CACI International Inc (CACI) 2005 Q4 法說會逐字稿

Good day, everyone. Welcome to the CACI International fourth quarter fiscal 2005 earnings conference call. Today's call is being recorded. At this time, all lines are in a listen-only mode. Later, we will announce the opportunity for questions and instructions will be given at that time. If you should need any assistance during this call, please press the star or asterisk key followed by zero and someone will help you. At this time, I would like to turn the conference over to Mr. David Dragics. Please go ahead, sir.

Thank you, Gwen, and good morning, ladies and gentlemen. I'm Dave Dragics, Vice President of Investor Relations of CACI International. We're very pleased that you're able to participate with us today. We are providing presentation slides during our call and will also make every effort to keep all of you on the same page as we are. So let's move to the next exhibit. Before we begin our discussion this morning, I'd like to make our customary, but very important, statement regarding CACI's written around oral disclosures and commentary. There will be statements in this call that do not address historical fact and as such constitute forward-looking statements under current law.

These statements are subject to important factors that could cause actual results to differ materially from the statements made today. The primary factors that could cause actual results to differ materially from those anticipated are listed at the bottom of last evening's earnings release and are described in the Company's Securities and Exchange Commission filings. Our Safe Harbor Statement is include on this exhibit and should be incorporated as part of any transcript of this call. Moving to the next exhibit, to open up our discussion this morning, here is Jack London, Chairman, President and CEO of CACI International.

Thank you, Dave. And good morning, ladies and gentlemen, and thank you for joining us today. I'd also like to extend a personal welcome to those of who you are new to CACI into our call this morning. We appreciate your interest and invite you to join us on our future conference calls as well. With me today to discuss our results and answer your questions are Steve Waechter, our Chief Financial Officer, Bill Fairl, Chief Operating Officer of our U.S. operations, and by phone from the United Kingdom, Greg Bradford, Chief Executive of CACI limited UK. I also have the distinct pleasure today of introducing the newest member of our top management team, Mr. Paul M. Cofoni, the new President of CACI's U.S. operations. Paul is a highly respected senior executive in the IT industry and in the federal government community. We are very pleased to have him on board.

Paul joins us from Computer Sciences Corporation, where he most recently was president of the federal sector, which had revenues of approximately $5 billion in 2005. He brings CACI more than 30 years of outstanding senior level experience and solid leadership with a superb record of customer satisfaction and success on large competitive contracts. Please welcome the President of CACI's U.S. operations, Mr. Paul M. Confoni.

Thank you, Jack. I am honored to join a company that has a solid reputation and ambitious growth objectives and that offers the solutions and services our federal agencies rely on to complete their vital missions. I am looking forward to being a champion of our fine name in the federal market. CACI is a first class operation with a long history of outstanding performance. When I was at CSC, CACI was regarded as a strong competitor, which makes me doubly happy to be on the CACI team today. My goals as president include broadening our focus at all federal agencies and placing special emphasis on further integrating CACI capabilities into Homeland Security, the intelligence community, and federal communications programs. I also look forward to a rewarding and lasting partnership with Dr. London and all our outstanding CACI employees. We have exciting new opportunities for growth and you can be sure we will continue to achieve and succeed in all our markets. With that, let me turn the call back over to you, Jack.

Thank you, Paul. And indeed, welcome aboard. In fiscal 2005, CACI delivered the best year-end and fourth quarter profits and revenue in our Company's history. We recorded total growth of 42%, with total revenues of $1.62 billion and total net earnings of $85.3 million. Our organic growth rate was 16%. We set new growth records in every quarter of the fiscal year. This strong organic growth combined with our successful acquisition strategy has doubled our business in just 24 months from 843 million in 2003 to 1.62 billion this year. CACI is a strong growth company and a growth market, and we are confident that we can maintain our historic rate of growth in fiscal 2006. We will do this by continuing to anticipate and adapt ahead of change, pursue smart, carefully selected contract opportunities, understand and respond to our customer's needs, and make smart acquisitions and smart hires.

Next slide, please. The federal government drives our business and approximately 75% of our revenue comes from the defense and intelligence communities. So in looking ahead for CACI, we will be considering the national security challenges facing our nation and the national strategies for addressing them. I want to note that one of the reasons we have been successful all these years, we believe, has been our ability to understand and anticipate what the government must do to achieve the nation's operational and security goals. Here's an example to illustrate my point. When the cold war ended and the defense and intelligence community budgets fell in the '90s, we continued to grow at 13% a year by providing IT and network services in those critical markets. And when defense budgets rose again at the end of the decade, we were growing even more rapidly, at well over 20% per year.

And we still see contractor support expanding for our services. Recently General Richard Myers, Chairman of the Joint Chiefs of Staff, spoke about contractor support for America's military at a town hall meeting on June 29, 2005. He said, and I quote, we at DOD rely quite heavily on the private sector and on contractors. And whether it's logistics in Iraq, or logistics in Afghanistan, or think tank work and analysis that has to go on here in Washington or at other major command headquarters, we get great services out of these folks. And great service is what CACI provides to our government clients. In about three weeks, on September the 11th, we will all mark the fourth anniversary of the terrorist attacks that alerted every American to the dangers we now face. The Jihadist terrorist attacks since then, most recently in London, England, and Sharm El Sheikh, Egypt remind us every day of these dangers and growing challenges.

In all of this, the world has changed dramatically. Today's battle field is asymmetric. Because our enemies cannot match us in the linear battle space, they strike the softest targets, killing innocent people to create fear and uncertainty, trying to sap our will to prevail. To win this global war on terrorism, we simply must exploit information technology to flush out our enemies and anticipate their locations and activities. We have to have and use information tools to figure out what their next moves will be so we can preempt and disrupt their attacks. And as we watch closely, terrorist and rogue nation activity in every theater around the world, we know global terrorism won't disappear overnight and Homeland Security remains indeed a critical challenge. As America's intelligence community presses ahead to meet terrorist threats and monitor clandestine activities, for example, in Iran, North Korea and Syria, CACI provides the services and solutions our customers need to carry out their missions.

But history also tells us that the specific challenges will change. For example, another global hot spot that is emerging is the great shift in economic power, as China flexes its muscles in the marketplace. With over 1.3 billion people and a rapidly growing economy, China's political direction will be of concern for the U.S. and intelligence gathering systems will certainly be needed more robustly as we go forward. In fact, intelligence solutions are the fastest growing element of CACI's business with 60% compound average growth over the last couple of years and strong growth predicted in the year ahead. Among the greatest challenges for our intelligence agencies is the sheer physical volume of the data they must process. CACI supports this information gathering and data analysis activity in a number of ways. For example, our networking capabilities help knit together America's intelligence, defense, law enforcement, and Homeland Security agencies, so that they can collaborate effectively and share information securely.

