UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December~~March 31, ~~2017~~2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-31400

CACI International Inc

(Exact name of registrant as specified in its charter)

Delaware

54-1345888

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

~~1100 North Glebe~~12021 Sunset Hills Road, ~~Arlington,~~Reston, VA ~~22201~~20190

(Address of principal executive offices)

(703) 841-7800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	CACI	New York Stock Exchange

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~~Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the Registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐.

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting company,” and “emerging growth company”in Rule 12b-2 of the Exchange Act.

~~Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes~~ ☐ No ☒.

If an emerging growth company, indicate by check mark if the ~~registrant~~Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐.

Indicate by check mark whether the ~~number~~Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 14, 2021, there were 23,550,726 shares outstanding of ~~each of the Registrant’s classes of Common Stock, as of January 24, 2018:~~ CACI International ~~Inc Common Stock, $0.10~~Inc’s common stock, par value ~~24,627,905 shares.~~

$0.10 per share.

CACI INTERNATIONAL INC

		PAGE
PART I:	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended ~~December~~March 31, ~~2017~~2021 and ~~2016~~2020	3

	Consolidated Statements of ~~Operations~~Comprehensive Income (Unaudited) for the ~~Six~~Three and Nine Months Ended ~~December~~March 31, ~~2017~~2021 and ~~2016~~2020	4

	Consolidated ~~Statements~~Balance Sheets (Unaudited) as of ~~Comprehensive Income (Unaudited) for the Three~~March 31, 2021 and ~~Six Months Ended December 31, 2017 and 2016~~June 30, 2020	5

	Consolidated ~~Balance Sheets~~Statements of Cash Flows (Unaudited) ~~as of December~~for the Nine Months Ended March 31, ~~2017~~2021 and ~~June 30, 2017~~2020	6

	Consolidated Statements of ~~Cash Flows~~Shareholder’s Equity (Unaudited) for the ~~Six~~Three and Nine Months Ended ~~December~~March 31, ~~2017~~2021 and ~~2016~~2020	7

	Notes to Unaudited Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1821

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2629

Item 4.	Controls and Procedures	2629


PART II:	OTHER INFORMATION

Item 1.	Legal Proceedings	2731

Item 1A.	Risk Factors	2733

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2733

Item 3.	Defaults Upon Senior Securities	2733

Item 4.	Mine Safety Disclosures	2833

Item 5.	Other Information	2833

Item 6.	Exhibits	2834

	Signatures	2935

~~PART I~~

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

CACI INTERNATIONAL INC

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(amounts in thousands, except per share data)

	Three Months Ended					Three Months Ended				Nine Months Ended
	December 31,					March 31,				March 31,
	2017			2016		2021		2020		2021		2020
Revenue	$	1,087,860		$	1,057,530	$	1,551,918	$	1,465,600	$	4,480,135	$	4,224,461
Costs of revenue:
Direct costs		727,160			705,321
Operating costs and expenses:
Costs of revenue							1,000,235		953,630		2,887,300		2,737,378
Indirect costs and selling expenses		254,180			253,822		369,015		371,135		1,071,826		1,081,175
Depreciation and amortization		18,258			18,132		31,230		27,159		93,608		81,888
Total costs of revenue		999,598			977,275
Total operating costs and expenses							1,400,480		1,351,924		4,052,734		3,900,441
Income from operations		88,262			80,255		151,438		113,676		427,401		324,020
Interest expense and other, net		10,956			12,325		8,954		14,087		28,021		45,612
Income before income taxes		77,306			67,930		142,484		99,589		399,380		278,408
Income tax expense (benefit)		(65,489	)		25,510
Income tax expense							22,140		19,012		78,914		50,659
Net income	$	142,795		$	42,420	$	120,344	$	80,577	$	320,466	$	227,749
Basic earnings per share	$	5.80		$	1.74	$	4.83	$	3.21	$	12.81	$	9.11
Diluted earnings per share	$	5.66		$	1.69	$	4.78	$	3.16	$	12.66	$	8.94
Weighted-average basic shares outstanding		24,622			24,387		24,935		25,078		25,026		25,012
Weighted-average diluted shares outstanding		25,211			25,069		25,166		25,478		25,307		25,481

See Notes to Unaudited Consolidated Financial Statements

CACI INTERNATIONAL INC

~~CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)~~

~~(amounts in thousands)~~

Six Months Ended

December 31,

2017

2016

Revenue

$
2,173,674

$
2,130,810

Costs of revenue:

Direct costs

1,466,838

1,433,542

Indirect costs and selling expenses

515,424

511,160

Depreciation and amortization

35,846

36,195

Total costs of revenue

2,018,108

1,980,897

Income from operations

155,566

149,913

Interest expense and other, net

22,203

24,814

Income before income taxes

133,363

125,099

Income tax expense (benefit)

(51,478
)

46,016

Net income

$
184,841

$
79,083

Basic earnings per share

$
7.53

$
3.25

Diluted earnings per share

$
7.33

$
3.16

Weighted-average basic shares outstanding

24,555

24,363

Weighted-average diluted shares outstanding

25,228

24,998

~~See Notes to Unaudited Consolidated Financial Statements~~

~~CACI INTERNATIONAL INC~~

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(amounts in thousands)

	Three Months Ended					Six Months Ended					Three Months Ended					Nine Months Ended
	December 31,					December 31,					March 31,					March 31,
	2017		2016			2017		2016			2021		2020			2021		2020
Net income	$	142,795	$	42,420		$	184,841	$	79,083		$	120,344	$	80,577		$	320,466	$	227,749
Other comprehensive income:
Other comprehensive income (loss):
Foreign currency translation adjustment		1,191		(6,424	)		5,554		(10,126	)		440		(10,570	)		21,946		(4,663	)
Change in fair value of interest rate swap agreements, net of tax		2,613		10,045			3,121		12,899			6,467		(21,173	)		11,363		(22,402	)
Other comprehensive income, net of tax		3,804		3,621			8,675		2,773
Other comprehensive income (loss), net of tax												6,907		(31,743	)		33,309		(27,065	)
Comprehensive income	$	146,599	$	46,041		$	193,516	$	81,856		$	127,251	$	48,834		$	353,775	$	200,684

See Notes to Unaudited Consolidated Financial Statements

CACI ~~INTERNATIONAL~~INTERNATIONAL INC

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(amounts in thousands, except per share data)

