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John P. Gavin, CFA, is the founder and CEO of Disclosure Insight®, an independent publisher of investment research. Mr. Gavin has spent his entire career of over 25 years in the financial services industry. Prior to starting “DI” in 2000, he worked as an equity analyst and portfolio manager... More
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  • The Pentagon is Cutting $600 Billion - Here Are Some of the Companies at Risk 0 comments
    Jan 5, 2012 10:29 AM | about stocks: ACM, APEI, CACI, JEC, KBR, LDOS, TTEK

    The Pentagon will finally announce its long-anticipated military spending cuts today (MarketWatch.com article here). In light of that, it might be prudent to revisit some companies that attribute considerable portions of their revenue to the Department of Defense (“DoD”) and/or related government agencies. Here are disclosures taken from the SEC filings of six military contractors and one for-profit education company (in alphabetical order):

    ACM: 22% from U.S federal government in fiscal 2011 (10-K filed 21-Nov-11)

    • Approximately 22%, 26% and 26% of our revenue was derived through direct contracts with agencies of the U.S. federal government in the years ended September 30, 2011, 2010 and 2009, respectively. One of these contracts accounted for approximately 3%, 9% and 10% of our revenue in the years ended September 30, 2011, 2010 and 2009, respectively. The work attributed to the U.S. federal government includes our work for the Department of Defense, Department of Energy, Department of Justice and the Department of Homeland Security.

    APEI: 43% from DoD-sponsored tuition assistance in the nine months ended 30-Sep-11 (10-K filed 18-Feb-11)

    • Approximately 40% and 43% of the Company’s revenues for the three and nine month periods ended September 30, 2011 were derived from students who received tuition assistance from tuition assistance programs sponsored by the United States Department of Defense compared to approximately 48% and 51% of the Company’s revenues for the three and nine months ended September 30, 2010, respectively..

    CACI: 79.9% from DoD customers (10-K filed 29-Aug-11)

    • We derived 94.9 percent of our total revenue in FY2011 and 94.8 percent of our total revenue in FY2010 from federal government contracts, either as a prime contractor or a subcontractor. We derived 79.9 percent of our total revenue in FY2011 and 77.8 percent of our total revenue in FY2010 from contracts with agencies of the DoD.

    JEC: 24.4% of revenue in fiscal 2011 (10-K filed 21-Nov-11)

    • For example, in fiscal 2011, 2010, and fiscal 2009, approximately 24.4%, 25.4%, and 20.3%, respectively, of our revenue was earned directly or indirectly from agencies of the U.S. federal government.
    • Long-term clients include the Ministry of Defence in the U.K., NASA, the DoD, the U.S. Special Operations Command (“USSOCOM”), and the Australian Department of Defence.

    KBR: At least 28% from the DoD (10-K filed 23-Feb-11). The U.S. government accounted for 32% of 2010 consolidated revenue.

    • We provide substantial work under our government contracts to the U.S. DOD and other governmental agencies. These contracts include our worldwide United States Army logistics contracts, known as LogCAP III and IV, and the U.S. Army Europe (“USAREUR”) contract.
    • 2010 Revenues under the LogCAP III project were approximately $2.8 billion (28.1%)
    • Revenue from U.S. government (millions):   $3,277

    SAI: 75% from the DoD (10-Q filed 8-Dec-11)

    • Revenues under contracts with the DoD, including subcontracts under which the DoD is the ultimate purchaser, represented approximately 75% of our total revenues in fiscal 2011.

    TTEK: 20.4% of revenue in fiscal 2011 (10-K filed 17-Nov-11)

    • The DoD accounted for 20.4%, 28.6% and 30.9% of our revenue in fiscal 2011, 2010 and 2009, respectively. We typically support multiple programs within a single U.S. federal government agency, both domestically and internationally.
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