CACI INTERNATIONAL INC /DE/ - FORM 8-K/A - EX-99.4

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8-K/A - 8-K/A - CACI INTERNATIONAL INC /DE/	d663675d8ka.htm
EX-99.2 - EX-99.2 - CACI INTERNATIONAL INC /DE/	d663675dex992.htm
EX-23.1 - EX-23.1 - CACI INTERNATIONAL INC /DE/	d663675dex231.htm
EX-99.3 - EX-99.3 - CACI INTERNATIONAL INC /DE/	d663675dex993.htm

Exhibit 99.4

CACI International Inc

Unaudited Pro Forma Condensed Consolidated Financial Statements

As of and for the Three Months ended September 30, 2013

and for the Year ended June 30, 2013

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On November 15, 2013, CACI International Inc (CACI or the Company) acquired Six3 Systems Holdings II, Inc. and its wholly owned subsidiary Six3 Systems, Inc. (Six3 Systems). Six3 Systems provides highly specialized support to the national security community in the areas of cyber and signals intelligence; intelligence, surveillance, and reconnaissance; and intelligence operations.

The unaudited pro forma condensed consolidated balance sheet as of September 30, 2013 has been prepared as if the Six3 Systems acquisition had occurred on such date. The unaudited pro forma condensed consolidated statements of operations for the three months ended September 30, 2013 and the twelve months ended June 30, 2013 have been prepared as if the Six3 Systems acquisition had occurred on July 1, 2012.

The historical consolidated financial information of CACI and the financial information of Six3 Systems have been adjusted in the unaudited pro forma consolidated financial statements to give effect to pro forma events that are (1) directly attributable to the Six3 Systems acquisition, (2) factually supportable, and (3) with respect to the statements of operations, expected to have a continuing impact on the consolidated results. The unaudited pro forma consolidated financial information should be read in conjunction with the accompanying notes thereto. In addition, the unaudited pro forma consolidated financial information was based on and should be read in conjunction with the:

•

historical audited consolidated financial statements for the year ended June 30, 2013 and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of CACI included in its Annual Report on Form 10-K;

•

historical unaudited interim consolidated financial statements and related notes of CACI included in its Quarterly Report on Form 10-Q for the three months ended September 30, 2013; and

•

historical consolidated financial statements of Six3 Systems included as Exhibits 99.2 and 99.3 to this Current Report on Form 8-K/A.

The unaudited pro forma condensed consolidated financial statements are provided for informational purposes only and are not intended to represent or be indicative of what the actual consolidated results of operations or the consolidated financial position of CACI would have been had the Six3 Systems acquisition been completed as of the dates indicated. In addition, the unaudited pro forma condensed consolidated financial information does not purport to project the future financial position or operating results of CACI nor does it reflect any operational efficiency that may have been achieved if the acquisition had occurred on July 1, 2012 or September 30, 2013. Six3 Systems’ operating results included in the unaudited pro forma condensed consolidated statement of operations for the three months ended September 30, 2013 are not intended to represent or be indicative of operating results for a full year.

The unaudited pro forma consolidated financial information has been prepared using the acquisition method of accounting which requires, among other things, the assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date. We believe that the fair values assigned to the assets acquired and the liabilities assumed, as reflected in the pro forma financial statements, are based on reasonable assumptions. However, all components of the purchase price allocation are considered preliminary. CACI’s judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed can materially impact the results of operations. We anticipate finalizing the purchase price allocations before the end of our fiscal year ending June 30, 2014.

