CACI International Inc
CACI
#1607
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HK$103.95 B
Marketcap
HK$4,704
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<p>SECURITIES AND EXCHANGE COMMISSION<br>
Washington, D.C. 20549<br wp="br1">
<br wp="br2">
</p>
<p><b>FORM 10-K</b><br wp="br1">
<br wp="br2">
</p>
<p>ANNUAL REPORT UNDER SECTION 13 OR 15(d)<br>
OF THE SECURITIES EXCHANGE ACT OF 1934<br wp="br1">
<br wp="br2">
</p>
<p><b>For the Fiscal Year Ended June 30, 1999</b><br wp="br1">
<br wp="br2">
</p>
<p><u>Commission File Number 0-8401</u><br wp="br1">
<br wp="br2">
</p>
<p><font size="4"><u><b>CACI International Inc</b></u></font></p>
<p>( Exact name of Registrant as<br>
specified in its charter)</p>
<p><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Delaware&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
<p>(State or other jurisdiction of<br>
incorporation or organization) &nbsp;</p>
<p><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;54-134588&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
<p>(I.R.S. Employer Identification No.)</p>
<p><u>1100 N. Glebe Road, Arlington VA 22201</u></p>
<p>(Address of principal executive offices)</p>
<p><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(703) 841-7800&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
<p>(Registrant's telephone number,<br>
including area code)</p>
</center>
<div align="left">
<p>Securities registered pursuant to Section 12(b) of the Act:<br wp="br1">
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<td align="center" valign="top" width="22%"><u>Title of each class</u></td>
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<td align="center" valign="top" width="45%"><u>Name of each exchange on which registered</u></td>
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</p>
<p>Securities registered pursuant to Section 12(g) of the Act:</p>
</div>
<center>
<p><u>CACI International Inc Common Stock, $0.10 par value</u></p>
<p>(Title of each class)</p>
</center>
<p>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 <u>X </u>. No <u>&nbsp;&nbsp;&nbsp;&nbsp; </u>.</p>
<p>The aggregate market value of the voting stock held by non-affiliates of the Registrant as of August 31, 1999, was approximately $198,519,098.</p>
<p>Indicate the number of shares outstanding of each of the Registrant's classes of Common Stock, as of August 31, 1999: CACI International Inc Common Stock, $.10 par value, 10,981,426 shares.</p>
<p><u>Documents Incorporated by Reference</u></p>
<p>(1) The information relating to directors and officers contained in the proxy statement of the Registrant to be filed in connection with its 1999 Annual Meeting of Stockholders is incorporated by reference into Part III, Items 10, 11, 12, and 13 of
this Form 10-K.<br wp="br1">
<br wp="br2">
<hr size="1">
</p>
<center>
<p><u><b>BUSINESS INFORMATION</b></u></p>
</center>
<p>Unless the context indicates otherwise, the terms &quot;the Company&quot; and &quot;CACI&quot; as used in Parts I and II, include both CACI International Inc and its wholly-owned subsidiaries. The term &quot;the Registrant&quot;, as used in Parts I and
II, refers to CACI International Inc only.<br wp="br1">
<br wp="br2">
</p>
<center>
<p><b>PART I</b></p>
</center>
<p><u><b>Item 1.&nbsp; &nbsp;&nbsp; Business</b></u></p>
<p><u>Background</u></p>
<p>CACI International Inc (the &quot;Registrant&quot;) was organized as a Delaware corporation under the name of &quot;CACI WORLDWIDE, INC.&quot; on October 8, 1985. By a merger effected on June 2, 1986, the Registrant became the parent of CACI, Inc., a
Delaware corporation, and CACI N.V., a Netherlands corporation.</p>
<p>The Registrant is a holding company and its operations are conducted through wholly-owned subsidiaries which are located in the U.S. and Europe.</p>
<p><u>Overview</u></p>
<p>CACI founded its business in 1962 in simulation technology, and has strategically diversified within the information technology (&quot;IT&quot;) industry. With 1999 revenue of $442 million, CACI serves clients in major segments of government and
commercial markets primarily throughout North America and Western Europe, delivering client solutions for systems integration, information assurance and security, reengineering, logistics and engineering support, electronic commerce, intelligent document
manageme
<p>The Company's service and value have enabled it not only to sustain high rates of repeat business and long-term client relationships, but also to compete effectively for new clients and new contracts. The Company is organized to seek competitive
business opportunities and has designed its operations to support major programs through centralized business development and industry alliances. CACI has structured its new business development organization to respond to the globally competitive
marketplace. The
<p>The Company's primary markets -- both domestic and international -- are agencies of national governments, major corporations, state and local governments, and other business organizations. The market for CACI's information systems and advanced
technology services is created by the complex systems and information environment in which clients operate and the continuous demand to stay current with emerging technology while increasing performance.</p>
<p>The Company operates through wholly-owned subsidiaries established to serve specific market segments or conduct business in specific geopolitical jurisdictions. The subsidiaries are primarily organized into the Information Systems Group and the
Marketing Systems Group.</p>
<p>In CACI's Information Systems Group, systems integration solutions are applied throughout the federal and commercial arenas to improve organizational performance by enhancing system infrastructure through such activities as migrating legacy systems to
more powerful or new environments such as the Internet, automating procurement, assuring security and accessibility of vital information, and reusing legacy software and data.</p>
<p>CACI provides electronic commerce solutions to the Federal Government for automated procurement. Its complete suite of electronic commerce products is available on a GSA schedule and provides a flexible but fully-featured configuration to enable easy
management of purchases and contracts.</p>
<p>CACI's RENovate<font size="1"><sup>SM</sup></font> methodology combines tasks and methodologies to plan, integrate, and manage technology change - without losing existing investments in technology.</p>
<p>In response to the year 2000 challenge, CACI offers a wide range of solutions, including the Company's Restore 2000<font size="1"><sup>SM</sup></font> conversion methodology, that has been independently validated by the Information Technology
Association of America, based upon a Software Engineering Institute Level 3-certified process reengineering approach.</p>
<p>In its simulation technology business, the Company offers simulation languages, network planning software products, and services that enable clients to visualize the impact of proposed changes or new technologies before implementation. CACI's
simulation offerings address client needs in the areas of military training and war-gaming exercises, air traffic control, logistics, manufacturing, wide area communications networks including satellites, land lines, local area computer networks, the
study of busine
<p>The Company has generated commercial business from solutions built on CACI's thirty-year history of logistics and engineering support for the Department of Defense (&quot;DoD&quot;). CACI's C<font size="4">&middot;</font>GATE<font size="1"><sup>TM</sup>
</font> product data management system enables clients to standardize and improve the way they manage the life cycle of systems, products, and material assets, resulting in cost savings and increased productivity. C<font size="4">&middot;</font>GATE soluti
<p>The Company's intelligent document management solutions provide a range of enabling technologies that facilitate the management of large document collections and allow organizations to achieve higher operational efficiencies and mission effectiveness.
The enabling technologies include Internet-based user interfaces; integration of commercial off-the-shelf software, mass storage architectures, data warehousing and data mining, and work flow management design and implementation. CACI provides intelligent
d
<p>CACI's major operating subsidiary in Europe, CACI Limited, is headquartered in London, England, and operates primarily in support of CACI's information systems, marketing systems and simulation technology lines of business in the U.K.</p>
<p>The Marketing Systems Group offers marketing systems software and database products, targeted to clients who need systems and analysis for retail sales of consumer products, direct marketing campaigns, franchise or branch site location projects, and
similar requirements.</p>
<p>At June 30, 1999, CACI employed approximately 4,228 people. This total includes 364 part-time employees. The corporation currently operates from its headquarters at Three Ballston Plaza, 1100 N. Glebe Road, Arlington, Virginia. CACI has operating
offices and facilities in over 80 other locations throughout the U.S., Western Europe and Canada.</p>
<p><u>General Description of CACI Systems, Technologies and Products</u></p>
<p>Representative systems applications, services and products include:</p>
<div>
<ul>
<li>Asset management systems and services
<li>Customer database management systems
<li>Debt management systems and services
<li>Electronic commerce and automated procurement
<li>Information management systems
<li>Intelligent document management systems and services
<li>Litigation support services
<li>Logistics and engineering support services and products, computer-aided logistics/data information systems
<li>Marketing data, demographic information systems and services, site location planning and analysis systems
<li>Network services, information assurance/security, and telecommunications network services
<li>Product data and supply chain management
<li>Records management systems and services
<li>Simulation and modeling languages, products and services
<li>Software development and reuse
<li>Systems and process reengineering
<li>Systems integration
<li>State motor vehicle registration and related management information systems
<li>Weapons systems/equipment configuration management systems
<li>World Wide Web integration
<li>Year 2000 date reconfiguration services
</ul>
</div>
<p>CACI products are installed in numerous locations worldwide, and many are designed to run on a variety of commercially available computers. Representative CACI software and marketing systems include:</p>
<p><i>Performance Prediction Technology</i>:</p>
<ul>
<li>SIMFACTORY<sup>&reg;</sup> II.5 General Factory Simulator. A software product for factory planners to study alternative plant and equipment configurations.
<li>COMNET III<font size="1"><sup>TM</sup></font> Network Simulation Software. An object-oriented high-fidelity wide area network, local area network and metro area network telecommunications simulator for capacity planning and failure analysis.
<li>COMNET Baseliner<font size="1"><sup>TM</sup></font> Telecommunications Simulation Software. An automatic network traffic and topology-gathering tool.
<li>COMNET Predictor<font size="1"><sup>TM</sup></font> Network Planning Software. A planning tool for the day-to-day network manager that predicts the impact of changes to very large telecommunications networks before implementation.
<li>Enterprise Profiler<font size="1"><sup>TM</sup></font> Telecommunications Simulation Software. A tool for analyzing application traffic.
<li>NETWORK II.5<sup>&reg;</sup> Computer Architecture Simulation Software. A tool for engineers to study alternative combinations of computers and data storage devices.
<li>SIMSCRIPT II.5<sup>&reg;</sup> Simulation Programming Language. A language designed especially for analysts to build computer-based representations (&quot;models&quot;) of complex activities, e.g., airways and airport traffic; maintenance procedures
for fleets of ships; warfare studies of military equipment and tactics; and communications networks.
<li>SIMPROCESS<sup>&reg;</sup> III Object-oriented Analytical Simulation Software. A prototyping tool for business process reengineering that enables managers to model a current business process, then explore alternative approaches before implementation.
<li>MODSIM III<font size="1"><sup>TM</sup></font> Simulation Programming Language. A graphical computer programming and simulation environment that generates C++ code.
</ul>
<p><i>Marketing Data and Information Products</i>:</p>
<ul>
<li>InSite<font size="4">&middot;</font>USA<font size="1"><sup>TM</sup></font> and InSite<font size="1"><sup>TM</sup></font> (U.S. and U.K. versions) Marketing and Demographics Information Systems. PC-based geographic information systems combining
software, data and mapping capabilities to enable planners to study markets to help determine the location of retail outlets, branch networks, sales territories, potential customers, and competitors.
<li>ACORN<font size="1"><sup>SM</sup></font> (A Classification of Residential Neighborhoods) Demographic Information System. A system that analyzes consumers according to the type of residential area in which they live, used to identify the prime
prospects for all types of consumer goods and services.
<li>AnaData<font size="1"><sup>TM</sup></font> Database Marketing System. A database marketing system that enables companies to analyze their customers by product holding and usage for the purpose of cross-selling other products and services.
<li>UpFront<sup>&reg;</sup> Graphical Interface Software. A graphical user interface that enables software to be used in an object-oriented manner.
<li>SITE<sup>&reg;</sup> Demographic Information Software and Reports. Detailed demographic and applied market research database services for any geographic area, such as county, zip code, TV broadcast area, congressional district, or retail trade area.
<li>Lifestyles*UK<font size="1"><sup>TM</sup></font> Database System. An extensive database of U.K. consumers showing the likely lifestyles and purchasing behavior of each individual.
</ul>
<p><i>Electronic Commerce Products</i>:</p>
<ul>
<li>SACONS<sup>&reg;</sup> Automated Contracting System. A commercial off-the-shelf system that provides clients an automated, cost effective way to complete procurement activities and improve productivity.
<li>SACONS<sup>&reg;</sup>-EDI Module. An automated, electronic commerce add-on module to the SACONS system that creates and receives data transmissions using standard protocols.
<li>SACONS<sup>&reg;</sup>-Gateway Module. An add-on module to the SACONS system that centralizes protocols established by the U.S. Government for electronic procurement.
<li>QuickBid<sup>&reg;</sup> Automated Bid/Contracting System. A World Wide Web-based value-added network that allows electronic identification and competition for U.S. Government business.
</ul>
<p><i>Product Data Management and Supply Chain Management</i>:</p>
<ul>
<li>ACIM Availability Centered Inventory Model. A marginal cost inventory model designed to optimize expensive service part inventory across multiple levels of repair and geographically disbursed distribution centers to obtain the minimum investment
consistent with a desired customer service.
<li>C<font size="4">&middot;</font>GATE<font size="1"><sup>TM</sup></font> Product Data and Configuration Management System. A system tailored to the requirements of the aerospace and defense industry which enables firms and government agencies to
simultaneously manage configuration and distribute product data across their enterprises, without respect to geographic or organizational boundaries.
</ul>
<p><i>Imaging and Document Management Products</i>:</p>
<ul>
<li>ADIIS<font size="1"><sup>TM</sup></font> Document Imaging Software System. A flexible automated document conversion and workflow management system that includes advanced imaging, optical character recognition, indexing, document retrieval and work
process management.
</ul>
<p><u>U.S. Government Agencies</u></p>
<p>CACI offers its entire range of information systems, technical services and proprietary products to defense and civilian agencies of the U.S. Government. These activities require CACI's expert knowledge of agency policies and operations. These
assignments may combine a wide range of CACI's skills in information systems, systems engineering, telecommunications, logistics sciences, weapons systems, simulation, automated document management, litigation support and debt management. CACI also
contracts with o
<p><u>State and Local Governments</u></p>
<p>CACI is a leader in the supply of automated information systems for state governments' management of vehicle registration, licensing and wheeled vehicle revenue support, and for local governments' management of false alarm billing systems and housing
registration systems. The Company also offers its software and systems integration services to this market segment.</p>
<p><u>Major Corporations</u></p>
<p>CACI's commercial market base consists primarily of large corporations (nominally characterized as the &quot;Fortune 1000&quot;). This market is a primary target of the Company's proprietary software and database products in its marketing systems and
simulation technology lines of business. The market for CACI's proprietary simulation products is worldwide.</p>
<p><u>Other Services</u></p>
<p>CACI also provides information about its products and services, investor relations, and career opportunities on its World Wide Web home page at http://www.caci.com.</p>
<p><u>CACI Employment and Benefits</u></p>
<p>CACI's business success is highly correlated with the Company's ability to recruit, train, promote, and retain exceptional people at all levels of the organization. The most valuable asset and resource the Company has is its people. The Company is in
continuing competition for highly skilled professionals in virtually all of its high technology areas.</p>
<p>For these reasons, the Company has endeavored to develop and maintain competitive salary structures, incentive compensation programs, fringe benefits, opportunities for growth, and individual recognition and award programs.</p>
<p>In order to compete effectively in attracting and retaining highly skilled personnel, the Company and its subsidiaries provide substantial benefits to their employees. These benefits vary among the Company's subsidiaries, but generally include paid
vacations and holidays, medical, dental, disability and life insurance, incentive bonuses, tuition reimbursement for job-related education and training, technical training, and other benefits under retirement and stock purchase plans.</p>
<p>The Company recruits people from various populations, including experienced professionals, university graduates, trade and technical school graduates, seasoned technicians, and entry-level employees. The Company's employee profile includes a
high-percentage of college graduates, many with masters and doctoral degrees. The Company seeks professionals with academically certified credentials in computer-based information sciences, systems engineering, modeling and simulation, telecommunications,
network sys
<p>The Company has structured its promotion and advancement policies to meet the current market environment. Individuals advance in relation to their demonstrated abilities to perform, their leadership skills, or their managerial achievements.</p>
<p>CACI's advancement criteria incorporate specific requirements to demonstrate a client-service orientation and to work synergistically within the Company. This philosophy is consistent with CACI's current market, and is a catalyst for individuals to
support Company objectives.</p>
<p>The Company has published policies that set high standards for the conduct of its business. The Company also requires all of its employees, consultants, officers, and directors to subscribe annually to and affirm the Company's published Code of Ethics
and Business Conduct Standards.</p>
<p><u>Marketplace, Description and Significant Activities</u></p>
<p>CACI operates in an industry which includes many highly competitive firms. At the same time, CACI is one of the larger public corporations in its segment of the information technology industry. Although the Company is a premier supplier of proprietary
computer-based simulation technology products worldwide, and is a major supplier of proprietary marketing systems products in both the U.S. and the U.K., CACI is not primarily a software product developer-distributor (See discussion following on Patents,
Tr
<p>Competition for new contracts centers on past performance, responsiveness to proposal requirements, price, and many other factors. Competition for software products and services focuses on reputation, applicability to client needs and market demand,
and quality of product support and maintenance services, among other elements.</p>
<p>The Company has established the capability to combine comprehensive knowledge of client challenges with significant expertise in the design, integration, development and implementation of advanced information technology solutions. This capability
provides CACI with important opportunities to support large equipment manufacturers with the systems integration and software services required to compete for multi-million dollar contracts from the U.S. Government.</p>
<p>CACI has developed strategic business relationships with companies such as Microsoft Corporation, Sun Microsystems, Infonet Services Corporation, PKS, Viasoft, Inc., NCR Corporation, MicroStrategy, Digital Equipment Corporation, Computer Associates,
Lotus Development Corporation and Equifax. These businesses have perspectives and objectives compatible with those of the Company, and offer products and services that complement CACI's. The Company intends to continue development of these kinds of
relationsh
<p>Marketing and new business development for the Company's services and products is conducted by all the officers and managers of the Company, including the Chief Executive Officer, executive officers, vice presidents, and division and department
managers. CACI's proprietary software and data products are sold primarily by full-time salespeople. For its information systems and services markets, the Company employs several marketing professionals who support the Company's targeting of major
contract opportu
<p>CACI competes with a substantial number of firms, some of which are larger in size and have greater financial resources. The Company obtains much of its business on the basis of proposals submitted in response to requests from potential and current
customers, who may also request proposals from other firms. Additionally, the Company faces indirect competition from certain government agencies that perform services for themselves similar to those marketed by CACI. The Company knows of no single
competitor
<p>CACI's sales of proprietary software and data products are generally effected by limited duration or perpetual licenses. The Company generally prices its products in catalog fashion and via the Internet. Often, product prices are determined by the
target computer on which the product will run, by the number of users or by frequency of usage.</p>
<p>For CACI's information systems and professional services contracts, the Company submits bids for work and products to be delivered. Commercial bids are frequently negotiated as to terms and conditions for schedule, specifications, delivery, and
payment. CACI's contracts and subcontracts include a wide range of contractual types, including firm fixed-price, cost reimbursement and labor-hour-and-materials expense.</p>
<p>Often, the form of contract and terms will be specified by the client. This is especially the case with government clients. In these situations, the Company may seek alternative arrangements or choose not to bid in those cases where the contracting