	December 31,			June 30,			March 31,			June 30,
	2017			2017			2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	56,328		$	65,539		$	105,591		$	107,236
Accounts receivable, net		758,141			757,341			860,720			841,227
Prepaid expenses and other current assets		73,697			57,022			162,374			137,423
Total current assets		888,166			879,902			1,128,685			1,085,886
Goodwill		2,614,294			2,577,435			3,632,075			3,407,110
Intangible assets, net		244,072			235,371			493,062			406,885
Property and equipment, net		101,470			91,749			184,375			170,521
Operating lease right-of-use assets								371,151			330,767
Supplemental retirement savings plan assets		91,755			91,367			100,429			96,355
Accounts receivable, long-term		8,177			7,886			11,802			9,629
Other long-term assets		36,199			27,372			48,836			35,319
Total assets	$	3,984,133		$	3,911,082		$	5,970,415		$	5,542,472
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	80,947		$	53,965		$	46,920		$	46,920
Accounts payable		91,056			62,874			109,695			89,961
Accrued compensation and benefits		234,999			239,741			382,246			338,760
Other accrued expenses and current liabilities		166,359			170,164			304,030			293,518
Total current liabilities		573,361			526,744			842,891			769,159
Long-term debt, net of current portion		1,070,846			1,177,598			1,775,071			1,357,519
Supplemental retirement savings plan obligations, net of current portion		87,593			81,823			100,629			103,004
Deferred income taxes		192,688			273,320			216,966			213,096
Operating lease liabilities, noncurrent								377,044			309,680
Other long-term liabilities		72,825			57,876			138,420			128,704
Total liabilities		1,997,313			2,117,361		$	3,451,021		$	2,881,162
COMMITMENTS AND CONTINGENCIES
Shareholders’ equity:
Preferred stock $0.10 par value, 10,000 shares authorized, no shares issued or outstanding		—			—
Common stock $0.10 par value, 80,000 shares authorized; 42,059 shares issued and 24,625 outstanding at December 31, 2017 and 41,896 shares issued and 24,462 outstanding at June 30, 2017		4,206			4,190
Preferred stock $0.10 par value, 10,000 shares authorized, 0 shares issued or outstanding								—			—
Common stock $0.10 par value, 80,000 shares authorized; 42,672 shares issued and 23,551 outstanding at March 31, 2021 and 42,525 shares issued and 25,093 outstanding at June 30, 2020								4,267			4,253
Additional paid-in capital		568,646			569,080			478,039			573,744
Retained earnings		2,010,460			1,825,619			3,052,110			2,731,644
Accumulated other comprehensive loss		(20,441	)		(29,116	)		(38,976	)		(72,285	)
Treasury stock, at cost (17,434 and 17,435 shares, respectively)		(576,186	)		(576,187	)
Treasury stock, at cost (19,122 and 17,432 shares, respectively)								(976,181	)		(576,181	)
Total CACI shareholders’ equity		1,986,685			1,793,586			2,519,259			2,661,175
Noncontrolling interest		135			135			135			135
Total shareholders’ equity		1,986,820			1,793,721			2,519,394			2,661,310
Total liabilities and shareholders’ equity	$	3,984,133		$	3,911,082		$	5,970,415		$	5,542,472

See Notes to Unaudited Consolidated Financial Statements

CACI ~~INTERNATIONAL~~INTERNATIONAL INC

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in thousands)

	Six Months Ended						Nine Months Ended
	December 31,						March 31,
	2017			2016			2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	184,841		$	79,083		$	320,466		$	227,749
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization		35,846			36,195			93,608			81,888
Amortization of deferred financing costs		2,212			2,252			1,743			1,762
Loss on disposal of fixed assets		—			975
Non-cash lease expense								57,800			54,493
Stock-based compensation expense		12,389			10,557			23,841			22,204
Deferred income taxes		(83,212	)		5,081			(585	)		39,527
Equity in earnings of unconsolidated ventures		—			(103	)
Changes in operating assets and liabilities, net of effect of business acquisitions:
Accounts receivable, net		7,367			71,080			(18,826	)		36,433
Prepaid expenses and other assets		(10,107	)		1,649			(27,068	)		(35,461	)
Accounts payable and other accrued expenses		15,190			(58,873	)		27,933			27,638
Accrued compensation and benefits		(11,126	)		(15,339	)		41,691			(4,522	)
Income taxes payable and receivable		(3,796	)		(391	)		10,102			(42,383	)
Supplemental retirement savings plan obligations and other long-term liabilities		6,157			3,184
Operating lease liabilities								(55,274	)		(56,240	)
Long-term liabilities								25,085			4,737
Net cash provided by operating activities		155,761			135,350			500,516			357,825
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(22,013	)		(21,826	)		(51,273	)		(54,331	)
Cash paid for business acquisitions, net of cash acquired		(45,565	)		(5,605	)		(355,452	)		(102,437	)
Proceeds from net working capital refund of acquired business		—			13,619
Proceeds from equity method investments		—			4,681
Other		(183	)		1,051			2,744			—
Net cash (used in) investing activities		(67,761	)		(8,080	)
Net cash used in investing activities								(403,981	)		(156,768	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings under bank credit facilities		256,500			240,500			2,478,500			1,438,500
Principal payments made under bank credit facilities		(338,483	)		(338,991	)		(2,062,690	)		(1,593,690	)
Payment of contingent consideration		(3,630	)		—			—			(8,700	)
Proceeds from employee stock purchase plans		2,459			2,262			6,840			5,463
Repurchases of common stock		(2,463	)		(2,243	)		(506,629	)		(5,584	)
Payment of taxes for equity transactions		(12,656	)		(3,632	)		(19,567	)		(30,616	)
Net cash used in financing activities		(98,273	)		(102,104	)		(103,546	)		(194,627	)
Effect of exchange rate changes on cash and cash equivalents		1,062			(1,598	)		5,366			(1,302	)
Net (decrease) increase in cash and cash equivalents		(9,211	)		23,568
Cash and cash equivalents, beginning of period		65,539			49,082
Cash and cash equivalents, end of period	$	56,328		$	72,650
Net increase (decrease) in cash and cash equivalents								(1,645	)		5,128
Cash and cash equivalents at beginning of period								107,236			72,028
Cash and cash equivalents at end of period							$	105,591		$	77,156
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for income taxes, net of refunds	$	35,264		$	41,273		$	48,855		$	46,895
Cash paid during the period for interest	$	20,505		$	22,512		$	25,405		$	41,151
Non-cash financing and investing activities:
Landlord sponsored tenant improvement							$	15,468		$	1,630
Accrued capital expenditures	$	3,316		$	1,482		$	1,075		$	3,687

See Notes to Unaudited Consolidated Financial Statements

7CACI INTERNATIONAL INC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

(amounts in thousands)

	Common Stock Shares Amount				Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Treasury Stock Shares Amount						Total CACI Shareholders’ Equity			Noncontrolling Interest		Total Shareholders’ Equity
BALANCE, June 30, 2020		42,525	$	4,253	$	573,744		$	2,731,644	$	(72,285	)		17,432		$	(576,181	)	$	2,661,175		$	135	$	2,661,310
Net income		—		—		—			320,466		—			—			—			320,466			—		320,466
Stock-based compensation expense		—		—		23,841			—		—			—			—			23,841			—		23,841
Tax withholdings on restricted share vestings		147		14		(19,500	)		—		—			—			—			(19,486	)		—		(19,486	)
Change in fair value of interest rate swap agreements, net		—		—		—			—		11,363			—			—			11,363			—		11,363
Currency translation adjustment		—		—		—			—		21,946			—			—			21,946			—		21,946
Repurchases of common stock		—		—		(100,065	)		—		—			1,721			(406,564	)		(506,629	)		—		(506,629	)
Treasury stock issued under stock purchase plans		—		—		19			—		—			(31	)		6,564			6,583			—		6,583
BALANCE, March 31, 2021		42,672	$	4,267	$	478,039		$	3,052,110	$	(38,976	)		19,122		$	(976,181	)	$	2,519,259		$	135	$	2,519,394

BALANCE, June 30, 2019		42,314	$	4,231	$	576,277		$	2,410,164	$	(43,156	)		17,434		$	(576,185	)	$	2,371,331		$	135	$	2,371,466
Net income		—		—		—			227,749		—			—			—			227,749			—		227,749
Stock-based compensation expense		—		—		22,204			—		—			—			—			22,204			—		22,204
Tax withholdings on restricted share vestings		204		21		(30,460	)		—		—			—			—			(30,439	)		—		(30,439	)
Change in fair value of interest rate swap agreements, net		—		—		—			—		(22,402	)		—			—			(22,402	)		—		(22,402	)
Currency translation adjustment		—		—		—			—		(4,663	)		—			—			(4,663	)		—		(4,663	)
Repurchases of common stock		—		—		(369	)		—		—			24			(5,215	)		(5,584	)		—		(5,584	)
Treasury stock issued under stock purchase plans		—		—		80			—		—			(26	)		5,219			5,299			—		5,299
BALANCE, March 31, 2020		42,518	$	4,252	$	567,732		$	2,637,913	$	(70,221	)		17,432		$	(576,181	)	$	2,563,495		$	135	$	2,563,630

