments to BofA:

  

Bank of America

New York, NY

SWIFT: BOFAUS3N

Bank Routing: 026-009-593

Account Name: Bank of America

Account No.: 0012334-61892

4. Offices :

(a) The Office of Counterparty for the Transaction is: Counterparty is not a Multibranch Party

(b) The Office of BofA for the Transaction is:

Bank of America, N.A.

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

 

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Bank of America Tower at One Bryant Park

New York, NY 10036

5. Notices : For purposes of this Confirmation:

(a) Address for notices or communications to Counterparty:

CACI International Inc

1100 North Glebe Road

Arlington, VA 22201

Attn: Thomas A. Mutryn, CFO and Treasurer

Telephone: (703) 841-4488

(b) Address for notices or communications to BofA:

Bank of America, N.A.

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

Bank of America Tower at One Bryant Park

New York, NY 10036

Attn: John Servidio

Telephone: 646-855-7127

Facsimile: 704-208-2869

6. Additional Provisions Relating to Transactions in the Shares .

(a) Counterparty acknowledges and agrees that the Initial Shares delivered on the Initial Share Delivery Date may be sold short to Counterparty. Counterparty further acknowledges and agrees that BofA may, during (i) the period from the date hereof to the Valuation Date and (ii) the period from and including the first True-Up Valuation Date to and including the last True-Up Valuation Date, if any, (together, the “ Relevant Period ”), purchase Shares in connection with the Transaction, which Shares may be used to cover all or a portion of such short sale or may be delivered to Counterparty. Such purchases will be conducted independently of Counterparty. The timing of such purchases by BofA, the number of Shares purchased by BofA on any day, the price paid per Share pursuant to such purchases and the manner in which such purchases are made, including without limitation whether such purchases are made on any securities exchange or privately, shall be within the absolute discretion of BofA. It is the intent of the parties that the Transaction comply with the requirements of Rule 10b5-1(c)(1)(i)(B) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and the parties agree that this Confirmation shall be interpreted to comply with the requirements of Rule 10b5-1(c), and Counterparty shall not take any action that results in the Transaction not so complying with such requirements. Without limiting the generality of the preceding sentence, Counterparty acknowledges and agrees that (A) Counterparty does not have, and shall not attempt to exercise, any influence over how, when or whether BofA effects any purchases of Shares in connection with the Transaction, (B) during the period beginning on (but excluding) the date of this Confirmation and ending on (and including) the last day of the Relevant Period, neither Counterparty nor its officers or employees shall, directly or indirectly, communicate any information regarding Counterparty or the Shares to any employee of BofA or its Affiliates responsible for trading the Shares in connection with the transactions contemplated hereby, (C) Counterparty is entering into the Transaction in good faith and not as part of a plan or scheme to evade compliance with federal securities laws including, without limitation, Rule 10b-5 promulgated under the Exchange Act and (D) Counterparty will not alter or deviate from this Confirmation or enter into or alter a corresponding hedging transaction with respect to the Shares. Counterparty also acknowledges and agrees that any amendment, modification, waiver or termination of this Confirmation must be effected in accordance with the requirements for the amendment or termination of a “plan” as defined in Rule 10b5-1(c) under the Exchange Act. Without limiting the generality of the foregoing, any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 under the Exchange Act, and no such amendment, modification or waiver shall be made at any time at which Counterparty or any officer or director of Counterparty is aware of any material nonpublic information regarding Counterparty or the Shares.

(b) Counterparty agrees that neither Counterparty nor any of its Affiliates or agents shall take any action that would cause Regulation M to be applicable to any purchases of Shares, or any security for which the Shares are a reference security (as defined in Regulation M), by Counterparty or any of its affiliated purchasers (as defined in Regulation M) during the Relevant Period.

 

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(c) Counterparty shall, at least one day prior to the first day of the Relevant Period, notify BofA of the total number of Shares purchased in Rule 10b-18 purchases of blocks pursuant to the once-a-week block exception contained in Rule 10b-18(b)(4) by or for Counterparty or any of its affiliated purchasers during each of the four calendar weeks preceding the first day of the Relevant Period and during the calendar week in which the first day of the Relevant Period occurs (“Rule 10b-18 purchase”, “blocks” and “affiliated purchaser” each being used as defined in Rule 10b-18), which notice shall be substantially in the form set forth as Appendix A hereto.