arrangement appears to expose the Company to inappropriate risk. By Company policy, fixed-price contracts require the approval of a senior officer of the Company, and review and release approval by the Chief Executive Officer.</p>
<p>At any one time, the Company may have several hundred separate contract obligations. In 1999, the ten top revenue-producing contracts accounted for 46% of CACI's revenue, or $204 million. One contract for automated litigation support to the Civil
Division of DoJ, accounted for 13% of total 1999 Company revenue.</p>
<p>In 1999, 79% of CACI's revenue came from U.S. Government contracts, the remaining 21% coming from commercial and state and local contracts, as well as proprietary product sales. Of that total, 49% of the Company's revenue came from DoD contracts, 16%
from contracts with DoJ, and 13 % from other civilian agency government clients.</p>
<p>The Company is working to diversify its business portfolio. The Company, nonetheless, will aggressively seek additional work from DoD. In 1999, the DoD revenue grew by 35%, or $56 million, primarily as a result of the November 13, 1998 acquisition of
QuesTech, Inc. and the acquisition of the business of Government Systems, Inc. on November 1, 1997.</p>
<p>The Company believes it is the largest supplier of litigation support and related automation services to the U.S. Government. The Company intends to seek additional litigation support work from the U.S. Government and offers significant economies to
the Government through its specialization in this field. The Company also provides automated debt management support services to DoJ and seeks to expand this business line into other agencies and commercial clients.</p>
<p>During the past two fiscal years, the Company examined a number of acquisition opportunities. On November 13, 1998, the Company purchased all of the outstanding stock of QuesTech, Inc., now known as CACI Technologies, Inc., for $42 million. This
acquisition has expanded the Company's Information Systems Group contract base with DoD and provided new opportunities in the areas of network security and information assurance. As noted above, in fiscal year 1998 the Company acquired the business and
net assets
<p>The Company's Marketing Systems Group in the U.S. purchased the assets of Information Decision Systems (&quot;IDS&quot;) for $2.6 million on August 13, 1998. IDS provided internet access to demographic site information and the acquisition has enhanced
the Marketing Systems Group's share of the U.S. demographics information market.</p>
<p>On November 6, 1997, CACI Limited acquired the outstanding stock of AnaData Limited, a provider of database marketing software products in the United Kingdom, for $1.9 million. The acquired products are used across a range of database marketing
applications, from relationship marketing through advanced name and address processing. The AnaData business was merged into the Company's already sizeable database marketing business in CACI's Marketing Systems Group in the U.K. The acquisition gives
CACI ownersh
<p><u>Seasonal Nature of Business</u></p>
<p>The Company's business in general is not seasonal although the summer and winter holiday seasons affect Company revenue because of the impact of holidays and vacations on the Company's labor sales and on product and service sales by the Company's
European operations. Variations in the Company's business also may occur at the expiration of major contracts until such contracts are renewed or new contracts obtained.</p>
<p><u>Research and Development</u></p>
<p>During fiscal years 1999, 1998 and 1997, the Company spent $ 2,409,000, $2,015,000, and $2,402,000, respectively, for research and development.</p>
<p><u>Environmental Protection Requirements</u></p>
<p>There has been no significant adverse impact on the Company's business as a result of laws that have been enacted for the protection of the environment.</p>
<p><u>Patents, Trademarks, Trade Secrets and Licenses</u></p>
<p>The Company believes that its business is dependent to a significant extent on its technical and organizational knowledge, practices and procedures, in some of which it claims proprietary rights.</p>
<p>The Company owns four United States patents, as well as patents in Canada and Israel. While the Company believes its patents are valid, it does not consider that its business is dependent on patent protection in any material way.</p>
<p>CACI claims copyright, trademark and proprietary rights in each of its proprietary computer software and data products and the related documentation. The Company presently owns approximately 45 registered U.S. trademarks and service marks. All of the
Company's registered U.S. trademarks and service marks may be renewed indefinitely. CACI also is a party to agreements which give it the right to distribute computer software and other products owned by other companies, and to receive income from those
produ
<p>The Company has developed and holds proprietary rights in a number of computer software packages, databases and methodologies, including, but not limited to: ACORN<font size="1"><sup>SM</sup></font>, ADIIS<font size="1"><sup>TM</sup></font>, C<font
size="4">&middot;</font>GATE, CACI Coder/Plus<font size="1"><sup>TM</sup></font>, COMNET II.5<sup>&reg;</sup>, COMNET III<font size="1"><sup>TM</sup></font>, COMNET Baseliner<font size="1"><sup>TM</sup></font>, COMNET Predictor<font size="1"><sup>TM</sup></fon
<p>In addition, subsidiaries of the Registrant claim foreign copyright, trademark, and proprietary rights in computer software products and databases including, but not limited to: ACORN<sup>&reg;</sup> (and the related Change*ACORN<sup>&reg;</sup>,
Custom*ACORN<sup>&reg;</sup>, Financial*ACORN<sup>&reg;</sup>, Holiday*ACORN<sup>&reg;</sup>, Household*ACORN<sup>&reg;</sup>, Investor*ACORN<sup>&reg;</sup>, Property*ACORN<sup>&reg;</sup>, Scottish*ACORN<sup>&reg;</sup>), ACORN Lifestyles<sup>&reg;</sup>, CACI
<p>Some of the Registrant's subsidiaries are parties to agreements pursuant to which they may have the right to distribute computer software products owned by others, and to obtain income therefrom.</p>
<p><u>Backlog</u></p>
<p>The Company's backlog as of June 30, 1999 was $1.08 billion, of which $260 million was funded for orders believed to be firm. Total backlog as of June 30, 1998 was $1.05 billion, of which $185 million represented firm orders. The source of backlog is
primarily contracts with the U.S. Government. It is presently anticipated that all of the firm backlog will be filled during the fiscal year ending June 30, 2000.</p>
<p><u>Business Segments, Foreign Operations, and Major Customer</u></p>
<p>The business segment, foreign operations and major customer information is provided in the Company's Consolidated Financial Statements contained in this Report. In particular, see Note 11, Business Segment Information, to the Notes to Consolidated
Financial Statements.</p>
<p>The following information is provided about the amounts of revenue attributable to firm fixed-price contracts (including proprietary software product sales), time-and-materials contracts, and cost reimbursable contracts of the Company during each of
the last three fiscal years: <font size="1">(dollars in thousands)</font><br wp="br1">
<br wp="br2">
<table border="0" width="81%">
<tr>
<td width="8%"></td>
<td align="center" valign="bottom" width="15%"><font size="2">Fiscal Year<br>
Ended June 30,</font></td>
<td align="center" valign="bottom" width="13%"><font size="2">Firm<br>
Fixed-Price</font></td>
<td align="center" valign="bottom" width="15%"><font size="2">Time-And-<br>
Materials</font></td>
<td align="center" valign="bottom" width="15%"><font size="2">Cost<br>
Reimbursable</font></td>
<td align="center" valign="bottom" width="15%"><font size="2">Total</font></td>
</tr>
<tr>
<td width="8%"></td>
<td colspan="5">
<hr size="1">
</td>
</tr>
<tr>
<td width="8%"></td>
<td align="center" width="15%"><font size="2">1999</font></td>
<td align="center" width="13%"><font size="2">$90,978</font></td>
<td align="center" width="15%"><font size="2">$263,895</font></td>
<td align="center" width="15%"><font size="2">$86,875</font></td>
<td align="center" width="15%"><font size="2">$441,748</font></td>
</tr>
<tr>
<td width="8%"></td>
<td align="center" width="15%"><font size="2">1998</font></td>
<td align="center" width="13%"><font size="2">$84,612</font></td>
<td align="center" width="15%"><font size="2">$171,137</font></td>
<td align="center" width="15%"><font size="2">$70,361</font></td>
<td align="center" width="15%"><font size="2">$326,110</font></td>
</tr>
<tr>
<td width="8%"></td>
<td align="center" width="15%"><font size="2">1997</font></td>
<td align="center" width="13%"><font size="2">$67,627</font></td>
<td align="center" width="15%"><font size="2">$122,987</font></td>
<td align="center" width="15%"><font size="2">$82,370</font></td>
<td align="center" width="15%"><font size="2">$272,984</font></td>
</tr>
</TABLE>
</p>
<p><u><b>Item 2.&nbsp;&nbsp;&nbsp; Properties</b></u></p>
<p>As of June 30, 1999, CACI leased office space at 83 locations containing an aggregate of approximately 1,090,591 square feet located in 28 states and the District of Columbia. In four countries outside the U.S., CACI leased seven offices containing
about 26,500 square feet. CACI's leases expire primarily within the next five years. In most cases, CACI anticipates that leases will be renewed or replaced by other leases.</p>
<p>All of CACI's offices are in modern and well-maintained buildings. The facilities are substantially utilized and adequate for present operations.</p>
<p>As of June 30, 1999, CACI International Inc maintained its corporate headquarters in approximately 155,000 square feet of space at 1100 North Glebe Road, Arlington, Virginia. See Note 9, Commitments and Contingencies, to the Notes to Consolidated
Financial Statements, for additional information regarding the Company's lease commitments.</p>
<p><u><b>Item 3. Legal Proceedings</b></u><b> </b></p>
<p><u>CACI, INC.-FEDERAL v. Arizona Department of Transportation</u></p>
<p>Reference is made to Part II, Item 1, Legal Proceedings, in the Registrant's Quarterly Report on Form 10-Q for the period ended March 31, 1999 for the most recently filed information concerning the lawsuit filed on June 25, 1996, by CACI, INC.-FEDERAL
(&quot;CACI&quot;), the Registrant's wholly-owned subsidiary, in Superior Court for Maricopa County, Arizona, against the Arizona Department of Transportation (&quot;ADOT&quot;). This suit seeks the following: (i) a declaratory judgment that the disputes
pr
<p>Since the filing of Registrant's report indicated above, the parties have continued settlement discussions, with no resolution to date.</p>
<p><u><b>Item 4. Submission of Matters to a Vote of Security Holders</b></u></p>
<p>No matter was submitted to a vote of security holders during the fourth quarter of the Registrant's fiscal year ended June 30, 1999, through the solicitation of proxies or otherwise.<br wp="br1">
<br wp="br2">
</p>
<center>
<p><b>PART II</b></p>
</center>
<p><u><b>Item 5. &nbsp;&nbsp;&nbsp; Market for the Registrant's Common Equity and Related Stockholder Matters</b></u></p>
<p>The Registrant's Common Stock became publicly traded on June 2, 1986, replacing paired units of common stock of CACI, Inc. and beneficial interests in common shares of CACI N.V. which had been traded in the over-the-counter market.</p>
<p>From July 1, 1997 to June 30, 1999, the ranges of high and low sales prices of the common shares of the Registrant quoted on the Nasdaq National Market System for each quarter during this period are as follows:
<table width="80%">
<tr>
<td width="28%"></td>
<td width="8%"></td>
<td colspan="2" align="center"><font size="2">1999
<hr size="1">
</font></td>
<td colspan="2" align="center"><font size="2">1998
<hr size="1">
</font></td>
</tr>
<tr>
<td width="28%"></td>
<td align="center" width="8%"><font size="2">Quarter</font></td>
<td align="left" width="11%"><font size="2">High</font></td>
<td align="left" width="11%"><font size="2">Low</font></td>
<td align="left" width="11%"><font size="2">High</font></td>
<td align="left" width="11%"><font size="2">Low</font></td>
</tr>
<tr>
<td width="28%"></td>
<td colspan="5">
<hr size="1">
</td>
</tr>
<tr>
<td width="28%"></td>
<td align="center" width="8%"><font size="2">1<sup>st</sup></font></td>
<td align="left" width="11%"><font size="2">$22</font></td>
<td align="left" width="11%"><font size="2">$15</font></td>
<td align="left" width="11%"><font size="2">$20</font></td>
<td align="left" width="11%"><font size="2">$13 <sup>7/8</sup></font></td>
</tr>
<tr>
<td width="28%"></td>
<td align="center" width="8%"><font size="2">2<sup>nd</sup></font></td>
<td align="left" width="11%"><font size="2">$20<sup> 1/4</sup></font></td>
<td align="left" width="11%"><font size="2">$14 <sup>5/8</sup></font></td>
<td align="left" width="11%"><font size="2">$20 <sup>5/8</sup></font></td>
<td align="left" width="11%"><font size="2">$16</font></td>
</tr>
<tr>
<td width="28%"></td>
<td align="center" width="8%"><font size="2">3<sup>rd</sup></font></td>
<td align="left" width="11%"><font size="2">$18 <sup>3/4</sup></font></td>
<td align="left" width="11%"><font size="2">$16</font></td>
<td align="left" width="11%"><font size="2">$22 <sup>1/4</sup></font></td>
<td align="left" width="11%"><font size="2">$18 <sup>1/2</sup></font></td>
</tr>
<tr>
<td width="28%"></td>
<td align="center" width="8%"><font size="2">4<sup>th</sup></font></td>
<td align="left" width="11%"><font size="2">$22 <sup>7/8</sup></font></td>
<td align="left" width="11%"><font size="2">$16 <sup>1/8</sup></font></td>
<td align="left" width="11%"><font size="2">$22 <sup>1/4</sup></font></td>
<td align="left" width="11%"><font size="2">$17 <sup>1/8</sup></font></td>
</tr>
</TABLE>
</p>
<p>The Registrant has never paid a cash dividend. The present policy of the Registrant is to retain earnings to provide funds for the operation and expansion of its business. The Registrant does not intend to pay any cash dividends at this time.</p>
<p>At August 31, 1999, the number of record stockholders of the Registrant's Common Stock was approximately 812.</p>
<p><u>Item 6.&nbsp;&nbsp;&nbsp; Selected Financial Data</u></p>
<p>The selected financial data set forth below is derived from the audited financial statements of the Company for the years ended June 30, 1999, 1998, 1997, 1996 and 1995. This information should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and the financial statements of the Company and the notes thereto included as Item 8 in this Form 10-K.<br wp="br1">
<br wp="br2">
</p>
<p><font size="1">(dollars in thousands, except per share)</font></p>
<center>
<p><u><b>Income Statement Data</b></u><br wp="br1">
<br wp="br2">
<table border="0" width="90%">
<tr>
<td width="30%"><font size="2">Year ended June 30,</font></td>
<td align="center" width="12%"><font size="2">&nbsp;&nbsp;1999</font></td>
<td align="center" width="12%"><font size="2">&nbsp;&nbsp;1998</font></td>
<td align="center" width="12%"><font size="2">&nbsp;&nbsp;1997</font></td>
<td align="center" width="12%"><font size="2">&nbsp;&nbsp;1996</font></td>
<td align="center" width="12%"><font size="2">&nbsp;&nbsp;1995</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td width="30%"><font size="2">Revenue</font></td>
<td align="right" width="12%"><font size="2">$441,748</font></td>
<td align="right" width="12%"><font size="2">$326,110</font></td>
<td align="right" width="12%"><font size="2">$272,984</font></td>
<td align="right" width="12%"><font size="2">$244,615</font></td>
<td align="right" width="12%"><font size="2">$232,964</font></td>
</tr>
<tr>
<td colspan="6"><font size="2">Costs and expenses</font></td>
</tr>
<tr>
<td width="30%"><font size="2">&nbsp;&nbsp; Direct costs</font></td>
<td align="right" width="12%"><font size="2">256,957</font></td>
<td align="right" width="12%"><font size="2">177,584</font></td>
<td align="right" width="12%"><font size="2">147,084</font></td>
<td align="right" width="12%"><font size="2">133,184</font></td>
<td align="right" width="12%"><font size="2">126,442</font></td>
</tr>
<tr>
<td width="30%"><font size="2">&nbsp;&nbsp; Indirect costs and selling expenses</font></td>
<td align="right" width="12%"><font size="2">146,940</font></td>
<td align="right" width="12%"><font size="2">119,320</font></td>
<td align="right" width="12%"><font size="2">101,157</font></td>
<td align="right" width="12%"><font size="2">89,160</font></td>
<td align="right" width="12%"><font size="2">87,688</font></td>
</tr>
<tr>
<td width="30%"><font size="2">&nbsp;&nbsp; Depreciation and amortization</font></td>
<td align="right" width="12%"><font size="2">7,653</font></td>
<td align="right" width="12%"><font size="2">6,872</font></td>
<td align="right" width="12%"><font size="2">5,770</font></td>
<td align="right" width="12%"><font size="2">4,719</font></td>
<td align="right" width="12%"><font size="2">4,467</font></td>
</tr>
<tr>
<td width="30%"><font size="2">&nbsp;&nbsp; Goodwill amortization</font></td>
<td align="right" width="12%"><font size="2">3,224</font></td>
<td align="right" width="12%"><font size="2">2,020</font></td>
<td align="right" width="12%"><font size="2">1,082</font></td>
<td align="right" width="12%"><font size="2">791</font></td>
<td align="right" width="12%"><font size="2">514</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="1">
</td>
</tr>
</tr>
<tr>
<td width="30%"><font size="2">&nbsp;&nbsp; Total operating expenses</font></td>
<td align="right" width="12%"><font size="2">414,774</font></td>
<td align="right" width="12%"><font size="2">305,796</font></td>
<td align="right" width="12%"><font size="2">255,093</font></td>
<td align="right" width="12%"><font size="2">227,854</font></td>
<td align="right" width="12%"><font size="2">219,111</font></td>
</tr></tr>
<tr>
<td width="30%"><font size="2">Income from operations</font></td>
<td align="right" width="12%"><font size="2">26,974</font></td>
<td align="right" width="12%"><font size="2">20,314</font></td>
<td align="right" width="12%"><font size="2">17,891</font></td>
<td align="right" width="12%"><font size="2">16,761</font></td>
<td align="right" width="12%"><font size="2">13,853</font></td>
</tr>
<tr>
<td width="30%"><font size="2">Interest expense</font></td>
<td align="right" width="12%"><font size="2">3,713</font></td>
<td align="right" width="12%"><font size="2">1,837</font></td>
<td align="right" width="12%"><font size="2">1,105</font></td>
<td align="right" width="12%"><font size="2">605</font></td>
<td align="right" width="12%"><font size="2">478</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td width="30%"><font size="2">Income before income taxes</font></td>
<td align="right" width="12%"><font size="2">23,261</font></td>
<td align="right" width="12%"><font size="2">18,477</font></td>
<td align="right" width="12%"><font size="2">16,786</font></td>
<td align="right" width="12%"><font size="2">16,156</font></td>
<td align="right" width="12%"><font size="2">13,375</font></td>
</tr>
<tr>
<td valign="top" width="30%"><font size="2">Income taxes</font></td>
<td align="right" width="12%"><font size="2">9,091</font></td>
<td align="right" width="12%"><font size="2">6,762</font></td>
<td align="right" width="12%"><font size="2">6,714</font></td>
<td align="right" width="12%"><font size="2">6,305</font></td>
<td align="right" width="12%"><font size="2">5,219</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td width="30%"><font size="2">Net income</font></td>
<td align="right" width="12%"><font size="2">$&nbsp;&nbsp;14,170</font></td>
<td align="right" width="12%"><font size="2">$&nbsp;&nbsp;11,715</font></td>
<td align="right" width="12%"><font size="2">$&nbsp;&nbsp;10,072</font></td>
<td align="right" width="12%"><font size="2">$ &nbsp;&nbsp;&nbsp; 9,851</font></td>
<td align="right" width="12%"><font size="2">$ &nbsp;&nbsp;&nbsp; 8,156</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
<tr>
<td width="30%"><font size="2">Basic earnings per share <sup>(1)</sup></font></td>
<td align="right" width="12%"><font size="2">$ &nbsp;&nbsp;&nbsp;&nbsp; 1.30</font></td>
<td align="right" width="12%"><font size="2">$ &nbsp;&nbsp;&nbsp;&nbsp; 1.09</font></td>
<td align="right" width="12%"><font size="2">$ &nbsp;&nbsp;&nbsp;&nbsp; 0.96</font></td>
<td align="right" width="12%"><font size="2">$ &nbsp;&nbsp;&nbsp;&nbsp; 0.97</font></td>
<td align="right" width="12%"><font size="2">$ &nbsp;&nbsp;&nbsp;&nbsp; 0.81</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
<tr>
<td valign="top" width="30%"><font size="2">Diluted earnings per share <sup>(1)</sup></font></td>
<td align="right" width="12%"><font size="2">$ &nbsp;&nbsp;&nbsp;&nbsp; 1.26</font></td>
<td align="right" width="12%"><font size="2">$ &nbsp;&nbsp;&nbsp;&nbsp; 1.05</font></td>
<td align="right" width="12%"><font size="2">$ &nbsp;&nbsp;&nbsp;&nbsp; 0.92</font></td>
<td align="right" width="12%"><font size="2">$ &nbsp;&nbsp;&nbsp;&nbsp; 0.92</font></td>
<td align="right" width="12%"><font size="2">$ &nbsp;&nbsp;&nbsp;&nbsp; 0.77</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
<br wp="1">
<br wp="br2">
</p>
<p><font size="2"><u><b>Balance Sheet Data</b></u><br wp="1">
<br wp="br2">
<table border="0" width="90%">
<tr>
<td width="30%"><font size="2">Year ended June 30,</font></td>
<td align="center" width="12%"><font size="2">&nbsp;&nbsp;1999</font></td>
<td align="center" width="12%"><font size="2">&nbsp;&nbsp;1998</font></td>
<td align="center" width="12%"><font size="2">&nbsp;&nbsp;1997</font></td>
<td align="center" width="12%"><font size="2">&nbsp;&nbsp;1996</font></td>
<td align="center" width="12%"><font size="2">&nbsp;&nbsp;1995</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td width="30%"><font size="2">Total assets</font></td>
<td align="right" width="12%"><font size="2">$221,712</font></td>
<td align="right" width="12%"><font size="2">$163,060</font></td>
<td align="right" width="12%"><font size="2">$118,860</font></td>
<td align="right" width="12%"><font size="2">$103,308</font></td>
<td align="right" width="12%"><font size="2">$&nbsp; 74,642</font></td>
</tr>
<tr>
<td width="30%"><font size="2">Long-term obligations</font></td>
<td align="right" width="12%"><font size="2">67,027</font></td>
<td align="right" width="12%"><font size="2">31,231</font></td>
<td align="right" width="12%"><font size="2">10,568</font></td>
<td align="right" width="12%"><font size="2">2,414</font></td>
<td align="right" width="12%"><font size="2">2,340</font></td>
</tr>
<tr>
<td width="30%"><font size="2">Working capital</font></td>
<td align="right" width="12%"><font size="2">66,726</font></td>
<td align="right" width="12%"><font size="2">54,878</font></td>
<td align="right" width="12%"><font size="2">42,014</font></td>
<td align="right" width="12%"><font size="2">28,675</font></td>
<td align="right" width="12%"><font size="2">26,517</font></td>
</tr>
<tr>
<td width="30%"><font size="2">Stockholders' equity</font></td>
<td align="right" width="12%"><font size="2">98,937</font></td>
<td align="right" width="12%"><font size="2">84,327</font></td>
<td align="right" width="12%"><font size="2">70,774</font></td>
<td align="right" width="12%"><font size="2">55,338</font></td>
<td align="right" width="12%"><font size="2">44,485</font></td>
</tr>
</TABLE>
</b></font></p>
</center>
<p><font size="2"><sup>(1)</sup> &nbsp; Computed on the basis described in Note 1, Earnings Per Share, of the Notes to Consolidated Financial Statements. As a result, prior period per share amounts have been restated.</font><font size="2">999<br wp="br1">
<br wp="br2">
<hr size="1">
</font></p>
<p><font size="2"><u><b>Item 7. Management's Discussion and Analysis of Financial Condition &amp; Results of Operations</b></u></font></p>
<p><font size="2">The following discussion and analysis is provided to enhance the understanding of, and should be read in conjunction with, the Financial Statements and the related Notes. All years refer to the Company's fiscal year which ends on June 30.
