CACI closes revised ISS deal

CACI International reported March 1 that it closed the acquisition of Information Systems Support (ISS), but under renegotiated terms.

In December 2005, CACI disclosed plans to buy ISS, a Gaithersburg, Md., IT solutions company that specializes in communications and logistics. But the deal hit a snag a month later when ISS failed to win a significant contract recompete. On Jan. 31, CACI announced that the lost deal would require a revised valuation of ISS.

CACI did not disclose its initial offer for ISS, but the firm said this week that it renegotiated the purchase price. The company will pay $145 million for ISS, according to CACI’s March 1 filing with the Securities and Exchange Commission.

The deal is subject to a post-closing adjustment in purchase price, the SEC filing states. ISS is to produce a final closing balance sheet and, based on that document, pay CACI the amount, if any, the company’s net assets fall below $25 million. Conversely, CACI will pay the seller if net assets exceed $25 million.

ISS has about 1,000 employees, more than 70 percent of whom hold clearances at the secret level or above. CACI executives speaking during a December 2005 conference call identified the General Services Administration’s Applications ‘n Support for Widely-diverse End-User Requirements program as ISS’ largest contract.

CACI has somewhat reduced its financial forecast based on its revised expectations regarding ISS' contribution. The company lowered its full-year revenue estimate to $1.785 billion to $1.805 billion from an earlier projection of $1.810 billion to $1.835 billion. The company also lowered the upper end of its full-year earnings forecast to $2.81 earnings per share -- inclusive of stock option expense -- from $2.83. The company’s 2006 fiscal year ends June 30.

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