(d) During the Relevant Period, Counterparty shall (i) notify BofA prior to the opening of trading in the Shares on any day on which Counterparty makes, or expects to be made, any public announcement (as defined in Rule 165(f) under the Securities Act of 1933, as amended (the “ Securities Act ”) of any merger, acquisition, or similar transaction involving a recapitalization relating to Counterparty (other than any such transaction in which the consideration consists solely of cash and there is no valuation period), (ii) promptly notify BofA following any such announcement that such announcement has been made, and (iii) promptly deliver to BofA following the making of any such announcement a certificate indicating (A) Counterparty’s average daily Rule 10b-18 purchases (as defined in Rule 10b-18) during the three full calendar months preceding the date of the announcement of such transaction and (B) Counterparty’s block purchases (as defined in Rule 10b-18) effected pursuant to paragraph (b)(4) of Rule 10b-18 during the three full calendar months preceding the date of the announcement of such transaction. In addition, Counterparty shall promptly notify BofA of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders. Counterparty acknowledges that any such public announcement may result in a Regulatory Disruption and may cause the Relevant Period to be suspended. Accordingly, Counterparty acknowledges that its actions in relation to any such announcement or transaction must comply with the standards set forth in Section 6(a) above.

(e) Without the prior written consent of BofA (such consent not to be unreasonably withheld, conditioned or delayed), Counterparty shall not, and shall cause its Affiliates and affiliated purchasers (each as defined in Rule 10b-18) not to, directly or indirectly (including, without limitation, by means of a cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable for Shares during the Relevant Period.

(f) Notwithstanding anything to the contrary in this Confirmation, the Agreement or the Definitions, under no circumstances will the Payment Obligation (as defined in Section 10(a) of this Confirmation) payable in connection with any early termination or cancellation of the Transaction (including termination or cancellation due to an Extraordinary Event or an Additional Termination Event) include the effects of any Dividends declared or paid by Counterparty.

7. Representations, Warranties and Agreements .

(a) In addition to the representations, warranties and agreements in the Agreement and those contained elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with, BofA as follows:

(i) As of the Trade Date, and as of the date of any election by Counterparty of the Share Termination Alternative under (and as defined in) Section 10(a) below, (A) none of Counterparty and its officers and directors is aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Exchange Act when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.

(ii) Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that BofA is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260,

 

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Earnings Per Share , ASC Topic 815, Derivatives and Hedging , or ASC Topic 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity (or any successor issue statements) or under FASB’s Liabilities & Equity Project.

(iii) Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

(iv) Prior to the Trade Date, Counterparty shall deliver to BofA a resolution of Counterparty’s board of directors authorizing the Transaction and such other certificate or certificates as BofA shall reasonably request. Prior to any election by Counterparty to (x) make a cash payment to BofA pursuant to the provisions opposite the caption “Counterparty Cash Settlement” above or (y) receive a Share delivery from BofA pursuant to the provisions opposite the caption “BofA Share Settlement” above, Counterparty shall deliver to BofA a resolution of Counterparty’s board of directors authorizing such election (and related payment or receipt of delivery, as the case may be) and such other certificate or certificates as BofA shall reasonably request. Counterparty has publicly disclosed on May 2, 2011 its intention to institute a program for the acquisition of Shares.

(v) Counterparty is not entering into this Confirmation to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act, and will not engage in any other securities or derivative transaction to such ends.

(vi) Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

(vii) On the Trade Date, the Prepayment Date, the Initial Share Delivery Date and the Settlement Date, Counterparty is not, or will not be, “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “ Bankruptcy Code ”)) and Counterparty would be able to purchase the Shares hereunder in compliance with the corporate laws of the jurisdiction of its incorporation.

(viii) No state or local (including non-U.S. jurisdictions) law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of BofA or its affiliates owning or holding (however defined) Shares.

(ix) Counterparty shall not declare or pay any Dividend (as defined above) to holders of record as of any date occurring prior to the Settlement Date.

(x) Counterparty understands no obligations of BofA to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any affiliate of BofA or any governmental agency.

(b) Each of BofA and Counterparty agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended.

(c) Counterparty acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act, by virtue of Section 4(2) thereof. Accordingly, Counterparty represents and warrants to BofA that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof, and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.