</font></p>
<p><font size="2">The table below sets forth, for the periods indicated, the customer mix in revenue with related percentages of total revenue.<br wp="br1><br wp=" br2">
<table border="0" width="92%">
<tr>
<td width="23%"><font size="1">(dollars in thousands)</font></td>
<td colspan="2" align="center" valign="top"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;1999</font></td>
<td colspan="2" align="center" valign="top"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;1998</font></td>
<td colspan="2" align="center" valign="top"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;1997</font></td>
</tr>
<tr>
<td colspan="7">
<hr size="1">
</td>
</tr>
<tr>
<td width="23%"><font size="2">Department of Defense</font></td>
<td align="right" width="12%"><font size="2">$216,573</font></td>
<td align="right" width="11%"><font size="2">49.0%</font></td>
<td align="right" width="12%"><font size="2">$160,982</font></td>
<td align="right" width="11%"><font size="2">49.4%</font></td>
<td align="right" width="12%"><font size="2">$141,172</font></td>
<td align="right" width="11%"><font size="2">51.7%</font></td>
</tr>
<tr>
<td width="23%"><font size="2">Federal Civilian Agencies</font></td>
<td align="right" width="12%"><font size="2">130,766</font></td>
<td align="right" width="11%"><font size="2">29.6&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="12%"><font size="2">89,768</font></td>
<td align="right" width="11%"><font size="2">27.5&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="12%"><font size="2">69,615</font></td>
<td align="right" width="11%"><font size="2">25.5&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="23%"><font size="2">Commercial</font></td>
<td align="right" width="12%"><font size="2">72,136</font></td>
<td align="right" width="11%"><font size="2">16.3&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="12%"><font size="2">65,878</font></td>
<td align="right" width="11%"><font size="2">20.2&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="12%"><font size="2">55,132</font></td>
<td align="right" width="11%"><font size="2">20.2&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="23%"><font size="2">State &amp; Local Government</font></td>
<td align="right" width="12%"><font size="2">22,273</font></td>
<td align="right" width="11%"><font size="2">5.1&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="12%"><font size="2">9,482</font></td>
<td align="right" width="11%"><font size="2">2.9&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="12%"><font size="2">7,065</font></td>
<td align="right" width="11%"><font size="2">2.6&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td colspan="7">
<hr size="1">
</td>
</tr>
<tr>
<td width="23%"><font size="2">Total</font></td>
<td align="right" width="12%"><font size="2">$441,748</font></td>
<td align="right" width="11%"><font size="2">100.0%</font></td>
<td align="right" width="12%"><font size="2">$326,110</font></td>
<td align="right" width="11%"><font size="2">100.0%</font></td>
<td align="right" width="12%"><font size="2">$272,984</font></td>
<td align="right" width="11%"><font size="2">100.0%</font></td>
</tr>
<tr>
<td colspan="7">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
</font></p>
<p><font size="2"><i>Revenue.</i> For the year ended June 30, 1999, the Company's total revenue increased by $115.6 million, or 35%. The increase was attributable to acquisitions made during 1999 and to a 15% internal growth rate mainly in the Federal
civilian and state and local markets. Total revenue in 1998 increased by $53.1 million, or 19%, from $273.0 million to $326.1 million. This increase was primarily due to recent acquisitions coupled with continued internal revenue growth of 14% generated
from F
<p><font size="2">All of the acquisitions have been accounted for using the purchase method of accounting and the results of their operations have been included in the Company's revenue since the date of acquisition. Acquisitions made during the last two
years accounted for $67.8 million of the 1999 revenue growth. On November 13, 1998, the Company acquired 100% of the issued and outstanding common stock of QuesTech, Inc., now known as CACI Technologies, Inc. CACI Technologies contributed revenue of $56.1 m
<p><font size="2">Revenue growth from 1997 to 1999 with the Department of Defense is primarily due to acquisitions.</font></p>
<p><font size="2">Revenue from Federal Civilian agencies increased 45.7% or $41.0 million for 1999 as compared to 1998. Approximately 54% of Federal Civilian agency revenue is derived from the Department of Justice (&quot;DoJ&quot;) in providing
litigation support services and in developing an automated debt collection system. Revenue for DoJ was $71.2 million, $58.4 million and $53.2 million in 1999, 1998 and 1997, respectively. In 1999, the Company experienced significant revenue growth, 90% or
$28.2 mill
n from the acquisition of GSI, which resulted primarily from services and equipment provided to the Federal Aviation Administration, and by $4.9 million of internal growth, primarily in the Company's year 2000 software renovation services.</font></p>
<p><font size="2">Commercial revenue is derived primarily from the Company's Marketing Systems Group in the U.K., and to a lesser degree from the Simulation Systems Group and commercial litigation support. For the years 1999 and 1998, commercial revenue
increased by 9.5%, or $6.3 million, and 19%, or $10.7 million, respectively. These increases were primarily the result of growth in the Marketing Systems Group's sales of territory optimization and marketing analysis software products and services as well a
s
for systems integration services. Total Marketing Systems Group revenue was $49.9 million, $40.9 million, and $33.0 million in 1999, 1998 and 1997, respectively. The nature of the Company's proprietary software products business is inherently less
predictable than the Company's longer-term contract work with the Federal Government and may fluctuate from year to year.</font></p>
<p><font size="2">As a percentage, revenue from state and local governments has increased significantly to 5.0% of revenue from 2.9% of revenue a year ago. The $12.8 million increase in revenue to $22.3 million in 1999 versus $9.5 million in 1998 was
largely due to Year 2000 business and systems integration services. In 1998, revenue from state and local agencies increased $2.4 million from 1997 due to Year 2000 remediation services.</font></p>
<p><font size="2">The Company's total funded and unfunded backlog at June 30, 1999 increased to $1.08 billion compared to $1.05 billion a year ago.</font></p>
<p><font size="2"><i>Results of Operations.</i> The following table sets forth the relative percentages that certain items of expense and earnings bear to revenue.<br wp="br1">
<br wp="br2">
<table width="80%">
<tr>
<td width="20%"></td>
<td width="30%"></td>
<td align="center" width="10%"><font size="2">&nbsp; 1999</font></td>
<td align="center" width="10%"><font size="2">&nbsp; 1998</font></td>
<td align="center" width="10%"><font size="2">&nbsp; 1997</font></td>
</tr>
<tr>
<td width="20%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td width="20%"></td>
<td width="30%"><font size="2">Revenue</font></td>
<td align="right" width="10%"><font size="2">100.0%</font></td>
<td align="right" width="10%"><font size="2">100.0%</font></td>
<td align="right" width="10%"><font size="2">100.0%</font></td>
</tr>
<tr>
<td width="20%"></td>
<td colspan="4"><font size="2">Costs and expenses</font></td>
</tr>
<tr>
<td width="20%"></td>
<td width="30%">&nbsp;&nbsp;&nbsp;<font size="2">Direct costs</font></td>
<td align="right" width="10%"><font size="2">58.2&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">54.5&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">53.9&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="20%"></td>
<td width="30%">&nbsp;&nbsp;&nbsp;<font size="2">Indirect &amp; selling expenses</font></td>
<td align="right" width="10%"><font size="2">33.3&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">36.6&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">37.1&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="20%"></td>
<td width="30%">&nbsp;&nbsp;&nbsp;<font size="2">Depreciation &amp; amortization</font></td>
<td align="right" width="10%"><font size="2">1.7&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">2.1&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">2.1&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="20%"></td>
<td width="30%">&nbsp;&nbsp;&nbsp;<font size="2">Goodwill amortization</font></td>
<td align="right" width="10%"><font size="2">0.7&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">0.6&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">0.3&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="20%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td width="20%"></td>
<td width="30%">&nbsp;&nbsp;&nbsp;<font size="2">Total operating expenses</font></td>
<td align="right" width="10%"><font size="2">93.9&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">93.8&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">93.4&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="20%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td width="20%"></td>
<td width="30%"><font size="2">Income from operations</font></td>
<td align="right" width="10%"><font size="2">6.1&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">6.2&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">6.6&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="20%"></td>
<td width="30%"><font size="2">Interest expense</font></td>
<td align="right" width="10%"><font size="2">0.8&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">0.6&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">0.5&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="20%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td width="20%"></td>
<td width="30%"><font size="2">Income before income taxes</font></td>
<td align="right" width="10%"><font size="2">5.3&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">5.6&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">6.1&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="20%"></td>
<td width="30%"><font size="2">Income taxes</font></td>
<td align="right" width="10%"><font size="2">2.1&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">2.1&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" width="10%"><font size="2">2.4&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="20%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td width="20%"></td>
<td width="30%"><font size="2">Net income</font></td>
<td align="right" width="10%"><font size="2">3.2%</font></td>
<td align="right" width="10%"><font size="2">3.5%</font></td>
<td align="right" width="10%"><font size="2">3.7%</font></td>
</tr>
<tr>
<td width="20%"></td>
<td colspan="4">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
</font></p>
<p><font size="2"><i>Income from Operations.</i> Operating income increased 33% for 1999 as compared to 1998. This was due to the 35% growth in revenue offset by a higher proportion of other direct costs to total direct costs, which generally provides a
lower margin. In 1998, the Company reported a 13.5% increase in operating income, which was primarily due to a 19.5% growth in revenue, partially offset by a 0.3% decline in operating margins.</font></p>
<p><font size="2">During the last three years, as a percentage of revenue, total direct costs were 58.2%, 54.5% and 53.9%. Direct costs include direct labor and other direct costs such as equipment purchases, subcontract costs and travel expenses. The
largest component of direct costs, direct labor, was $126.9 million, $103.6 million and $92.3 million in 1999, 1998 and 1997, respectively. Other direct costs were $130.1, $74.0 million and $54.8 million in 1999, 1998 and 1997, respectively, and have
grown at
<p><font size="2">Indirect costs and selling expenses include fringe benefits, marketing and bid &amp; proposal costs, indirect labor, and other discretionary costs. Most of these expenses are highly variable and have grown in proportion with the growth
in revenue. As a percentage of revenue, indirect costs were 33.3%, 36.6% and 37.1% for 1999, 1998 and 1997, respectively. The continued decline, as a percentage of revenue is due to the impact of higher other direct costs on revenue.</font></p>
<p><font size="2">Depreciation and amortization of property and equipment increased $0.7 million from $6.9 million in 1998 to $7.6 million in 1999. The increase was primarily due to property and equipment acquired with QuesTech, which resulted in
additional expense of $0.5 million. The remaining increase came from a higher level of capital expenditures in 1999 as compared to 1998. The increase of depreciation and amortization in 1998 was primarily due to the property and equipment acquired with GSI.</font><
<p><font size="2">Goodwill amortization increased $1.2 million in 1999 as a result of recent acquisitions. The acquisitions of QuesTech, IDS and GSI resulted in incremental goodwill amortization expense of $0.6 million, $0.2 million, and $0.4 million,
respectively. The 1998 increase in goodwill amortization of $0.8 million was due to the acquisition of GSI.</font></p>
<p><font size="2">Interest expense increased in 1999 and 1998 by $1.9 million and $0.7 million, respectively. The higher costs were the result of increases in average borrowings during these periods to $58.8 million and $27.5 million, respectively, from
the 1997 average of $15.6 million. The increased borrowings were primarily the result of the acquisitions discussed previously.</font></p>
<p><font size="2">The effective income tax rates in 1999, 1998 and 1997 were 39.1%, 36.6% and 40.0%, respectively. The decrease in the effective tax rate in 1998 was primarily the result of a lower effective state income tax rate. The increase in the 1999
rate was primarily due to higher non-deductible goodwill amortization expense associated with acquisition of QuesTech.</font></p>
<p><font size="2"><u>Effects of Inflation</u></font></p>
<p><font size="2">Approximately 20% of the Company's business is conducted under cost-reimbursable contracts which automatically adjust revenue to cover increased costs from inflation. Over 59% of the business is under time-and-materials contracts where
labor rates are often fixed for several years. The Company generally is able to price these contracts in a manner to accommodate rates of inflation as experienced in recent years. The remaining portion of the Company's business is fixed-price and is primari
l
<p><font size="2"><u>Liquidity and Capital Resources</u></font></p>
<p><font size="2">Historically, the Company's positive cash flow from operations and available credit facilities has provided adequate liquidity and working capital to fully fund the Company's operational needs and support acquisition activities. Working
capital was $66.7 million and $54.9 million as of June 30, 1999 and 1998, respectively. The increase in working capital in 1999 was primarily related to the QuesTech acquisition. Operating activities provided cash of $18.7 million and $19.9 million for 1999
<p><font size="2">The Company used $52.1 million in investing activities in 1999 versus $42.6 million for the same period last year. The acquisitions of QuesTech and IDS accounted for $44.4 million of the total cash invested in 1999. In 1998, the
acquisitions of GSI and AnaData Limited accounted for a combined purchase price of $35.4 million, which was primarily financed through bank borrowings. Purchases of office and computer-related equipment of $7.5 million and $6.4 million in 1999 and 1998,
respectivel
<p><font size="2">During 1999, the Company financed its investing activities from operating cash flow and from a net increase in borrowings of $32.2 million under its line of credit. For the year ended June 30, 1998, financing activities provided cash of
$22.8 million primarily from a net increase in borrowings of $21.0 million to fund the acquisitions made in 1998.</font></p>
<p><font size="2">In anticipation of continuing its strategy of acquisitions and in order to secure lower interest rates, on June 19, 1998 the Company executed a new five-year unsecured revolving line of credit. The agreement permits borrowings of up to
$125 million with annual sublimits on amounts borrowed for acquisitions. (See also Note 4 to the Notes to Consolidated Financial Statements.) The Company also maintains a 500,000 pound sterling unsecured line of credit in London, England, which expires in N
o
0, 1999, the Company had approximately $64 million available for borrowings under its lines of credit.</font></p>
<p><font size="2">While the Registrant did not purchase any of its shares in 1998 or 1999, it has repurchased its shares in the market in prior years. The Registrant has never paid any cash dividends as its policy is to invest earnings in the growth of
the Company.</font></p>
<p><font size="2">The Company believes that the combination of internally generated funds, available bank borrowings and cash on hand will provide the required liquidity and capital resources for the foreseeable future.</font></p>
<p><font size="2"><u>Year 2000</u></font></p>
<p><font size="2">The following discussion addresses the Company's response to the Year 2000 issue, which is the result of computer programs written using two digit years rather than four digit years to define the applicable year. Computer systems and
products that have date-sensitive software may recognize a date using &quot;00&quot; as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations which could potentially prevent
normal b
<p><font size="2">The Company has undertaken a multi-dimensional compliance program to address its readiness to handle the date issue in connection with both Information Technology (&quot;IT&quot;) and non-IT systems (such as those using embedded chip
technology). The scope of the compliance program includes CACI-developed software products and systems, infrastructure hardware and software applications, business applications, office equipment, leasehold facilities, and critical business partners. The
Compan
<p><font size="2">The status of all CACI software products is published on the Company's Internet site at http://www.caci.com. The Company achieved full product compliance of its supported products, product versions and/or platforms in July 1999.</font></p>

<p><font size="2">Regarding custom systems previously developed by CACI for its customers, the Company has evaluated the contractual commitments that would obligate CACI to remediate non-compliant systems and considered potential legal exposure concerning
systems for which CACI has no continuing express warranty or maintenance obligations. Those completed projects with specific year 2000 compliance requirements have been determined to be year 2000 compliant based on CACI testing and customer acceptance of t
<p><font size="2">Over the past few years, the Company has made a concerted effort to update its desktop and laptop computers and its internal communications network equipment and software. With current technology in place, the Company believes that most
of these systems are compliant. The Company also has evaluated the major components of its computer hardware and software and, its telecommunications equipment and software and, based on replacement of certain components, believe they are materially complia
<p><font size="2">The Company has identified the following systems as our key business applications: finance &amp; project management, payroll, human resources, and contracts. Our human resources information, project forecasting, and contracts database
systems are compliant. In addition, we recently completed the upgrade of our payroll system to a fully compliant MS-Windows<sup>&reg;</sup>-based version supplied by an outside vendor.</font></p>
<p><font size="2">In January 1998, we began our implementation of a new finance system, which is supplied by Deltek Systems, a leading supplier of such systems to the government contracting industry. This system is compliant and our plan to have it
implemented by June 1999 was successful.</font></p>
<p><font size="2">We have and will continue to determine and assess our critical business partners as a part of our compliance program. Presently, such significant business partners include, but are not limited to, our suppliers, the utility companies,
our bank lending group, an outside vendor used to process payroll, insurance and benefit providers, and property management firms. CACI's operations are dependent to varying degrees on the readiness of these and other partners. CACI has issued
questionnaires
<p><font size="2">The Company is heavily dependent upon the effectiveness of its customers' systems, principally in the U.S. Government, for the administration of contracts and payment of the Company's invoices. The Company has made formal inquiries and
continues to vigorously pursue responses concerning the efforts of its larger U.S. Government customers to determine the status and encourage correction of any problems in their systems. The primary concern is whether there will be delays in contract paymen
t
<p><font size="2">The financial impact of preparing the Company to be Year 2000 compliant cannot be fully determined at this time. Presently, the most significant costs are related to our implementation of our new business systems in finance and project
management, which are discussed above. Costs for this project, including software, hardware, consulting fees and labor are estimated at $2 million, of which approximately 75% has been spent to date. These costs are being capitalized and will be depreciated
b
<p><font size="2">The Company has devoted one full-time individual, an oversight committee of 15 individuals and approximately 40 LAN administrators at various offsite locations to communicate and implement all aspects of the Year 2000 compliance program.
The Company has found that many of the upgrades or patches necessary to fix the software are being provided at no cost by major vendors.</font></p>
<p><font size="2">In summary, the Company has established a Year 2000 compliance program plan that is progressing as described above. CACI expects that its business systems will be year 2000 ready, but it may experience isolated incidences of
non-compliance and potential outages with respect to its information technology infrastructure. CACI plans to allocate internal resources to be ready to take action should these events occur. Investors should be aware of the fact that the process of
addressing the Year
ncremental. The Company will continue to report on the status of its Year 2000 compliance program. Investors are cautioned, however, that the Company's assessment of its readiness, of the costs of performing the program and the risks attended thereto, and
of the need for any contingency plans may change materially in the future as we proceed further through plan performance.</font></p>
<p><font size="2"><u>Forward Looking Statements</u></font></p>
<p><font size="2">There are statements made herein which do not address historical facts and, therefore, could be interpreted to be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements
are subject to factors that could cause actual results to differ materially from anticipated results. The factors that could cause actual results to differ materially from those anticipated include, but are not limited to, the following: regional and natio
<p><font size="2"><u><b>Item 8. Financial Statements and Supplementary Data</b></u></font></p>
<p><font size="2">The Consolidated Financial Statements of CACI International Inc and subsidiaries are provided in Section II of the Report.</font></p>
<p><font size="2"><u><b>Item 9. Disagreements on Accounting and Financial Disclosure</b></u></font></p>
<p><font size="2">The Company had no disagreements with its independent accountants on accounting principles, practices or financial statement disclosure during the two years prior to the date of the most recent financial statements included in this Report.
