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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended December 31, 2004

Commission File Number 0-8401

CACI International Inc

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

54-1345888

(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)

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

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

CACI International Inc Common Stock, $0.10 par value

(Title of each class)

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 the number of shares outstanding of each of the registrant’s classes of common stock, as of February 4, 2005: CACI International Inc Common Stock, $0.10 par value, 29,903,131 shares.

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CACI INTERNATIONAL INC AND SUBSIDIARIES

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PART 1

FINANCIAL INFORMATION

Item 1. Financial Statements

CACI INTERNATIONAL INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(amounts in thousands, except per share data)

See notes to consolidated financial statements (unaudited)

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CACI INTERNATIONAL INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(amounts in thousands, except per share data)

See notes to consolidated financial statements (unaudited)

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CACI INTERNATIONAL INC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except per share data)

See notes to condensed consolidated financial statements (unaudited)

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CACI INTERNATIONAL INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in thousands)

See notes to condensed consolidated financial statements (unaudited)

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CACI INTERNATIONAL INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(amounts in thousands)

See notes to condensed consolidated financial statements (unaudited)

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CACI INTERNATIONAL INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. 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.

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 condensed 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 Securities and Exchange Commission on Form 10-K for the year ended June 30, 2004. The results of operations for the three and six months ended December 31, 2004 are not necessarily indicative of the results to be expected for any subsequent period, or for the full fiscal year.

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

The Company considers all investments with an original maturity of three months or less to be cash equivalents. The Company classifies investments with a maturity of more than three months but less than twelve months as short-term marketable securities. To date, marketable securities have been classified as available-for-sale and have been carried at fair value with any unrealized gains and losses reported as a separate component of comprehensive income. The fair value of marketable securities was determined based on quoted market prices for those instruments at the reporting date. The cost of securities sold is based on specific identification. Premiums and discounts are amortized over the period from acquisition to maturity and are included in investment income, along with interest and dividends.

During the year ended June 30, 2004 and the six-month period ended December 31, 2004, there were no realized or unrealized gains or losses. The Company’s cash and equivalents and short-term marketable securities at December 31, 2004, and June 30, 2004, consisted of the following (cost approximated fair value):

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Accounts receivable are reported net of allowances for doubtful accounts of approximately $6.1 million and $4.9 million at December 31, 2004 and June 30, 2004, respectively. The increase from the allowance balance reported as of June 30, 2004, relates primarily to an adjustment made to the preliminary purchase price allocation of the Defense and Intelligence Group (D&IG) of American Management Systems, Inc. (AMS) acquisition for acquired receivables where collectability is in doubt. Accounts receivable consist of the following:

Intangible assets consist of the following:

Intangible assets are being amortized over periods ranging from 12 to 120 months based on their estimated useful lives. The intangible assets acquired with the purchase of the D&IG, as well as those with other recent acquisitions, are being amortized using an accelerated method based upon the estimated cash flows expected to be derived from customer relationships. Amortization expense was $4.9 million and $9.8 million for the three and six months ended December 31, 2004, respectively, and $8.2 million for the year ended June 30, 2004. Expected amortization expense through June 30, 2009, is as follows:

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Accrued compensation and benefits consist of the following:

Other accrued expenses consist of the following:

In order to fund the acquisition of D&IG, the Company executed a $550 million credit facility, which included a revolving credit facility and an institutional term loan. Total initial borrowings under the credit facility were $422.6 million, of which $367.4 million was outstanding at December 31, 2004. The five-year secured revolving credit facility permits continuously renewable borrowings of up to $200 million with annual sublimits on amounts borrowed for acquisitions. The Company had $20.0 million outstanding on the revolving credit facility as of December 31, 2004, which has been classified as current note payable in the accompanying consolidated balance sheet. $10.0 million of this revolving credit facility was repaid in January 2005.

The revolving credit facility permits one, two three and six month interest rate options. The Company pays a fee on the unused portion of the facility. The institutional term loan is a seven-year secured facility in the amount of $350 million. The Company had $347.4 million outstanding on the term loan as of December 31, 2004. One percent of the principal is to be prepaid in each of years one through six of the term with the remainder due on the maturity date. Interest rates on both the revolver and the term loan are based on LIBOR or the higher of the prime rate or Federal funds rate plus applicable margins. As of December 31, 2004, the weighted average interest rate on the loans outstanding under the credit facilities was approximately 4.0%. Interest expense for the three and six months ended December 31, 2004 was $3.8 million and $7.2 million, respectively. Margin and unused fee rates are determined quarterly based on the leverage ratio. The total costs associated with securing the new credit facility were approximately $8.2 million, which are being amortized as additional interest expense over the life of the revolving credit facility and institutional term loan. The unamortized balance of approximately $7.3 million as of December 31, 2004 is included with other assets in the accompanying Consolidated Balance Sheet. The Company is required to operate within certain limits on leverage, net worth and fixed-charge coverage ratios. As of December 31, 2004, the Company was in compliance with these covenants. The revolving credit facility and institutional term loan are secured by substantially all of the Company’s assets.