Our government also faces significant challenges in streamlining its processes. Here, CACI software and system integration solutions help federal agencies transform their business processes and support E-government initiatives to reduce paperwork and improve service. And CACI success has been recognized in the media. The Wall Street Journal rates us number one in computer services industry for five-year and ten-year average returns to shareholders. Washington Technology places us 17th among the top 100 federal prime contractors, and Business 2.0 magazine places us 30th among the 100 fastest growing technology companies. In our M&A activity, we are pleased by the outstanding financial performance from the Defense and Intelligence Group that we acquired from American Management Systems in May of 2004. Our AMS acquisition was recognized by the Northern Virginia Technology Council as its, quote, hottest deal in 2004. Next exhibit, please.

As we look to the year ahead, let me highlight some developing trends we're watching in our market space. The Department of Defense will spend more than $500 billion this fiscal year, almost $100 billion more than originally forecasted. In congress, the house has approved defense appropriations of $409 billion for FY '06, including $45 billion in supplemental spending. We anticipate there will be an additional supplemental with final defense spending totaling approximately $500 billion during FY '06. We expect the government to operate on a continuing resolution beginning October 1st, and without impact on CACI's business operations. Intelligence community spending will continue to focus on two areas that CACI supports actively. First, improving the IT structure and management of intelligence systems, and, two, assembling teams of intelligence officers and analysts with the skills to respond to today's threats.

We also expect to play an expanding role in government transformation, as budget pressures require almost every agency to reexamine its business processes and organizational structures. Next slide, please. That's how things look at CACI as we begin another year. I'll be happy to respond to your questions later in the call, but now I want to turn to the details of our financial operational metrics. And for that information, let me turn over the microphone to our Chief Financial Officer, Steve Waechter. He will then be followed by Bill Fairl, our Chief Operating Officer for U.S. operations. Steve, over to you.

Thank you, Jack, and good morning, everyone. Let's go to Exhibit Number Nine and I'll give you details on our financial results and other key metrics. Our revenue in the quarter was up 20% to $429.8 million and our federal business grew 20% during the fourth quarter and represented 94% of our total revenue. The organic growth rate for CACI was approximately 14% during the quarter and for the full year CACI's organic growth rate was 16%. We have averaged 15.6% organic growth over the past four years and believe our targeted organic growth rates of 12% to 15% remains very achievable. Diluted earnings per share for the quarter were $0.76 per diluted share, up $0.10 -- 10% compared with the prior year's very strong quarter of $0.69 per diluted share. Let's take a look at some of our key income statement, balance sheet and operating metrics during the quarter. For this, please go to Exhibit Number Ten.

Our operating margin was 9.4% compared to 10% in the fourth quarter of last year. In the fourth quarter of last year, as you may recall, timing of the receipt of award fees on several contracts and increased volume on one contract with fixed unit pricing drove our margins higher than normal. For the year, operating margins improved by 20 basis points to 9.3%. This improvement was driven by the higher margin business acquired with the AMS Defense and Intelligence Group, economies of scale related with this acquisition, and the continued growth from higher margin national security and intelligence business. We were able to improve operating margins, despite incurring significant costs related to the implementation of Sarbanes-Oxley, legal costs related with Iraq, and non-cash charges related with the expensing of restricted stock units. Moving to the next Exhibit, Number 11. Our operating cash flow for the year was $137 million, up 81% over last year.

We ended the year with 133 million in cash and equivalents at fiscal year-end and our outstanding debt was down to $347 million. Our strong operating cash flow performance was the result of our successful collection activities. Day sales outstanding at the end of the quarter were 70, down from the prior quarter's 76. As we begin fiscal year '06, our strong balance sheet coupled with our credit facility and recent shelf registration, gives us a substantial acquisition war chest and the credibility to significantly leverage up for acquisitions in excess of $1 billion. Let's move to the next exhibit. With respect to contract metrics, approximately 82% of our revenue this past quarter was earned as a prime contractor. And for the quarter, 55% of our revenue came from time and materials work, 26% from cost reimbursable and 19% from fixed price work.

Our United Kingdom operation reported 15.7 million in revenue during the quarter, 18% more than reported in the year earlier quarter. For the full year, the operation reported 55.8 million in revenue, an increase of 20% over last year. Our United Kingdom operation is well positioned to replicate its success in 2005 in the coming fiscal year. With respect to Sarbanes-Oxley, we have no material weaknesses in our control systems and we expect to submit a clean report with our 10-K. Moving to Exhibit Number 13. Our strategic goal is to grow by 20% or more every year through a combination of organic growth and acquisitions. And although our guidance for fiscal year '06 does not include any future potential acquisitions, they remain a major component of our strategic plan for profitability growth. We are reaffirming our June 23rd guidance, but are doing so now by showing the estimated dollar impact of stock option expenses instead of just the percentage impact.

The Company is adopting FAS 123R this quarter. As a result, we are required to recognize stock option expense in our financial statements beginning this quarter. Our income, margin and EPS numbers will all include stock option expense and going forward will be reported in this manner. I would urge all analysts who publish models and earnings expectations for CACI to include stock option expenses in their models. We want to insure that the consensus estimates for CACI are based upon GAAP results and therefore strongly suggest that your models include stock option expenses. Now for our guidance, please go to Exhibit Number 14. As I go through the guidance, I will reference margin income and EPS amounts that reflect the expensing of stock options. Comparative, pro forma numbers with and without stock option expenses are displayed on the slides.

I encourage to you follow Exhibit Number 14 closely. For the first quarter of fiscal year '06, we estimate that our revenue will range between $420 and $430 million. We expect our operating margin for the quarter to range from 8% to 8.1% and that net income will range from $18.6 million to $19.3 million. Finally, we expect diluted earnings per share for the quarter to be between $0.60 and $0.62 per diluted share and that diluted weighted average shares will be 30.9 million. Our general practice is to issue most of our stock options at the beginning of each fiscal year and amortize them over a period of time. However, for certain grants, the full value of the underlying grant is expensed immediately on the date of the grant. As a result, beginning this year and going forward, the effect of our stock option expense for the first quarter of any fiscal year will tend to be higher than the effect for the entire fiscal year.