 

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(d) Counterparty agrees and acknowledges that BofA is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment,” within the meaning of Section 546 of the Bankruptcy Code and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “payment or other transfer of property” within the meaning of Sections 362 and 546 of the Bankruptcy Code, and (B) BofA is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 362(o), 546(e), 546(g), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

8. Agreements and Acknowledgements Regarding Hedging .

Counterparty acknowledges and agrees that:

(a) During the Relevant Period, BofA and its Affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction;

(b) BofA and its Affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction;

(c) BofA shall make its own determination as to whether, when or in what manner any hedging or market activities in Counterparty’s securities shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Settlement Price and/or the VWAP Price; and

(d) Any market activities of BofA and its Affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Settlement Price and/or the VWAP Price, each in a manner that may be adverse to Counterparty.

9. Special Provisions regarding Transaction Announcements .

(a) If a Transaction Announcement occurs on or prior to the Settlement Date, then the Calculation Agent shall adjust the Discount in a commercially reasonable manner to take into account the occurrence of such Transaction Announcement and its impact on the Transaction. If a Transaction Announcement occurs after the Trade Date but prior to the Scheduled Earliest Acceleration Date, the Scheduled Earliest Acceleration Date shall be adjusted to be the date of such Transaction Announcement.

(b) “ Transaction Announcement ” means (i) the announcement of an Acquisition Transaction, (ii) an announcement that Counterparty or any of its subsidiaries has entered into an agreement, a letter of intent or an understanding to enter into an Acquisition Transaction, (iii) the announcement of an intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, an Acquisition Transaction, or (iv) any other announcement that in the reasonable judgment of the Calculation Agent may result in an Acquisition Transaction. For the avoidance of doubt, announcements as used in this definition of Transaction Announcement refer to any public announcement whether made by the Issuer or a third party.

Acquisition Transaction ” means (i) any Merger Event (and for purposes of this definition the definition of Merger Event shall be read with the references therein to “100%” being replaced by “15%” and to “50%” by “75%” and as if the clause beginning immediately following the definition of Reverse Merger therein to the end of such definition were deleted) or Tender Offer, or any other transaction involving the merger of Counterparty with or into any third party, (ii) the sale or transfer of all or substantially all of the assets of Counterparty, (iii) a recapitalization, reclassification, binding share exchange or other similar transaction, (iv) any acquisition, lease, exchange, transfer, disposition (including

 

11


by way of spin-off or distribution) of assets (including any capital stock or other ownership interests in subsidiaries) or other similar event by Counterparty or any of its subsidiaries where the aggregate consideration transferable or receivable by or to Counterparty or its subsidiaries exceeds 15% of the market capitalization of Counterparty and (v) any transaction in which Counterparty or its board of directors has a legal obligation to make a recommendation to its shareholders in respect of such transaction pursuant to Rule 14e-2 under the Exchange Act.

10. Other Provisions .

(a) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events . If either party would owe the other party any amount pursuant to Section 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “ Payment Obligation ”), Counterparty shall have the right, in its sole discretion, to satisfy or to require BofA to satisfy, as the case may be, any such Payment Obligation, in whole or in part, by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to BofA, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of an Extraordinary Event, as applicable (“ Notice of Share Termination ”); provided that if BofA would owe Counterparty the Payment Obligation and Counterparty does not elect to require BofA to satisfy such Payment Obligation by the Share Termination Alternative in whole, BofA shall have the right, in its sole discretion, to elect to satisfy any portion of such Payment Obligation that Counterparty has not so elected by the Share Termination Alternative, notwithstanding Counterparty’s failure to elect or election to the contrary; and provided further that Counterparty shall not have the right to so elect (but, for the avoidance of doubt, BofA shall have the right to so elect) in the event of (i) an Insolvency, a Nationalization, a Merger Event or a Tender Offer, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash or (ii) an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, which Event of Default or Termination Event resulted from an event or events within Counterparty’s control. Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of an Extraordinary Event, as applicable, with respect to the Payment Obligation or such portion of the Payment Obligation for which the Share Termination Alternative has been elected (the “ Applicable Portion ”):

 