CACI International Inc and Subsidiaries

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of September 30, 2013

(in thousands)


	CACI International Inc			Six3 Systems		Pro Forma Adjustments			Pro Forma Consolidated

ASSETS
Current assets:
Cash and cash equivalents	$	102,725		$	20,201	$	(17,379	) 5(a)	$	105,547
Accounts receivable, net		635,126			68,764		—			703,890
Deferred income taxes		7,497			6,300		—			13,797
Prepaid expenses and other current assets		32,967			4,074		1,294	5(b)		38,335

Total current assets		778,315			99,339		(16,085	)		861,569

Goodwill		1,481,671			201,763		513,803	5(c)		2,197,237
Intangible assets, net		97,681			19,158		145,142	5(d)		261,981
Supplemental retirement savings plan assets		84,598			—		—			84,598
Property and equipment, net		63,628			8,024		—			71,652
Accounts receivable, long-term		9,961			—		—			9,961
Other long-term assets		34,395			1,317		4,571	5(e)		40,283

Total assets	$	2,550,249		$	329,601	$	647,431		$	3,527,281


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	299,046		$	2,400	$	28,772	5(f)	$	330,218
Accounts payable		139,516			5,973		—			145,489
Accrued compensation and benefits		153,549			36,757		—			190,306
Other accrued expenses and current liabilities		136,391			32,096		2,248	5(g)		170,735

Total current liabilities		728,502			77,226		31,020			836,748
Long-term debt, net of current portion		319,895			230,335		581,279	5(f)		1,131,509
Supplemental retirement savings plan obligations		77,577			—		—			77,577
Deferred income taxes		124,738			7,896		57,271	5(h)		189,905
Other long-term liabilities		53,756			—		—			53,756

Total liabilities		1,304,468			315,457		669,570			2,289,495


COMMITMENTS AND CONTINGENCIES
Shareholders’ equity:
Preferred stock		—			—		—			—
Common stock		4,136			735		(735	) 5(i)		4,136
Additional paid-in capital		529,151			—		—			529,151
Retained earnings		1,290,630			13,409		(21,404	) 5(j)		1,282,635
Accumulated other comprehensive loss		(3,042	)		—		—			(3,042	)
Treasury stock, at cost		(577,173	)		—		—			(577,173	)

Total CACI shareholders’ equity		1,243,702			14,144		(22,139	)		1,235,707
Noncontrolling interest in joint venture		2,079			—		—			2,079

Total shareholders’ equity		1,245,781			14,144		(22,139	)		1,237,786

Total liabilities and shareholders’ equity	$	2,550,249		$	329,601	$	647,431		$	3,527,281

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

CACI International Inc and Subsidiaries

Pro Forma Condensed Consolidated Statement of Operations

Three Months Ended September 30, 2013

(in thousands except per share amounts)


	CACI International Inc			Six3 Systems		Pro Forma Adjustments			Pro Forma Consolidated

Revenue	$	864,265		$	124,325	$	(2,240	) 6(a)	$	986,350
Costs of revenue:
Direct costs		601,422			89,151		(14,165	) 6(b)		676,408
Indirect costs and selling expenses		188,710			15,713		12,244	6(c)		216,667
Depreciation and amortization		12,951			2,448		3,062	6(d)		18,461

Total costs of revenue		803,083			107,312		1,141			911,536

Income from operations		61,182			17,013		(3,381	)		74,814
Interest expense and other, net		7,388			4,686		(9	) 6(e)		12,065

Income before income taxes		53,794			12,327		(3,372	)		62,749
Income taxes		20,402			4,387		(1,128	) 6(f)		23,661


Net income including portion attributable to noncontrolling interest in earnings of joint venture		33,392			7,940		(2,244	)		39,088
Noncontrolling interest in earnings of joint venture		(400	)		—		—			(400	)

Net income attributable to CACI	$	32,992		$	7,940	$	(2,244	)	$	38,688

Basic earnings per share	$	1.42							$	1.66

Diluted earnings per share	$	1.33							$	1.56

Weighted-average basic shares outstanding		23,314								23,314

Weighted-average diluted shares outstanding		24,835								24,835

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

CACI International Inc and Subsidiaries

Unaudited Pro Forma Condensed Consolidated Statements of Operations

Year Ended June 30, 2013

(in thousands except per share amounts)


	CACI International Inc			Six3 Systems		Pro Forma Adjustments			Pro Forma Consolidated