In accordance with the guidance we have receive on implementation of FAS 123R, our prior year pro forma results do not include the immediate expense recognition for similar grants issued last year. For all of fiscal 2006, we expect revenue will range from 1.775 billion to 1.850 billion and we expect net income for the full year to be in the range of 88 million to 92.5 million. Diluted earnings per share is expected to range from $2.84 to $2.98. And fully diluted shares for all of fiscal year 2006 are expected to be approximately 31 million. We continue to anticipate that CACI's operating cash flow will be in the range of 135 million to 150 million for fiscal year '06. And I would remind you expensing of stock options is a non-cash event. In the next exhibit, I would like to note that in our press releases and during our conference calls as we go through fiscal 2006, we will be reporting our results in accordance with GAAP. But in addition, we will highlight the pro forma results of the same period of fiscal year 2005, so that you will be able to make meaningful comparisons.

That completes my financial review. Now here is Bill Fairl, who will cover our details on our U.S.-based operations. Bill?

Thanks, Steve, and good morning, everyone. Let's go to Exhibit Number 16 and I'll start by discussing some of our key operating metrics. Our fourth quarter was another quarter of extremely strong performance in our U.S.-based operations, driven by our support of the mission critical needs of our Army, Navy and intelligence community customers. Contract funding orders totaled $433 million, and just over $1.8 billion for the full fiscal year. Organic growth for our U.S.-based operations was 13% in the quarter and approximately 16% for all of fiscal '05. In the next exhibit, revenue from our DOD customers increased nearly 24% during the quarter. Our work with the U.S. Army, which is our largest customer, is driven by the need to support the war fighter in southwest Asia, particularly through our support of tactical military intelligence, communications, and logistics.

Our work with the U.S. Navy remains strong, with increased levels of work coming through the SeaPorts enhanced contract vehicle and from our growing presence in supporting naval aviation. In our DOD financial management practice, we continue to expand our ability to deliver enhanced services and solutions, which positions CACI to participate in the modernization of Legacy business systems. Within the DOD acquisition arena, this past month we successfully met another major milestone in the development of the standard procurement system. In our work with the intelligence community, we have seen a significant expansion of our work and this is now one of CACI's fastest growing areas. Our intel revenue grew by 40% for all of fiscal '05 and represented approximately 26% of our fiscal '05 revenue.

Our federal civilian revenue grew about 7% during the quarter. The primary growth drivers in this area were analysis and systems support of intelligence agencies and transformation work performed by our defense and intelligence group. Next exhibit, please. Now, I want to update on you some of our business development metrics. I'm very pleased to report that our proposal activity remains extremely strong and is, in fact, increasing. At the end of our fiscal '05 fourth quarter, we had approximately $2 billion in submittal proposals under evaluations. And we expect that essentially all of these will be awarded by this December. During our first and second quarters of fiscal '06, I anticipate that we will submit more than $4.3 billion in additional proposals. And to give you a little more detail on our quarter one and quarter two submittals, we expect that 15 of those will be $100 million or greater.

Now, looking back over fiscal '05, we had more than $1.2 billion in contract awards. In addition to the major wins we described in our earnings release, we added important new broad-scope contract vehicles, such as a business and financial management contract with NAVAIR worth up to $135 million. And a blanket purchase agreement to provide information technology support to GSA with a ceiling of $150 million. Looking ahead into our fiscal '06, our pipeline of qualified opportunities over the next 24 months stands at approximately $13 billion, and that's an all time high for us. In addition to the quarter one and quarter two proposal submittals I mentioned earlier, we are currently pursuing 17 longer-lead tier one deals, meaning those deals greater than $100 million. I want to stress that these 17 are in addition to the 15 $100 million or greater deals that we're going to submit in our first and second quarters of fiscal '06. I think that gives you a really clear indication of just how active and strong our pipeline is, particularly for large deals.

Moving to Exhibit Number 19. I want to comment on some trends we are seeing in the federal market that specifically relate to and favor CACI. First, as I noted last quarter, with the lengthening of the procurement cycle for new contracts in some parts of the government, our clients continue to utilize our existing long-term contracts that have virtually unlimited contract ceiling. Second, we believe that our support of army logistics and tactical intelligence programs will continue to grow based in part on the requirement to have based activities so mobile deploying forces can use already established activities, be they signal hubs or logistics facilities. Third, the DOD is going to continue to focus on transformation, particularly process and system management improvements, which will create savings within department's budgets and these are extremely favorable initiatives for CACI.

And finally, we see significant potential growth in our U.S. Coastguard work as a result of that service's increased Homeland Security responsibilities. And we believe our support of both the law enforcement and the intelligence communities will continue to result in solid growth in our business. In summary, we're very pleased with our results for our fourth quarter and all of fiscal '05 and, just as important, our position in the federal marketplace just couldn't be better for continuing our growth momentum in fiscal '06 and beyond, given our nation's strategic focus on national defense, intelligence, Homeland Security, and the transformation of government. If you'll turn to the next exhibit, our fiscal '05 contract funding, which grew by 34% over fiscal '04, is at an all time high and gives us a terrific launch ramp for fiscal '06. Companywide, we have nearly 600 contract-funded positions we are filling. Approximately 80% of these require that the individual have a security clearance of some type.

Our opportunity pipeline, now at approximately $13 billion, is the strongest it's ever been. Our clients are now and will continue to be very well funded as we support them in their national priority missions. We look forward to fiscal '06 being another year of outstanding performance for our U.S.-based operations. Jack, that concludes my remarks.

Okay. Well, thanks, Bill, and also thank you, Steve, for the updates on our operating and financial metrics. Next exhibit, please. Fiscal 2005, another terrific year for CACI. During the past 24 months, we have doubled our revenue and net income. We're making tremendous progress on our goals to reach 3 billion in annual revenue by our fiscal year 2009. And we are excited about our new executive management team. Talented leaders like Paul Cofoni, Bill Fairl, Randy Fuerst and Keith Kellogg, who bring valuable senior level experience and extensive knowledge about CACI's marketplace. And we have built a strong financial base on top to support our aggressive M&A plans going forward. We're in hot pursuit of a highly respected tier one position in the federal IT market space.

We believe the high priority areas in which we operate and support the federal government, national defense, intelligence, Homeland Security, and government transformation, will continue to be the robust market for the foreseeable future. We also have the skilled people, the experience, the Legacies, the capabilities to continue to add value to our customer's needs and requirements. Finally, I want to take this opportunity to thank all the employees of CACI around the world for their dedication and support. They provide the client relationships that enable our success and they make possible the success of our customers as well. I would like to thank our investors as well for your continued support, and we look forward to continuing our growth and success in fiscal year 2006 and beyond. At this point, we're ready to open our discussion up to your questions. So, Gwen, I'll turn the microphone back over to you to open up the questioning.