<br wp="br1">
<br wp="br2">
</font></p>
<center>
<p><font size="2"><b>PART III</b></font></p>
</center>
<p><font size="2">The Information required by Items 10, 11, 12, and 13 of Part III of Form 10-K has been omitted in reliance on General Instruction G(3) and is incorporated herein by reference to the Company's definitive proxy statement to be filed with
the SEC pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended.<br wp="br1">
<br wp="br2">
<hr>
<br wp="br1">
<br wp="br2">
</font></p>
<center>
<p><font size="2"><b>PART IV</b></font></p>
</center>
<p><font size="2"><u><b>Item 14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K</b></u>
<table width="100%" border="0">
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td width="6%"></td>
<td width="80%"></td>
</tr>
<tr>
<td width="6%">(a)</td>
<td colspan="3">Documents filed as part of this Report</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%">1.</td>
<td colspan="2">Financial Statements</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td width="6%">A.</td>
<td width="80%">Report of Independent Accountants</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%">B.</td>
<td valign="top" width="80%">Consolidated Statements of Operations for the years ended June 30, 1999, 1998 and 1997</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%">C.</td>
<td valign="top" width="80%">Consolidated Balance Sheets as of June 30, 1999 and 1998</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%">D.</td>
<td valign="top" width="80%">Consolidated Statements of Cash Flows for the years ended June 30, 1999, 1998 and 1997</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%">E.</td>
<td valign="top" width="80%">Consolidated Statements of Shareholders' Equity for the years ended June 30, 1999, 1998 and 1997</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%">F.</td>
<td valign="top" width="80%">Consolidated Statements of Comprehensive Income for the years ended June 30, 1999, 1998, 1997</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%">G.</td>
<td valign="top" width="80%">Notes to Consolidated Financial Statements</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%">2.</td>
<td colspan="2">Supplementary Financial Data.</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" colspan="2">Schedule II - Valuation and Qualifying Accounts for the years ended June 30, 1999, 1998 and 1997</td>
</tr>
<tr>
<td width="6%">(b)</td>
<td colspan="3">Reports on Form 8-K</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%"><font size="3">&middot;</font></td>
<td valign="top" width="80%">The Registrant filed a Current Report on Form 8-K on November 28, 1998, in which the Registrant reported that it had acquired all of the issued and outstanding stock of QuesTech, Inc.</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%"><font size="3">&middot;</font></td>
<td valign="top" width="80%">The Registrant filed a Current Report on Form 8-K/A on January 27, 1999, in which the Registrant amended Items 7(a)(1), 7(b)(2) and 7(c)of the Current Report on Form 8-K filed on November 28, 1998.</td>
</tr>
<tr>
<td valign="top" width="6%">(c)</td>
<td colspan="3" valign="top">Exhibits (listed by numbers corresponding to the exhibit table of Item 601 regulation S-K).</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%">(3)</td>
<td colspan="2">Articles of Incorporation and By-laws:</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td width="6%">3.1</td>
<td width="80%">Certificate of Incorporation of the Registrant, as amended to date.</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td width="6%">3.2</td>
<td width="80%">By-laws of the Registrant, as amended to date.</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%">(4)</td>
<td colspan="2">Instruments Defining the Rights of Security Holders:</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%">4.1</td>
<td valign="top" width="80%">Clause FOURTH of the Registrant's Certificate of Incorporation, incorporated above as Exhibit 3.1.</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%">(10)</td>
<td colspan="2">Material Contracts:</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%">10.1</td>
<td valign="top" width="80%">Form of Stock Option Agreement between the Registrant and certain employees is incorporated by reference from Exhibit 10.6 of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission for
the fiscal year ended June 30, 1991.</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%">10.2</td>
<td valign="top" width="80%">Employment Agreement between the Registrant and Dr. J. P. London dated August 17, 1995, is incorporated by reference from Exhibit 10.3 of the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the fiscal year ended June 30, 1995.</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%">10.3</td>
<td valign="top" width="80%">The 1996 Stock Incentive Plan of the Registrant is incorporated by reference to the Registration Statement on Form S-8 filed with the Commission on January 24, 1997.</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%">10.4</td>
<td valign="top" width="80%">The Acquisition Agreement dated November 1, 1997, between the Registrant, CACI, Inc., and Government Systems, Inc., is incorporated by reference from the Current Report on Form 8-K filed with the Securities and Exchange
Commission on November 14, 1997.</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%">10.5</td>
<td valign="top" width="80%">The Revolving Credit Agreement dated June 19, 1998, between Registrant, NationsBank N.A., and certain other parties is incorporated by reference from Exhibit 10.8 of the Registrant's Annual Report on Form 10-K filed with the
Securities and Exchange Commission for the fiscal year ended June 30, 1998.</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%">10.6</td>
<td valign="top" width="80%">The Acquisition Agreement dated as of July 30, 1998, between the Registrant, QuesTech, Inc., and CACI Acquisition Corporation, is incorporated by reference from Exhibit 99.1 of the Current Report on Form 8-K filed with the
Securities and Exchange Commission on November 24, 1998</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td valign="top" width="6%">10.7</td>
<td valign="top" width="80%">Consulting and Separation Agreement between the Registrant and Ronald R. Ross, former President and Chief Operating Officer, dated August 10, 1999.</td>
</tr>
<tr>
<td width="6%"></td>
<td valign="top" width="6%">(11)</td>
<td colspan="2" valign="top">Computation of Earnings per Common and Common Equivalent Share.</td>
</tr>
<tr>
<td width="6%"></td>
<td valign="top" width="6%">(21)</td>
<td colspan="2" valign="top">The significant subsidiaries of the Registrant, as defined in Section 1-02(w) of regulation S-X, are:</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td width="6%"></td>
<td width="80%"></td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">CACI, Inc., a Delaware Corporation</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">CACI, INC.-FEDERAL, a Delaware Corporation</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td width="6%"></td>
<td width="80%">(also does business as &quot;CACI Marketing Systems&quot;, &quot;Information Decision Systems&quot;, &quot;Demographic on Call&quot; and &quot;CACI IDS&quot;)</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">CACI, INC.-COMMERCIAL, a Delaware Corporation</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">CACI Products Company, a Delaware Corporation</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">CACI Development Company, a Delaware Corporation</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">CACI Products Company California, a California Corporation</td>
</tr></tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">American Legal Services Corp., a Delaware Corporation</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td width="6%"></td>
<td width="80%">(also does business as &quot;CACI Advanced Legal Systems&quot; and &quot;CACI Legal Systems&quot;)</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">CACI Field Services, Inc., a Delaware Corporation</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">CACI N.V., a Netherlands Corporation</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">CACI Limited, a United Kingdom Corporation</td>
</tr>
<div>
</tr></div>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">Automated Sciences Group, Inc., a Delaware Corporation</td>
</tr></tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">IMS Services, Incorporated, a Maryland Corporation</td>
</tr>
<div>
</tr></div>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">Integrated Microcomputer Systems, Inc., a Maryland Corporation</td>
</tr></tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">CACI Technologies, Inc., a Virginia Corporation</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%"></td>
<td colspan="2">CACI Technology Services, Inc., a Virginia Corporation</td>
</tr>
<tr>
<td width="6%"></td>
<td width="6%">(27)</td>
<td colspan="2">Financial Data Schedule</td>
</tr>
</TABLE>
</font><br>
<hr size="1">
</p>
<center>
<p><b>SECTION II</b><br wp="br1">
<br wp="br2">
</p>
<p><b>REPORT OF INDEPENDENT ACCOUNTANTS</b></p>
<p><b>AND</b></p>
<p><b>CONSOLIDATED FINANCIAL STATEMENTS</b></p>
<p><b>FOR THE YEARS ENDED JUNE 30, 1999, 1998 AND 1997</b><br wp="br1">
<br wp="br2">
<hr size="1">
</p>
<p>REPORT OF INDEPENDENT ACCOUNTANTS<br wp="br1">
<br wp="br2">
<br wp="br1">
<br wp="br2">
</p>
</center>
<p>To the Board of Directors and Shareholders<br>
CACI International Inc<br>
Arlington, Virginia<br wp="br1">
<br wp="br2">
</p>
<p>We have audited the accompanying consolidated balance sheets of CACI International Inc and subsidiaries (the Company) as of June 30, 1999 and 1998, and the related consolidated statements of operations, shareholders' equity, cash flows and
comprehensive income for each of the three years in the period ended June 30, 1999. Our audits also included the financial statement schedules listed in the Index at Item 14(a)(2). These financial statements are the responsibility of the Company's
management. Our respo
<p>We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the
over
<p>In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the
period ended June 30, 1999, in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly i
</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /s/<br wp="br1">
<br wp="br2">
</p>
<p>McLean, Virginia<br>
August 10, 1999<br wp="br1">
<br wp="br2">
<hr size="1">
</p>
<center>
<p>CACI INTERNATIONAL INC<br>
CONSOLIDATED STATEMENTS OF OPERATIONS<br>
<font size="2">(amounts in thousands, except per share data)</font><br wp="br1">
<br wp="br2">
<table width="86%" border="0">
<tr>
<td width="45%"><font size="2">Year ended June 30,</font></td>
<td align="center" width="12%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1999</font></td>
<td align="center" width="12%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1998</font></td>
<td align="center" width="12%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1997</font></td>
</tr>
<tr>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td width="45%"><font size="2">Revenue</font></td>
<td align="right" width="12%"><font size="2">$441,748</font></td>
<td align="right" width="12%"><font size="2">$326,110</font></td>
<td align="right" width="12%"><font size="2">$272,984</font></td>
</tr>
<tr>
<td width="45%"><font size="2">Costs and expenses</font></td>
<td width="12%"></td>
<td width="12%"></td>
<td width="12%"></td>
</tr>
<tr>
<td width="45%">&nbsp;&nbsp; <font size="2">Direct costs</font></td>
<td align="right" width="12%"><font size="2">256,957</font></td>
<td align="right" width="12%"><font size="2">177,584</font></td>
<td align="right" width="12%"><font size="2">147,084</font></td>
</tr>
<tr>
<td width="45%">&nbsp;&nbsp;<font size="2"> Indirect costs and selling expenses</font></td>
<td align="right" width="12%"><font size="2">146,940</font></td>
<td align="right" width="12%"><font size="2">119,320</font></td>
<td align="right" width="12%"><font size="2">101,157</font></td>
</tr>
<tr>
<td width="45%">&nbsp;&nbsp; <font size="2">Depreciation and amortization</font></td>
<td align="right" width="12%"><font size="2">7,653</font></td>
<td align="right" width="12%"><font size="2">6,872</font></td>
<td align="right" width="12%"><font size="2">5,770</font></td>
</tr>
<tr>
<td width="45%">&nbsp;&nbsp;<font size="2"> Goodwill amortization</font></td>
<td align="right" width="12%"><font size="2">3,224</font></td>
<td align="right" width="12%"><font size="2">2,020</font></td>
<td align="right" width="12%"><font size="2">1,082</font></td>
</tr>
<tr>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td width="45%">&nbsp;&nbsp; <font size="2">Total operating expenses</font></td>
<td align="right" width="12%"><font size="2">414,774</font></td>
<td align="right" width="12%"><font size="2">305,796</font></td>
<td align="right" width="12%"><font size="2">255,093</font></td>
</tr>
<tr>
<td width="45%"><font size="2">Income from operations</font></td>
<td align="right" width="12%"><font size="2">26,974</font></td>
<td align="right" width="12%"><font size="2">20,314</font></td>
<td align="right" width="12%"><font size="2">17,891</font></td>
</tr>
<tr>
<td width="45%"><font size="2">Interest expense</font></td>
<td align="right" width="12%"><font size="2">3,713</font></td>
<td align="right" width="12%"><font size="2">1,837</font></td>
<td align="right" width="12%"><font size="2">1,105</font></td>
</tr>
<tr>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td width="45%"><font size="2">Income before income taxes</font></td>
<td align="right" width="12%"><font size="2">23,261</font></td>
<td align="right" width="12%"><font size="2">18,477</font></td>
<td align="right" width="12%"><font size="2">16,786</font></td>
</tr>
<tr>
<td width="45%"><font size="2">Income taxes</font></td>
<td align="right" width="12%"><font size="2">9,091</font></td>
<td align="right" width="12%"><font size="2">6,762</font></td>
<td align="right" width="12%"><font size="2">6,714</font></td>
</tr>
<tr>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td width="45%"><font size="2">Net income</font></td>
<td align="right" width="12%"><font size="2">$&nbsp;&nbsp;14,170</font></td>
<td align="right" width="12%"><font size="2">$&nbsp;&nbsp;11,715</font></td>
<td align="right" width="12%"><font size="2">$&nbsp;&nbsp;10,072</font></td>
</tr>
<tr>
<td colspan="4">
<hr size="3" noshade>
</td>
</tr>
<tr>
<td width="45%"><font size="2">EARNINGS PER COMMON AND<br>
COMMON EQUIVALENT SHARE:</font></td>
<td width="12%"></td>
<td width="12%"></td>
<td width="12%"></td>
</tr>
<tr>
<td valign="top" width="45%"><font size="2">Basic earnings per share</font></td>
<td align="right" valign="top" width="12%"><font size="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.30</font></td>
<td align="right" valign="top" width="12%"><font size="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.09</font></td>
<td align="right" valign="top" width="12%"><font size="2">$&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;0.96</font></td>
</tr>
<tr>
<td valign="top" width="45%"><font size="2">Diluted earnings per share</font></td>
<td align="right" valign="top" width="12%"><font size="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.26</font></td>
<td align="right" valign="top" width="12%"><font size="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.05</font></td>
<td align="right" valign="top" width="12%"><font size="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.92</font></td>
</tr>
<tr>
<td valign="top" width="45%"><font size="2">Average shares outstanding</font></td>
<td align="right" valign="top" width="12%"><font size="2">10,896</font></td>
<td align="right" valign="top" width="12%"><font size="2">10,779</font></td>
<td align="right" valign="top" width="12%"><font size="2">10,504</font></td>
</tr>
<tr>
<td valign="top" width="45%"><font size="2">Average shares and equivalent shares outstanding</font></td>
<td align="right" valign="top" width="12%"><font size="2">11,220</font></td>
<td align="right" valign="top" width="12%"><font size="2">11,153</font></td>
<td align="right" valign="top" width="12%"><font size="2">11,005</font></td>
</tr>
<tr>
<td colspan="4">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</p>
</center>
<p><font size="2">See Notes to Consolidated Financial Statements.</font><br wp="br1">
<br wp="br2">
<hr size="1">
</p>
<center>
<p>CACI INTERNATIONAL INC<br>
CONSOLIDATED BALANCE SHEETS<br>
<font size="2">(dollars in thousands)</font>
<table border="0" width="84%">
<tr>
<td valign="bottom" width="60%"><font size="2">June 30,</font></td>
<td align="right" valign="bottom" width="12%"><font size="2">1999&nbsp;&nbsp;</font></td>
<td align="right" valign="bottom" width="12%"><font size="2">1998&nbsp;&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td colspan="3">
<hr size="1">
</td>
<td></td>
</tr>
<tr>
<td width="60%"><font size="2">ASSETS</font></td>
<td width="12%"></td>
<td width="12%"></td>
<td></td>
</tr>
<tr>
<td width="60%"><font size="2">Current assets</font></td>
<td width="12%"></td>
<td width="12%"></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">&nbsp;&nbsp;Cash and equivalents</font></td>
<td align="right" valign="top" width="12%"><font size="2">$ &nbsp;&nbsp;&nbsp;&nbsp;2,403&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">$&nbsp;&nbsp;&nbsp;&nbsp;2,081&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">&nbsp;&nbsp;Accounts receivable</font></td>
<td align="right" valign="top" width="12%"></td>
<td align="right" valign="top" width="12%"></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Billed</font></td>
<td align="right" valign="top" width="12%"><font size="2">99,681&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">83,995&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Unbilled</font></td>
<td align="right" valign="top" width="12%"><font size="2">12,264&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">9,350&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Total accounts receivable</font></td>
<td align="right" valign="top" width="12%"><font size="2">111,945&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">93,345&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">&nbsp;&nbsp;Income taxes receivable</font></td>
<td align="right" valign="top" width="12%"><font size="2">948&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">-&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">&nbsp;&nbsp;Deferred income taxes</font></td>
<td align="right" valign="top" width="12%"><font size="2">198&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">209&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">&nbsp;&nbsp;Deferred contract costs</font></td>
<td align="right" valign="top" width="12%"><font size="2">1,543&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">2,383&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">&nbsp;&nbsp;Prepaid expenses and other</font></td>
<td align="right" valign="top" width="12%"><font size="2">5,437&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">4,362&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td colspan="3">
<hr size="1">
</td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Total current assets</font></td>
<td align="right" valign="top" width="12%"><font size="2">122,474&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">102,380&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Property and equipment, net</font></td>
<td align="right" valign="top" width="12%"><font size="2">13,762&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">11,351&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Accounts receivable, long-term</font></td>
<td align="right" valign="top" width="12%"><font size="2">7,036&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">6,075&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Goodwill</font></td>
<td align="right" valign="top" width="12%"><font size="2">67,767&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">37,474&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Other assets</font></td>
<td align="right" valign="top" width="12%"><font size="2">6,266&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">4,884&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Deferred contract costs, long-term</font></td>
<td align="right" valign="top" width="12%"><font size="2">989&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">480&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Deferred income taxes</font></td>
<td align="right" valign="top" width="12%"><font size="2">3,418&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">416&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td colspan="3">
<hr size="1">
</td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Total assets</font></td>
<td align="right" valign="top" width="12%"><font size="2">$221,712&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">$163,060&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td colspan="3">
<hr size="3" noshade>
</td>
<td></td>
</tr>
<br wp="br1">
<br wp="br2">
<tr>
<td width="60%"><font size="2">LIABILITIES AND SHAREHOLDERS' EQUITY</font></td>
<td width="12%"></td>
<td width="12%"></td>
<td></td>
</tr>
<tr>
<td width="60%"><font size="2">Current liabilities</font></td>
<td width="12%"></td>
<td width="12%"></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">&nbsp;&nbsp;Accounts payable and accrued expenses</font></td>
<td align="right" valign="top" width="12%"><font size="2">$&nbsp;32,851&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">$&nbsp;24,257&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">&nbsp;&nbsp;Accrued compensation and benefits</font></td>
<td align="right" valign="top" width="12%"><font size="2">21,304&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">17,010&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">&nbsp;&nbsp;Income taxes payable</font></td>
<td align="right" valign="top" width="12%"><font size="2">-&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">4,390&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">&nbsp;&nbsp;Deferred income taxes</font></td>
<td align="right" valign="top" width="12%"><font size="2">1,593&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">1,845&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td colspan="3">
<hr size="1">
</td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Total current liabilities</font></td>
<td align="right" valign="top" width="12%"><font size="2">55,748&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">47,502&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Note payable, long-term</font></td>
<td align="right" valign="top" width="12%"><font size="2">62,069&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">29,800&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Deferred rent expenses</font></td>
<td align="right" valign="top" width="12%"><font size="2">720&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">1,289&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Deferred income taxes</font></td>
<td align="right" valign="top" width="12%"><font size="2">138&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">142&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Other long-term obligations</font></td>
<td valign="top" align="right" width="12%"><font size="2">4,100&nbsp;</font></td>
<td valign="top" align="right" width="12%"><font size="2">-&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td width="60%"><font size="2">Shareholders' equity</font></td>
<td valign="top" width="12%"></td>
<td valign="top" width="12%"></td>
<td></td>
</tr>
<tr>
<td width="60%"><font size="2">&nbsp; &nbsp;Common stock</font></td>
<td valign="top" width="12%"></td>
<td valign="top" width="12%"></td>
<td></td>
</tr>
<tr>
<td width="60%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $.10 par value, 40,000,000 shares authorized,<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14,499,000 and 14,371,000 shares issued</font></td>
<td align="right" valign="bottom" width="12%"><font size="2">1,450&nbsp;</font></td>
<td align="right" valign="bottom" width="12%"><font size="2">1,437&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Capital in excess of par</font></td>
<td align="right" valign="top" width="12%"><font size="2">13,932&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">12,344&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Retained earnings</font></td>
<td align="right" valign="top" width="12%"><font size="2">98,585&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">84,415&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Cumulative currency translation adjustments</font></td>
<td align="right" valign="top" width="12%"><font size="2">(1,368)</font></td>
<td align="right" valign="top" width="12%"><font size="2">(207)</font></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Treasury stock, at cost (3,526,000 shares)</font></td>
<td align="right" valign="top" width="12%"><font size="2">(13,662)</font></td>
<td align="right" valign="top" width="12%"><font size="2">(13,662)</font></td>
<td></td>
</tr>
<tr>
<td colspan="3">
<hr size="1">
</td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Total shareholders' equity</font></td>
<td align="right" valign="top" width="12%"><font size="2">98,937&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">84,327&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td colspan="3">
<hr size="1">
</td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"></td>
<td align="right" valign="top" width="12%"></td>
<td align="right" valign="top" width="12%"></td>
<td></td>
</tr>
<tr>
<td valign="top" width="60%"><font size="2">Total liabilities and shareholders' equity</font></td>
<td align="right" valign="top" width="12%"><font size="2">$221,712&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="2">$163,060&nbsp;</font></td>
<td></td>
</tr>
<tr>
<td colspan="3">
<hr size="3" noshade>
</td>
<td></td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</p>
</center>
<p><font size="2">See Notes to Consolidated Financial Statements.<br wp="br1">
<br wp="br2">
<hr size="1">
<br wp="br1">
<br wp="br2">
</font></p>
<center>
<p><font size="2">CACI INTERNATIONAL INC<br>
CONSOLIDATED STATEMENTS OF CASH FLOWS<br>
</font><font size="2">(dollars in thousands)</font><font size="2"></td><br wp="br1">
<br wp="br2">
<table border="0" width="97%">
<tr>
<td valign="top" width="56%"><font size="2">Year ended June 30,</font></td>
<td align="center" valign="top" width="11%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;1999</font></td>
<td align="center" valign="top" width="3%"></td>
<td align="center" valign="top" width="11%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;1998</font></td>
<td align="center" valign="top" width="3%"></td>
<td align="center" valign="top" width="12%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;1997</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td colspan="6" valign="top"><font size="2">CASH FLOWS FROM OPERATING ACTIVITIES</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Net income</font></td>
<td align="right" valign="top" width="11%"><font size="2">$14,170</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">$11,715</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">$10,072</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Reconciliation of net income to net cash<br>
&nbsp;&nbsp;provided by operating activities</font></td>
<td width="11%"></td>
<td width="3%"></td>
<td width="11%"></td>
<td width="3%"></td>
<td width="12%"></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Depreciation &amp; amortization</font></td>
<td align="right" valign="top" width="11%"><font size="2">10,877</font></td>
<td width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">8,892</font></td>
<td width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">6,852</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;(Gain) loss on sale of property and equipment</font></td>
<td align="right" valign="top" width="11%"><font size="2">30</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">(166)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">(657)</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Provision (benefit) for deferred income taxes</font></td>
<td align="right" valign="top" width="11%"><font size="2">1,512</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">(2,898)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">2,531</font></td>
</tr>
<tr>
<td colspan="2" valign="top"><font size="2">Changes in operating assets and liabilities</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable</font></td>