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The components of notes payable are as follows:

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.

The Company has entered into a subcontract agreement with a vendor to purchase a number of directional finding units to be ordered in connection with the performance of one of the Company’s contracts over a four year period ending in fiscal year 2006. The subject subcontract provides for unit price decreases as the number of units purchased under the subcontract increases. Based on the present status of contract performance, management believes that the Company will purchase a sufficient number of units over the subcontract term to allow it to realize the lowest unit cost available. Based upon that expectation, unit costs incurred to date have been recognized in other direct costs in the accompanying condensed consolidated income statements, at such lowest unit cost. Based on the number of units ordered to date and assuming that no other units are ordered under the subcontract, the Company’s maximum unit price exposure (the difference between the unit price that would be applicable to the number of units actually purchased as compared to the discount price at which the Company has recognized the purchases to date) is estimated to be approximately $1.7 million, which has not been recorded in the Company’s financial statements as of December 31, 2004.

The Company is currently under examination by the tax authorities of the State of Indiana. The examination is for the period beginning June 30, 1991 and ending June 30, 2000 and focuses on whether the Company established a taxable presence in Indiana during the examination period. Management of the Company believes that it did not establish a taxable presence and is contesting the State’s conclusion vigorously. Management has accrued its best estimate of the exposure for this matter. The Company does not believe the outcome will have a material adverse effect on its financial statements.

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.

In October 2004, an arbitrator of an arbitration proceeding to which the Company was party, issued his final decision awarding the Company damages in the amount of $10.6 million, plus legal fees of $.8 million. The Company is awaiting the defendant’s response to the arbitrator’s final decision and will recognize the award, or portion thereof, only as payments are received.

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The Company currently accounts for employee stock-based compensation transactions using the intrinsic value method in accordance with Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees (APB No. 25), as amended by Financial Accounting Standards Board (FASB) Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation. For the three and six months ended December 31, 2004, the Company recognized, under APB No. 25, net after-tax compensation expense of approximately $271,000 and $630,000 relating to incentive grants of restricted stock units. No such compensation cost was recognized in connection with these transactions in the three and six months ended December 31, 2003, as no incentive restricted stock grants had been granted. If the Company’s employee stock-based compensation transactions had been accounted for based on their fair value, as determined under Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, the pro forma earnings would have been as follows:

These pro forma results may not be indicative of future results for the full fiscal year due to differences between the assumed and actual life of stock options, forfeitures, and other factors. The fair value of each option granted is estimated on the grant date using the Black-Scholes option-pricing model. The weighted average fair value of options granted during the six months ended December 31, 2004 and 2003 was $15.08 and $11.76, respectively. The following significant assumptions were made in estimating fair value:

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The Company adopted the 2002 Employee Stock Purchase Plan (ESPP), Management Stock Purchase Plan (MSPP), and Director Stock Purchase Plan (DSPP) at its annual shareholder meeting on November 21, 2002 and implemented these plans beginning July 1, 2003. There are 500,000, 300,000, and 75,000 shares authorized for grants under the ESPP, MSPP and DSPP, respectively. The aforementioned plans provide employees, management, and directors with an opportunity to acquire or increase an ownership interest in the Company through the purchase of shares of the Company’s common stock subject to certain terms and conditions.

The ESPP allows eligible full-time employees to purchase shares of common stock at 85% of the lower of the fair market value of a share of common stock on the first or last day of the quarter. Eligible employees are provided the opportunity to acquire Company common stock once each quarter. The maximum number of shares that an eligible employee may purchase during any quarter is equal to two times an amount determined as follows: 20% of such employee’s compensation over the quarter, divided by 85% of the fair market value of a share of common stock on the first day of the offering period.

As the ESPP is a qualified plan under Section 423 of the Internal Revenue Code, and as the Company follows APB Opinion No. 25, no compensation expense has been recorded for shares acquired by employees under the ESPP. The Company follows the disclosure provisions of SFAS No. 123 in accounting for the ESPP.