Thank you. [OPERATOR INSTRUCTIONS] We'll go first to Brian Gesuale with Raymond James.

Yes, good morning, guys. Steve, wanted to dig into the backlog number. You have a few major recompetes in '06. Wondering if you can give us some indication on the quantitative side how that effected backlog as we're ramping towards the end of these contract lives, and maybe Bill can chime in on what the acquisition strategy and plan is for some of these major awards.

Yes, Brian, this is Steve. I'm going to turn it over to Bill because I think he can better address it than I can. Bill?

Okay. Brian, did you say FY '06 or FY '05?

I think we need to repeat the question, pour it out a little bit.

Yes, I guess the contracts I'm talking about, I think you'll submit them in '05 with a late-- in calendar year '05 with kind of a middle year acquisition strategy. I mean the major ones I'm looking at are TEFOS and Mega and some of those type of vehicles.

Oh, those are fiscal '06 activities, Brian.

So my question is with those contracts, you know, obviously in fiscal year '04's backlog, those were pretty substantial. I imagine as we tail down towards the end of those vehicles, the year-over-year comparison on those major contracts is somewhat less. Can you kind of talk about the acquisition strategy and maybe put some numbers around that theory?

Yes. To your point on those two particular contracts, we are in the final years of those contracts, which means the, if you will, the unfunded part of the backlog there, which I think is what you're getting at, is essentially come near the end of its cycle here, if you will. So the TEFOS contract and the Mega contract, the solicitations are both for fiscal year '06 events for us and the award of the TEFOS contract would be in fiscal '06 as well. So that part of it would be recharged, if you will.

Okay.

We'll go next to Tom Meagher with FBR.

Yes, good morning. How are you all doing? Maybe I could start off, Steve, with a couple of housekeeping questions. First, could you give us the cash interest taxes number for '05, the DOJ revenue in the quarter and then if you had any kind of an operating cash flow projection going forward?

On the-- let me break it into parts here. I think DOJ revenue during the quarter was approximately 23 million for the quarter and that compared with about 29 million a year ago. And for the year it was 93 million compared to 108 million a year ago. Tom, what was your other question on tax?

If you had a cash interest in taxes number for '05?

That's in the cash flow statement.

Cash what?

Cash interest paid for taxes.

I don't have that handy. Okay. we can do that off line.

We'll get back to you, Tom.

Okay, thank you. And then, Steve, if you had any kind of an operating cash flow projection for '06?

In '06 we indicated 135 to 150 million is what we're looking at, Tom.

Okay. And then maybe, Bill, one question for you. Obviously there has been a lot of chatter here recently in the press about a potential withdrawal of at least some of our troops from Iraq. I'm just wondering, given the amount of work you do over there, what effect would that have on your service support work and are those, in particular the human assets you're using over there, are they re-deployable somewhere else if that were to occur?

Well, maybe I can address that. We hear a lot of talk about it, but I think we'll have to wait to see what actually happens. In terms of CACI's operations, we do have opportunities to shift our people and we have, as indicated, 600 some odd openings for security credentialed people. So I think the impact probably would be minimal. In fact, the other side of that coin is we have actually a very small percentage of our business actually devoted inside Iraq. We do a lot of work supporting the war through intelligence systems and IT and so on, but the actual employment in the country is very small. Relative to our size.

Jack, I would add to that, Tom, that I think the issue you mention is still very much up in the air, if you will, but even if that were to happen, I think there would still be the reliance on contractor personnel for certain, if you will, back office kinds of functions.

Thank you. We'll go next to Sandra Notardonato with Robert Baird.

Hi. I was wondering if you could address the sequential decline in absolute dollar spend on the SG&A line? And also why the gross margins declined on a quarterly basis, please?

I thank you. I'll ask Steve to handle that one, please.

Sure. With respect to the SG&A, there are many factors for the lower SG&A, certainly relative to third quarter. The decrease is primarily related to kind of year-end true-ups with respect to fringe benefits and other payroll-related costs. We establish certain provisional factors for accruing our benefits throughout the year and we adjust them to our actuals in the fourth quarter. That's a part of the rational there. I think your other question related to gross margins, I believe? Was that the question?

Yes, that was the question.

The gross margins are primarily reflective of a shift in our contract mix to more cost reimbursable contracts, which carry lower gross margins in general and some higher reimbursable costs on time and materials contracts, otherwise known as ODCs. And I point out that 25% of our revenue this year came from cost reimbursable compared to 21% a year ago. That's primarily because of the AMS acquisition.

What were pass throughs in the quarter, Steve?

On the ODC, we give it a little differently here. ODCs were higher in the quarter. We do it as a percent as-- our total direct costs. They were about 55% during the quarter, which is higher than the average we typically see, which is around 51%.

Okay, and what drove that?

Just, again, the mix of contracts and the revenue -- the requirements basically from our customers on some of the subcontracts.

If I could follow-up with one more. I guess if I look at the decline in SG&A spend and I look at a flat backlog number, one, an outsider could say, you know, maybe CACI isn't reinvesting in its growth. How would you comment on that?

Well, I'd like to say that we're very attuned to continuing the investment in our future. We have a very robust pipeline of bids and we are going to be pursuing those, as Bill indicated. So I don't think one can draw that conclusion on a short-term basis like that.

In fact, I would add to that, Jack. I think as you roll forward, it gets a little complicated as you look at our forecast going forward, again, because of this impact of our adoption of FAS 123. You'll see on a relative basis, as SG&A costs as a percent to revenues will increase next first quarter and for the year. Lot of that is stock option expenses, but we are investing heavily in our bids and proposals activity and just across the board.

Great, thank you.

We'll go next to John Mahoney with BB&T.

Thank you very much. My questions have already been answered, but congratulations on a nice quarter.

Thanks, John.

Thank you, and as a reminder, if your question has been answered already, you can press star, two to remove yourself from the queue and please limit yourself to one question and one follow-up question. We'll go next to Jason Kupferberg with UBS.

Good morning, guys.

Good morning.

Question for Steve and maybe Bill wants to chime in as well. Just coming back to the backlog here, given that there's no growth in that metric year-over-year, what -- what sort of general levels of contract awards and/or fundings do we need to kind of look for going forward to kind of frame where we might end up in the organic growth range for fiscal '06 in that kind of 10% to 15% card or maybe it's 9 to 14 now that you guys are guiding to?

