CACI Starts Year on Aggressive Note

P> It didn't come as a surprise when CACI International Inc. of Arlington, Va., last year announced two separate acquisitions three months apart. After all, the information technology services company has been on an acquisition spree, racking up about 10 in the last several years.

CEO J.P. London has made acquisitions a key part of CACI's growth, which he pegs at 15 percent annually. CACI bought American Legal Systems Corp. of Arlington, Va., in 1992 for its litigation support business, SofTech Inc.'s government services division in 1994, and Automated Sciences Group in Silver Spring, Md., a systems and software engineering company, last September.

In fact, London has his own SWAT team that eyes potential acquisition targets. "We've been very aggressive in the acquisition game. I think we've learned how to do it right.... There have been no acquisitions that have been a problem at this point," he said.

The strategy has allowed the company to grow its top line. In the last two and a half years, CACI's revenues have increased from $145 million in 1993 to $233 million in 1995 and net income during the same period increased from $3 million to $8.2 million. Ray Oleson, CACI's COO, reported that 30 percent to 40 percent of that growth came from previous acquisitions. He expects the next acquisition to hit the $40 million to $50 million range.

Until then, CACI will be digesting its most recent purchase.

"We thought IMS would be a strategic fit," said Oleson. "We liked their client base and we were able to integrate from the start of the deal."

The deal also got a nod from Bill Loomis, an analyst at Ferris Baker Watts in Baltimore. "IMS seems to have a good reputation and is a good fit for CACI," he said. "CACI is definitely not overpaying for it."

The company paid $6.5 million for IMS; it also will pay IMS' four founders $1.5 million in consulting fees over three years.

CACI has retained approximately 300 of IMS' 375 employees. IMS' owners chose not to stay and manage the company until the end, which allowed CACI to make the integration immediately. CACI plans to temporarily attach the IMS name to the CACI name to keep IMS' loyal customer base. According to Oleson, IMS was a very viable business with a strong backlog of proposals. The company's sale was brought on mainly by an interest from the owners, the Yey brothers, to pursue other ventures. Only Joseph Yey, the youngest of the four siblings, will continue at CACI.

Although both companies share a similar client base that includes the Navy and the Department of Justice, the IMS purchase allows CACI to expand into other government agencies such as the Department of Energy, Oleson said. .

The company's recent acquisitions also have brought CACI new clients in agencies such as the Department of Defense, where CACI has had a presence for some time. In fact, the defense market generates 51 percent of CACI's revenues, and the company's defense business continues to grow, with sales increasing 27 percent last year.

Although CACI is diversifying its business mix, 75 percent still comes from federal government contracts, such as a recent $66 million subcontract with VGS Inc. to support the General Services Administration's Federal Systems Integration and Management Center. CACI's success in federal infotech contracting began in 1990 as the company attempted to transform itself from a professional services company to one focused on infotech. Wall Street must like what it sees; since Jack London took over CACI in mid-1991, the company's stock has nearly quadrupled to nearly $12 per share.