<td align="right" valign="top" width="11%"><font size="2">(10,023)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">(12,014)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">(275)</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets</font></td>
<td align="right" valign="top" width="11%"><font size="2">(1,726)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">273</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">363</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses</font></td>
<td align="right" valign="top" width="11%"><font size="2">2,169</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">1,481</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">(873)</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Accrued compensation and benefits</font></td>
<td align="right" valign="top" width="11%"><font size="2">4,589</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">4,192</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">(990)</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Deferred rent expenses</font></td>
<td align="right" valign="top" width="11%"><font size="2">(466)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">(755)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">(638)</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Income taxes payable (receivable)</font></td>
<td align="right" valign="top" width="11%"><font size="2">(1,993)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">7,374</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">(1,357)</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Deferred contract costs</font></td>
<td align="right" valign="top" width="11%"><font size="2">331</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">1,764</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">-</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Other long-term obligations</font></td>
<td align="right" valign="top" width="11%"><font size="2">(750)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">-</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">-</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Net cash provided by operating activities</font></td>
<td align="right" valign="top" width="11%"><font size="2">18,721</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">19,858</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">15,028</font></td>
</tr>
<tr>
<td colspan="6" valign="top"><font size="2">CASH FLOWS FROM INVESTING ACTIVITIES</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Acquisitions of property and equipment</font></td>
<td align="right" valign="top" width="11%"><font size="2">(7,507)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">(6,428)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">(6,544)</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Proceeds from sale of business, property and equipment</font></td>
<td align="right" valign="top" width="11%"><font size="2">9</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">1,207</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">373</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Purchase of businesses</font></td>
<td align="right" valign="top" width="11%"><font size="2">(44,418)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">(36,513)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">(10,351)</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Capitalized software costs and other</font></td>
<td align="right" valign="top" width="11%"><font size="2">(195)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">(837)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">(1,292)</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Net cash used in investing activities</font></td>
<td align="right" valign="top" width="11%"><font size="2">(52,111)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">(42,571)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">(17,814)</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">CASH FLOWS FROM FINANCING ACTIVITIES</font></td>
<td colspan="5" align="right" valign="top"></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Proceeds under line of credit</font></td>
<td align="right" valign="top" width="11%"><font size="2">200,630</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">175,950</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">116,471</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Payments under line of credit</font></td>
<td align="right" valign="top" width="11%"><font size="2">(168,361)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">(154,950)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">(117,658)</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Proceeds from stock options</font></td>
<td align="right" valign="top" width="11%"><font size="2">1,601</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">1,764</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">4,402</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Net cash provided by financing activities</font></td>
<td align="right" valign="top" width="11%"><font size="2">33,870</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">22,764</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">3,215</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Effect of exchange rates on cash and equivalents</font></td>
<td align="right" valign="top" width="11%"><font size="2">(158)</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">15</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">(192)</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Net increase in cash and equivalents</font></td>
<td align="right" valign="top" width="11%"><font size="2">322</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">66</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">237</font></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Cash and equivalents, beginning of year</font></td>
<td align="right" valign="top" width="11%"><font size="2">2,081</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">2,015</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">1,778</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Cash and equivalents, end of year</font></td>
<td align="right" valign="top" width="11%"><font size="2">$2,403</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">$2,081</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">$2,015</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">SUPPLEMENTAL DISCLOSURES OF CASH<br>
FLOW INFORMATION</font></td>
<td align="right" valign="top" width="11%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"></td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Cash paid during the year for income taxes, net of refunds</font></td>
<td align="right" valign="top" width="11%"><font size="2">$7,909</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">$1,483</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">$2,826</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
<tr>
<td valign="top" width="56%"><font size="2">Cash paid during the year for interest</font></td>
<td align="right" valign="top" width="11%"><font size="2">$3,160</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">$1,909</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">$1,035</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</font></p>
</center>
<p><font size="2">See Notes to Consolidated Financial Statements.</font><font size="2"><br wp="br1">
<br wp="br2">
<hr size="1">
<br wp="br1">
<br wp="br2">
</font></p>
<center>
<p><font size="2">CACI INTERNATIONAL INC<br>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY<br>
</font><font size="1">(amounts in thousands)</font><font size="2">
<table border="0" cellpadding="5" width="100%">
<tr>
<td width="30%"></td>
<td width="10%"></td>
<td width="11%"></td>
<td width="12%"></td>
<td width="14%"></td>
<td width="14%"></td>
<td width="12%"></td>
<td width="12%"></td>
<td width="14%"></td>
</tr>
<tr>
<td width="30%"></td>
<td align="center" valign="bottom" colspan="2"><font size="1">Common stock
<hr size="1">
</font></td>
<td align="center" width="12%"></td>
<td align="center" width="14%"></td>
<td align="center" width="14%"></td>
<td align="center" colspan="2" valign="bottom"><font size="1">Treasury stock
<hr size="1">
</font></td>
<td align="center" width="14%"></td>
</tr>
<tr>
<td width="30%"></td>
<td align="center" valign="bottom" width="10%"><font size="1">Shares</font></td>
<td align="center" valign="bottom" width="11%"><font size="1">Amount</font></td>
<td align="center" valign="top" width="12%"><font size="1">Capital<br>
in excess<br>
of par</font></td>
<td align="center" valign="top" width="14%"><font size="1">Retained<br>
earnings</font></td>
<td align="center" valign="top" width="14%"><font size="1">Cumulative<br>
currency<br>
translation<br>
adjustments</font></td>
<td align="center" valign="bottom" width="12%"><font size="1">Shares</font></td>
<td align="center" valign="bottom" width="12%"><font size="1">Amount</font></td>
<td align="center" valign="top" width="14%"><font size="1">Total<br>
shareholders'<br>
equity</font></td>
</tr>
<tr>
<td colspan="9">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="30%"><font size="1">BALANCE July 1, 1996</font></td>
<td align="right" valign="top" width="10%"><font size="1">13,755</font></td>
<td align="right" valign="top" width="11%"><font size="1">$1,376</font></td>
<td align="right" valign="top" width="12%"><font size="1">$&nbsp;6,239</font></td>
<td align="right" valign="top" width="14%"><font size="1">$62,628</font></td>
<td align="right" valign="top" width="14%"><font size="1">$(1,243)</font></td>
<td align="right" valign="top" width="12%"><font size="1">3,526</font></td>
<td align="right" valign="top" width="12%"><font size="1">$(13,662)</font></td>
<td align="right" valign="top" width="14%"><font size="1">$55,338&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="30%"><font size="1">Net income</font></td>
<td align="right" valign="top" width="10%"><font size="1">-</font></td>
<td align="right" valign="top" width="11%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">10,072</font></td>
<td align="right" valign="top" width="14%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">10,072&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="30%"><font size="1">Currency translation adjustments</font></td>
<td align="right" valign="top" width="10%"><font size="1">-</font></td>
<td align="right" valign="top" width="11%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">962&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">962&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="30%"><font size="1">Exercise of stock options<br>
&nbsp;&nbsp;(including $2,720<br>
&nbsp;&nbsp;income tax benefit)</font></td>
<td align="right" valign="top" width="10%"><font size="1">460</font></td>
<td align="right" valign="top" width="11%"><font size="1">46</font></td>
<td align="right" valign="top" width="12%"><font size="1">4,356</font></td>
<td align="right" valign="top" width="14%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">4,402&nbsp;</font></td>
</tr>
<tr>
<td colspan="9">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="30%"><font size="1">BALANCE June 30, 1997</font></td>
<td align="right" valign="top" width="10%"><font size="1">14,215</font></td>
<td align="right" valign="top" width="11%"><font size="1">1,422</font></td>
<td align="right" valign="top" width="12%"><font size="1">10,595</font></td>
<td align="right" valign="top" width="14%"><font size="1">72,700</font></td>
<td align="right" valign="top" width="14%"><font size="1">(281)</font></td>
<td align="right" valign="top" width="12%"><font size="1">3,526</font></td>
<td align="right" valign="top" width="12%"><font size="1">(13,662)</font></td>
<td align="right" valign="top" width="14%"><font size="1">70,774&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="30%"><font size="1">Net income</font></td>
<td align="right" valign="top" width="10%"><font size="1">-</font></td>
<td align="right" valign="top" width="11%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">11,715</font></td>
<td align="right" valign="top" width="14%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">11,715&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="30%"><font size="1">Currency translation adjustments</font></td>
<td align="right" valign="top" width="10%"><font size="1">-</font></td>
<td align="right" valign="top" width="11%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">74&nbsp;</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">74&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="30%"><font size="1">Exercise of stock options<br>
&nbsp;&nbsp;(including $834 income<br>
&nbsp;&nbsp;tax benefit)</font></td>
<td align="right" valign="top" width="10%"><font size="1">156</font></td>
<td align="right" valign="top" width="11%"><font size="1">15</font></td>
<td align="right" valign="top" width="12%"><font size="1">1,749</font></td>
<td align="right" valign="top" width="14%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">1,764&nbsp;</font></td>
</tr>
<tr>
<td colspan="9">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="30%"><font size="1">BALANCE June 30, 1998</font></td>
<td align="right" valign="top" width="10%"><font size="1">14,371</font></td>
<td align="right" valign="top" width="11%"><font size="1">1,437</font></td>
<td align="right" valign="top" width="12%"><font size="1">12,344</font></td>
<td align="right" valign="top" width="14%"><font size="1">84,415</font></td>
<td align="right" valign="top" width="14%"><font size="1">(207)</font></td>
<td align="right" valign="top" width="12%"><font size="1">3,526</font></td>
<td align="right" valign="top" width="12%"><font size="1">(13,662)</font></td>
<td align="right" valign="top" width="14%"><font size="1">84,327&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="30%"><font size="1">Net income</font></td>
<td align="right" valign="top" width="10%"><font size="1">-</font></td>
<td align="right" valign="top" width="11%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">14,170</font></td>
<td align="right" valign="top" width="14%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">14,170&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="30%"><font size="1">Currency translation adjustments</font></td>
<td align="right" valign="top" width="10%"><font size="1">-</font></td>
<td align="right" valign="top" width="11%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">(1,161)</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">(1,161)</font></td>
</tr>
<tr>
<td valign="top" width="30%"><font size="1">Exercise of stock options<br>
&nbsp;&nbsp;(including $436 income<br>
&nbsp;&nbsp;tax benefit)</font></td>
<td align="right" valign="top" width="10%"><font size="1">128</font></td>
<td align="right" valign="top" width="11%"><font size="1">13</font></td>
<td align="right" valign="top" width="12%"><font size="1">1,588</font></td>
<td align="right" valign="top" width="14%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="12%"><font size="1">-</font></td>
<td align="right" valign="top" width="14%"><font size="1">1,601&nbsp;</font></td>
</tr>
<tr>
<td colspan="9">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="30%"><font size="1">BALANCE, June 30, 1999</font></td>
<td align="right" valign="top" width="10%"><font size="1">14,499</font></td>
<td align="right" valign="top" width="11%"><font size="1">$1,450</font></td>
<td align="right" valign="top" width="12%"><font size="1">$13,932</font></td>
<td align="right" valign="top" width="14%"><font size="1">$98,585</font></td>
<td align="right" valign="top" width="14%"><font size="1">$ (1,368)</font></td>
<td align="right" valign="top" width="12%"><font size="1">3,526</font></td>
<td align="right" valign="top" width="12%"><font size="1">$(13,662)</font></td>
<td align="right" valign="top" width="14%"><font size="1">$98,937&nbsp;</font></td>
</tr>
<tr>
<td colspan="9">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</font></p>
</center>
<p><font size="2">See Notes to Consolidated Financial Statements.<br wp="br1">
<br wp="br2">
<hr size="1">
<br wp="br1">
<br wp="br2">
</font></p>
<center>
<p><font size="2">CACI INTERNATIONAL INC AND SUBSIDIARIES<br>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME<br>
</font><font size\"2" size="2">(dollars in thousands)</font><font size="2"></td><br wp="br1">
<br wp="br2">
<br wp="br1">
<br wp="br2">
<table width="87%">
<tr>
<td></td>
<td valign="top" width="52%"><font size="2">Year ended June 30,</font></td>
<td align="center" valign="top" width="13%"><font size="2">1999</font></td>
<td align="right" valign="top" width="5%"></td>
<td align="center" valign="top" width="12%"><font size="2">1998</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="center" valign="top" width="13%"><font size="2">1997</font></td>
</tr>
<tr>
<td></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td></td>
<td align="left" valign="top" width="52%"><font size="2">Net income</font></td>
<td align="right" valign="top" width="13%"><font size="2">$14,170&nbsp;</font></td>
<td align="right" valign="top" width="5%"></td>
<td align="right" valign="top" width="12%"><font size="2">$11,715</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">$10,072</font></td>
</tr>
<tr>
<td></td>
<td align="left" valign="top" width="52%"><font size="2">Currency translation adjustment</font></td>
<td align="right" valign="top" width="13%"><font size="2">(1,161)</font></td>
<td align="right" valign="top" width="5%"></td>
<td align="right" valign="top" width="12%"><font size="2">74</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">962</font></td>
</tr>
<tr>
<td></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td></td>
<td valign="top" width="52%"><font size="2">Comprehensive income</font></td>
<td align="right" valign="top" width="13%"><font size="2">$13,009&nbsp;</font></td>
<td align="right" valign="top" width="5%"></td>
<td align="right" valign="top" width="12%"><font size="2">$11,789</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">$11,034</font></td>
</tr>
<tr>
<td></td>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</font></p>
</center>
<p><font size="2">See Notes to Consolidated Financial Statements.<br wp="br1">
<br wp="br2">
<hr size="1">
</font>NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</p>
<p><u>Business Activities</u></p>
<p>The Company is an international information systems and high technology services corporation. It is a leader in computer-based information technology systems, custom software, integration and operations, communication and network services, imaging and
document management, simulation, and proprietary database and software products. The Company provides worldwide services in support of U.S. national defense and civilian agencies, state and local governments, and commercial enterprises.</p>
<p><u>Principles of Consolidation</u></p>
<p>The consolidated financial statements include the statements of CACI International Inc and its wholly-owned subsidiaries (the &quot;Company&quot;). All significant intercompany balances and transactions have been eliminated in consolidation.</p>
<p><u>Revenue Recognition</u></p>
<p>Revenue on cost-plus-fee contracts is recognized to the extent of costs incurred plus a proportionate amount of the fee earned. Revenue on fixed-price contracts is recognized on the percentage-of-completion method based on costs incurred in relation to
total estimated costs. Revenue on time-and-material contracts is recognized to the extent of billable rates times hours delivered plus expenses incurred. Revenue from software license sales under agreement is recognized upon delivery when there is no signi
does not anticipate any material adjustment to the consolidated financial statements in subsequent periods for audits not yet completed.</p>
<p><u>Property and Equipment</u></p>
<p>Property and equipment is recorded at cost. Depreciation of equipment has been provided over the estimated useful life of the respective assets of three to ten years, using the straight-line method. Leasehold improvements are generally amortized using
the straight-line method over the respective remaining lease term or the useful life of the improvements, whichever is shorter.<br wp="br1">
<br wp="br2">
<table width="77%">
<tr>
<td valign="top" width="15%"></td>
<td valign="bottom" width="38%"><font size="2">June 30,</font></td>
<td align="center" valign="bottom" width="10%"><font size="2">1999</font></td>
<td align="center" valign="top" width="4%"></td>
<td align="center" valign="bottom" width="10%"><font size="2">1998</font></td>
</tr>
<tr>
<td width="15%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="38%"><font size="1">(dollars in thousands)</font></td>
<td width="10%"></td>
<td width="4%"></td>
<td width="10%"></td>
</tr>
<tr>
<td width="15%"></td>
<td width="38%"><font size="2">Equipment and furniture</font></td>
<td align="right" width="10%"><font size="2">$40,388&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">$33,949&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="38%"><font size="2">Leasehold improvements</font></td>
<td align="right" valign="top" width="10%"><font size="2">3,008&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">2,412&nbsp;</font></td>
</tr>
<tr>
<td width="15%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="38%"><font size="2">Property and equipment, at cost</font></td>
<td align="right" valign="top" width="10%"><font size="2">43,396&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">36,361&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="38%"><font size="2">Less accumulated depreciation and amortization</font></td>
<td align="right" valign="top" width="10%"><font size="2">(29,634)</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">(25,010)</font></td>
</tr>
<tr>
<td width="15%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="38%"><font size="2">Total property and equipment, net</font></td>
<td align="right" valign="top" width="10%"><font size="2">$13,762&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">$11,351&nbsp;</font></td>
</tr>
<tr>
<td width="15%"></td>
<td colspan="4">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
</p>
<p><u>Deferred Contract Costs</u></p>
<p>Deferred contract costs include the cost of equipment acquired by the Company to provide communications services under contract. The costs are charged to expense as the associated service revenue is billed to the customer. As of June 30, 1999,
approximately $1.5 million is classified as a current asset, which represents the amount to be recovered within the next twelve months.</p>
<p><u>Capitalized Software Costs</u></p>
<p>Costs incurred internally in creating a computer software product to be sold or licensed are charged to expense when incurred as research and development until technological feasibility has been established for the product. Technological feasibility is
established upon completion of a detailed program design or, in its absence, completion of a working model. Thereafter, all such software development costs are capitalized and subsequently reported at the lower of unamortized cost or estimated net realizab
<p><u>Goodwill</u></p>
<p>The excess of cost over fair market value of net assets acquired is being amortized using the straight-line method, generally over 10 to 30 years. Accumulated amortization was $8,211,000 and $4,972,000 at June 30, 1999, and June 30, 1998, respectively.
</p>
<p><u>Income Taxes</u></p>
<p>Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as operating loss and tax credit
carryforwards.</p>
<p>U.S. income taxes have not been provided on $22,616,000 in undistributed earnings of foreign subsidiaries that have been permanently reinvested outside the United States. If such earnings were distributed to the United States, certain foreign tax
credits would be available to reduce the associated tax liability.</p>
<p><u>Currency Translation</u></p>
<p>The assets and liabilities of the Company's foreign subsidiaries whose functional currency is other than the U.S. dollar are translated at the exchange rates in effect on the reporting date, and income and expenses are translated at the weighted
average exchange rate during the period. The net effect of such translation gains and losses is not included in determining net income, but is accumulated as a separate component of shareholders' equity. Foreign currency transaction gains and losses are
included
<p><u>Earnings Per Share</u></p>
<p>In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (&quot;SFAS&quot;) No. 128, &quot;Earnings Per Share&quot;, which simplifies the standards for computing earnings per share previously found in
Accounting Principles Board Opinion No. 15 and makes them comparable to international earnings per share standards. The Statement is effective for financial statements issued for periods ending after December 15, 1997. As a result, the Company's reported
ear
<p>SFAS No. 128 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 available to common shareholders 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
incl
<p><u>Statement of Cash Flows</u></p>
<p>For purposes of the Statement of Cash Flows, short-term investments with an original maturity of three months or less are considered cash equivalents.</p>
<p><u>Fair Value of Financial Instruments</u></p>
<p>The carrying amounts of the Company's accounts payable and accrued expenses approximate their fair value. The line of credit has a floating interest rate that varies with current indices and, as such, its recorded value approximates fair value.</p>
<p><u>Use of Estimates</u></p>
<p>The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.</p>
<p><u>Recent Accounting Pronouncements</u></p>
<p>In June 1997, the Financial Accounting Standards Board issued SFAS No. 130, &quot;Reporting Comprehensive Income&quot;, and SFAS No. 131, &quot;Disclosures about Segments of an Enterprise and Related Information&quot;. As specified by these Statements,
the Company began to apply these Statements in fiscal 1999 and has reclassified its financial statements for earlier periods for comparative purposes.</p>
<p>SFAS No. 130 requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. As a
result, the Company has reported the effects of foreign currency translation gains or losses as a component of comprehensive income in a separate financial statement.</p>
<p>SFAS No. 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in
interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. This Statement supersedes SFAS No. 14, &quot;Financial Reporting for Segments of a
Busines
<p><u>Reclassifications</u></p>
<p>Certain reclassifications have been made to the prior years' financial statements in order for them to conform to the current presentation.</p>
<p>NOTE 2. CAPITALIZED SOFTWARE DEVELOPMENT COSTS</p>
<p>The costs for software development capitalized and amortized for the years ended June 30, 1999, 1998 and 1997, included on the Consolidated Balance Sheets as other assets, were as follows:<br wp="br1">
<br wp="br2">
<table width="74%">
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="30%"><font size="1">(dollars in thousands)</font></td>
<td align="center" valign="top" width="10%"><font size="2">1999</font></td>
<td align="center" valign="top" width="4%"></td>
<td align="center" valign="top" width="10%"><font size="2">1998</font></td>
<td align="center" valign="top" width="4%"></td>
<td align="center" valign="top" width="10%"><font size="2">1997</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="30%"><font size="2">Annual activity</font></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"></td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="30%"><font size="2">Balance, beginning of year</font></td>
<td align="right" valign="top" width="10%"><font size="2">$1,863&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">$2,029&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">$1,229&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="30%"><font size="2">Capitalized during year</font></td>
<td align="right" valign="top" width="10%"><font size="2">501&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">694&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">1,399&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="30%"><font size="2">Amortized during year</font></td>
<td align="right" valign="top" width="10%"><font size="2">(816)</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">(860)</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">(599)</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="30%"><font size="2">Balance, end of year</font></td>