Share Termination Alternative:    Applicable and means, if delivery pursuant to the Share Termination Alternative is owed by BofA, that BofA shall deliver to Counterparty the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, or such later date as the Calculation Agent may reasonably determine (the “ Share Termination Payment Date ”), in satisfaction of the Payment Obligation or the Applicable Portion, as the case may be. If delivery pursuant to the Share Termination Alternative is owed by Counterparty, the “Net Share Settlement Provisions” set forth in paragraphs 1 through 4 of Annex A shall apply as if such delivery were a settlement of the Transaction pursuant to Section 2, the Settlement Date were the Early Termination Date, the True-Up Amount were zero (0) minus the Payment Obligation (or the Applicable Portion, as the case may be) owed by Counterparty, and “Shares” as used in Annex A were replaced by “Share Termination Delivery Units.”
Share Termination Delivery Property:    A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation (or the Applicable Portion, as the case may be) divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
Share Termination Unit Price:    The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination

 

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     Delivery Property, as determined by the Calculation Agent in its discretion by commercially
reasonable means and notified by the Calculation Agent to the parties at the time of
notification of the Payment Obligation.
Share Termination Delivery Unit:    In the case of a Termination Event, Event of Default, Delisting or Additional Disruption Event, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, one Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
Failure to Deliver:    Applicable
Other applicable provisions:    If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares or any portion of the Share Termination Delivery Units) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units”.

(b) Equity Rights. BofA acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Counterparty’s bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Counterparty herein under or pursuant to any other agreement.

(c) Indemnification . In the event that BofA or the Calculation Agent or any of their Affiliates becomes involved in any capacity in any action, proceeding or investigation brought by or against any person in connection with this Confirmation, Counterparty shall reimburse BofA or the Calculation Agent or such Affiliate for its reasonable legal out-of-pocket expenses (including the cost of any investigation and preparation) incurred in connection therewith within 30 calendar days of receipt of notice of such expenses, except if such action, proceeding or investigation is the result of the gross negligence, willful misconduct or bad faith of BofA, the Calculation Agent or any of their Affiliates. Counterparty shall indemnify and hold BofA or the Calculation Agent or such Affiliate harmless against any losses, claims, damages or liabilities to which BofA or the Calculation Agent or such Affiliate may become subject in connection with any such action, proceeding or investigation except if such action, proceeding or investigation is the result of the gross negligence, willful misconduct or bad faith of BofA, the Calculation Agent or any of their Affiliates. The reimbursement and indemnity obligations of Counterparty under this Section 10(c) shall be in addition to any liability that Counterparty may otherwise have, shall extend upon the same terms and conditions to the partners, directors, officers, agents, employees and controlling persons (if any), as the case may be, of BofA or the Calculation Agent and their Affiliates and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of Counterparty, BofA or the Calculation Agent, any such Affiliate and any such person. Counterparty also agrees that neither BofA, the Calculation Agent nor any of such Affiliates, partners, directors, officers, agents, employees or controlling persons shall have any liability to Counterparty for or in connection with any matter referred to in this Confirmation except to the extent that any losses, claims, damages, liabilities or expenses incurred by Counterparty result from the gross negligence, willful misconduct or bad faith of BofA or the Calculation Agent or a breach by BofA or the Calculation Agent of any of its representations, warranties, agreements, covenants or obligations under this Confirmation or the Agreement. The foregoing provisions shall survive any termination or completion of the Transaction.

 

13


(d) Staggered Settlement . If BofA would owe Counterparty any Shares pursuant to the “Settlement Terms” above, BofA may, if BofA determines it would be advisable to do so based upon the advice of counsel, by notice to Counterparty on or prior to the Settlement Date (a “ Nominal Settlement Date ”), elect to deliver the Shares deliverable on such Nominal Settlement Date on two or more dates (each, a “ Staggered Settlement Date ”) or at two or more times on the Nominal Settlement Date as follows: (i) in such notice, BofA will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date) or delivery times and how it will allocate the Shares it is required to deliver under “Settlement Terms” above among the Staggered Settlement Dates or delivery times; and (ii) the aggregate number of Shares that BofA will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that BofA would otherwise be required to deliver on such Nominal Settlement Date.

(e) Adjustments . For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.

(f) Transfer and Assignment . BofA may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, to any of its Affiliates without the consent of Counterparty.