As of December 31, 2004, participants have purchased approximately 146,000 shares under the ESPP at a weighted average price per share of $34.33. Of these shares, approximately 46,000 were purchased at $34.00 per share during the three months ended December 31, 2004, and approximately 77,000 were purchased at a weighted average price per share of $34.15 during the six months ended December 31. 2004.

The MSPP provides those senior executives with stock holding requirements a mechanism to receive Restricted Stock Units (“RSUs”) in lieu of up to 30% of their annual bonus. The RSUs are awarded under the MSPP at 85% of the market price of the Company’s common stock on the date of the award and vest at the earlier of 1) three years from the grant date, 2) upon a change of control of the Company, 3) upon a participant’s retirement at or after age 65, or 4) upon a participant’s death or permanent disability. Vested RSUs will be settled in shares of common stock or cash payment, as elected by the participant.

The Company accounts for MSPP transactions in accordance with APB No. 25. As of December 31, 2004, there are approximately 51,000 RSUs outstanding under the MSPP at a weighted average price per share of $35.12. During the fiscal year ended June 30, 2004, the Company issued approximately 28,900 RSUs at a weighted average price per share of $36.48 per share, of which approximately 5,800 have been forfeited due to employee terminations and resignations. During the six months ended December 31 2004, the Company issued approximately 34,500 RSUs at a weighted average price per share of $34.00 per share, of which approximately 6,500 have been forfeited due to employee terminations and resignations.

The DSPP allows directors to elect to receive RSUs at the market price of the Company’s common stock on the date of the award in lieu of up to 50% of their annual retainer fees. Vested RSUs will be settled in shares of common stock. As of June 30 2004, approximately 1,600 RSUs had been issued under the DSPP at a weighted average price per share of $42.87. There were no RSUs issued under the DSPP during the six-month period ended December 31, 2004.

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SFAS No. 128, Earnings Per Share requires dual presentation of basic and diluted earnings per share on the face of the income statement. Basic earnings per share excludes dilution and is computed by dividing income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Diluted earnings per share includes the incremental effect of stock options and RSUs calculated using the treasury stock method. The chart below shows the calculation of basic and diluted earnings per share for the three and six-month periods ended December 31, 2004 and 2003, respectively:

On May 1, 2004, the Company completed the purchase of the D&IG and related assets of AMS. D&IG provides the U.S. Government with business management solutions, including information technology and software design, for defense, intelligence and homeland security agencies in support of acquisition, financial management, logistics, warfighting and intelligence missions. The transaction was entered into with CGI Group Inc., which concurrently purchased all of the outstanding shares of AMS.

The D&IG acquisition has been accounted for under the purchase method of accounting pursuant to the provisions of SFAS No. 141, Business Combinations. Accordingly, the identifiable intangible assets acquired and liabilities assumed were recognized at their fair value as of the date of the acquisition. During the six months ended December 31, 2004, the Company made certain adjustments to the allocation of the D&IG purchase price as part of the process of finalizing the D&IG balance sheet. The Company is in the process of finalizing the opening D&IG balance sheet, as further information becomes available and plans to complete any adjustments to the purchase price allocation by June 30, 2005. The Company may be required to pay additional consideration of up to $10 million based on the resolution of the final D&IG balance sheet at the acquisition date. Any additional amounts paid will be recorded as goodwill.

In August 2004, the Company acquired all of the outstanding capital stock in IMAJ Consulting, Ltd (IMAJ), a company in the United Kingdom, for approximately $3.7 million. IMAJ has broad expertise in classical statistics and advanced intelligent systems methods enabling the most appropriate techniques or combination of techniques to be selected for each analytical project. The Company is in the process of finalizing the IMAJ opening balance sheet, thus, the allocation of the purchase price is subject to adjustment as further information becomes available.

Adjustments made to the purchase price allocations of the D&IG acquisition and other fiscal year 2004 acquisitions, the acquisition of IMAJ, and a $4.0 million earn-out payment related to the Company’s May 2003 acquisition of Premier Technology Group, Inc., resulted in an increase of approximately $6.4 million to goodwill during the six-months ended December 31, 2004.

The Company reports operating results and financial data for two reporting segments: domestic operations and international operations. Domestic operations provide information technology and communications solutions through all four of the Company’s major service offerings: systems integration, managed network services, knowledge management and engineering services. Its customers are primarily U.S. federal agencies. Other customers include foreign government agencies, commercial businesses and state and local government agencies. International operations offer services to both commercial and government customers primarily through the Company’s systems integration line of business. The Company evaluates the performance of its operating segments based on income before income taxes. Summarized financial information for the Company’s reportable segments is shown in the following table.