<td align="right" valign="top" width="10%"><font size="2">$1,548 &nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">$1,863&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">$2,029&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
<br>
NOTE 3. ACCOUNTS RECEIVABLE</p>
<p>Total accounts receivable are net of allowance for doubtful accounts of $3,050,000 and $3,637,000 at June 30, 1999 and 1998, respectively. Accounts receivable are classified as follows:<br wp="br1">
<br wp="br2">
<table width="86%">
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="50%"><font size="1">(dollars in thousands)</font></td>
<td align="center" valign="top" width="11%"><font size="2">1999</font></td>
<td align="center" valign="top" width="4%"></td>
<td align="center" valign="top" width="11%"><font size="2">1998</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="50%"><font size="2">Billed receivables</font></td>
<td align="right" valign="top" width="11%"></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="11%"></td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="50%"><font size="2">&nbsp;&nbsp;Billed receivables</font></td>
<td align="right" valign="top" width="11%"><font size="2">$&nbsp;88,918</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="11%"><font size="2">$76,458</font></td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="50%"><font size="2">&nbsp;&nbsp;Billable receivables at end of period</font></td>
<td align="right" valign="top" width="11%"><font size="2">10,763</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="11%"><font size="2">7,537</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="50%"><font size="2">&nbsp;&nbsp;Total billed receivables</font></td>
<td align="right" valign="top" width="11%"><font size="2">99,681</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="11%"><font size="2">83,995</font></td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="50%"><font size="2">Unbilled receivables</font></td>
<td align="right" valign="top" width="11%"></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="11%"></td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="50%"><font size="2">&nbsp;&nbsp;Unbilled pending receipt of contractual documents<br>
&nbsp;&nbsp;&nbsp;&nbsp; authorizing billing</font></td>
<td align="right" valign="top" width="11%"><font size="2">12,172</font></td>
<td width="4%"></td>
<td align="right" valign="top" width="11%"><font size="2">9,195</font></td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="50%"><font size="2">&nbsp;&nbsp; Unbilled retainages and fee withholdings expected to be<br>
&nbsp;&nbsp;&nbsp;&nbsp; billed within the next 12 months</font></td>
<td align="right" valign="top" width="11%"><font size="2">92</font></td>
<td width="4%"></td>
<td align="right" valign="top" width="11%"><font size="2">155</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="50%"></td>
<td align="right" valign="top" width="11%"><font size="2">12,264</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="11%"><font size="2">9,350</font></td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="50%"><font size="2">&nbsp;&nbsp; Unbilled retainages and fee withholdings expected to be<br>
&nbsp;&nbsp;&nbsp;&nbsp; billed within the next 12 months</font></td>
<td align="right" valign="bottom" width="11%"><font size="2">7,036</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="bottom" width="11%"><font size="2">6,075</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="50%"><font size="2">&nbsp;&nbsp;Total unbilled receivables</font></td>
<td align="right" valign="top" width="11%"><font size="2">19,300</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="11%"><font size="2">15,425</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="10%"></td>
<td valign="top" width="50%"><font size="2">Total accounts receivable</font></td>
<td align="right" valign="top" width="11%"><font size="2">$118,981</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="11%"><font size="2">$99,420</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="4">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
</p>
<p>NOTE 4. NOTE PAYABLE</p>
<p>On July 26, 1996, the Company entered into an unsecured credit agreement, which permitted borrowings of up to $50 million with sublimits on amounts borrowed for acquisitions, dividends paid, and repurchases of Company stock. Interest was calculated
based on the Prime Rate, London Interbank Offered Rate (&quot;LIBOR&quot;), or Federal Funds Rate, dependent upon borrowing options and financial covenant thresholds. In October 1997, the Company increased its borrowing capacity to $70 million and
extended the
<p>NOTE 5. INCOME TAXES</p>
<p>The provision (benefit) for income taxes for the years ended June 30, consists of:<br wp="br1">
<br wp="br2">
<table width="82%">
<tr>
<td valign="top" width="18%"></td>
<td valign="bottom" width="20%"><font size="1">(dollars in thousands)</font></td>
<td align="center" valign="bottom" width="12%"><font size="2">&nbsp;&nbsp;1999</font></td>
<td align="center" valign="top" width="4%"></td>
<td align="center" valign="bottom" width="12%"><font size="2">&nbsp;&nbsp;1998</font></td>
<td align="center" valign="top" width="4%"></td>
<td align="center" valign="bottom" width="12%"><font size="2">&nbsp;&nbsp;1997</font></td>
</tr>
<tr>
<td width="18%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="18%"></td>
<td valign="top" width="20%"><font size="2">Current</font></td>
<td valign="top" width="12%"></td>
<td valign="top" width="4%"></td>
<td valign="top" width="12%"></td>
<td valign="top" width="4%"></td>
<td valign="top" width="12%"></td>
</tr>
<tr>
<td valign="top" width="18%"></td>
<td valign="top" width="20%"><font size="2">Federal</font></td>
<td align="right" valign="top" width="12%"><font size="2">$5,757&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">$7,986 &nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">$2,911</font></td>
</tr>
<tr>
<td valign="top" width="18%"></td>
<td valign="top" width="20%"><font size="2">State and local</font></td>
<td align="right" valign="top" width="12%"><font size="2">669&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">649 &nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">675</font></td>
</tr>
<tr>
<td valign="top" width="18%"></td>
<td valign="top" width="20%"><font size="2">Foreign</font></td>
<td align="right" valign="top" width="12%"><font size="2">1,153&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">1,025&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">597</font></td>
</tr>
<tr>
<td width="18%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="18%"></td>
<td valign="top" width="20%"><font size="2">Total current</font></td>
<td align="right" valign="top" width="12%"><font size="2">7,579&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">9,660&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">4,183</font></td>
</tr>
<tr>
<td width="18%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="18%"></td>
<td valign="top" width="20%"><font size="2">Deferred</font></td>
<td align="right" valign="top" width="12%"></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"></td>
</tr>
<tr>
<td valign="top" width="18%"></td>
<td valign="top" width="20%"><font size="2">Federal</font></td>
<td align="right" valign="top" width="12%"><font size="2">1,626&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">(2,261)</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">2,050</font></td>
</tr>
<tr>
<td valign="top" width="18%"></td>
<td valign="top" width="20%"><font size="2">State and local</font></td>
<td align="right" valign="top" width="12%"><font size="2">(129)</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">(731)</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">454</font></td>
</tr>
<tr>
<td valign="top" width="18%"></td>
<td valign="top" width="20%"><font size="2">Foreign</font></td>
<td align="right" valign="top" width="12%"><font size="2">15&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">94&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">27</font></td>
</tr>
<tr>
<td width="18%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="18%"></td>
<td valign="top" width="20%"><font size="2">Total deferred</font></td>
<td align="right" valign="top" width="12%"><font size="2">1,512&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">(2,898)</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">2,531</font></td>
</tr>
<tr>
<td width="18%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="18%"></td>
<td valign="top" width="20%">Total</td>
<td align="right" valign="top" width="12%"><font size="2">$9,091&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">$6,762&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="12%"><font size="2">$6,714</font></td>
</tr>
<tr>
<td width="18%"></td>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
</p>
<p>A reconciliation of the income tax provision (benefit) and the amount computed by applying the statutory U.S. income tax rate of 35% for the years ended June 30, 1999 and 1998 and 34% for the year ended June 30, 1997 is as follows:<br wp="br1">
<br wp="br2">
<table width="89%">
<tr>
<td valign="top" width="5%"></td>
<td valign="bottom" width="50%"><font size="1">(dollars in thousands)</font></td>
<td valign="bottom" width="10%" align="center"><font size="2">1999</font></td>
<td align="center" valign="top" width="2%"></td>
<td align="center" valign="bottom" width="10%"><font size="2">1998</font></td>
<td align="center" valign="top" width="2%"></td>
<td align="center" valign="bottom" width="10%"><font size="2">1997</font></td>
</tr>
<tr>
<td width="5%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="5%"></td>
<td valign="top" width="50%"><font size="2">Amount at statutory U.S. rate</font></td>
<td align="right" valign="top" width="10%"><font size="2">$8,141&nbsp;</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">$6,467&nbsp;</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">$5,707&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="5%"></td>
<td valign="top" width="50%"><font size="2">State taxes, net of U.S. income tax benefit</font></td>
<td align="right" valign="top" width="10%"><font size="2">351&nbsp;</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">96&nbsp;</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">745&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="5%"></td>
<td valign="top" width="50%"><font size="2">Taxes on foreign earnings at different effective rates</font></td>
<td align="right" valign="top" width="10%"><font size="2">(39)</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">(65)</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">29&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="5%"></td>
<td valign="top" width="50%"><font size="2">Other expenses not deductible for tax purposes</font></td>
<td align="right" valign="top" width="10%"><font size="2">(29)</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">29&nbsp;</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">74&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="5%"></td>
<td valign="top" width="50%"><font size="2">Non-deductible goodwill</font></td>
<td align="right" valign="top" width="10%"><font size="2">667&nbsp;</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">235&nbsp;</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">209&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="5%"></td>
<td valign="top" width="50%"><font size="2">Foreign and research &amp; development tax credits</font></td>
<td align="right" valign="top" width="10%"><font size="2">-&nbsp;</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">-&nbsp;</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">(50)</font></td>
</tr>
<tr>
<td width="5%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="5%"></td>
<td valign="top" width="50%"><font size="2">Total</font></td>
<td align="right" valign="top" width="10%"><font size="2">$9,091&nbsp;</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">$6,762&nbsp;</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">$6,714&nbsp;</font></td>
</tr>
<tr>
<td width="5%"></td>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
<tr>
<td valign="top" width="5%"></td>
<td valign="top" width="50%"><font size="2">Effective tax rate</font></td>
<td align="right" valign="top" width="10%"><font size="2">39.1%</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">36.6%</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">40.0%</font></td>
</tr>
<tr>
<td width="5%"></td>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
</p>
<p>The tax effects of temporary differences that give rise to significant deferred tax assets and deferred tax liabilities at June 30, 1999 and 1998, are as follows:<br wp="br1">
<br wp="br2">
<table width="69%">
<tr>
<td valign="top" width="15%"></td>
<td valign="bottom" width="30%"><font size="1">(dollars in thousands)</font></td>
<td align="center" valign="bottom" width="10%"><font size="2">1999</font></td>
<td align="center" valign="top" width="4%"></td>
<td align="center" valign="bottom" width="10%"><font size="2">1998</font></td>
</tr>
<tr>
<td width="15%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">Deferred tax assets</font></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Accrued vacation and other expenses</font></td>
<td align="right" valign="top" width="10%"><font size="2">$&nbsp;5,333&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">$&nbsp;4,111&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Appreciation of options</font></td>
<td align="right" valign="top" width="10%"><font size="2">1,606&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%">-&nbsp;</td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Accrued postretirement obligations</font></td>
<td align="right" valign="top" width="10%"><font size="2">1,415&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%">-&nbsp;</td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Deferred rent</font></td>
<td align="right" valign="top" width="10%"><font size="2">427&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">602&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Other long-term obligations</font></td>
<td align="right" valign="top" width="10%"><font size="2">355&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%">-&nbsp;</td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Foreign transactions</font></td>
<td align="right" valign="top" width="10%"><font size="2">61&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">67&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Pension</font></td>
<td align="right" valign="top" width="10%"><font size="2">7&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">307&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Depreciation</font></td>
<td align="right" valign="top" width="10%"><font size="2">188&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">141&nbsp;</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Other</font></td>
<td align="right" valign="top" width="10%"><font size="2">20&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">143&nbsp;</font></td>
</tr>
<tr>
<td width="15%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Total deferred tax assets</font></td>
<td align="right" valign="top" width="10%"><font size="2">9,412&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">5,371&nbsp;</font></td>
</tr>
<tr>
<td width="15%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">Deferred tax liabilities</font></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Unbilled revenues</font></td>
<td align="right" valign="top" width="10%"><font size="2">(6,512)</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">(5,361)</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Capitalized software</font></td>
<td align="right" valign="top" width="10%"><font size="2">(335)</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">(486)</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Goodwill</font></td>
<td align="right" valign="top" width="10%"><font size="2">(255)</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">(326)</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Other</font></td>
<td align="right" valign="top" width="10%"><font size="2">(425)</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">(560)</font></td>
</tr>
<tr>
<td width="15%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Total deferred tax liabilities</font></td>
<td align="right" valign="top" width="10%"><font size="2">(7,527)</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">(6,733)</font></td>
</tr>
<tr>
<td width="15%"></td>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="30%"><font size="2">Net deferred tax asset (liability)</font></td>
<td align="right" valign="top" width="10%"><font size="2">$&nbsp;1,885&nbsp;</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="10%"><font size="2">$(1,362)</font></td>
</tr>
<tr>
<td width="15%"></td>
<td colspan="4">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
<br wp="br1">
</p>
<p>NOTE 6. STOCK INCENTIVE PLAN</p>
<p>Until September 24, 1996, the Company had an Employee Stock Incentive Plan (the &quot;1986 Plan&quot;) which provided that key employees could be awarded some or all of the following: non-qualified stock options; incentive stock options within the
meaning of the Internal Revenue Code; and common stock. At the Company's 1996 Annual Meeting on November 14, 1996, the shareholders approved a new Stock Incentive Plan (the &quot;1996 Plan&quot;). The 1996 Plan permits award of incentive and non-qualified
stock
<p>The period during which each option is exercisable is determined when granted, but in no event could options granted under the 1986 Plan be exercisable after December 31, 2000. Pursuant to the terms of the 1986 Plan, no grants of options or other
securities could be made after September 24, 1996.</p>
<p>All awards granted under both the 1986 Plan and the 1996 Plan have been non-qualified stock options. The stock option exercise prices were at fair market value on the date of grant. Accordingly, no compensation cost has been recognized for stock option
grants. Had compensation cost for the Company's stock-based compensation plans been determined based on the fair value at grant dates for awards under those plans consistent with the method of accounting under SFAS No. 123, the Company's net income and ear
<table width="76%">
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="25%"><font size="1">(dollars in thousands, except per share)</font></td>
<td align="center" valign="top" width="10%"><font size="2">&nbsp;&nbsp;1999</font></td>
<td align="center" valign="top" width="3%"></td>
<td align="center" valign="top" width="10%"><font size="2">&nbsp;&nbsp;1998</font></td>
<td align="center" valign="top" width="3%"></td>
<td align="center" valign="top" width="10%"><font size="2">&nbsp;&nbsp;1997</font></td>
</tr>
<tr>
<td width="15%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="25%"><font size="2">Net income</font></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="25%"><font size="2">&nbsp;&nbsp;As reported</font></td>
<td align="right" valign="top" width="10%"><font size="2">$14,170</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">$11,715</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">$10,072</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="25%"><font size="2">&nbsp;&nbsp;Pro forma</font></td>
<td align="right" valign="top" width="10%"><font size="2">13,697</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">10,991</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">9,681</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="25%"><font size="2">Diluted earnings per share</font></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="25%"><font size="2">&nbsp;&nbsp;As reported</font></td>
<td align="right" valign="top" width="10%"><font size="2">$&nbsp;&nbsp;&nbsp;1.26</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">$&nbsp;&nbsp;&nbsp;1.05</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">$&nbsp;&nbsp;&nbsp; 0.92</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="25%"><font size="2">&nbsp;&nbsp;Pro forma</font></td>
<td align="right" valign="top" width="10%"><font size="2">1.22</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">0.99</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">0.88</font></td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</p>
<p>The fair value of each option is estimated on the date of grant using the Black-Sholes option-pricing model with the following additional assumptions:<br wp="br1">
<br wp="br2">
<table width="76%">
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="25%"><font size="2">Year ended June 30,</font></td>
<td align="center" valign="top" width="10%"><font size="2">1999</font></td>
<td align="center" valign="top" width="3%"></td>
<td align="center" valign="top" width="10%"><font size="2">1998</font></td>
<td align="center" valign="top" width="3%"></td>
<td align="center" valign="top" width="10%"><font size="2">1997</font></td>
</tr>
<tr>
<td width="15%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="25%"><font size="2">Dividend yield</font></td>
<td align="right" valign="top" width="10%"><font size="2">0%</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">0%</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">0%</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="25%"><font size="2">Volatility rate</font></td>
<td align="right" valign="top" width="10%"><font size="2">36.4%</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">26.6%</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">47.0%</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="25%"><font size="2">Discount rate</font></td>
<td align="right" valign="top" width="10%"><font size="2">6.0%</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">5.7%</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">6.2%</font></td>
</tr>
<tr>
<td valign="top" width="15%"></td>
<td valign="top" width="25%"><font size="2">Expected term (years)</font></td>
<td align="right" valign="top" width="10%"><font size="2">5&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">5&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">3&nbsp;&nbsp;</font></td>
</tr>
</TABLE>
<br wp="br1">
<br wp="2">
</p>
<p>Stock option activity and price information regarding the Plans follows:<br wp="br1">
<br wp="br2">
<table width="95%">
<tr>
<td valign="bottom" align="center" width="37%"><font size="1">(shares in thousands)</font></td>
<td valign="bottom" align="center" width="15%"><font size="2">Number<br>
of Shares</font></td>
<td valign="bottom" align="center" width="20%"><font size="2">Exercise<br>
Price</font></td>
<td valign="bottom" align="center" width="22%"><font size="2">Weighted Average<br>
Exercise Price</font></td>
</tr>
<tr>
<td colspan="4">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">Shares under option, July 1, 1996</font></td>
<td align="right" valign="top" width="15%"><font size="2">1,379&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="20%"><font size="2">1.87&nbsp;&nbsp;-&nbsp;&nbsp;14.44</font></td>
<td align="center" valign="top" width="22%"><font size="2">&nbsp;4.75</font></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">&nbsp;&nbsp;Granted</font></td>
<td align="right" valign="top" width="15%"><font size="2">188&nbsp;</font></td>
<td align="right" valign="top" width="20%"><font size="2">11.06&nbsp;&nbsp;-&nbsp;&nbsp;19.31</font></td>
<td align="center" valign="top" width="22%"><font size="2">16.74</font></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">&nbsp; &nbsp;Exercised</font></td>
<td align="right" valign="top" width="15%"><font size="2">(460)&nbsp;</font></td>
<td align="right" valign="top" width="20%"><font size="2">1.87&nbsp;&nbsp;-&nbsp;&nbsp;13.44</font></td>
<td align="center" valign="top" width="22%"><font size="2">3.60</font></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">&nbsp; &nbsp;Forfeited</font></td>
<td align="right" valign="top" width="15%"><font size="2">(46)&nbsp;
<hr size="1">
</font></td>
<td align="right" valign="top" width="20%"><font size="2">1.87&nbsp;&nbsp;-&nbsp;&nbsp;14.63</font></td>
<td align="center" valign="top" width="22%"><font size="2">10.34</font></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">Shares under option, June 30, 1997</font></td>
<td align="right" valign="top" width="15%"><font size="2">1,061&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="20%"><font size="2">1.87&nbsp;&nbsp;-&nbsp;&nbsp;19.31</font></td>
<td align="center" valign="top" width="22%"><font size="2">&nbsp;7.18</font></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">&nbsp; &nbsp;Granted</font></td>
<td align="right" valign="top" width="15%"><font size="2">366&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="20%"><font size="2">15.00&nbsp;&nbsp;-&nbsp;&nbsp;20.28</font></td>
<td align="center" valign="top" width="22%"><font size="2">19.19</font></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">&nbsp; &nbsp;Exercised</font></td>
<td align="right" valign="top" width="15%"><font size="2">(156)&nbsp;</font></td>
<td align="right" valign="top" width="20%"><font size="2">1.87&nbsp;&nbsp;-&nbsp;&nbsp;14.63</font></td>
<td align="center" valign="top" width="22%"><font size="2">&nbsp;5.98</font></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">&nbsp;&nbsp;Forfeited</font></td>
<td align="right" valign="top" width="15%"><font size="2">(88)&nbsp;
<hr size="1">
</font></td>
<td align="right" valign="top" width="20%"><font size="2">2.59&nbsp;&nbsp;-&nbsp;&nbsp;19.31</font></td>
<td align="center" valign="top" width="22%"><font size="2">14.76</font></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">Shares under option, June 30, 1998</font></td>
<td align="right" valign="top" width="15%"><font size="2">1,183&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="20%"><font size="2">1.87&nbsp;&nbsp;-&nbsp;&nbsp;20.28</font></td>
<td align="center" valign="top" width="22%"><font size="2">10.14</font></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">&nbsp;&nbsp;Granted</font></td>
<td align="right" valign="top" width="15%"><font size="2">375&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="20%"><font size="2">15.41&nbsp;&nbsp;-&nbsp;&nbsp;18.81</font></td>
<td align="center" valign="top" width="22%"><font size="2">17.27</font></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">&nbsp;&nbsp; Exercised</font></td>
<td align="right" valign="top" width="15%"><font size="2">(128)&nbsp;</font></td>
<td align="right" valign="top" width="20%"><font size="2">1.87&nbsp;&nbsp;-&nbsp;&nbsp;15.00</font></td>
<td align="center" valign="top" width="22%"><font size="2">&nbsp;9.24</font></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">&nbsp;&nbsp;Forfeited</font></td>
<td align="right" valign="top" width="15%"><font size="2">(51)&nbsp;
<hr size="1">
</font></td>
<td align="right" valign="top" width="20%"><font size="2">3.50&nbsp;&nbsp;-&nbsp;&nbsp;19.31</font></td>
<td align="center" valign="top" width="22%"><font size="2">13.75</font></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">Shares under option, June 30, 1999</font></td>
<td align="right" valign="top" width="15%"><font size="2">1,379&nbsp;&nbsp;
<hr size="3" noshade>
</font></td>
<td align="right" valign="top" width="20%"><font size="2">1.87&nbsp;&nbsp;-&nbsp;&nbsp;20.28</font></td>
<td align="center" valign="top" width="22%"><font size="2">12.07</font></td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
<table width="98%">
<tr>
<td valign="bottom" width="33%"><font size="1">(shares in thousands)</font></td>
<td valign="bottom" align="center" width="12%"><font size="2">Number<br>
of<br>
Shares</font></td>
<td valign="bottom" align="center" width="20%"><font size="2">Exercise<br>
Price</font></td>
<td valign="bottom" align="center" width="15%"><font size="2">Weighted<br>
Average<br>
Exercise<br>
Price</font></td>
<td valign="bottom" align="center" width="18%"><font size="2">Weighted<br>
Average<br>
Remaining<br>
Contractual Life</font></td>
</tr>
<tr>
<td colspan="5">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="33%"><font size="2">Shares under option, June 30, 1999</font></td>
<td align="right" valign="top" width="12%"><font size="2">377</font></td>
<td align="right" valign="top" width="20%"><font size="2">1.87&nbsp;&nbsp;-&nbsp;&nbsp;&nbsp;2.50</font></td>
<td align="right" valign="top" width="15%"><font size="2">1.97</font></td>
<td align="center" valign="top" width="18%"><font size="2">1.5</font></td>
</tr>
<tr>
<td valign="top" width="33%"></td>
<td align="right" valign="top" width="12%"><font size="2">113</font></td>
<td align="right" valign="top" width="20%"><font size="2">2.87&nbsp;&nbsp;-&nbsp;&nbsp;&nbsp;3.50</font></td>
<td align="right" valign="top" width="15%"><font size="2">3.12</font></td>