Well, as the-- this is Jack. I want to address that broadly. The business has shifted over the last few years because of the intensity of the use of our IDIQ and open GSA schedule kinds of contracts, which we have never, by tradition we're very conservative, we never put the values of those into the backlog, so they appear as funding numbers. So I would say just as a general guideline, if you want, which we will not use that formally as a guideline, but a guideline of our bookings, funded bookings that would parallel, if you will, the guidance as we go forward, gives you an indication of our success in meeting those objectives. Although even that can be lumpy.

Jason, it's Steve. Just as a general indicator, we believe that the funded backlog is clearly a key indicator of what's going to come in the next year. And as you can see, we're up about 19% on that funded backlog today. And then going forward, in terms of bid proposal, you heard Bill talk about the pipeline that's out there. I would say that's -- if we're anywhere close to being as successful as we have in the past on that, we're going have enough new-new business to more than fuel a 12% to 15% growth rate.

Jason, it's Bill. If I could just add to that, I'll give you an example of what Dr. London was talking about. Our SeaPort enhanced contract vehicle, which we have as well as others, that has essentially no contract ceiling on it. That doesn't show up in our unfunded backlog anywhere. It doesn't show up at all until we get a funded task quarter, in which case it goes immediately into funded backlog, which goes to Steve's point, that that's the real true metric to look at here, if you will. We could put all of our Navy work on that for the foreseeable future and you never see an increase in the unfunded backlog. Look at the funded backlog.

Okay. That's helpful. Just as a follow-up, Bill, can you talk about kind of here in the near-term as we draw near the end of the government's fiscal year, the very busy September quarter traditionally, what are you guys looking for over the next six weeks? Are you looking for a real surge here in contract award activity and maybe, as part of your commentary around that, can you comment on the-- I believe there were five, you know, what we would call large deals that you guys currently had submitted and under evaluation as of last quarter. How have those five panned out over the last four months or so since we had an earnings call?

Okay, thank you. I'm going to ask Bill dial onto that.

Okay. Jason, all indications are that as we roll into the last six weeks of this quarter, that it will be like quarters in the past and nobody will be taking any vacations in September and we'll be burning the midnight oil here and contract activities will be going back and forth. And that's really when all this seems to really come to a head in the September timeframe here. So I guess on both counts there, all indications are that this September will be like Septembers in the past.

We'll go next to Brett Manderfeld with Piper Jaffray.

Related to that question, Bill, I think on your initial guidance for this year you had mentioned $2.7 billion in awards that were expected by the end of the government's fiscal year in September. Is that still a reasonable number or is some of that kind of slipped here into the December quarter as well?

Brett, I think for the most part, that's still more or less on track to happen here by the end of our first fiscal quarter. And, again, I want to emphasize a point I made last time. Those are awards of those contract vehicles. I would love it if every single one of them went to us, but -- .

They are decisions--

Decisions, if you will.

Of course, yes. And just one follow-up. Steve, on the option expense side of things, you know, I guess I understand that the first quarter there will be an acceleration, but for the rest of the year, should it be fairly linear in terms of the impact on earnings? Thanks.

Yes, yes, it will be.

Okay, great. Thank you.

Get the blip in the first quarter and then it levels out.

We'll go next to Laura Lederman with William Blair.

Yes, a few questions. I don't know if I missed it, because I had to step out for a moment, but did you give total turnover in staff and if you could give the voluntary and involuntary and also talk a little bit more about the comfort with the ability to hire out there and then I'll follow-up with another question. Thank you.

Okay, thank you. We have a significant number of openings, which we did report. Maybe you didn't hear it. I think we had somewhere around 600, wasn't it, Bill?

Yes.

And a great number of these are individuals with security clearances. We've had a shift in our population base and some of the lower level skill set work has been shifted and we -- our population, though not having grown that much, has been shifted to higher skill set people with clearances and, Bill, you might want to pick up on that.

Yes, Jack, we -- we're now up to 6400 people with security clearances, which is an increase of 13% over last year and the makeup of our work force, if you will. So you can -- it's this idea we have of moving up the food chain, if you will, higher value services. As far as the voluntary attrition numbers, we don't-- it's not our practice to give out specific numbers, but let me tell you that we're in the industry norm range on that. It's a top priority. Both that and the recruiting, as Jack mentioned, we have those 600 firm-funded openings and that's a nice opportunity window for us to work off and hire people there, if you will. We're also looking for every opportunity we can to keep our voluntary attrition rate as low as possible, so those two things, recruiting and retention, top watch items for us here at CACI.

Thank you, Bill.

Also, the upside in revenue in the quarter, how much of that was from ODCs, if you will, versus what else did it come from in terms of revenue up side? And once again, I miss a bit of the call. Okay, well, Steve, will you handle this?

Yes, I would -- we were about 5 million over the upper side of our guidance, if you will, and I would say just about all of that was really related to ODCs.

We'll go next to Cynthia Houlton with RBC Capital Markets.

Hello, Cynthia.

Hi, how are you?

Good.

Just a question about the tax rate this quarter, if you could maybe discuss why the tax rate was significantly lower than kind of historical and then what we should anticipate on a go-forward basis.

Sure. The lower tax rate in the fourth relates primarily to foreign tax credits, some state job creation tax credits and a change in estimate on a -- to settle a particular tax issue in one state. The impact in the quarter was about $0.02 or so. Going forward, I would still anticipate that our tax rate's going to be in that 38% range is what you ought to be using.

Okay. In terms of the -- you know, is that kind of an annual true-up or I guess I'm just -- ?

No, it was really just kind of timing of settlement on a particular issue we had, the timing of when we got some credits in and both the foreign and then in a particular state.

Okay. So just kind of all kind of came together and all impacted -- .

Came together at one time here.

Okay.

Thank you.

And then just DSOs, you know, certainly a good improvement this quarter. Is that kind of the level we should anticipate on a go-forward basis?

Well, internally I would tell you we would like to go lower. You know, that would be our target, but I would think for modeling purposes, kind of the low to mid-70s is probably an appropriate range.

We'll go next to Josephine Millward with Stanford Financial Group.

Hello, Josephine.

Good morning. Great quarter, guys.

Thank you.

You've been reporting higher than average ODC revenue for several quarters now. Should we expect this trend to continue going forward?

We have a continuing shift in business mix because of customer requirements, but I'm going to ask Bill to, Chief Operating Officer, to address that for you.

Okay. And if you can just give us a little more color on what you expect operating margins to be going forward as well.

Okay. Take the ODC first and then we'll talk to the op margins.

All right, thanks.

Josephine, this is Bill Fairl. We're now in, I think as I -- earlier question and as I alluded to, we're in our first fiscal quarter of FY '06. It's the last quarter of the government's fiscal year and in the past we've seen a lot of ODC activity in this quarter in particular. So, as I mentioned, I see no reason at this point in time that that pattern would change at least for this particular quarter. And that's about as far as I would want to go out now and talk about ODCs. Steve?