Revenue	$	3,681,990		$	436,870	$	2,587	6(a)	$	4,121,447
Costs of revenue:
Direct costs		2,535,606			321,325		(57,148	) 6(b)		2,799,783
Indirect costs and selling expenses		821,465			62,883		68,246	6(c)		952,594
Depreciation and amortization		54,078			10,456		12,895	6(d)		77,429

Total costs of revenue		3,411,149			394,664		23,993			3,829,806

Income from operations		270,841			42,206		(21,406	)		291,641
Interest expense and other, net		25,818			17,313		2,339	6(e)		45,470

Income before income taxes		245,023			24,893		(23,745	)		246,171
Income taxes		92,347			9,870		(8,875	) 6(f)		93,342


Net income including portion attributable to noncontrolling interest in earnings of joint venture		152,676			15,023		(14,870	)		152,829
Noncontrolling interest in earnings of joint venture		(987	)		—		—			(987	)

Net income attributable to CACI	$	151,689		$	15,023	$	(14,870	)	$	151,842

Basic earnings per share	$	6.59							$	6.60

Diluted earnings per share	$	6.35							$	6.36

Weighted-average basic shares outstanding		23,010								23,010

Weighted-average diluted shares outstanding		23,885								23,885

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

CACI INTERNATIONAL INC

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.

Description of Transaction

On November 15, 2013, CACI completed the acquisition of Six3 Systems, pursuant to an Agreement and Plan of Merger (the Merger Agreement), dated October 8, 2013, among CACI, Six3 Systems, Six3 Systems Holdings, LLC, CACI, Inc.-FEDERAL and CACI Acquisition II, Inc. (Merger Sub). In accordance with the terms of the Merger Agreement, Merger Sub’s separate corporate existence ceased and Six3 Systems continued as the surviving corporation. Pursuant to the Merger Agreement, holders of Six3 Systems common stock received, in the aggregate, $820 million in cash, reduced by Six3 Systems transaction related expenses and the amount of Six3 Systems’ indebtedness at closing and subject to adjustment based on changes in Six3 Systems’ Cash and Net Working Capital (each as defined in the Merger Agreement) at closing.

In connection with the acquisition, on November 15, 2013, CACI entered into a fifth amendment (the Amendment) to its credit agreement dated as of October 21, 2010 (the Credit Agreement). The Amendment modified the Credit Agreement to allow for the incurrence of $700 million in additional term loans and a $100 million increase in the revolving facility to finance the acquisition of Six3 Systems.

Note 2.

Basis of Presentation

The unaudited pro forma condensed consolidated balance sheet as of September 30, 2013, and the unaudited pro forma condensed consolidated statements of operations for the three months ended September 30, 2013 and for the year ended June 30, 2013, are based on the historical financial statements of CACI, after giving effect to CACI’s acquisition of Six3 Systems and the assumptions and adjustments described in the notes herein. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2013 is presented as if the acquisition occurred on September 30, 2013. The unaudited pro forma condensed consolidated statements of operations for the three months ended September 30, 2013 and for the year ended June 30, 2013, are presented as if the acquisition occurred on July 1, 2012.

The unaudited pro forma condensed consolidated financial statements are not intended to represent or be indicative of the results of operations or financial position of CACI that would have been reported had the acquisition been completed as of the dates presented, and should not be taken as representative of the future results of operations or financial position of CACI. The unaudited pro forma financial statements, including the notes thereto, do not reflect any potential operating synergies that CACI may achieve with respect to the combined companies. The unaudited pro forma condensed consolidated financial statements and notes thereto should be read in conjunction with the historical financial statements of CACI included in the annual report on Form 10-K for the year ended June 30, 2013 filed with the Securities and Exchange Commission (the SEC) on August 27, 2013 and the quarterly report on Form 10-Q for the three months ended September 30, 2013 filed with the SEC on November 1, 2013, and in conjunction with the historical financial statements of Six3 Systems presented in Exhibits 99.2 and 99.3 of this Form 8-K/A.