<td align="center" valign="top" width="18%"><font size="2">1.5</font></td>
</tr>
<tr>
<td valign="top" width="33%"></td>
<td align="right" valign="top" width="12%"><font size="2">26</font></td>
<td align="right" valign="top" width="20%"><font size="2">5.94&nbsp;&nbsp;-&nbsp;&nbsp;&nbsp;8.56</font></td>
<td align="right" valign="top" width="15%"><font size="2">6.75</font></td>
<td align="center" valign="top" width="18%"><font size="2">1.5</font></td>
</tr>
<tr>
<td valign="top" width="33%"></td>
<td align="right" valign="top" width="12%"><font size="2">106</font></td>
<td align="right" valign="top" width="20%"><font size="2">10.00&nbsp;&nbsp;-&nbsp;&nbsp;15.00</font></td>
<td align="right" valign="top" width="15%"><font size="2">13.75</font></td>
<td align="center" valign="top" width="18%"><font size="2">1.5</font></td>
</tr>
<tr>
<td valign="top" width="33%"></td>
<td align="right" valign="top" width="12%"><font size="2">757
<hr size="1">
</font></td>
<td align="right" valign="top" width="20%"><font size="2">15.41&nbsp;&nbsp;-&nbsp;&nbsp;20.28</font></td>
<td align="right" valign="top" width="15%"><font size="2">18.29</font></td>
<td align="center" valign="top" width="18%"><font size="2">8.7</font></td>
</tr>
<tr>
<td valign="top" width="33%"></td>
<td align="right" valign="top" width="12%"><font size="2">1,379
<hr size="3" noshade>
</font></td>
<td align="right" valign="top" width="20%"></td>
<td align="right" valign="top" width="15%"></td>
<td align="center" valign="top" width="18%"></td>
</tr>
<tr>
<td valign="top" width="33%"><font size="2">Options exercisable, June 30, 1999</font></td>
<td align="right" valign="top" width="12%"><font size="2">377</font></td>
<td align="right" valign="top" width="20%"><font size="2">1.87&nbsp;&nbsp;-&nbsp;&nbsp;&nbsp;2.50</font></td>
<td align="right" valign="top" width="15%"><font size="2">1.97</font></td>
<td align="center" valign="top" width="18%"></td>
</tr>
<tr>
<td valign="top" width="33%"></td>
<td align="right" valign="top" width="12%"><font size="2">113</font></td>
<td align="right" valign="top" width="20%"><font size="2">2.87&nbsp;&nbsp;-&nbsp;&nbsp;&nbsp;3.50</font></td>
<td align="right" valign="top" width="15%"><font size="2">3.12</font></td>
<td align="center" valign="top" width="18%"></td>
</tr>
<tr>
<td valign="top" width="33%"></td>
<td align="right" valign="top" width="12%"><font size="2">26</font></td>
<td align="right" valign="top" width="20%"><font size="2">5.94&nbsp;&nbsp;-&nbsp;&nbsp;8.56</font></td>
<td align="right" valign="top" width="15%"><font size="2">6.75</font></td>
<td align="center" valign="top" width="18%"></td>
</tr>
<tr>
<td valign="top" width="33%"></td>
<td align="right" valign="top" width="12%"><font size="2">193</font></td>
<td align="right" valign="top" width="20%"><font size="2">10.00&nbsp;&nbsp;-&nbsp;&nbsp;15.00</font></td>
<td align="right" valign="top" width="15%"><font size="2">13.75</font></td>
<td align="center" valign="top" width="18%"></td>
</tr>
<tr>
<td valign="top" width="33%"></td>
<td align="right" valign="top" width="12%"><font size="2">108
<hr size="1">
</font></td>
<td align="right" valign="top" width="20%"><font size="2">15.41&nbsp;&nbsp;-&nbsp;&nbsp;20.28</font></td>
<td align="right" valign="top" width="15%"><font size="2">18.29</font></td>
<td align="center" valign="top" width="18%"></td>
</tr>
<tr>
<td valign="top" width="33%"></td>
<td align="right" valign="top" width="12%"><font size="2">817
<hr size="3" noshade>
</font></td>
<td align="right" valign="top" width="20%"></td>
<td align="right" valign="top" width="15%"></td>
<td align="center" valign="top" width="18%"></td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</p>
<p><font size="2">Exercise prices are based on the market price of the Company's common stock at the date the options are granted.</font><br wp="br1">
<br wp="br2">
</p>
<p>NOTE 7. PENSION PLAN</p>
<p>Through June 30, 1997, the Company had a defined contribution pension plan covering approximately 85% of its employees. The Company contributed to a trust an amount equal to 2.5% of a qualified employee's total fiscal year cash compensation, up to
$35,000 per year, and an amount equal to 5% of cash compensation in excess of $35,000 per year, subject to maximum contribution limitations.</p>
<p>Effective July 1, 1997, the Company merged its pension plan and voluntary 401(k) plan into a single plan, the CACI $MART Plan. Current Company employees who participated in the prior pension plan became fully vested in their prior Company contributions
on June 30, 1997, and their balances were transferred to the CACI $MART Plan.</p>
<p>Effective July 1, 1997, employees became immediately eligible to join the CACI $MART Plan, a defined contribution plan. Employees can contribute up to 15% (subject to certain statutory limitations) of their total compensation. The Company provides
matching contributions equal to 50% of the amount of the employee's contribution, up to 6% of the employee's total fiscal year cash compensation. In addition, the Company may also make discretionary profit sharing contributions to the plan. Employer
contributio
<p>The Company maintains a non-qualified, defined contribution plan, the CACI, Inc. Group Retirement Plan, which is available to certain executives participating in the CACI $MART Plan whose annual compensation exceeds the statutory limit of the qualified
plan. The Company contributes 5% of such excess eligible compensation to the Group Retirement Plan. Each participant is fully vested immediately in his account balance.</p>
<p>The total consolidated expense for pension and Company contribution to the 401(k) plan and the Group Retirement Plan for the years ended June 30, 1999, 1998 and 1997 was $5,401,000, $3,847,000 and $3,117,000, respectively. The Company funds the costs
of the qualified plans as they accrue.</p>
<p>NOTE 8. OTHER LONG-TERM OBLIGATIONS</p>
<p>In connection with the acquisition of QuesTech, the Company acquired certain long-term obligations. At June 30, 1999, the balance of such obligations consists of the following:<br wp="br1">
<br wp="br2">
<table width="65%">
<tr>
<td valign="top" width="35%"></td>
<td valign="bottom" width="20%"><font size="2">(dollars in thousands)</font></td>
<td align="right" valign="bottom" width="10%"><font size="2">1999&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="35%"></td>
<td colspan="2">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="35%"></td>
<td valign="top" width="20%"><font size="2">Accrued postretirement obligations</font></td>
<td align="right" valign="top" width="10%"><font size="2">$3,250</font></td>
</tr>
<tr>
<td valign="top" width="35%"></td>
<td valign="top" width="20%"><font size="2">Other long-term obligations</font></td>
<td align="right" valign="top" width="10%"><font size="2">850</font></td>
</tr>
<tr>
<td width="35%"></td>
<td colspan="2">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="35%"></td>
<td valign="top" width="20%"><font size="2">Total</font></td>
<td align="right" valign="top" width="10%"><font size="2">$4,100</font></td>
</tr>
<tr>
<td width="35%"></td>
<td colspan="2">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</p>
<p>Accrued postretirement obligations consist of three employee benefit plans: the Group Health Plan, Executive Life Insurance, and the Officer and Manager Deferred Compensation Plan (&quot;DefCom&quot;).</p>
<p><i><b>Group Health Plan.</b></i><b> </b>This plan extends medical and dental benefit coverage to certain employees of QuesTech, who upon retirement at the age of 65, have completed 20 years of full-time employment with the Company, or retire with an
individual employment agreement which specifically grants coverage approved by the insurance carrier of the subject group health policy. The accumulated postretirement benefit obligation (&quot;APBO&quot;) represents the present value of insurance claims
expe
<p><i><b>Executive Life.</b></i>. The Company maintains life insurance policies, covering certain officers, both former and active, through their lifetime, in accordance with their respective employment agreements. The cost of the insurees' premiums is
treated as compensation expense.</p>
<p><i><b>DefCom.</b></i> This plan allowed eligible employee participants to defer current compensation through June 30, 1999, at which time the plan was amended to suspend employee contributions. Participant account balances will continue to accrue
interest annually. The plan provides supplemental postretirement benefits along with certain specific death benefits to the participant's beneficiaries. Postretirement benefits under DefCom are payable upon the participant's termination of employment
(including
<p>The Company invests the amounts deferred by employees in life insurance policies. Since DefCom is a defined contribution plan, the accumulated postretirement benefit obligation consists of contributions plus accrued interest.</p>
<p>Other long-term obligations consists primarily of amounts due to certain founders of QuesTech (no longer affiliated with the Company) under confidential settlement agreements. Payments under the agreements will continue through 2006.</p>
<p>The following tables present the funded status of the plans discussed above and the FY99 periodic expense:<br wp="br1">
<br wp="br2">
<table width="85%">
<tr>
<td width="10%"></td>
<td valign="bottom" width="30%"><font size="1">(dollars in thousands)</font></td>
<td align="center" valign="bottom" width="12%"><font size="2">Group<br>
Health Plan</font></td>
<td align="center" valign="bottom" width="13%"><font size="2">Executive Life<br>
Insurance</font></td>
<td align="center" valign="bottom" width="10%"><font size="2">DefCom</font></td>
<td align="center" valign="bottom" width="10%"><font size="2">Total</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="5">
<hr size="1">
</td>
</tr>
<tr>
<td width="10%"></td>
<td valign="bottom" width="30%"><font size="2">Accumulated Postretirement Benefit<br>
Obligation:</font></td>
<td align="right" valign="top" width="12%"></td>
<td align="right" valign="top" width="13%"></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="10%"></td>
</tr>
<tr>
<td width="10%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Retirees</font></td>
<td align="right" valign="top" width="12%"><font size="2">$258&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="13%"><font size="2">$294&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">$1,377&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">$1,929&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td valign="bottom" width="30%"><font size="2">&nbsp;&nbsp;Fully eligible active plan<br>
&nbsp;&nbsp;&nbsp;&nbsp;participants</font></td>
<td align="right" valign="top" width="12%"><font size="2">55&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="13%"><font size="2">-&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">-&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">55&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td valign="top" width="30%"><font size="2">&nbsp;&nbsp;Other active plan participants</font></td>
<td align="right" valign="top" width="12%"><font size="2">126&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="13%"><font size="2">-&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">1,267&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">1,393&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="5">
<hr size="1">
</td>
</tr>
<tr>
<td width="10%"></td>
<td valign="top" width="30%"></td>
<td align="right" valign="top" width="12%"></td>
<td align="right" valign="top" width="13%"></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="10%"></td>
</tr>
<tr>
<td width="10%"></td>
<td valign="top" width="30%"><font size="2">Total</font></td>
<td align="right" valign="top" width="12%"><font size="2">439&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="13%"><font size="2">294&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">2,644&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">3,377&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="5">
<hr size="3" noshade>
</td>
</tr>
<tr>
<td width="10%"></td>
<td valign="top" width="30%"><font size="2">Fair value of plan assets</font></td>
<td align="right" valign="top" width="12%"><font size="2">-&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="13%"><font size="2">-&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">-&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">-&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td valign="top" width="30%"><font size="2">APBO in excess of plan assets</font></td>
<td align="right" valign="top" width="12%"><font size="2">439&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="13%"><font size="2">294&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">2,644&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">3,377&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td valign="top" width="30%"><font size="2">Unrecognized net/(gain) loss</font></td>
<td align="right" valign="top" width="12%"><font size="2">-&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="13%"><font size="2">19&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">105&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">124&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="5">
<hr size="1">
</td>
</tr>
<tr>
<td width="10%"></td>
<td valign="top" width="30%"><font size="2">Accrued postretirement benefit cost</font></td>
<td align="right" valign="top" width="12%"><font size="2">439&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="13%"><font size="2">313&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">$2,749&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">$3,501&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td valign="bottom" width="30%"><font size="2">Less current portion of postretirement<br>
&nbsp;&nbsp;obligations</font></td>
<td align="right" valign="bottom" width="12%"><font size="2">(21)&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="bottom" width="13%"><font size="2">(16)&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="bottom" width="10%"><font size="2">(214)&nbsp;&nbsp;</font></td>
<td align="right" valign="bottom" width="10%"><font size="2">(251)&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="5">
<hr size="1">
</td>
</tr>
<tr>
<td width="10%"></td>
<td valign="bottom" width="30%"><font size="2">Long-term portion of postretirement<br>
&nbsp;&nbsp;obligations</font></td>
<td align="right" valign="bottom" width="12%"><font size="2">$418&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="bottom" width="13%"><font size="2">$297&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="bottom" width="10%"><font size="2">$2,535&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="bottom" width="10%"><font size="2">$3,250&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="5">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
<table width="85%">
<tr>
<td width="10%"></td>
<td valign="bottom" width="30%"><font size="1">(dollars in thousands)</font></td>
<td align="center" valign="bottom" width="12%"><font size="2">Group<br>
Health Plan</font></td>
<td align="center" valign="bottom" width="13%"><font size="2">Executive Life<br>
Insurance</font></td>
<td align="center" valign="bottom" width="10%"><font size="2">DefCom</font></td>
<td align="center" valign="bottom" width="10%"><font size="2">Total</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="5">
<hr size="1">
</td>
</tr>
<tr>
<td width="10%"></td>
<td valign="top" width="30%"><font size="2">Reconciliation of accrued<br>
&nbsp;&nbsp;postretirement benefit cost:</font></td>
<td valign="top" width="12%"></td>
<td valign="top" width="13%"></td>
<td valign="top" width="10%"></td>
<td valign="top" width="10%"></td>
</tr>
<tr>
<td width="10%"></td>
<td valign="top" width="30%"><font size="2">Accrued postretirement cost at<br>
&nbsp;&nbsp;time of acquisition of QuesTech</font></td>
<td align="right" valign="bottom" width="12%"><font size="2">$429&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="bottom" width="13%"><font size="2">$310&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="bottom" width="10%"><font size="2">$2,931&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="bottom" width="10%"><font size="2">$3,670&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td valign="top" width="30%"><font size="2">Net periodic cost</font></td>
<td align="right" valign="top" width="12%"><font size="2">20&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="13%"><font size="2">16&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">118&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">154&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td valign="top" width="30%"><font size="2">Benefit payments</font></td>
<td align="right" valign="top" width="12%"><font size="2">(10)&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="13%"><font size="2">(13)&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">(300)&nbsp;&nbsp;</font></td>
<td align="right" valign="top" width="10%"><font size="2">(323)&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="5">
<hr size="1">
</td>
</tr>
<tr>
<td width="10%"></td>
<td valign="top" width="30%"><font size="2">Accrued postretirement benefit<br>
&nbsp;&nbsp;cost at June 30, 1999</font></td>
<td align="right" valign="bottom" width="12%"><font size="2">$439&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="bottom" width="13%"><font size="2">$313&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="bottom" width="10%"><font size="2">$2,749&nbsp;&nbsp;&nbsp;</font></td>
<td align="right" valign="bottom" width="10%"><font size="2">$3,501&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td width="10%"></td>
<td colspan="5">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</p>
<p>NOTE 9. COMMITMENTS AND CONTINGENCIES</p>
<p>The Company conducts its operations from leased office facilities, all of which are classified as operating leases and expire primarily over the next ten years.</p>
<p>The following is a schedule of future minimum lease payments under non-cancelable leases with a remaining term greater than one year as of June 30, 1999:<br wp="br1">
<br wp="br2">
<table width="63%">
<tr>
<td align="center" valign="top" width="15%"></td>
<td width="10%"></td>
<td align="center" valign="bottom" width="15%"><font size="2">Year ended<br>
June 30</font></td>
<td width="5%"></td>
<td align="center" valign="bottom" width="18%"><font size="2">Operating Leases<br>
</font><font size="1">(dollars in thousands)</font></td>
</tr>
<tr>
<td width="15%"></td>
<td width="10%"></td>
<td colspan="3">
<hr size="1">
</td>
</tr>
<tr>
<td align="right" valign="top" width="15%"></td>
<td width="10%"></td>
<td align="right" valign="top" width="15%"><font size="2">2000</font></td>
<td width="5%"></td>
<td align="right" valign="top" width="18%"><font size="2">$17,304&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td align="right" valign="top" width="15%"></td>
<td width="10%"></td>
<td align="right" valign="top" width="15%"><font size="2">2001</font></td>
<td width="5%"></td>
<td align="right" valign="top" width="18%"><font size="2">16,908&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td align="right" valign="top" width="15%"></td>
<td width="10%"></td>
<td align="right" valign="top" width="15%"><font size="2">2002</font></td>
<td width="5%"></td>
<td align="right" valign="top" width="18%"><font size="2">14,382&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td align="right" valign="top" width="15%"></td>
<td width="10%"></td>
<td align="right" valign="top" width="15%"><font size="2">2003</font></td>
<td width="5%"></td>
<td align="right" valign="top" width="18%"><font size="2">8,876&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td align="right" valign="top" width="15%"></td>
<td width="10%"></td>
<td align="right" valign="top" width="15%"><font size="2">2004</font></td>
<td width="5%"></td>
<td align="right" valign="top" width="18%"><font size="2">5,384&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
</tr>
<tr>
<td align="right" valign="top" width="15%"></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="15%"><font size="2">Later years</font></td>
<td width="5%"></td>
<td align="right" valign="top" width="18%"><font size="2">16,217&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<hr size="1">
</font></td>
</tr>
<tr>
<td align="right" valign="top" colspan="3"><font size="2">Total minimum lease payments</font></td>
<td width="5%"></td>
<td align="right" valign="top" width="18%"><font size="2">$79,071&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<hr size="3" noshade>
</font></td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</p>
<p>Operating leases reflect the minimum lease payments net of a minimal amount of sub-lease income. Rent expense incurred from operating leases for the years ended June 30, 1999, 1998 and 1997 amounted to $13,383,000, $10,780,000, and $9,778,000
respectively.</p>
<p>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 will not have a material adverse effect on
the Company's operations and liquidity.<br wp="br1">
<br wp="br2">
<br>
NOTE 10. BUSINESS ACQUISITIONS</p>
<p>All of the acquisitions made by the Company have been accounted for using the purchase method of accounting, and the results of their operations have been included in the Company's statements of operations since the dates of acquisition. The purchase
price for each acquisition was allocated to the acquired assets and liabilities using the respective fair value at the date of acquisition. The excess, if any, has been recorded as goodwill and is being amortized on a straight-line basis over 10 to 30
years.
<p><u>1999 Acquisitions</u></p>
<p>On November 13, 1998, the Company acquired all of the common stock of QuesTech, Inc., a company that specialized in the development and application of information technology, scientific research and management support services for the defense and
national security communities, for $18.13 per share in cash. The total consideration paid by the Company, including the assumption of liabilities, was approximately $42 million. The transaction was funded through borrowings under the Company's existing
line of c
banks. Approximately $31 million of the purchase consideration has been allocated to goodwill based upon the excess of the purchase price over the estimated fair value of net assets acquired, and is being amortized over 30 years. QuesTech (renamed CACI
Technologies, Inc.) contributed revenues of $56.1 million for the period from November 13, 1998 to June 30, 1999.</p>
<p>On August 13, 1998, the Company purchased the assets of Information Decision System (&quot;IDS&quot;) for $2.6 million in cash. IDS provided internet access to demographic site information and the acquisition is expected to enhance the current U.S.
market share of the Company's Marketing Systems Group in the industry. Approximately $2.4 million has been allocated to goodwill, based upon the excess of the purchase price over the estimated fair value of net assets acquired, and is being amortized over
15 y
<p><u>1998 Acquisitions</u></p>
<p>On November 1, 1997, the Company acquired the business and net assets of Government Systems, Inc. (&quot;GSI&quot;), a subsidiary of Infonet Services Corporation, a multinational communications network provider, for $28 million in cash plus an
additional $5.5 million to pay off existing debt of GSI. GSI delivers international communications and network-related services to meet the networking needs of the U.S. Government and other organizations. GSI's annual revenue, prior to acquisition, was
approximatel
<p>Also in November 1997, CACI Limited in London, England, acquired all of the share capital of AnaData Limited. The total consideration paid was $1.9 million in cash, which was financed from CACI Limited's working capital. AnaData developed and marketed
software products for managing marketing databases, and historically generated annual revenue of approximately $2.5 million. Based upon estimated fair values, $1 million of the purchase consideration has been allocated to software intellectual property
righ
<p><u>1997 Acquisitions</u></p>
<p>On October 1, 1996, the Company acquired the business and most of the assets of Sunset Resources, Inc. for $6.2 million. Sunset Resources was an engineering and information technology firm that focused on logistics and engineering support services to
the Air Force and electronic commerce. The excess of the purchase price over the fair value of the net assets acquired was $4.6 million.</p>
<p>On January 3, 1997, the Company acquired the business of Sales Performance Analysis Limited (&quot;SPA&quot;), including the intellectual property rights to certain software products, for $2.6 million. SPA developed and marketed a unique range of
specialized software products and services that enabled companies to make more effective use of their field forces through the optimal configuration of sales and services territories. SPA's annual revenue prior to acquisition was $2.0 million. The excess
of the
<p>On May 14, 1997, the Company purchased the Simulation Engineering Division of Statistica, Inc., which specializes in computer modeling and simulation. The purchase price of $0.8 million was based on the value of the tangible assets acquired.
Consequently, there was no goodwill recorded with this purchase.</p>
<p><u>Pro Forma Information (unaudited)</u></p>
<p>The following unaudited pro forma combined condensed statements of operations set forth the consolidated results of operations of the Company for the years ended June 30, 1999, 1998 and 1997, as if the above mentioned acquisitions had occurred at the
beginning of both the year of acquisition and the year prior to the acquisition. This unaudited pro forma information does not purport to be indicative of the actual financial position or the results that would actually have occurred if the combinations
had
<table width="89%">
<tr>
<td valign="top" width="8%"></td>
<td valign="bottom" width="41%"><font size="1">(dollars in thousands, except per share amounts)</font></td>
<td align="center" valign="bottom" width="13%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1999</font></td>
<td align="center" valign="top" width="4%"></td>
<td align="center" valign="bottom" width="13%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1998</font></td>
<td align="center" valign="top" width="4%"></td>
<td align="center" valign="bottom" width="13%"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1997</font></td>
</tr>
<tr>
<td width="8%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="8%"></td>
<td valign="top" width="41%"><font size="2">Revenue</font></td>
<td align="right" valign="top" width="13%"><font size="2">$471,087</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="13%"><font size="2">$417,239</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="13%"><font size="2">$316,300</font></td>
</tr>
<tr>
<td valign="top" width="8%"></td>
<td valign="top" width="41%"><font size="2">Net income</font></td>
<td align="right" valign="top" width="13%"><font size="2">14,191</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="13%"><font size="2">11,418</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="13%"><font size="2">9,389</font></td>
</tr>
<tr>
<td valign="top" width="8%"></td>
<td valign="top" width="41%"><font size="2">Diluted earnings per share</font></td>
<td align="right" valign="top" width="13%"><font size="2">1.26</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="13%"><font size="2">1.03</font></td>
<td align="right" valign="top" width="4%"></td>
<td align="right" valign="top" width="13%"><font size="2">0.85</font></td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</p>
<p>NOTE 11. BUSINESS SEGMENT INFORMATION</p>
<p>The Company reports operating results and financial data in two segments: the Information Systems Group (ISG) and the Marketing Systems Group (MSG). The Information Systems Group delivers client solutions for systems integration, Year 2000 conversion,
information assurance/security, reengineering, electronic commerce, intelligent document management, product data management, software development and reuse, telecommunications, and market analysis. Its customers are primarily Federal agencies, however,
it
<p>The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies in Note 1 to the financial statements. The Company evaluates the performance of its operating segments based on income
(loss) before income taxes. Summarized financial information concerning the Company's reportable segments is shown in the following tables. The &quot;Other&quot; column includes the elimination of intersegment revenue and corporate related items.