BALANCE, December 31, 2020		42,663	$	4,266	$	570,176		$	2,931,766	$	(45,883	)		17,432		$	(576,181	)	$	2,884,144		$	135	$	2,884,279
Net income		—		—		—			120,344		—			—			—			120,344			—		120,344
Stock-based compensation expense		—		—		8,800			—		—			—			—			8,800			—		8,800
Tax withholdings on restricted share vestings		9		1		(905	)		—		—			—			—			(904	)		—		(904	)
Change in fair value of interest rate swap agreements, net		—		—		—			—		6,467			—			—			6,467			—		6,467
Currency translation adjustment		—		—		—			—		440			—			—			440			—		440
Repurchases of common stock		—		—		(100,032	)		—		—			1,699			(402,177	)		(502,209	)		—		(502,209	)
Treasury stock issued under stock purchase plans		—		—		—			—		—			(9	)		2,177			2,177			—		2,177
BALANCE, March 31, 2021		42,672	$	4,267	$	478,039		$	3,052,110	$	(38,976	)		19,122		$	(976,181	)	$	2,519,259		$	135	$	2,519,394

BALANCE, December 31, 2019		42,505	$	4,250	$	561,521		$	2,557,336	$	(38,478	)		17,434		$	(576,184	)	$	2,508,445		$	135	$	2,508,580
Net income		—		—		—			80,577		—			—			—			80,577			—		80,577
Stock-based compensation expense		—		—		7,705			—		—			—			—			7,705			—		7,705
Tax withholdings on restricted share vestings		13		2		(1,371	)		—		—			—			—			(1,369	)		—		(1,369	)
Change in fair value of interest rate swap agreements, net		—		—		—			—		(21,173	)		—			—			(21,173	)		—		(21,173	)
Currency translation adjustment		—		—		—			—		(10,570	)		—			—			(10,570	)		—		(10,570	)
Repurchases of common stock		—		—		(190	)		—		—			7			(1,798	)		(1,988	)		—		(1,988	)
Treasury stock issued under stock purchase plans		—		—		67			—		—			(9	)		1,801			1,868			—		1,868
BALANCE, March 31, 2020		42,518	$	4,252	$	567,732		$	2,637,913	$	(70,221	)		17,432		$	(576,181	)	$	2,563,495		$	135	$	2,563,630

CACI ~~INTERNATIONAL~~INTERNATIONAL INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.	Basis of Presentation

The accompanying unaudited consolidated financial statements of CACI International Inc and subsidiaries (CACI or the Company) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and include the assets, liabilities, results of operations, comprehensive income and cash flows for the Company, including its subsidiaries and ventures that are majority-owned or otherwise controlled by the Company. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. All intercompany balances and transactions have been eliminated in consolidation.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and amounts included in other current assets and current liabilities that meet the definition of a financial instrument approximate fair value because of the short-term nature of these amounts. The fair value of the Company’s debt outstanding as of ~~December~~March 31, ~~2017~~2021 under its bank credit facility approximates its carrying value. The fair value of the Company’s debt under its bank credit facility was estimated using Level 2 inputs based on market data of companies with a corporate rating similar to CACI’s that have recently priced credit facilities. See Notes 611 and ~~12.~~18.

In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments and reclassifications (all of which are of a normal, recurring nature) that are necessary for the fair presentation of the periods presented. It is suggested that these unaudited consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s latest annual report to the SEC on Form 10-K for the year ended June 30, ~~2017.~~2020. The results of operations for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021 are not necessarily indicative of the results to be expected for any subsequent interim period or for the full fiscal year.

2.	Recent Accounting Pronouncements

Accounting Standards Updates Adopted

In ~~January 2017,~~August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ~~No. 2017-01,~~ ~~Clarifying the Definition of~~2018-15, Customer’s Accounting for Implementation Costs Incurred in a ~~Business~~Cloud Computing Arrangement That Is a Service Contract, which ~~revises~~aligns the ~~definition of~~capitalization requirements for implementation costs incurred in a ~~business and provides guidance to assist entities~~hosting arrangement that is a service contract with ~~evaluating whether transactions should be accounted~~the existing capitalization requirements for ~~as acquisitions (or disposals) of assets or businesses. The guidance is effective for the fiscal year, and interim periods within that fiscal year, beginning after December 15, 2017.~~implementation costs associated with internal-use software (Subtopic 350-40). The Company ~~believes that~~adopted this standard on July 1, 2020 using the ~~evaluation~~prospective method. The adoption of ~~whether transactions should be accounted for as acquisitions (or dispositions) of assets~~this standard did not have a material impact on our operating results, financial position or ~~businesses will be simplified under the new standard.~~cash flows.

In ~~February~~June 2016, the FASB issued ASU ~~No. 2016-02,~~ ~~Leases~~, 2016-13, Financial Instruments - Credit Losses, which ~~amends~~requires companies to record an allowance for expected credit losses over the ~~existing guidance on accounting for leases. The new standard requires lessees to put virtually all leases on the balance sheet by recognizing lease~~contractual term of financial assets, including short-term trade receivables and contract assets, and ~~lease liabilities. Lessor accounting is largely unchanged from that applied under previous guidance.~~expands disclosure requirements for credit quality of financial assets. The ~~amended guidance is effective for~~Company adopted this standard on July 1, 2020 using the ~~fiscal year, and interim periods within that fiscal year, beginning after December 15, 2018, and requires a~~ modified retrospective ~~approach. Early adoption is permitted.~~method. The ~~Company is currently evaluating the impact of the~~ adoption of this standard ~~on its consolidated financial statements.~~

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers~~, as amended (ASC 606), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. On July 9, 2015, the FASB approved a one-year deferral of the effective date of ASU 2014-09 to annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2017, using either a full retrospective approach or a modified approach.

The Company plans to adopt the standard on July 1, 2018 and apply it on a modified retrospective basis, whereby the cumulative effect of applying the standard will be recognized through shareholders’ equity on the date of adoption. We are in the process of identifying the changes to accounting policies, business processes, systems, disclosures, and controls to support the adoption of the new standard.

~~CACI INTERNATIONAL INC~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

We expect the standard will impact the pattern of revenue recognition for some of our contracts with customers. For our award and incentive fee contracts, we will recognize a constrained amount of variable consideration over time as the performance obligation is satisfied rather than defer recognition of the relevant portion of fee until customer notification of the amount earned. Some of our fixed price contracts in which revenue is recognized on a straight-line basis over the performance period will be converted to recognition of revenue over time by measuring the progress toward complete satisfaction of the performance obligation using input methods, including cost and labor hours. We dodid not ~~anticipate~~have a material impact ~~to our cost-plus-fixed fee, fixed price/level-of-effort, time-and-materials, or fixed price contracts that currently use percentage-of-completion accounting.~~

~~The cumulative catch-up adjustment that will be recorded through shareholders’ equity on July 1, 2018 is still being quantified. We will continue evaluating the impact of the standard~~ on our ~~contract portfolio through the date of adoption.~~operating results, financial position or cash flows.