(g) Amendments to Equity Definitions . The following amendments shall be made to the Equity Definitions:

(i) Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative effect on the theoretical value of the relevant Shares” and replacing them with the words “an economic effect on the relevant Transaction”;

(ii) The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction or Share Forward Transaction, then following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has an economic effect on the Transaction and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “( provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing such latter phrase with the words “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, stock loan rate or liquidity relative to the relevant Shares)”;

(iii) Section 11.2(e)(v) of the Equity Definitions is hereby amended by adding, immediately following the word “Shares”, the words “other than any purchase by Counterparty of Shares delivered by BofA pursuant to this Transaction, any acquisition of Shares by Counterparty under its employee benefit plans or any acquisition of shares pursuant to stock repurchase plans publicly announced prior to the Trade Date”; for the avoidance of doubt, the issuance of stock options in the Shares or the planned repurchase of shares consistent with past practice or as previously disclosed in reports filed with the U.S. Securities and Exchange Commission prior to the Trade Date shall not result in a Potential Adjustment Event.

(iv) Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “diluting or concentrative effect on the theoretical value of the relevant Shares” and replacing them with the words “economic effect on the relevant Transaction”;

(v) Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at BofA’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that issuer”;

 

14


(vi) Section 12.9(b)(iv) of the Equity Definitions is hereby amended by (A) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); and (B) deleting the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares in the amount of the Hedging Shares or” in the penultimate sentence; and

(vii) Section 12.9(b)(v) of the Equity Definitions is hereby amended by (A) adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and (B)(1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C) and (3) replacing in the penultimate sentence the words “either party” with “the Hedging Party” and (4) deleting clause (X) in the final sentence.

(h) Additional Termination Event . It shall constitute an Additional Termination Event, with respect to which Counterparty shall be the sole Affected Party, the Transaction shall be the sole Affected Transaction and BofA shall be the party entitled to designate an Early Termination Date, if Counterparty shall declare or pay any Dividend to holders of record on any date occurring prior to the Settlement Date.

(i) No Netting and Set-off . Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.

(j) Disclosure . Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.

(k) Designation by BofA . Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing BofA to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, BofA (the “ Designator ”) may designate any of its Affiliates (the “ Designee ”) to deliver or take delivery, as the case may be, and otherwise perform its obligations to deliver, if any, or take delivery of, as the case may be, any such Shares or other securities in respect of the Transaction, and the Designee may assume such obligations, if any. Such designation shall not relieve the Designator of any of its obligations, if any, hereunder. Notwithstanding the previous sentence, if the Designee shall have performed the obligations, if any, of the Designator hereunder, then the Designator shall be discharged of its obligations, if any, to Counterparty to the extent of such performance.

(l) Termination Currency . The Termination Currency shall be USD.

(m) Waiver of Trial by Jury . EACH OF COUNTERPARTY AND BOFA HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF BOFA OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

(n) Governing Law; Jurisdiction . THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS .

 

15


Please confirm your agreement to be bound by the terms stated herein by executing the copy of this Confirmation enclosed for that purpose and returning it to us by mail or facsimile transmission to the address for Notices indicated above.

 

Yours sincerely,
BANK OF AMERICA, N.A.
By:   /s/ Jake Mendelsohn
Name:        Jake Mendelsohn
Title:        Managing Director

 

Confirmed as of the date first above written:
CACI INTERNATIONAL INC
By:   /s/ Thomas A. Mutryn
Name:        Thomas A. Mutryn
Title:        EVP & CFO


APPENDIX A

[ CACI International Inc Letterhead ]

August 24, 2011

Bank of America, N.A.

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

Bank of America Tower at One Bryant Park

New York, New York 10036

Attn: John Servidio

 

  Re: Issuer Forward Repurchase Transaction

Ladies and Gentlemen:

In connection with our entry into a confirmation between you and us dated as of August 24, 2011 (the “ Confirmation ”), we hereby represent that set forth below is the total number of shares of our common stock purchased by or for us or any of our affiliated purchasers in Rule 10b-18 purchases of blocks pursuant to the once-a-week block exception contained in Rule 10b-18(b)(4) (all defined in Rule 10b-18 under the Securities Exchange Act of 1934, as amended) during the four full calendar weeks immediately preceding the first day of the Relevant Period (as defined in the Confirmation) and the week during which the first day of the Relevant Period occurs:

 

     Monday’s
Date
   Friday’s
Date
   Share
Number
 

Week 4:

   July 25, 2011    July 29, 2011      0   

Week 3:

   August 1, 2011    August 5, 2011      0   

Week 2:

   August 8, 2011    August 12, 2011      0   

Week 1:

   August 15, 2011    August 19, 2011      0   

Current Week:

   August 22, 2011    August 26, 2011      0   

We understand that you will use this information in calculating trading volume for purposes of Rule 10b-18.