For as far as modeling goes then, we historically have seen kind of 51% to 52% of our direct costs as being ODCs. I think that's a fair range to use as you do your modeling going forward. With respect to operating margins, while the margins in the first quarter I gave you earlier were 8% to 8.1%, again, reflective of that stock option expense issue, that's a first quarter issue. For the year, we kind of think we are going to be in the 8.8% to 8.9%, maybe up to 9% operating margin for the full year.

And that's with the 123R all included in the accounting treatment, which is the main point and on cash trend account increase.

Right. That's correct.

Can you give the range without the option expensing?

Without options it would be in the 9.5 to 9.7 range.

Great, thank you.

We'll go next to Joseph Vafi with Jefferies & Company.

Hi, guys, good morning.

Good morning, Joe.

Good morning.

I was wondering if we could kind of recircle back here to some of the new business activity and the like. I know we've been -- you've been focusing on the fundings number. And since that does include both, I would imagine both new and renewal business, I was wondering if we could get some color there on maybe this quarter and maybe a general trend on what would be the breakout in that funding's number between new and renewal.

It's all -- it's all new business, Joe. It's all-- those are contracts, existing contracts that we already have. So I don't know whether new and renewal. It's just they are task orders that come on existing contracts.

Right.

I don't know if I understand your question.

Yes. I guess, Steve, the way I would -- I guess what I was trying get at is generally on your existing contracts and vehicles, you generally, as I think we understand it, you get fundings through a six-month window forward on average on some of your stuff and then you would get another reload on funding six months later. And so I guess the question is, as since the award activity has been flat to down on new awards and we're focusing on the funding number, just trying to get a feel for how much of that is brand new business coming into that fundings number versus ongoing business that's just getting reloaded on a funding basis, on a recurring basis?

Joe, this is Bill Fairl. I think one way I'm going to answer that question for you is just I mentioned the total awards we had in fiscal '05 of 1.2 billion and of that 75% of that is new-new business. And the other quarter of that is -- was recompete awards. So the majority of it is new-new business.

That's the awards.

Yes.

The key, however, is the forward funding.

Right. And I understand the funded backlog is up, which is a very important metric for the company.

Quite frankly, it's more important than any other metric.

Right.

Joe, the other way to maybe look at it, too, is just our organic growth rate is in that 16% range. Maybe that would help. That all flows through that funding number also.

Right. I'm just trying to-- the number's up 37% or even more and so that's such a large number. I mean that's not a number we can really focus on for organic growth because it includes renewal business as well and I'm just trying to get a feel for what the renewal rate is or the amount that's not brand new business that's in that fundings number.

Okay.

We'll go next to Julie Santoriello with Morgan Stanley.

Thanks, good morning.

Good morning, Julie.

Hi. Steve, wonder if you can comment a little bit specifically on DIG and revenues there. If I look at and kind of back out your organic revenue growth and look at the contributions from DIG, I realize there's only about a one month of contribution in the fiscal fourth quarter. But it still seems as though the revenue sort of pace on a monthly basis in the fourth quarter and may have slowed from the third quarter. Is that true and is there anything in particular that we should read into that?

Well, I'm not sure if I fully understand your question, but the AMS DIG business was about $72 million in the quarter. And if you look at it on kind of a 12-month basis, kind of annualizing them, they are just under $300 million, which is about up 18% from where we were a year ago. Does that answer what you're looking for?

Yes, it does, and the way that I was backing into it is not the most accurate way. So that's why I just wanted to clarify.

I would like to mention that as we go forward, the ability of our system to hang on to the clean lines of an acquisition become more difficult because we integrate and we combine efforts and we pursue business in joint basis inside the company and that within a year or so, it's pretty well blended and in two or three years it's completely blended.

Okay, and on the same topic of acquisitions, can you talk to us a little bit more about the pipeline, what you're seeing in acquisitions? It's been relatively quiet for a while now. I know that we've heard that pricing has gone up and it seems as though just about all companies in your sector are looking for acquisitions and I think you talked about essentially doing an acquisition as large as $1 billion. Wanted to clarify that and also just get some color on the pipeline and pricing. Thanks.

Well, thank you. It's a good question and certainly the M&A program is a central piece of CACI's business strategy, has been for a number of years, with some 29, 30 transactions over the last 15 years, all successful. The latest, of course, was the D&I Group from AMS. I would say to you that we're very aggressive in the marketplace. We'll continue to be aggressive in the marketplace. It is a fulsome arena. There are a lot of great number of smaller companies that are interested, apparently, in exit strategies and with respect to larger transactions, I don't think that the intent was to tell you we had a $1 billion target. We were trying to represent the strength of our financial structure in terms of balance sheet and borrowing capability to approach the marketplace, but obviously we can now, in that vein, look at larger opportunities as we go forward. Steve, do you want to add some color to that?

I think you've covered it for the most part, Jack. Again, as Jack said, there are many targets out there. We are aggressively looking and we're confident we're going to get one or two or a couple deals done here this year.

We'll go next to Tim Quillin with Stephens, Incorporate.

Good morning.

Good morning.

The first quarter revenue guidance is sequentially flat or down and the midpoint is less than 10% growth and I know it's the same guidance that you had given in June and so I don't want to rehash it too much. But it's mid quarter now and I would think you would have a little more visibility and so is there any reason that we should have a relatively slow growth quarter?

This is Steve. I think our guidance is reflective of our best estimates, at this point in time, of where we think we're going. Again, keep in mind, our first quarter tends to be somewhere between -- about 3% lower than what you're going to see in the fourth quarter, just in general, because we have less days available. People take vacations. There's lower billable hours available. So we kind of model that into our overall look-see of what's out there. So, again, we're very comfortable with the guidance, the ranges that we've put out there at this point.

I think I would like to add in point here, it has been my policy all along to present a more conservative approach on our guidance, as you may know. So this is what we have learned over the experience with trend lines and we're standing by that guidance for this first quarter.

Fair enough. And then just to follow-up on the question regarding revenue from the DIG acquisition. My understanding is that in the first couple quarters the fiscal year revenue was about 73 million and then about 76 million in the third quarter. So 72 million would still be the lowest quarter that you had in fiscal '05. And so is there any reason to suspect that growth is slowing there, or maybe are we at a bit of a lull before we ramp up on some of the SPS programs?

I think the thing that you may have seen in the third quarter is we had some ODCs related to a software sale in the third quarter. The normal run rate is in that kind of 72 to 73, going to 74 kind of range.