3.	~~Acquisitions~~Acquisition

~~Domestic Acquisition~~

On ~~November 22, 2017,~~August 11, 2020, CACI ~~acquired 100 percent~~completed the acquisition of the outstanding membership interests of a business in the United States. The acquisition was financed with cash on hand. The purchase consideration is approximately $53.0 million, which includes a $40.1 million initial cash payment, $4.5 million of deferred consideration, $8.7 million estimated fair value of contingent consideration to be paid upon achieving certain metrics and a $0.3 million estimated refund due from the sellerAscent Vision Technologies (AVT) for a ~~net working capital adjustment.~~purchase price of approximately $348.8 million. AVT specializes in Electro-Optical Infrared payloads, On-Board Computer Vision Processing and counter-unmanned aircraft system (C-UAS) solutions. The Company preliminarily recognized fair values of the assets acquired and liabilities assumed and ~~preliminarily~~ allocated ~~$26.7~~$211.0 million to goodwill and ~~$24.9~~$133.8 million to intangible assets. The goodwill of $211.0 million is largely attributable to the assembled workforce of AVT and expected synergies between the Company and AVT. The intangible assets ~~primarily~~ consist of customer relationships of $65.7 million and technology of $68.1 million. The fair value attributed to intangible assets is being amortized on an accelerated basis over approximately 20 years for customer relationships and over approximately 10 years for technology. The fair value attributed to the intangible assets acquired ~~technology.~~ The final purchase price is subject to customary adjustments for final working capital. The final purchase price allocation is provisional and is expected to be completed in the second quarter of FY2019, will bewas based on ~~final appraisals~~assumptions and other ~~analysis of fair values of acquired~~information compiled by management, including independent valuations that utilized established valuation techniques. Of the value attributed to goodwill and intangible assets, and liabilities. The Company does not expect that differences between the preliminary and final purchase price allocation will have a material impact on its results of operations or financial position.

~~International Acquisitions~~

~~On October 1, 2017, CACI Limited acquired 100 percent of the outstanding shares of a United Kingdom (U.K.) IT consulting services and software engineering company. The purchase consideration~~approximately $319.7 million is ~~approximately $9.1 million, which includes initial cash payments, deferred consideration and an estimated net working capital payment.~~

On November 1, 2017, CACI Limited acquired 100 percent of the outstanding shares of a London-based software and mapping data company. The company provides geographical information systems, logistics and route optimization software and related map data. The purchase consideration is approximately $7.5 million, which includes initial cash payments, deferred consideration and an estimated net working capital payment.deductible for income tax purposes.

~~CACI INTERNATIONAL INC~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

4.	Intangible Assets

Intangible assets consisted of the following (in thousands):

	December 31,			June 30,			March 31,			June 30,
	2017 ⁽¹⁾			2017			2021 (1)			2020
Intangible assets
Intangible assets:
Customer contracts and related customer relationships	$	431,973		$	635,895		$	602,407		$	570,562
Acquired technologies		13,888			28,503			198,262			129,925
Covenants not to compete		—			3,305
Other		804			1,545			7			8
Intangible assets		446,665			669,248			800,676			700,495
Less accumulated amortization
Less accumulated amortization:
Customer contracts and related customer relationships		(194,166	)		(402,934	)		(266,949	)		(271,708	)
Acquired technologies		(8,025	)		(26,542	)		(40,663	)		(21,900	)
Covenants not to compete		—			(3,288	)
Other		(402	)		(1,113	)		(2	)		(2	)
Less accumulated amortization		(202,593	)		(433,877	)		(307,614	)		(293,610	)
Total intangible assets, net	$	244,072		$	235,371		$	493,062		$	406,885

~~__________________~~

⁽¹⁾

During the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2021, the Company ~~wrote off $250.7~~removed $37.4 million in fully amortized intangible assets.

Intangible assets are primarily amortized on an accelerated basis over periods ranging from one to twenty years. The weighted-average period of amortization for all customer contracts and related customer relationships as of ~~December~~March 31, ~~2017~~2021 is ~~14.7~~17.7 years, and the weighted-average remaining period of amortization is ~~11.7~~14.4 years. The weighted-average period of amortization for acquired technologies as of ~~December~~March 31, ~~2017~~2021 is ~~7.4~~10.5 years, and the weighted-average remaining period of amortization is ~~6.4~~9.0 years.

Expected amortization expense for the remainder of the fiscal year ending June 30, ~~2018,~~2021, and for each of the fiscal years thereafter, is as follows (in thousands):

Fiscal year ending June 30,	Amount		Amount
2018 (six months)	$	18,854
2019		34,257
2020		29,651
2021		26,190
2021 (three months)			$	16,889
2022		22,613		68,592
2023				65,164
2024				57,812
2025				50,552
Thereafter		112,507		234,053
Total intangible assets, net	$	244,072	$	493,062

Goodwill

The changes in the carrying amount of goodwill for the ~~year ended June 30, 2017 and the six~~nine months ended ~~December~~March 31, ~~2017~~2021 are as follows (in thousands):

Domestic

International

Total

Balance at June 30, 2016

$
2,487,148

$
98,195

$
2,585,343

Business acquisitions

(7,652
)

2,220

(5,432
)
Foreign currency translation

—

(2,476
)

(2,476
)
Balance at June 30, 2017

2,479,496

97,939

2,577,435

Business acquisitions

26,662

6,379

33,041

Foreign currency translation

—

3,818

3,818

Balance at December 31, 2017

$
2,506,158

$
108,136

$
2,614,294

	Domestic		International			Total
Balance at June 30, 2020	$	3,279,856	$	127,254		$	3,407,110
Goodwill acquired (1)		211,004		(1,478	)		209,526
Foreign currency translation		1,139		14,300			15,439
Balance at March 31, 2021	$	3,491,999	$	140,076		$	3,632,075

(1)

Includes goodwill initially allocated to new business combinations as well as measurement period adjustments.

~~CACI INTERNATIONAL INC~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

6.	Revenue Recognition

We disaggregate our revenue arrangements by contract type, customer, whether we perform on the contract as the prime or subcontractor, and whether the solution provided is primarily expertise or technology as defined herein. We believe that these categories allow for a better understanding of the nature, amount, timing, and uncertainty of revenue and cash flows arising from our contracts.

Revenue by Contract Type

The Company generated revenue on our cost-plus-fee, fixed-price, and time-and-materials contracts as follows during the three and nine months ended March 31, 2021 and 2020 (in thousands):

	Three Months Ended						Nine Months Ended
	March 31, 2021						March 31, 2021
	Domestic		International		Total		Domestic		International		Total
Cost-plus-fee	$	905,774	$	—	$	905,774	$	2,572,967	$	—	$	2,572,967
Fixed-price		424,580		32,519		457,099		1,245,278		86,456		1,331,734
Time-and-materials		174,683		14,362		189,045		532,039		43,395		575,434
Total	$	1,505,037	$	46,881	$	1,551,918	$	4,350,284	$	129,851	$	4,480,135

	Three Months Ended						Nine Months Ended
	March 31, 2020						March 31, 2020
	Domestic		International		Total		Domestic		International		Total
Cost-plus-fee	$	852,700	$	—	$	852,700	$	2,418,891	$	—	$	2,418,891
Fixed-price		376,314		29,422		405,736		1,128,866		83,713		1,212,579
Time-and-materials		190,344		16,820		207,164		550,167		42,824		592,991
Total	$	1,419,358	$	46,242	$	1,465,600	$	4,097,924	$	126,537	$	4,224,461