 

Very truly yours,
CACI INTERNATIONAL INC
By:  

/s/ Spiro Fotopoulos

  Name: Spiro Fotopoulos
  Title:   VP/Assistant Secretary


ANNEX A

NET SHARE SETTLEMENT PROVISIONS

1. Net Share Settlement shall be made (i) by delivery on the Settlement Date (such date, the “ Net Share Settlement Date ”) of a number of Shares (the “ Restricted Payment Shares ”) with a value equal to the absolute value of the True-Up Amount, with such Shares’ value based on the realizable market value thereof to BofA (which value shall take into account an illiquidity discount resulting from the fact that the Restricted Payment Shares will not be registered for resale), as determined by the Calculation Agent (the “ Restricted Share Value ”), and paragraph 2 of this Annex A shall apply to such Restricted Payment Shares, and (ii) by delivery of the Make-Whole Payment Shares as described in paragraph 3 below.

2. (a) All Restricted Payment Shares and Make-Whole Payment Shares shall be delivered to BofA (or any affiliate of BofA designated by BofA) pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(2) thereof.

(b) As of or prior to the date of delivery, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BofA and any potential purchaser of any such Shares from BofA (or any affiliate of BofA designated by BofA) identified by BofA shall be afforded a commercially reasonable opportunity to conduct a due diligence investigation with respect to Counterparty customary in scope for private placements of equity offerings of its size (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them).

(c) As of the date of delivery, Counterparty shall enter into an agreement (a “ Private Placement Agreement ”) with BofA (or any affiliate of BofA designated by BofA) in connection with the private placement of such Shares by Counterparty to BofA (or any such affiliate) and the private resale of such Shares by BofA (or any such affiliate), substantially similar to private placement purchase agreements customary in scope for private placements of equity offerings of its size, in form and substance commercially reasonably satisfactory to BofA, which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements of its size relating to the indemnification of BofA and its affiliates, and shall provide for the payment by Counterparty of all fees and expenses in connection with such resale, including all fees and expenses of counsel for BofA, and shall contain representations, warranties and agreements of Counterparty reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resales.

(d) Counterparty shall not take or cause to be taken any action that would make unavailable either (i) the exemption set forth in Section 4(2) of the Securities Act for the sale of any Restricted Payment Shares or Make-Whole Payment Shares by Counterparty to BofA or (ii) an exemption from the registration requirements of the Securities Act reasonably acceptable to BofA for resales of Restricted Payment Shares and Make-Whole Payment Shares by the BofA (or an affiliate of BofA).

(e) Counterparty expressly agrees and acknowledges that the public disclosure of all material information relating to Counterparty is within Counterparty’s control.

3. If Restricted Payment Shares are delivered in accordance with paragraph 2 above, on the Settlement Date, a balance (the “ Settlement Balance ”) shall be established with an initial balance equal to the absolute value of the True-Up Amount. Following the delivery of Restricted Payment Shares or any Make-Whole Payment Shares, BofA shall sell all such Restricted Payment Shares or Make-Whole Payment Shares in a commercially reasonable manner. At the end of each Exchange Business Day upon which sales have been made, the Settlement Balance shall be reduced by an amount equal to the aggregate proceeds received by BofA or its affiliate upon the sale of such Restricted Payment Shares or Make-Whole Payment Shares, less a customary and commercially reasonable private placement fee for private placements of common stock by similar issuers of similar size. If, on any Exchange Business Day, all Restricted Payment Shares and Make-Whole Payment Shares have been sold and the Settlement Balance has not been reduced to zero, Counterparty shall, have the option to (i) deliver to BofA or as directed by BofA one Settlement Cycle following such Exchange Business Day an additional number of Shares (the “ Make-Whole Payment Shares ” and, together with the Restricted Payment

 

A-1


Shares, the “ Payment Shares ”) equal to (x) the Settlement Balance as of such Exchange Business Day divided by (y) the Restricted Share Value of the Make-Whole Payment Shares as of such Exchange Business Day or (ii) promptly deliver to BofA cash in an amount equal to the then remaining Settlement Balance. This provision shall be applied successively until either the Settlement Balance is reduced to zero or the aggregate number of Restricted Payment Shares and Make-Whole Payment Shares equals the Maximum Deliverable Number. If on any Exchange Business Day, Restricted Payment Shares and Make-Whole Payment Shares remain unsold and the Settlement Balance has been reduced to zero, BofA shall promptly return such unsold Restricted Payment Shares or Make-Whole Payment Shares.