CACI INTERNATIONAL INC

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Note 3.

Accounting Policies

Adjustments to Six3 Systems’ historical results were required to conform Six3 Systems’ accounting policies regarding revenue recognition to CACI’s accounting policies. At this time, CACI is not aware of any other differences that would have a material impact on the pro forma financial statements.

Note 4.

Purchase Price Allocation

CACI’s acquisition of Six3 Systems was accounted for using the acquisition method of accounting which requires, among other things, that the assets acquired and the liabilities assumed be recognized at their fair values as of the acquisition date. The initial purchase consideration paid at closing to acquire Six3 Systems was $820.0 million plus $25.8 million representing the estimated cash and net working capital adjustment, as defined in the agreement. Of the payment made at closing, $40.0 million was deposited into an escrow account pending final determination of the net cash and working capital acquired and to secure the sellers’ indemnification obligations (the Indemnification Amount). Any remaining Indemnification Amount at the end of the indemnification period will be distributed to the sellers.

CACI is in the process of finalizing its valuation of the assets acquired and liabilities assumed. Based on the Company’s preliminary valuation, the total estimated consideration of $847.3 million has been allocated to assets acquired (including identifiable intangible assets and goodwill) and liabilities assumed (including deferred taxes on identifiable intangible assets that are not deductible for income tax purposes), as follows (in thousands):


Cash	$	10,166
Accounts receivable		80,615
Prepaid expenses and other current assets		17,551
Property and equipment		8,051
Customer contracts and customer relationships		164,300
Goodwill		702,747
Other assets		598
Accounts payable		(9,047	)
Accrued expenses and other current liabilities		(63,417	)
Long-term deferred tax liability		(64,275	)


Total estimated consideration	$	847,289

The value attributed to customer contracts and customer relationships is being amortized on an accelerated basis over approximately 14 years.

CACI INTERNATIONAL INC

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Note 5.

Pro Forma Adjustments – Balance Sheet

The following pro forma adjustments are included in the unaudited pro forma condensed consolidated balance sheet:

(a)

To reflect the cash outflows as a result of the Six3 acquisition, consisting of the following (in thousands):


Proceeds from additional borrowing	$	845,000
Purchase consideration paid		(845,850	)
Payment of financing fees		(11,962	)
Payment of CACI transaction costs		(4,567	)


Adjustment to cash and cash equivalents	$	(17,379	)

(b)

To reflect changes in prepaid expenses and other current assets, as follows (in thousands):


Increase income tax receivable associated with accrued transaction costs	$	1,561
Eliminate Six3 Systems capitalized financing fees		(267	)


Adjustment to prepaid expenses and other current assets	$	1,294

(c)

To eliminate the Six3 Systems historical goodwill and record the estimated fair value of the goodwill that would have been recognized if the acquisition occurred on September 30, 2013.

(d)

To eliminate the Six3 Systems historical intangible assets and record the estimated fair value at the date of acquisition of the identifiable intangible assets acquired.

(e)

To reflect changes in other long-term assets, as follows (in thousands):


Capitalized financing fees associated with additional borrowings recorded within other long-term assets	$	5,614
Eliminate Six3 Systems capitalized financing fees		(1,043	)


Adjustment to other long-term assets	$	4,571

(f)

To reflect changes in long-term debt, as follows (in thousands):


	Current Portion of Long-Term Debt			Long-Term Debt
Additional borrowing	$	31,172		$	813,828
Eliminate Six3 Systems historical debt paid off at closing		(2,400	)		(230,335	)
Capitalized financing fees associated with additional borrowings recorded within long-term debt		—			(2,214	)


Adjustment to long-term debt	$	28,772		$	581,279

CACI INTERNATIONAL INC

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(g)

To reflect changes in other accrued expenses and current liabilities, as follows (in thousands):


Record estimated net working capital adjustment to be paid to sellers upon finalization of closing date balance sheet	$	1,439
Accrue CACI transaction costs not paid as of closing		856
Eliminate accrued interest associated with Six3 Systems historical debt		(47	)


Adjustment to other accrued expenses and current liabilities	$	2,248

(h)

To eliminate the Six3 Systems deferred tax liability associated with its historical intangible assets and record the CACI deferred tax liability associated with future amortization of identifiable intangibles recognized in the acquisition, which are not deductible for income tax purposes.