Customer Group

The Company generated revenue from our primary customer groups as follows during the three and nine months ended March 31, 2021 and 2020 (in thousands):

	Three Months Ended						Nine Months Ended
	March 31, 2021						March 31, 2021
	Domestic		International		Total		Domestic		International		Total
Department of Defense	$	1,074,056	$	—	$	1,074,056	$	3,091,126	$	—	$	3,091,126
Federal Civilian agencies		405,855		—		405,855		1,186,068		—		1,186,068
Commercial and other		25,126		46,881		72,007		73,090		129,851		202,941
Total	$	1,505,037	$	46,881	$	1,551,918	$	4,350,284	$	129,851	$	4,480,135

	Three Months Ended						Nine Months Ended
	March 31, 2020						March 31, 2020
	Domestic		International		Total		Domestic		International		Total
Department of Defense	$	1,037,242	$	—	$	1,037,242	$	2,965,263	$	—	$	2,965,263
Federal Civilian agencies		361,320		—		361,320		1,067,342		—		1,067,342
Commercial and other		20,796		46,242		67,038		65,319		126,537		191,856
Total	$	1,419,358	$	46,242	$	1,465,600	$	4,097,924	$	126,537	$	4,224,461

Prime or Subcontractor

The Company generated revenue as either the prime or subcontractor as follows during the three and nine months ended March 31, 2021 and 2020 (in thousands):

	Three Months Ended						Nine Months Ended
	March 31, 2021						March 31, 2021
	Domestic		International		Total		Domestic		International		Total
Prime contractor	$	1,358,423	$	43,210	$	1,401,633	$	3,935,661	$	119,835	$	4,055,496
Subcontractor		146,614		3,671		150,285		414,623		10,016		424,639
Total	$	1,505,037	$	46,881	$	1,551,918	$	4,350,284	$	129,851	$	4,480,135

	Three Months Ended						Nine Months Ended
	March 31, 2020						March 31, 2020
	Domestic		International		Total		Domestic		International		Total
Prime contractor	$	1,298,073	$	42,788	$	1,340,861	$	3,723,024	$	119,597	$	3,842,621
Subcontractor		121,285		3,454		124,739		374,900		6,940		381,840
Total	$	1,419,358	$	46,242	$	1,465,600	$	4,097,924	$	126,537	$	4,224,461

Expertise or Technology

The Company generated revenue by providing expertise or technology solutions to our customers as follows during the three and nine months ended March 31, 2021 and 2020 (in thousands):

	Three Months Ended						Nine Months Ended
	March 31, 2021						March 31, 2021
	Domestic		International		Total		Domestic		International		Total
Expertise	$	745,440	$	18,979	$	764,419	$	2,184,449	$	52,929	$	2,237,378
Technology		759,597		27,902		787,499		2,165,835		76,922		2,242,757
Total	$	1,505,037	$	46,881	$	1,551,918	$	4,350,284	$	129,851	$	4,480,135

	Three Months Ended						Nine Months Ended
	March 31, 2020						March 31, 2020
	Domestic		International		Total		Domestic		International		Total
Expertise	$	744,997	$	18,339	$	763,336	$	2,180,498	$	47,225	$	2,227,723
Technology		674,361		27,903		702,264		1,917,426		79,312		1,996,738
Total	$	1,419,358	$	46,242	$	1,465,600	$	4,097,924	$	126,537	$	4,224,461

Significant Estimates

For many of our fixed price revenue arrangements and for revenue arrangements that have award or incentive fees, the Company uses an estimate at completion (EAC) to measure progress towards the complete satisfaction of its performance obligations. For these revenue arrangements, revenue is recognized over time primarily using a cost-to-cost input method based on the ratio of costs incurred to date to total estimated costs at completion. The EAC process requires the Company to use professional judgment when assessing risks, estimating contract revenue and costs, estimating variable consideration, and making assumptions for schedule and technical issues. The Company periodically reassesses its EAC assumptions and updates its estimates as needed. When estimates of total costs to be incurred on a contract exceed total revenue, a provision for the entire loss on the contract is recorded in the period in which the loss is determined.

Based on changes in a contract’s EAC, a cumulative adjustment to revenue will be recorded. For the three and nine months ended March 31, 2021, we recognized an increase to income before income taxes of $10.7 million ($0.31 per diluted share) and $36.6 million ($1.06 per diluted share), respectively, compared with $8.3 million ($0.24 per diluted share) and $32.1 million ($0.93 per diluted share) for the three and nine months ended March 31, 2020, respectively, from EAC adjustments. The Company used its statutory tax rate when calculating the impact to diluted earnings per share.

Revenue recognized from previously satisfied performance obligations was $0.7 million and $2.3 million for the three and nine months ended March 31, 2021, respectively, compared with $(0.3) million and $9.9 million for the three and nine months ended March 31, 2020, respectively. The change in revenue generally relates to final true-up adjustments to our estimated award or incentive fees in the period in which we receive the customer’s final performance score or when we can determine that more objective, contractually-defined criteria have been fully satisfied.

Remaining Performance Obligations

The Company’s remaining performance obligations balance as of period end represents the expected revenue to be recognized for the satisfaction of remaining performance obligations on our existing contracts. This balance excludes unexercised contract option years and task orders that may be issued underneath an Indefinite Delivery/Indefinite Quantity (IDIQ) vehicle until such task orders are awarded. The remaining performance obligations balance generally increases with the execution of new contracts and converts into revenue as our contractual performance obligations are satisfied.

The Company continues to monitor this balance as it is subject to change from execution of new contracts, contract modifications or extensions, government deobligations, or early terminations. Based on this analysis, an adjustment to the period end balance may be required. Our remaining performance obligations balance as of March 31, 2021 was $6.7 billion.

The Company expects to recognize approximately 90 percent of our remaining performance obligations balance as revenue over the next twelve months and the remaining 10 percent thereafter.

7.	Accounts Receivable

	March 31,		June 30,
	2021		2020
Billed and billable receivables	$	750,529	$	779,339
Unbilled receivables		110,191		61,888
Total accounts receivable, net – current		860,720		841,227
Unbilled receivables, long-term		11,802		9,629
Total accounts receivable	$	872,522	$	850,856

Accounts receivable are recorded at amounts earned less an allowance for doubtful accounts. The Company periodically reassesses its allowance for doubtful accounts by analyzing reasonably available information as of the balance sheet date, including the length of time that the receivable has been outstanding, historical bad debts and aging trends, and other general and contract specific factors. In addition, the Company monitors its exposure to customer credit risk for its financial assets, including its trade receivables and contract balances.

The Company’s allowance for doubtful accounts was $3.1 million and $3.0 million at March 31, 2021 and June 30, 2020, respectively.

8.	Contract Balances

Contract assets are primarily comprised of unbilled receivables in which revenue has been recognized but our right to consideration is conditional on factors other than the passage of time. Contract assets exclude billed and billable receivables.

The incremental costs of obtaining a contract (e.g. sales commissions) are capitalized as an asset when the Company expects to recover them either directly or indirectly through the revenue arrangement’s profit margins. These capitalized costs are subsequently expensed over the revenue arrangement’s period of performance. Contract assets are not stated above their net realizable value.

Contract liabilities are primarily comprised of advance payments in which consideration is received in advance of satisfying a performance obligation. The advance payment is subsequently recognized into revenue as the performance obligation is satisfied.