Corporate a
<br wp="br2">
<table width="95%">
<tr>
<td valign="bottom" width="35%"><font size="1">(dollars in thousands)</font></td>
<td align="center" valign="bottom" width="10%"><font size="2"><b>ISG</b></font></td>
<td align="center" valign="top" width="3%"></td>
<td align="center" valign="bottom" width="10%"><font size="2"><b>MSG</b></font></td>
<td align="center" valign="top" width="2%"></td>
<td align="center" valign="bottom" width="10%"><font size="2"><b>Other</b></font></td>
<td align="center" valign="top" width="2%"></td>
<td align="center" valign="bottom" width="10%"><font size="2"><b>Total</b></font></td>
</tr>
<tr>
<td colspan="8">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2"><i><b>Year Ended June 30, 1999</b></i></font></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Revenue from external customers</font></td>
<td align="right" valign="top" width="10%"><font size="2">$391,808</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">$49,940</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">$&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;-</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">$441,748</font></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Pre-tax income (loss)</font></td>
<td align="right" valign="top" width="10%"><font size="2">22,160</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">4,016</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">(2,915)</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">23,261</font></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Total assets</font></td>
<td align="right" valign="top" width="10%"><font size="2">184,519</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">36,465</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">728</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">221,712</font></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Capital expenditures</font></td>
<td align="right" valign="top" width="10%"><font size="2">5,288</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">1,951</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">769</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">8,008</font></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Depreciation and amortization</font></td>
<td align="right" valign="top" width="10%"><font size="2">5,444</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">1,902</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">307</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">7,653</font></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2"><i><b>Year Ended June 30, 1998</b></i></font></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Revenue from external customers</font></td>
<td align="right" valign="top" width="10%"><font size="2">$285,089</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">$40,915</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">$&nbsp;&nbsp;&nbsp;106</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">$326,110</font></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Pre-tax income (loss)</font></td>
<td align="right" valign="top" width="10%"><font size="2">17,140</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">2,951</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">(1,614)</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">18,477</font></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Total assets</font></td>
<td align="right" valign="top" width="10%"><font size="2">129,948</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">32,152</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">960</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">163,060</font></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Capital expenditures</font></td>
<td align="right" valign="top" width="10%"><font size="2">3,891</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">2,474</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">757</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">7,122</font></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Depreciation and amortization</font></td>
<td align="right" valign="top" width="10%"><font size="2">5,012</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">1,529</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">331</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">6,872</font></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2"><i><b>Year Ended June 30, 1997</b></i></font></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Revenue from external customers</font></td>
<td align="right" valign="top" width="10%"><font size="2">$239,995</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">$32,989</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">$&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;-</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">$272,984</font></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Pre-tax income (loss)</font></td>
<td align="right" valign="top" width="10%"><font size="2">15,287</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">1,487</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">12</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">16,786</font></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Total assets</font></td>
<td align="right" valign="top" width="10%"><font size="2">94,221</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">24,166</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">473</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">118,860</font></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Capital expenditures</font></td>
<td align="right" valign="top" width="10%"><font size="2">7,223</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">453</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">275</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">7,951</font></td>
</tr>
<tr>
<td valign="top" width="35%"><font size="2">Depreciation and amortization</font></td>
<td align="right" valign="top" width="10%"><font size="2">4,218</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="10%"><font size="2">1,306</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">288</font></td>
<td align="right" valign="top" width="2%"></td>
<td align="right" valign="top" width="10%"><font size="2">5,812</font></td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</p>
<p>The loss in the &quot;other&quot; column primarily represents unallocated corporate costs. In FY97, all corporate costs were allocated to the Information Systems and Marketing Systems Groups.</p>
<p><i><b>Major Customers.</b></i> The Company earned approximately 79%, 77% and 77% of its revenue from the U.S. Government for the years ended June 30, 1999, 1998, and 1997, respectively. Revenue by customer sector for the three years ended June 30, 1999
is as follows:<br wp="br1">
<br wp="br2">
<table width="79%">
<tr>
<td valign="top" width="14%"></td>
<td valign="top" width="20%"><font size="1">(dollars in thousands)</font></td>
<td align="center" valign="top" width="13%">&nbsp;&nbsp;<font size="2">1999</font></td>
<td align="center" valign="top" width="3%"></td>
<td align="center" valign="top" width="13%">&nbsp;&nbsp;<font size="2">1998</font></td>
<td align="center" valign="top" width="3%"></td>
<td align="center" valign="top" width="13%">&nbsp;&nbsp;<font size="2">1997</font></td>
</tr>
<tr>
<td width="14%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="14%"></td>
<td valign="top" width="20%"><font size="2">Department of Defense</font></td>
<td align="right" valign="top" width="13%"><font size="2">$216,573</font></td>
<td valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">$160,982</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">$141,172</font></td>
</tr>
<tr>
<td valign="top" width="14%"></td>
<td valign="top" width="20%"><font size="2">Federal Civilian</font></td>
<td align="right" valign="top" width="13%"><font size="2">130,766</font></td>
<td valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">89,768</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">69,615</font></td>
</tr>
<tr>
<td valign="top" width="14%"></td>
<td valign="top" width="20%"><font size="2">Commercial</font></td>
<td align="right" valign="top" width="13%"><font size="2">72,136</font></td>
<td valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">65,878</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">55,132</font></td>
</tr>
<tr>
<td valign="top" width="14%"></td>
<td valign="top" width="20%"><font size="2">State &amp; local</font></td>
<td align="right" valign="top" width="13%"><font size="2">22,273</font></td>
<td valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">9,482</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">7,065</font></td>
</tr>
<tr>
<td width="14%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="14%"></td>
<td valign="top" width="20%"><font size="2">Total</font></td>
<td align="right" valign="top" width="13%"><font size="2">$441,748</font></td>
<td valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">$326,110</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">$272,984</font></td>
</tr>
<tr>
<td width="14%"></td>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</p>
<p><i><b>Geographic Information.</b></i> Revenue is attributed to geographic areas based on the location of the assets producing the revenue. Revenue from the Information Systems Group is generated predominantly in the United States. The foreign amounts
consist primarily of product and systems integration sales in the United Kingdom. Financial information relating to the Company's operations by geographic area is as follows:<br wp="br1">
<br wp="br2">
<table width="84%">
<tr>
<td align="center" valign="top" width="8%"></td>
<td align="center" valign="top" width="43%"><font size="1">(dollars in thousands)</font></td>
<td align="center" valign="top" width="13%"><font size="2">1999</font></td>
<td align="center" valign="top" width="3%"></td>
<td align="center" valign="top" width="13%"><font size="2">1998</font></td>
<td align="center" valign="top" width="3%"></td>
<td align="center" valign="top" width="14%"><font size="2">1997</font></td>
</tr>
<tr>
<td width="8%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="8%"></td>
<td valign="top" width="43%"><font size="2"><b>Revenue</b></font></td>
<td valign="top" width="13%"></td>
<td valign="top" width="3%"></td>
<td valign="top" width="13%"></td>
<td valign="top" width="3%"></td>
<td valign="top" width="14%"></td>
</tr>
<tr>
<td valign="top" width="8%"></td>
<td valign="top" width="43%"><font size="2">United States</font></td>
<td align="right" valign="top" width="13%"><font size="2">$394,995</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">$285,756</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="14%"><font size="2">$239,645</font></td>
</tr>
<tr>
<td valign="top" width="8%"></td>
<td valign="top" width="43%"><font size="2">Foreign</font></td>
<td align="right" valign="top" width="13%"><font size="2">46,753</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">40,354</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="14%"><font size="2">33,339</font></td>
</tr>
<tr>
<td width="8%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="8%"></td>
<td valign="top" width="43%"></td>
<td align="right" valign="top" width="13%"><font size="2">$441,748</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">$326,110</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="14%"><font size="2">$272,984</font></td>
</tr>
<tr>
<td width="8%"></td>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
<tr>
<td valign="top" width="8%"></td>
<td valign="top" width="43%"><font size="2"><b>Identifiable Assets</b></font></td>
<td align="right" valign="top" width="13%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="14%"></td>
</tr>
<tr>
<td valign="top" width="8%"></td>
<td valign="top" width="43%"><font size="2">United States</font></td>
<td align="right" valign="top" width="13%"><font size="2">$193,091</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">$134,431</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="14%"><font size="2">$&nbsp;97,847</font></td>
</tr>
<tr>
<td valign="top" width="8%"></td>
<td valign="top" width="43%"><font size="2">Foreign</font></td>
<td align="right" valign="top" width="13%"><font size="2">28,621</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">28,629</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="14%"><font size="2">21,013</font></td>
</tr>
<tr>
<td width="8%"></td>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="8%"></td>
<td valign="top" width="43%"></td>
<td align="right" valign="top" width="13%"><font size="2">$221,712</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">$163,060</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="14%"><font size="2">$118,860</font></td>
</tr>
<tr>
<td width="8%"></td>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</p>
<p>NOTE 12. COMMON STOCK DATA (UNAUDITED)</p>
<p>The Company's stock trades on the Nasdaq National Market System. The ranges of high and low sales prices for each quarter during fiscal years 1999 and 1998 are as follows:<br wp="br1">
<br wp="br2">
<table width="80%">
<tr>
<td width="28%"></td>
<td width="8%"></td>
<td colspan="2" align="center"><font size="2">1999
<hr size="1">
</font></td>
<td colspan="2" align="center"><font size="2">1998
<hr size="1">
</font></td>
</tr>
<tr>
<td width="28%"></td>
<td align="center" width="8%"><font size="2">Quarter</font></td>
<td align="left" width="11%"><font size="2">High</font></td>
<td align="left" width="11%"><font size="2">Low</font></td>
<td align="left" width="11%"><font size="2">High</font></td>
<td align="left" width="11%"><font size="2">Low</font></td>
</tr>
<tr>
<td width="28%"></td>
<td colspan="5">
<hr size="1">
</td>
</tr>
<tr>
<td width="28%"></td>
<td align="center" width="8%"><font size="2">First</font></td>
<td align="left" width="11%"><font size="2">$22</font></td>
<td align="left" width="11%"><font size="2">$15</font></td>
<td align="left" width="11%"><font size="2">$20</font></td>
<td align="left" width="11%"><font size="2">$13 <sup>7/8</sup></font></td>
</tr>
<tr>
<td width="28%"></td>
<td align="center" width="8%"><font size="2">Second</font></td>
<td align="left" width="11%"><font size="2">$20<sup> 1/4</sup></font></td>
<td align="left" width="11%"><font size="2">$14 <sup>5/8</sup></font></td>
<td align="left" width="11%"><font size="2">$20 <sup>5/8</sup></font></td>
<td align="left" width="11%"><font size="2">$16</font></td>
</tr>
<tr>
<td width="28%"></td>
<td align="center" width="8%"><font size="2">Third</font></td>
<td align="left" width="11%"><font size="2">$18 <sup>3/4</sup></font></td>
<td align="left" width="11%"><font size="2">$16</font></td>
<td align="left" width="11%"><font size="2">$22 <sup>1/4</sup></font></td>
<td align="left" width="11%"><font size="2">$18 <sup>1/2</sup></font></td>
</tr>
<tr>
<td width="28%"></td>
<td align="center" width="8%"><font size="2">Fourth</font></td>
<td align="left" width="11%"><font size="2">$22 <sup>7/8</sup></font></td>
<td align="left" width="11%"><font size="2">$16 <sup>1/8</sup></font></td>
<td align="left" width="11%"><font size="2">$22 <sup>1/4</sup></font></td>
<td align="left" width="11%"><font size="2">$17 <sup>1/8</sup></font></td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
</p>
<p>NOTE 13. QUARTERLY FINANCIAL DATA (UNAUDITED)</p>
<p>The quarterly financial data is unaudited, but in the opinion of management, all adjustments necessary for a fair presentation of the selected data for these interim periods have been included.<br wp="br1">
<br wp="br2">
<table width="92%">
<tr>
<td valign="top" width="6%"></td>
<td valign="top" width="35%"><font size="2">(dollars in thousands, except per share)</font></td>
<td align="center" valign="top" width="11%"><font size="2">First</font></td>
<td align="center" valign="top" width="3%"></td>
<td align="center" valign="top" width="13%"><font size="2">Second</font></td>
<td align="center" valign="top" width="3%"></td>
<td align="center" valign="top" width="12%"><font size="2">Third</font></td>
<td align="center" valign="top" width="3%"></td>
<td align="center" valign="top" width="11%"><font size="2">Fourth</font></td>
</tr>
<tr>
<td width="6%"></td>
<td colspan="8">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="6%"></td>
<td valign="top" width="35%"><font size="2"><i><b>Year ended June 30, 1999</b></i></font></td>
<td align="right" valign="top" width="11%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"></td>
</tr>
<tr>
<td valign="top" width="6%"></td>
<td valign="top" width="35%"><font size="2">Revenue</font></td>
<td align="right" valign="top" width="11%"><font size="2">$92,351</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">$103,720</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">$119,594</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">$126,083</font></td>
</tr>
<tr>
<td valign="top" width="6%"></td>
<td valign="top" width="35%"><font size="2">Costs and .expenses</font></td>
<td align="right" valign="top" width="11%"><font size="2">87,366</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">98,318</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">113,643</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">119,160</font></td>
</tr>
<tr>
<td valign="top" width="6%"></td>
<td valign="top" width="35%"><font size="2">Income taxes</font></td>
<td align="right" valign="top" width="11%"><font size="2">1,846</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">2,040</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">2,378</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">2,827</font></td>
</tr>
<tr>
<td valign="top" width="6%"></td>
<td valign="top" width="35%"><font size="2">Net income</font></td>
<td align="right" valign="top" width="11%"><font size="2">3,139</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">3,362</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">3,573</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">4,096</font></td>
</tr>
<tr>
<td valign="top" width="6%"></td>
<td valign="top" width="35%"><font size="2">Diluted earnings per share</font></td>
<td align="right" valign="top" width="11%"><font size="2">0.28</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">0.30</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">0.32</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">0.36</font></td>
</tr>
<tr>
<td valign="top" width="6%"></td>
<td valign="top" width="35%"><font size="2"><i><b>Year ended June 30, 1998</b></i></font></td>
<td align="right" valign="top" width="11%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"></td>
</tr>
<tr>
<td valign="top" width="6%"></td>
<td valign="top" width="35%"><font size="2">Revenue</font></td>
<td align="right" valign="top" width="11%"><font size="2">$&nbsp;70,669</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">$&nbsp;79,145</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">$&nbsp;85,239</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">$&nbsp;91,057</font></td>
</tr>
<tr>
<td valign="top" width="6%"></td>
<td valign="top" width="35%"><font size="2">Costs and expenses</font></td>
<td align="right" valign="top" width="11%"><font size="2">66,746</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">74,514</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">80,520</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">85,853</font></td>
</tr>
<tr>
<td valign="top" width="6%"></td>
<td valign="top" width="35%"><font size="2">Income taxes</font></td>
<td align="right" valign="top" width="11%"><font size="2">1,491</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">1,759</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">1,613</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">1,899</font></td>
</tr>
<tr>
<td valign="top" width="6%"></td>
<td valign="top" width="35%"><font size="2">Net income</font></td>
<td align="right" valign="top" width="11%"><font size="2">2,432</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">2,872</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">3,106</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">3,305</font></td>
</tr>
<tr>
<td valign="top" width="6%"></td>
<td valign="top" width="35%"><font size="2">Diluted earnings per share</font></td>
<td align="right" valign="top" width="11%"><font size="2">0.22</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="13%"><font size="2">0.26</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="12%"><font size="2">0.28</font></td>
<td align="right" valign="top" width="3%"></td>
<td align="right" valign="top" width="11%"><font size="2">0.29</font></td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
<hr size="1">
<br wp="br1">
<br wp="br2">
</p>
<div align="right">
<p><font size="2">SCHEDULE II<br wp="br1">
<br wp="br2">
<br wp="br1">
<br wp="br2">
<br wp="br1">
<br wp="br2">
</font></p>
</div>
<center>
<p><font size="2">CACI INTERNATIONAL INC AND SUBSIDIARIES<br>
VALUATION AND QUALIFYING ACCOUNTS<br>
FOR YEARS ENDED JUNE 30, 1999, 1998 AND 1997</font></p>
<p><font size="1">(dollars in thousands)<br wp="br1">
<br wp="br2">
<table width="93%">
<tr>
<td valign="bottom" width="37%"><font size="2">Description</font></td>
<td align="center" valign="bottom" width="13%"><font size="2">Balance at<br>
Beginning<br>
of Period</font></td>
<td align="center" valign="bottom" width="11%"><font size="2">Additions<br>
at Cost</font></td>
<td align="center" valign="bottom" width="14%"><font size="2">Deductions</font></td>
<td align="center" valign="bottom" width="11%"><font size="2">Other<br>
Changes<br>
Add<br>
(Deduct)</font></td>
<td align="center" valign="bottom" width="11%"><font size="2">Balance<br>
at End<br>
of Period</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="1">
</td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2"><b>1999</b></font></td>
<td valign="top" width="13%"></td>
<td valign="top" width="11%"></td>
<td valign="top" width="14%"></td>
<td valign="top" width="11%"></td>
<td valign="top" width="11%"></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">Reserves deducted from assets to<br>
which they apply:<br>
Allowances for doubtful accounts</font></td>
<td align="right" valign="bottom" width="13%"><font size="2">$3,637</font></td>
<td align="right" valign="bottom" width="11%"><font size="2">$&nbsp;&nbsp;789</font></td>
<td align="right" valign="bottom" width="14%"><font size="2">$(2,409)</font></td>
<td align="right" valign="bottom" width="11%"><font size="2">$1,033</font></td>
<td align="right" valign="bottom" width="11%"><font size="2">$3,050</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2"><b>1998</b></font></td>
<td valign="top" width="13%"></td>
<td valign="top" width="11%"></td>
<td valign="top" width="14%"></td>
<td valign="top" width="11%"></td>
<td valign="top" width="11%"></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">Reserves deducted from assets<br>
towhich they apply:<br>
Allowances for doubtful accounts</font></td>
<td align="right" valign="bottom" width="13%"><font size="2">$2,988</font></td>
<td align="right" valign="bottom" width="11%"><font size="2">$&nbsp;&nbsp;820</font></td>
<td align="right" valign="bottom" width="14%"><font size="2">$&nbsp;(381)</font></td>
<td align="right" valign="bottom" width="11%"><font size="2">$&nbsp;&nbsp;210</font></td>
<td align="right" valign="bottom" width="11%"><font size="2">$3,637</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2"><b>1997</b></font></td>
<td valign="top" width="13%"></td>
<td valign="top" width="11%"></td>
<td valign="top" width="14%"></td>
<td valign="top" width="11%"></td>
<td valign="top" width="11%"></td>
</tr>
<tr>
<td valign="top" width="37%"><font size="2">Reserves deducted from assets<br>
to which they apply:<br>
Allowances for doubtful accounts</font></td>
<td align="right" valign="bottom" width="13%"><font size="2">$2,245</font></td>
<td align="right" valign="bottom" width="11%"><font size="2">$1,006</font></td>
<td align="right" valign="bottom" width="14%"><font size="2">$&nbsp;(590)</font></td>
<td align="right" valign="bottom" width="11%"><font size="2">$&nbsp;&nbsp;327</font></td>
<td align="right" valign="bottom" width="11%"><font size="2">$2,988</font></td>
</tr>
<tr>
<td colspan="6">
<hr size="3" noshade>
</td>
</tr>
</TABLE>
</font></p>
<p><font size="2"><b>SIGNATURES</b><br wp="br1">
<br wp="br2">
</font></p>
</center>
<p><font size="2">Pursuant to the requirements of Section 13 or (15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 22<sup>nd</sup> day
of September, 1998.<br wp="br1">
<br wp="br2">
<table width="100%">
<tr>
<td valign="top" width="47%"></td>
<td valign="top" width="26%"><font size="2">CACI International Inc</font></td>
<td valign="top" width="26%"></td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
<table width="100%">
<tr>
<td valign="top" width="47%"></td>
<td valign="top" width="6%"><font size="2">By:</font></td>
<td valign="top" width="46%">
<center>
/s/
<hr size="1">
</center>
</td>
</tr>
<tr>
<td valign="top" width="47%"></td>
<td valign="top" width="6%"></td>
<td valign="top" width="46%"><font size="2">J.P. London<br>
Chairman of the Board, Chief Executive Officer<br>
and Director</font></td>
</tr>
</TABLE>
<br wp="br1">
<br wp="br2">
<br wp="br1">
<br wp="br2">
</font></p>
<p><font size="2">Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in capacities and on the dates indicated.<br wp="br1">
<br wp="br2">
<table width="100%">
<tr>
<td align="center" valign="top" width="28%"><font size="2">Signature
<hr size="1">
</font></td>
<td width="2%"></td>
<td align="center" valign="top" width="40%"><font size="2">Title
<hr size="1">
</font></td>
<td width="2%"></td>
<td align="center" valign="top" width="28%"><font size="2">Date
<hr size="1">
</font></td>
</tr>
<tr>
<td width="28%"></td>
<td width="2%"></td>
<td width="40%"></td>
<td width="2%"></td>
<td width="28%"></td>
</tr>
<tr>
<td align="center" valign="bottom" width="28%"><br wp="br1">
<font size="2">/s/
<hr size="1">
</font></td>
<td width="2%"></td>
<td valign="top" width="40%"><font size="2">Chairman of the Board,<br>
Chief Executive Officer and Director<br>
(Principal Executive Officer)</font></td>
<td width="2%"></td>
<td align="center" valign="top" width="28%"><br wp="br1">
<font size="2">September 22, 1999
<hr size="1">
</font></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">J.P. London</font></td>
<td width="2%"></td>
<td width="40%"></td>
<td width="2%"></td>
<td width="28%"></td>
</tr>
<tr>
<td align="center" valign="bottom" width="28%"><br wp="br1">
<font size="2">/s/
<hr size="1">
</font></td>
<td width="2%"></td>
<td valign="top" width="40%"><font size="2">Executive Vice President, Chief<br>
Financial Officer and Treasurer<br>
(Principal Financial and Accounting Officer)</font></td>
<td width="2%"></td>
<td align="center" valign="top" width="28%"><br wp="br1">
<font size="2">September 22, 1999
<hr size="1">
</font></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">Stephen L. Waechter</font></td>
<td width="2%"></td>
<td width="40%"></td>
<td width="2%"></td>
<td width="28%"></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">/s/
<hr size="1">
</font></td>
<td width="2%"></td>
<td valign="top" width="40%"><font size="2">Director</font></td>
<td width="2%"></td>
<td align="center" valign="top" width="28%"><font size="2">September 22, 1999
<hr size="1">
</font></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">Richard L. Leatherwood</font></td>
<td width="2%"></td>
<td width="40%"></td>
<td width="2%"></td>
<td width="28%"></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">/s/
<hr size="1">
</font></td>
<td width="2%"></td>
<td valign="top" width="40%"><font size="2">Director</font></td>
<td width="2%"></td>
<td align="center" valign="top" width="28%"><font size="2">September 22, 1999
<hr size="1">
</font></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">Larry L. Pfirman</font></td>
<td width="2%"></td>
<td width="40%"></td>
<td width="2%"></td>
<td width="28%"></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">/s/
<hr size="1">
</font></td>
<td width="2%"></td>
<td valign="top" width="40%"><font size="2">Director</font></td>
<td width="2%"></td>
<td align="center" valign="top" width="28%"><font size="2">September 22, 1999
<hr size="1">
</font></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">Warren R. Phillips</font></td>
<td width="2%"></td>
<td width="40%"></td>
<td width="2%"></td>
<td width="28%"></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">/s/
<hr size="1">
</font></td>
<td width="2%"></td>
<td valign="top" width="40%"><font size="2">Director</font></td>
<td width="2%"></td>
<td align="center" valign="top" width="28%"><font size="2">September 19, 1999
<hr size="1">
</font></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">Charles P. Revoile</font></td>
<td width="2%"></td>
<td width="40%"></td>
<td width="2%"></td>
<td width="28%"></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">/s/
<hr size="1">
</font></td>
<td width="2%"></td>
<td valign="top" width="40%"><font size="2">Director</font></td>
<td width="2%"></td>
<td align="center" valign="top" width="28%"><font size="2">September 22, 1999
<hr size="1">
</font></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">Glenn Ricart</font></td>
<td width="2%"></td>
<td width="40%"></td>
<td width="2%"></td>
<td width="28%"></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">/s/
<hr size="1">
</font></td>
<td width="2%"></td>
<td valign="top" width="40%"><font size="2">Director</font></td>
<td width="2%"></td>
<td align="center" valign="top" width="28%"><font size="2">September 21, 1999
<hr size="1">
</font></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">Vincent L. Salvatori</font></td>
<td width="2%"></td>
<td width="40%"></td>
<td width="2%"></td>
<td width="28%"></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">/s/
<hr size="1">
</font></td>
<td width="2%"></td>
<td valign="top" width="40%"><font size="2">Director</font></td>
<td width="2%"></td>
<td align="center" valign="top" width="28%"><font size="2">September 18, 1999
<hr size="1">
</font></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">William B. Snyder</font></td>
<td width="2%"></td>
<td width="40%"></td>
<td width="2%"></td>
<td width="28%"></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">/s/
<hr size="1">
</font></td>
<td width="2%"></td>
<td valign="top" width="40%"><font size="2">Director</font></td>
<td width="2%"></td>
<td align="center" valign="top" width="28%"><font size="2">September 21, 1999
<hr size="1">
</font></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">Richard P. Sullivan</font></td>
<td width="2%"></td>
<td width="40%"></td>
<td width="2%"></td>
<td width="28%"></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">/s/
<hr size="1">
</font></td>
<td width="2%"></td>
<td valign="top" width="40%"><font size="2">Director</font></td>
<td width="2%"></td>
<td align="center" valign="top" width="28%"><font size="2">September 22, 1999
<hr size="1">
</font></td>
</tr>
<tr>
<td align="center" valign="top" width="28%"><font size="2">John M. Toups</font></td>
<td width="2%"></td>
<td width="40%"></td>
<td width="2%"></td>
<td width="28%"></td>
</tr>
</TABLE>
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