And is there upside from there, I guess is what I'm trying -- is there growth potential there?

Yes, yes, there is. I think they are extremely well positioned, particularly in some of the intelligence level activities that they are working on and Bill could probably address this better than I. But I think they are -- of course now one of the things that we have going forward, and Jack kind of alluded to this earlier, they are integrated within CACI and the piece parts have now moved into other areas. So our ability to be able to give you these statistics going forward is going to be more difficult.

That probably will not be possible in 90 days or six months. Bill?

In particular, to go to Steve's point, they brought us tremendous capability in providing services and solutions in the national intelligence community. And as you know, we already had a presence there at CACI, so we brought all that together and we've really gotten some terrific centers of excellence and critical mass there to go after some larger jobs. So it's-- and that's-- as Jack mentioned earlier and I think as I reiterated, 600 openings, more than half of those come out of that particular area there. So I see a lot of growth going forward there, Tim.

I'd like to punctuate this because it's a good opportunity now. The DNI Group integration for may and mass has gone extremely well. We're very pleased with the leadership that's implemented the integration. It was a pretty good size bite for us. We were very satisfied in how that has turned out, and delightfully so, and believe that that represents a capability for this Corporation to take on larger challenges and anticipating success in that vein as well.

We'll go next to Cai von Rumohr with SG Cowen.

Yes, thank you very much, guys. I think after the third quarter you had indicated that you submitted bids of 1.6 billion in the third quarter. What did you submit in the fourth?

Hi, this is Bill Fairl.

Yes.

Let's see, in the fourth quarter we submitted just under $1 billion in bids.

Okay, okay.

And we now have, I think as I mentioned, we now have $2 billion in for evaluation.

Right. Now, that number's only up slightly from the third quarter and I think on the third quarter you'd kind of said wait till the September quarter. And now that 2 billion really is representing two quarters, September and December. So has there been any slippage in the awards here?

No. I think the question was asked earlier and we talked a little bit about it then. What we talked about on our last call was that we anticipated over our fourth quarter and our first quarter there to be about $2.5 - $2.7 billion in contract decisions awards, if you will.

Right.

And we still see that being the case here over that same period.

Okay. Should we be concerned -- I mean if we kind of just look at some of the data, I guess L3 looks like they won the Iraq interrogators contract. I guess you've had some layoffs on the DOJ contract, Anteon, on their call, said that they won six of the first task orders on this GSA contract, where I believe you're one of the other guys. I mean, has there been any kind of increase in the rate of contracts where you have not been successful?

No. I will tell you that -- I'll give you our win rate. We've stated our win rate target for new business is 40%. We actually last year beat that. We were at 41%. Our overall win rate is 48%. Over the past five years, our average, running average on recompetes is well over 90%. All those metrics are in place, if you will.

We'll go next to Cindy Shaw with Moors & Cabot.

Hi, two questions. Following up on the win rate, is that fairly consistent in any quarter or can that jump around a lot from quarter to quarter and then I have another question after that?

Well, I would like to say that having looked back across the performance of the Corporation for almost 30 years now, I can tell you that it comes in lumps, but these are overall statistics and they represent a very long history of competitive success. So on the whole, I think you can count on those kinds of numbers. We are obviously working to increase them. We're going to be pursuing larger contracts as well, but I can -- I would say you can rely on that overall, but for any quarter to quarter, obviously, you're going to have some variation, just like any other statistical moving average.

Okay. And then organic growth, Steve, you made a comment earlier during the prepared remarks of 12% to 15%. I've been hearing that number from you for quite sometime. Earlier this year there was some discussion about the law of large numbers kicking in and maybe it should be 10% to 15%. If you could comment on your comfort level with 12 as a floor versus 10% growth?

As I indicated in my comments earlier, 12 to 15 is our target growth and Bill and now Paul are geared up to do that. If you look at the pipeline of opportunities that are out there that we're either have bid on or actively pursuing, the opportunities are there to -- again, if we hit the historic win rates that we've had, we can do 12% to 15% or more.

Great, thank you very much.

We'll go next to Sandra Notardonato with Robert Baird.

Hi, thanks for taking a follow-up from me. I'm wondering if you wouldn't mind giving what type of win rate you project on the 15 contracts that you have in the pipeline that are greater than $100 million in value.

Okay. Sandra, it's Bill Fairl and I'll break that into those that are of a recompete nature and those that are new business. And our goals remain intact. Jack has got us all marching towards 100% win rate on our recompetes, that's always our objective. I mentioned that over the last five years we've achieved well over 90% win rate on our recompeted dollars and we're aiming for 100% going forward here as well. On the new business side of the house, which is where the majority of the opportunities are, and I'm talking about brand new business not recompetes, our target has been 40% and we've been able to beat that consistently and that's our plan going forward here as well.

So the 40% would apply to those 15 contracts that -- ?

Well, Sandra, some of those are recompetes.

Sure.

Some are new business. That's why I broke it in two parts.

And how many of those would be recompetes versus new business?

Sandra, we'd have to get back to you. I'm not prepared to discuss that right now.

Okay. Thank you.

We'll go next to Colin Gillis with Adams Harkness.

Yes, good morning, everybody.

Good morning.

Could you just refresh us on the tim line for Mega 3?

Sure. We expect the -- Colin, this is Bill Fairl. We expect the RP out most likely in our second quarter. And on that particular one, the client takes a fairly lengthy process to evaluate proposals. I don't expect an award on that really until fiscal '07, quite frankly, and we have plenty of contract ceiling on that to keep doing work for them in that intervening period there.

Okay, great. Just as a quick follow-up. Given the pace of award decisions in the government fiscal year, do you think we might see a larger than normal amount of funds obligated into the December quarter and decided in the December quarter, sort of rolled over into the next period?

Yes, Colin, Bill Fairl, again. At this point in time, I think we -- again, I'll go back to what I said. I think we see this quarter, meaning our first quarter, last quarter of the government's fiscal year, to be -- follow the path as usual. As to -- as to their first quarter, hard to say at this point. You know, Jack mentioned a possible continuing resolution earlier and how long that might last. So I think a little too hard to say right now.

We'll go next to Joseph Vafi with Jefferies & Company.

Hi, guys. Just a quick follow-up.

Sure.

It might have been answered. Jack, I know you and Steve you were talking about $1 billion worth of potential acquisition activity, or capacity here, and seemed like you stressed this large number a little bit more than maybe have you in the past. Is that any sign of the fact that you might be looking at significantly larger acquisitions than you might have in the past?