Net contract assets (liabilities) consisted of the following (in thousands):

		March 31,			June 30,
Description of Contract Related Balance	Financial Statement Classification	2021			2020
Contract assets – current:
Unbilled receivables	Accounts receivable, net	$	110,191		$	61,888
Costs to obtain – short-term	Prepaid expenses and other current assets		4,064			3,492
Contract assets – noncurrent:
Unbilled receivables	Accounts receivable, long-term		11,802			9,629
Costs to obtain – long-term	Other long-term assets		9,546			7,708
Contract liabilities – current:
Deferred revenue and other contract liabilities – short-term	Other accrued expenses and current liabilities		(59,323	)		(57,082	)
Contract liabilities – noncurrent:
Deferred revenue and other contract liabilities – long-term	Other long-term liabilities		(6,543	)		(6,507	)
Net contract assets (liabilities)		$	69,737		$	19,128

During the three and nine months ended March 31, 2021, we recognized $4.2 million and $57.1 million of revenue, respectively, compared with $6.2 million and $44.9 million of revenue for the three and nine months ended March 31, 2020, respectively, that was included in a previously recorded contract liability as of the beginning of the period.

9.	Inventories

Inventories consisted of the following (in thousands):

	March 31,		June 30,
	2021		2020
Materials, purchased parts and supplies	$	50,385	$	36,692
Work in process		11,270		10,867
Finished goods		16,915		17,608
Total	$	78,570	$	65,167

Inventories are stated at the lower of cost (average cost or first-in, first-out) or net realizable value and are included in prepaid expenses and other current assets on the accompanying consolidated balance sheets. The Company periodically assesses its current inventory balances and records a provision for damaged, deteriorated, or obsolete inventory based on historical patterns and forecasted sales.

10.	Sales of Receivables

On December 24, 2020, the Company amended its Master Accounts Receivable Purchase Agreement (MARPA) with MUFG Bank, Ltd. (the Purchaser), for the sale of certain designated eligible U.S. government receivables. The amendment extended the term of the MARPA to December 23, 2021. Under the MARPA, the Company can sell eligible receivables, including certain billed and unbilled receivables up to a maximum amount of $200.0 million. The Company’s receivables are sold under the MARPA without recourse for any U.S. government credit risk.

The Company accounts for receivable transfers under the MARPA as sales under ASC 860, Transfers and Servicing, and derecognizes the sold receivables from its balance sheets. The fair value of the sold receivables approximated their book value due to their short-term nature.

The Company does not retain an ongoing financial interest in the transferred receivables other than cash collection and administrative services. The Company estimated that its servicing fee was at fair value and therefore no servicing asset or liability related to these receivables was recognized as of March 31, 2021. Proceeds from the sold receivables are reflected in our operating cash flows on the statement of cash flows.

MARPA activity consisted of the following (in thousands):

	As of and for the Nine Months Ended
	March 31,
	2021			2020
Beginning balance:	$	200,000		$	192,527
Sales of receivables		2,048,585			1,750,496
Cash collections		(2,058,725	)		(1,749,524	)
Outstanding balance sold to Purchaser: (1)		189,860			193,499
Cash collected, not remitted to Purchaser (2)		(76,388	)		(55,588	)
Remaining sold receivables	$	113,472		$	137,911

(1)

For the nine months ended March 31, 2021 and 2020, the Company recorded a net cash outflow of $10.1 million and a net cash inflow of $1.0 million in its cash flows from operating activities, respectively, from sold receivables. MARPA cash flows are calculated as the change in the outstanding balance during the fiscal year.

(2)

Includes the cash collected on behalf of but not yet remitted to the Purchaser as of March 31, 2021 and 2020. This balance is included in other accrued expenses and current liabilities as of the balance sheet date.

11.	Long-term Debt

Long-term debt consisted of the following (in thousands):

	December 31,			June 30,			March 31,			June 30,
	2017			2017			2021			2020
Bank credit facility – term loans	$	951,885		$	978,867		$	809,364		$	844,555
Bank credit facility – revolver loans		210,000			265,000			1,020,000			569,000
Principal amount of long-term debt		1,161,885			1,243,867			1,829,364			1,413,555
Less unamortized debt issuance costs		(10,092	)		(12,304	)
Less unamortized discounts and debt issuance costs								(7,373	)		(9,116	)
Total long-term debt		1,151,793			1,231,563			1,821,991			1,404,439
Less current portion		(80,947	)		(53,965	)		(46,920	)		(46,920	)
Long-term debt, net of current portion	$	1,070,846		$	1,177,598		$	1,775,071		$	1,357,519

Bank Credit Facility

The Company has a ~~$1,981.3~~$2,438.4 million credit facility (the Credit Facility), which consists of an ~~$850.0~~$1,500.0 million revolving credit facility (the Revolving Facility) and a ~~$1,131.3~~$938.4 million term loan (the Term Loan). The Revolving Facility has subfacilities of $100.0 million for same-day swing line loan borrowings and $25.0 million for stand-by letters of credit. At any time and so long as no default has occurred, the Company has the right to increase the Revolving Facility or the Term Loan in an aggregate principal amount of up to the greater of $400.0 million or an amount subject to 2.75 times senior secured leverage, calculated assuming the Revolving Facility is fully drawn, with applicable lender approvals. The Credit Facility is available to refinance existing indebtedness and for general corporate purposes, including working capital expenses and capital expenditures.

The Revolving Facility is a secured facility that permits continuously renewable borrowings of up to ~~$850.0~~$1,500.0 million. As of ~~December~~March 31, ~~2017,~~2021, the Company had ~~$210.0~~$1,020.0 million outstanding under the Revolving Facility noand 0 borrowings on the swing ~~line and an outstanding letter of credit of $0.4 million.~~line. The Company pays a quarterly facility fee for the unused portion of the Revolving Facility.

The Term Loan is a five-year secured facility under which principal payments are due in quarterly installments of ~~$13.5~~$11.7 million ~~through June 30, 2018 and $27.0 million thereafter~~ until the balance is due in full on June ~~1, 2020.~~30, 2024. As of ~~December~~March 31, ~~2017,~~2021, the Company had ~~$951.9~~$809.4 million outstanding under the Term Loan.

The interest rates applicable to loans under the Credit Facility are floating interest rates that, at the Company’s option, equal a base rate or a Eurodollar rate plus, in each case, an applicable rate based upon the Company’s consolidated total leverage ratio. As of ~~December~~March 31, ~~2017,~~2021, the effective interest rate, including the impact of the Company’s floating-to-fixed interest rate swap agreements and excluding the effect of amortization of debt financing costs, for the outstanding borrowings under the Credit Facility was ~~3.36~~1.97 percent.

The Credit Facility requires the Company to comply with certain financial covenants, including a maximum ~~senior secured leverage ratio, a maximum~~ total leverage ratio and a minimum ~~fixed charge~~interest coverage ratio. The Credit Facility also includes customary negative covenants restricting or limiting the Company’s ability to guarantee or incur additional indebtedness, grant liens or other security interests to third parties, make loans or investments, transfer assets, declare dividends or redeem or repurchase capital stock or make other distributions, prepay subordinated indebtedness and engage in mergers, acquisitions or other business combinations, in each case except as expressly permitted under the Credit Facility. As of ~~December~~March 31, ~~2017,~~2021, the Company was in compliance with all of the financial covenants. A majority of the Company’s assets serve as collateral under the Credit Facility.

All debt issuance costs are being amortized from the date incurred to the expiration date of the Credit Facility.