4. Notwithstanding the foregoing, in no event shall Counterparty be required to deliver more than the Maximum Deliverable Number of Shares hereunder. “ Maximum Deliverable Number ” means the number of Shares set forth as such in Annex B to this Confirmation. Counterparty represents and warrants to BofA (which representation and warranty shall be deemed to be repeated on each day from the date hereof to the date on which resale of such Payment Shares is completed (the “ Final Resale Date ”)) that the Maximum Deliverable Number is equal to or less than the number of authorized but unissued Shares of Counterparty that are not reserved for future issuance in connection with transactions in such Shares (other than the transactions under this Confirmation) on the date of the determination of the Maximum Deliverable Number (such Shares, the “ Available Shares ”). In the event Counterparty shall not have delivered the full number of Shares otherwise deliverable as a result of this paragraph 4 (the resulting deficit, the “ Deficit Shares ”), Counterparty shall be continually obligated to deliver, from time to time until the full number of Deficit Shares have been delivered pursuant to this paragraph, Shares when, and to the extent that, (i) Shares are repurchased, acquired or otherwise received by Counterparty or any of its subsidiaries after the date hereof (whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares reserved for issuance in respect of other transactions prior to such date which prior to the relevant date become no longer so reserved or (iii) Counterparty additionally authorizes any unissued Shares that are not reserved for other transactions. Counterparty shall immediately notify BofA of the occurrence of any of the foregoing events (including the number of Shares subject to clause (i), (ii) or (iii) and the corresponding number of Shares to be delivered) and promptly deliver such Shares thereafter.

 

A-2


ANNEX B

 

Prepayment Amount:    An amount equal to the product of the Initial Shares and the Initial Price.
Prepayment Date:    August 29, 2011 (or if such date is not an Exchange Business Day, the next following Exchange Business Day).
Initial Averaging Date:    August 25, 2011.
Scheduled Final Averaging Date:    [    *    ]
Scheduled Earliest Acceleration Date:    [    *    ]
Initial Shares:    4,000,000 Shares
Initial Share Delivery Date:    August 29, 2011.
Initial Price:    The closing price of the Shares on the Exchange Business Day immediately preceding the Prepayment Date.
Discount:    [     *    ]
Maximum Stock Loan Rate:    50 basis points
Initial Stock Loan Rate:    25 basis points
Maximum Deliverable Number:    8,000,000 Shares

 

* Pursuant to Rule 24b-2 under the Securities and Exchange Act of 1934, as amended, this information has been omitted from this Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011.

 

B-1

Exhibit 31.1

Section 302 Certification

I, Paul M. Cofoni, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CACI International Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s Board of Directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to affect the Registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: November 7, 2011

 

/ S /    P AUL M. C OFONI        

Paul M. Cofoni
President
Chief Executive Officer and Director
(Principal Executive Officer)

Exhibit 31.2

Section 302 Certification

I, Thomas A. Mutryn, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CACI International Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s Board of Directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to affect the Registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls over financial reporting.

Date: November 7, 2011

 

/s/    THOMAS A. MUTRYN        

Thomas A. Mutryn
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)

Exhibit 32.1

Section 906 Certification

In connection with the quarterly report on Form 10-Q of CACI International Inc (the Company) for the three months ended September 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned President and Chief Executive Officer of the Company certifies, to the best of his knowledge and belief pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 7, 2011

 

/ S /    P AUL M. C OFONI        

Paul M. Cofoni
President
Chief Executive Officer and Director
(Principal Executive Officer)

Exhibit 32.2

Section 906 Certification

In connection with the quarterly report on Form 10-Q of CACI International Inc (the Company) for the three months ended September 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned Executive Vice President, Chief Financial Officer and Treasurer of the Company certifies, to the best of his knowledge and belief pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 7, 2011

 

/s/ THOMAS A. MUTRYN

Thomas A. Mutryn
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)