Yes, I think it's fair to -- fair question and thank you. We wanted to represent the fire power that we have in the financial markets because M&A is a significant dimension or element of our growth strategy, as we demonstrated We thought that the AMS transaction demonstrated our ability to take the next step up. We have an extremely strong cash generation and cash flow management capability here, as you indicated, as we've seen from out DSOs. So, yes, we want to represent that we can look at larger targets as well as a more rapid accelerated pace on the smaller transactions. Sort of a two track process that can be in place here. So yes, we do represent and want to represent that there is a much expanded capability.

And so I guess the follow-up then is, I mean, the DIG business was probably one of your largest acquisitions in your history and there are clearly targets out there in the public market and other places that are even larger, obviously. And I guess the question is do you think that the overall environment might be a little more ripe for maybe some stock mergers here or other larger transactions over the next couple years versus maybe what we've seen in the previous couple years?

Well, I'd like to think that was in the realm of the potential. I would say that obviously there's nothing that we can commit to because we're simply exploring, as we always are, searching in the marketplace for opportunities. So the general statement that we are raising our sights is valid, but we see a consolidating market out ahead of us, as you've indicated with some of the larger companies, and that's obviously a potential.

All right, thank you, Jack.

You bet.

Once again, star, one if you have a question. We'll go next to Shlomo Rosenbaum with Legg Mason.

Hi, guys. I just wanted to follow-up a little bit more on the contract wins. This is three quarters in a row that it's been below one in terms of a book-to-bill. That's the first time that I can see in going back the last three years that it's been more than one quarter being below one book-to-bill. I'm just trying to figure out how good of an indicator is this of potential future business and what does the book-to-bill -- will this book-to-bill metric move up in the second half -- in the first half or the second half of '06? Is that something we should look for given all the outstanding business that you've bid on?

Let me make sure we have a common vernacular, which I've sensed and picked up in the industry is not congruent and not shared in terms of definitions. Book-to-bill, I believe, used elsewhere is what we call our funded backlog, which is a number that is the most directly correlated to projected performance. Anything else, it has all kinds of variations on it. It has, furthermore, management interpretation, whether management is more aggressive or more conservative in describing what the value of a contract award is. At CACI we have a long Legacy and history of being relatively conservative on our announcements. I intend to keep it that way.

I believe it's a more fair representation to the potential. And in that regard -- plus the last year we had probably fewer recompetes that would have been in the pile anyway. So you had a year that had a little bit of variation. What you should focus on, clearly, is the funded backlog and the projections that we provide for you in that area. Our guidance is a best estimate, a professional best estimate, intends to have a conservative flavor to it, but we work very conscientiously to provide the public with guidance that we believe has the highest probability of fulfillment.

So can we go over again what the funded backlog is and how far of a forward indicator is the funded backlog?

It's 877 million. If you look at it as a percent to the total backlog, it's actually higher than where we were last year. Again, it's kind of hard to explain it here other than, as Jack indicated, those funded numbers are what we use as indicators of what's going forward. And typically we have about 50% or six months of funded backlog on hand. So I think it's a good indicator of what you are going to see on the average and historically for the first half of this year. And we'll continue to add to those funded numbers throughout the year.

Okay. Thanks a lot.

We hope that's helpful.

We'll go next to Jason Kupferberg with UBS.

Hey, guys, just a quick follow-up here. Bill, you mentioned the pipeline, the 15 deals greater than 100 million. Can you cut that a little bit more finely and tell us how many of those are greater than 200 million?

Okay. It's a little bit more than half, Jason.

Okay. That's helpful. And just coming back to a couple of the questions on DIG. I know we talked about the revenue side. But from a contract reward perspective, I know the total contract awards were down, I think, if my numbers are right, about 28% year on year. If we strip DIG out to kind of get more of an apples to apples comparison, what would that year-over-year decline look like?

Steve, do you want to address that and make sure we understand the question?

I'm not sure -- generally we don't measure it that way. I don't know if I have those statistics available to do it. DIG is now part of CACI and I know we had a couple large awards earlier in the year with them, but we can follow-up with you later on this if you would like. But I don't have those statistics available.

Okay. Let me just give you another one, Steve, quickly here. I know we were talking about M&A. Obviously it's been a little bit quiet. You guys have a lot of capacity and interest clearly. If for some reason you continue to have trouble finding transactions that meet your criteria, given the fact that you've built up a pretty substantial cash balance relative to historical levels, would you consider alternative uses of your cash? And if so, how would you potentially prioritize those?

Well, let me just say that we had this kind of review at the board level from time to time. We, at the moment, have no intent to employ our cash other than a forward investing programs as we've been doing. In other words, the additional path we've been on, the Legacy path over the last decade will be the same, at least for the time being. Obviously this is looked at from time to time by the board. We did look at it here recently at our board meeting and we continue to do so. If you're thinking in terms of something like share buybacks or something of that nature, I don't anticipate that in the near-term.

Okay. Thanks for the color.

Thank you. There are no further questions at this time. I would like to turn the conference back over to Mr. London for any closing remarks.

Thank you, Gwen, and certainly appreciate your help. Ladies and gentlemen, CACI has as its goal to be a $3 billion company by, in revenue, by the year 2009. Our growth goals remain to achieve a 20% compound rate, 12% to 15% on organic lines 5% to 8% on a M&A line. Those are our traditional goal targets, if you will, and will continue to be that. In terms of our guidance, I will reiterate for your benefit that these are our best professional estimates as we look forward into a world that is sometimes has a bit of cloudy nature to the crystal ball, but nonetheless, we give it our very best shot and we can do, if anything, move on the conservative side. We will be looking for larger deals. We will be aggressive in the M&A market. So our basic business plan I think is well defined, that we feel are very successful in our customer satisfaction levels, as you can see by the continuing expanding funding that we receive on our contracts. So we hope we provided you with a clear picture of our fourth quarter results and our expectations for fiscal year '06.

This quarter we will be travelling, a number us, to meet with some of you in Boston and Chicago. As always, you're welcome to come by and visit with us here in the Washington area. Should you be in this area, just give David a call. David Dragics, our investor relations department, I'm sure will set something up and help you out to that extent. Also, some of you may have a few other questions of an operating nature that you might like to discuss and we're certainly available to do so. And that we would be available in about, let's say 20 minutes or so to take your calls and questions. But, again, thank you, ladies and gentlemen, for your participation and interest in CACI International. We think we have a very viable enterprise and a very exciting and dynamic market and we look forward to talking with you in the days ahead. Thank you very much. This concludes our call.

Thank you. This concludes today's conference. And you may now disconnect.