(i)

To eliminate Six3 Systems’ historical common stock balance.

(j)

To record adjustments to retained earnings to eliminate Six3 Systems’ historical retained earnings, and the impact on retained earnings of the pro forma adjustments.

Note 6.

Pro Forma Adjustments – Statements of Operations

The following pro forma adjustments are included in the unaudited pro forma condensed consolidated statements of operations:

(a)

To conform Six3 Systems’ revenue recognition methodology to CACI’s policies.

(b)

To reclassify Six3 Systems’ fringe benefits attributable to direct labor from direct costs to indirect costs and selling expenses, as CACI includes fringe benefits attributable to both direct and indirect labor within indirect costs and selling expenses.

(c)

To reflect changes in indirect costs and selling expenses, as follows (in thousands):


	Three Months Ended September 30, 2013			Year Ended June 30, 2013
Reclassification of Six3 Systems’ fringe expense – see (b) above	$	14,165		$	57,148
Retention bonus expense		825			6,700
Eliminate CACI and Six3 Systems’ acquisition costs		(2,746	)		—
Loss on extinguishment associated with additional financing		—			4,398


Adjustment to indirect costs and selling expenses	$	12,244		$	68,246

In connection with the acquisition, Six3 Systems entered into retention agreements with certain Six3 executives. The agreements provide for a payment upon the one and two year anniversaries of the acquisition, dependent upon continued employment by the executive as an employee of the Company. The retention bonus expense will be recorded in the post-acquisition period as the employees provide service.

CACI INTERNATIONAL INC

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

In connection with the additional borrowings under CACI’s credit facility to finance the acquisition, the Company evaluated each creditor with ownership in the debt before and after the additional borrowings to determine whether the additional borrowings should be accounted for as a modification or an extinguishment of debt as it relates to each individual holder. As a result of this analysis, the Company recorded a loss on extinguishment within indirect costs and selling expenses in the period in which the acquisition occurred and the additional debt was incurred.

(d)

To reflect changes in depreciation and amortization expense, as follows (in thousands):


	Three Months Ended September 30, 2013			Year Ended June 30, 2013
Estimated amortization expense of acquired intangible assets	$	4,819		$	20,572
Eliminate Six3 Systems’ historical intangible asset amortization expense		(1,757	)		(7,677	)


Adjustment to depreciation and amortization expense	$	3,062		$	12,895

(e)

To reflect changes in interest expense and other, net, as follows (in thousands):


	Three Months Ended September 30, 2013			Year Ended June 30, 2013
Estimated interest expense associated with additional CACI borrowings	$	4,392		$	18,092
Amortization of deferred financing fees associated with additional CACI borrowings		385			1,559
Eliminate Six3 Systems’ historical interest expense		(4,786	)		(17,312	)


Adjustment to interest expense and other, net	$	(9	)	$	2,339

Estimated interest expense associated with the additional borrowing was computed using the interest rate on the additional borrowing in effect on the date of the borrowing.

(f)

To reflect the tax effect of the pro forma adjustments and the effective tax rate that would have been in effect had the acquisition closed on July 1, 2012.

Note 7.

Earnings per Share

Because CACI paid cash to acquire Six3 Systems and did not issue any stock or stock-based awards in connection with the Six3 Systems acquisition, the number of weighted average common shares outstanding used to compute pro forma basic and diluted earnings per share are the same as the CACI historical amounts.

CACI INTERNATIONAL INC /DE/ - FORM 8-K/A - EX-99.4 - January 30, 2014

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