~~CACI INTERNATIONAL INC~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~The aggregate maturities of long-term debt at March 31, 2021 are as follows (in thousands):

Twelve months ending March 31,
2022	$	46,920
2023		46,920
2024		46,920
2025		1,688,604
Principal amount of long-term debt		1,829,364
Less unamortized discounts and debt issuance costs		(7,373	)
Total long-term debt	$	1,821,991

Cash Flow Hedges

The Company periodically uses derivative financial instruments as part of a strategy to manage exposure to market risks associated with interest rate fluctuations. The Company has entered into several floating-to-fixed interest rate swap agreements for an aggregate notional amount of $800.0 million which hedge a portion of the Company’s floating rate indebtedness. The swaps mature at various dates through ~~2022.~~2026. The Company has designated the swaps as cash flow hedges. Unrealized gains are recognized as assets while unrealized losses are recognized as liabilities. The interest rate swap agreements are highly correlated to the changes in interest rates to which the Company is exposed. ~~Unrealized gains and losses on these swaps are designated as effective or ineffective.~~ Realized gains and losses in connection with each required interest payment are reclassified from accumulated other comprehensive income or loss to interest expense. The Company does not hold or issue derivative financial instruments for trading purposes.

The effect of derivative instruments in the consolidated statements of operations and accumulated other comprehensive loss for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021 and ~~2016~~2020 is as follows (in thousands):

	Three Months Ended				Six Months Ended				Three Months Ended					Nine Months Ended
	December 31,				December 31,				March 31,					March 31,
	2017		2016		2017		2016		2021		2020			2021		2020
Gain (loss) recognized in other comprehensive income	$	1,867	$	7,920	$	1,521	$	8,525	$	2,945	$	(21,606	)	$	757	$	(22,245	)
Amounts reclassified to earnings from accumulated other comprehensive loss		746		2,125		1,600		4,374		3,522		433			10,606		(157	)
Net current period other comprehensive income	$	2,613	$	10,045	$	3,121	$	12,899
Net current period other comprehensive income (loss)									$	6,467	$	(21,173	)	$	11,363	$	(22,402	)

12.

Leases

All of the Company’s leases are operating leases. The ~~aggregate maturities~~current portion of ~~long-term debt at December 31, 2017~~operating lease liabilities is included in other accrued expenses and current liabilities in our consolidated balance sheets. Lease balances in our consolidated balance sheet are as follows (in thousands):

Twelve months ending December 31,

2018

$
80,947

2019

107,930

2020

973,008

Principal amount of long-term debt

1,161,885

Less unamortized debt issuance costs

(10,092
)
Total long-term debt

$
1,151,793

	March 31, 2021		June 30, 2020
Operating lease right-of-use assets	$	371,151	$	330,767

Operating lease liabilities, current		59,357		67,549
Operating lease liabilities, noncurrent		377,044		309,680
	$	436,401	$	377,229

The Company’s total lease cost is recorded primarily within indirect costs and selling expenses and had the following impact on the consolidated statement of operations (in thousands):

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2021			2020			2021			2020
Operating lease cost	$	22,312		$	21,674		$	66,899		$	64,262
Short-term and variable lease cost		3,427			3,850			10,706			10,844
Sublease income		(84	)		(94	)		(296	)		(998	)
Total lease cost	$	25,655		$	25,430		$	77,309		$	74,108

The Company’s future minimum lease payments under non-cancelable operating leases for the remainder of the fiscal year ending June 30, 2021, and for each of the fiscal years thereafter, are as follows (in thousands):

Fiscal year ending June 30,
2021 (three months)	$	13,188
2022		77,841
2023		76,895
2024		70,669
2025		62,468
Thereafter		180,313
Total undiscounted lease payments		481,374
Less: imputed interest		(44,973	)
Total discounted lease liabilities	$	436,401

The weighted-average remaining lease term (in years) and weighted-average discount rate was 6.94 years and 2.78 percent, respectively.

Cash paid for operating leases was $64.6 million for the nine months ended March 31, 2021. During the nine months ended March 31, 2021 operating lease liabilities arising from obtaining new ROU assets was $97.8 million, which includes all noncash changes arising from new or remeasured operating lease arrangements.

7.13.

Commitments and Contingencies

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, either individually or in the aggregate, will not have a material adverse effect on the Company’s operations and liquidity.

Government Contracting

Payments to the Company on cost-plus-fee and ~~time-and-materials~~T&M contracts are subject to adjustment upon audit by the Defense Contract Audit Agency (DCAA) and other government agencies that do not utilize DCAA’s services. The DCAA ~~is nearing completion of~~has completed audits of the Company’s annual incurred cost ~~submissions for its fiscal years 2012 and 2013, and continues its audits of incurred cost submission for fiscal years 2011~~proposals through 2013 associated with CACI’s acquisition of National Security Solutions (NSS), a L-3 subsidiary. In its efforts to bring its audits more current, DCAA has commenced audits of our incurred cost submission through our fiscal year ~~2016.~~2019. We are still negotiating the results of prior years’ audits with the respective cognizant contracting officers and believe our reserves for such are adequate. In the opinion of management, adjustments that may result from these audits and the audits not yet started are not expected to have a material effect on the Company’s financial position, results of operations, or cash flows as the Company has accrued its best estimate of potential disallowances. Additionally, the DCAA continually reviews the cost accounting and other practices of government contractors, including the Company. In the course of those reviews, cost accounting and other issues are identified, discussed and settled.

On March 26, 2012, the Company received a subpoena from the Defense Criminal Investigative Service seeking documents related to one of the Company’s contracts for the period of January 1, 2007 through March 26, 2012. The Company has provided documents responsive to the subpoena and is cooperating fully with the government’s investigation. The Company has accrued its current best estimate of the likely outcome within its estimated range of zero to $3.9 million.

~~CACI INTERNATIONAL INC~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

8.14.

Stock-Based Compensation

~~Stock-based compensation expense recognized, together with~~For the ~~income tax benefits recognized, is as follows (in thousands):~~

Three Months Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Stock-based compensation related to RSUs included in
indirect costs and selling expense

$
6,038

$
5,660

$
12,389

$
10,557

~~Under the terms of the 2016 Amended~~nine months ended March 31, 2021 and ~~Restated Incentive Compensation Plan (the 2016 Plan),~~2020, the Company ~~may issue, among others, non-qualified stock options,~~recognized $23.8 million and $22.2 million of stock-based compensation, respectively, related to restricted stock ~~RSUs, SSARs,~~units (RSUs). The stock-based compensation was included in indirect costs and performance awards, collectively referred to herein as equity instruments. The 2016 Plan was approved by the Company’s stockholders in November 2016 and amended and restated the 2006 Stock Incentive Plan (the 2006 Plan) which was due to expire at the end of the ten-year period. Previous grants that were made under the 2006 Plan, and equity instruments granted prior to approval of the 2016 Plan continue to be governed by the terms of the 2006 Plan. During the periods presented all equity instrument grants were madeselling expenses in the ~~form~~consolidated statements of RSUs. Other than performance-based RSUs (PRSUs) which contain a market-based element, the fair value of RSU grants was determined based on the closing price of a share of the Company’s common stock on the date of grant. The fair value of RSUs with market-based vesting features was also measured on the grant date, but was done so using a binomial lattice model.

Annual grants under the 2016 Plan, and previously the 2006 Plan, are generally made to the Company’s key employees during the first quarter of the Company’s fiscal year and to members of the Company’s Board of Directors during the second quarter of the Company’s fiscal year. With the approval of its Chief Executive Officer, the Company also issues equity instruments to strategic new hires and to employees who have demonstrated superior performance.