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In December 2004, the FASB issued SFAS No. 123-R (FAS 123-R), Shared-Based Payments, which will require that companies recognize all forms of stock-based compensation as an expense in the statement of operations. Compensation cost to be recognized will be based on the estimated fair values of the equity instruments that are issued, and will be measured upon the date of grant. Compensation cost will be recognized over the vesting period during which an employee provides services in exchange for the grant award.

FAS 123-R will be effective for fiscal periods beginning after June 15, 2005, and the Company will adopt the provisions of this new standard for fiscal year 2006, beginning July 1, 2005. The effect of adopting FAS 123-R will be to reduce Company earnings as based on the fair values assigned to equity instruments granted to employees. The Company is currently preparing its analysis of FAR 123-R and the impact of its provisions, and thus is unable to provide details regarding its actual impact. The effect of recognizing stock-based compensation expense on historical earnings, however, is provided in Note I.

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

Results of Operations For the Three Months Ended December 31, 2004 and 2003.

Revenue. The table below sets forth revenue by customer segment with related percentages of total revenue for the three months ended December 31, 2004 (FY2005) and 2003 (FY2004), respectively:

For the three months ended December 31, 2004, total revenue increased by 48.0%, or $126.3 million, over the same period a year ago. The increase in revenue in the quarter resulted primarily from revenues of acquired businesses, and in particular, the Defense and Intelligence Group (“D&IG”) of American Management Systems, Inc (“AMS”) in May of last year. Revenue generated from the date that a business is acquired through the first anniversary date is considered acquired revenue. Recent acquisitions accounted for approximately $88.6 million of the revenue growth during the quarter as follows:

The increase in revenue also results from continuing growth in the systems integration, engineering services, and network services offerings. Overall this growth is a result of the Company’s strategic focus on national security and intelligence, the global war against terrorism, and the reshaping of the way government agencies communicate, use and disseminate information, and deliver services to the citizens.

Department of Defense (DoD) revenue increased 65.5%, or $112.7 million, for the three months ended December 31, 2004 as compared to the same period a year ago. DoD revenue increased primarily as a result of the May 1, 2004 acquisition of D&IG, and the continuing demand from DoD customers such as strategic and tactical organizations in the military intelligence community, the Army’s Communications Electronics Command, the Defense Information Systems Agency, and the U.S. Navy. The aforementioned acquisitions contributed $68.7 million of this increased revenue in the current quarter, a portion of which was derived from the customer base described above. D&IG accounted for $56.2 million of the acquired DoD revenue, of which approximately $2.5 million was earned on programs under which the Company and D&IG maintained a subcontractor arrangement prior to the acquisition.

Revenue from Federal Civilian Agencies increased 9.0%, or $6.8 million, for the quarter ended December 31, 2004. The increase was comprised of $17.4 million of revenues contributed by the aforementioned acquisitions, and a $10.6 million decrease in revenues earned from contracts of businesses that the Company has owned for more than 12 months. This decrease results primarily from fewer and smaller purchases of computer, communications and network equipment by the Company’s intelligence customers. Government funding that previously was applied to such equipment purchases is being redirected to finance the war in Iraq and the global war on terrorism.

Approximately 27.0% of the Federal Civilian Agency revenue was derived from the Department of Justice (DoJ), for whom the Company provides litigation support services and maintains an automated debt management system. Revenue from DoJ was $22.1 million in the second quarter of FY2005, as compared to $27.9 million over the same period a year ago. This decrease in DoJ revenue is the result of reduced work on an FBI-related contract and a decrease in fixed unit price work.

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Commercial revenue is derived from both international and domestic operations. The international operations accounted for $13.5 million, or 82.3%, of the total Commercial revenue, while the domestic operations accounted for $2.9 million, or 17.7%. Total Commercial revenue increased by 29.0%, or $3.7 million, during the second quarter of FY2005, as compared to the same period a year ago. The majority of this growth came from the Company’s international operations, where sales of software and data products were higher than a year earlier and the commercial IT services business showed a marked improvement. International operations revenue growth also benefited from favorable exchange rates. The balance of the growth in Commercial revenue resulted largely from revenues from D&IG customers.

Revenue from state and local governments increased by 89.4% or $3.2 million for the quarter ended December 31, 2004. This increase is attributable to both acquisitions and a new contract awarded during the quarter.

Income from Operations. The following table sets forth the relative percentage that certain items of expense and earnings bore to revenue for the quarters ended December 31, 2004 and 2003, respectively.