In September 2014, the Company made its annual grant to key employees consisting of 180,570 PRSUs. The final number of such PRSUs that are earned by participants and vest is based on the achievement of a specified earnings per share (EPS) for the year ended June 30, 2015 and on the average share price of Company stock for the 90 day period ending September 23, 2015, 2016 and 2017 as compared to the average share price for the 90 day period ended September 23, 2014. The specified EPS for the year ended June 30, 2015 was met and the average share price of the Company’s stock for the 90 day periods ending September 23, 2015, 2016 and 2017 exceeded the average share price of the Company’s stock for the 90 day period ended September 23, 2014, resulting in an additional 63,642 RSUs earned by participants.

In September 2015, the Company made its annual grant to key employees consisting of 208,160 PRSUs. The final number of such PRSUs that are earned by participants and vest is based on the achievement of a specified EPS for the year ending June 30, 2016 and on the average share price of Company stock for the 90 day periods ending September 18, 2016, 2017 and 2018 as compared to the average share price for the 90 day period ended September 18, 2015. The specified EPS for the year ended June 30, 2016 was met and the average share price of the Company’s stock for the 90 day period ending September 18, 2016 and 2017 exceeded the average share price of the Company’s stock for the 90 day period ended September 18, 2015, resulting in an additional 48,068 RSUs earned by participants.

In September 2016, the Company made its annual grant to key employees consisting of 193,420 PRSUs. The final number of such PRSUs that are earned by participants and vest is based on the achievement of a specified EPS for the year ended June 30, 2017 and on the average share price of Company stock for the 90 day period ending September 30, 2017, 2018 and 2019 as compared to the average share price for the 90 day period ended September 30, 2016. The specified EPS for the year ended June 30, 2017 was met and the average share price of the Company’s stock for the 90 day period ending September 30, 2017 exceeded the average share price of the Company’s stock for the 90 day period ended September 30, 2016, resulting in an additional 21,824 RSUs earned by participants.

In September 2017, the Company made its annual grant to key employees consisting of 146,550 PRSUs. The final number of such PRSUs that are earned by participants and vest is based on the achievement of a specified EPS for the year ended June 30, 2018 and on the average share price of Company stock for the 90 day period ending September 15, 2018, 2019 and 2020 as compared to the average share price for the 90 day period ended September 15, 2017. If the specified EPS for the year ended June 30, 2018 is met and if the average share price of the Company’s stock for the 90 day period ending September 15, 2018, 2019 and 2020 exceeds the average share price of the Company’s stock for the 90 day period ended September 15, 2017 by 100 percent or more, then an additional 146,550 could be earned by participants. This is the maximum number of additional RSUs that can be earned related to the September 2017 annual grant. In addition to the performance and market conditions, there is a service vesting condition which stipulates that 50 percent of the earned award will vest on October 1, 2020 and 50 percent of the earned award will vest on October 1, 2021, in both cases dependent upon continuing service by the grantee as an employee of the Company, unless the grantee is eligible for earlier vesting upon retirement or certain other events.

~~CACI INTERNATIONAL INC~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

As of December 31, 2017, the total number of shares authorized by shareholders for grants under the 2016 Plan and its predecessor plan is 1,200,000 plus any forfeitures from the 2006 Plan. The aggregate number of grants that may be made may exceed this approved amount as forfeited RSUs become available for future grants. As of December 31, 2017, cumulative grants of 311,387 equity instruments underlying the shares authorized have been awarded, and 79,330 of these instruments have been forfeited.operations.

Activity related to RSUs during the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021 is as follows:

RSUs

Unvested at June 30, 2017

834,607

Granted

269,631

Vested

(256,589
)
Forfeited

(27,161
)
Unvested at December 31, 2017

820,488

Weighted-average grant date fair value for RSUs

$
145.94

	RSUs
Unvested at June 30, 2020		501,923
Granted		197,179
Vested		(236,643	)
Forfeited		(27,534	)
Unvested at March 31, 2021		434,925

As of ~~December~~March 31, ~~2017,~~2021, there was ~~$49.1~~$46.0 million of total unrecognized compensation costs related to RSUs scheduled to be recognized over a weighted-average period of ~~3.0~~2.7 years.

9.15.

Earnings Per Share

~~ASC 260,~~ Earnings ~~Per Share (ASC 260), 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 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 but not securities that are anti-dilutive. Using the treasury stock method, diluted earnings per share include the incremental effect of RSUs that are no longer subject to a market or performance condition. The PRSUs granted in September 2017 are excluded from the calculation of diluted earnings per share as the underlying shares are considered to be contingently issuable shares. These shares will be included in the calculation of diluted earnings per share beginning in the first reporting period in which the performance metric is achieved. The chart below shows the calculation of basic and diluted earnings per sharecomputed as follows (in thousands, except per share ~~amounts)~~data):

	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	December 31,				December 31,				March 31,				March 31,
	2017		2016		2017		2016		2021		2020		2021		2020
Net income	$	142,795	$	42,420	$	184,841	$	79,083	$	120,344	$	80,577	$	320,466	$	227,749
Weighted-average number of basic shares outstanding during the period		24,622		24,387		24,555		24,363		24,935		25,078		25,026		25,012
Dilutive effect of RSUs after application of treasury stock method		589		682		673		635		231		400		281		469
Weighted-average number of diluted shares outstanding during the period		25,211		25,069		25,228		24,998		25,166		25,478		25,307		25,481
Basic earnings per share	$	5.80	$	1.74	$	7.53	$	3.25	$	4.83	$	3.21	$	12.81	$	9.11
Diluted earnings per share	$	5.66	$	1.69	$	7.33	$	3.16	$	4.78	$	3.16	$	12.66	$	8.94

~~10.~~16.

Income Taxes

The Company is subject to income taxes in the U.S. and various state and foreign jurisdictions. Tax statutes and regulations within each jurisdiction are subject to interpretation and require the application of significant judgment. The Company is currently under examination by two state jurisdictions for the years 2010 through 2017 and one foreign jurisdiction for the years 2011 through 2015. The Company does not expect resolution of these examinations to have a material impact on its results of operations, financial condition or cash flows.

~~CACI INTERNATIONAL INC~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

The Company’s total liability for unrecognized tax benefits as of ~~December~~March 31, ~~2017~~2021 and June 30, ~~2017~~2020 was ~~$1.9~~$28.9 million and ~~$1.7~~$8.8 million, respectively. During the quarter, the Company recognized an increase in reserves for uncertain tax positions related to an increase in research and development tax credits. The ~~$1.9~~$28.9 million unrecognized tax benefit at ~~December~~March 31, ~~2017,~~2021, if recognized, would positively impact the Company’s effective tax rate.

The Company’s effective tax rate for the three and nine months ended March 31, 2021 and 2020 are reflected below (in thousands):

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2021			2020			2021			2020
Income tax expense	$	22,140		$	19,012		$	78,914		$	50,659
Effective income tax rate		15.5	%		19.1	%		19.8	%		18.2	%

The effective income tax rate was 15.5 percent and 19.8 percent for the three and nine months ended March 31, 2021, respectively, compared with 19.1 percent and 18.2 percent, respectively, for the same periods last year. For the three months ended, ~~December 31, 2017 decreased to (84.7) percent from 37.6 percent for~~ the same period last year. The effective tax rate decreased primarily due to certain impacts of the Tax Cuts and Jobs Act (TCJA) discussed below. The effective tax rate was also favorably affected by a benefit from the research and development tax credit and gains from the change in value of assets invested in corporate owned life insurance (COLI) policies.

~~The~~Company’s effective income tax rate ~~for~~was lower in the ~~six months ended December 31, 2017 decreased to (38.6) percent from 36.8 percent for the same~~current period ~~last year. The effective tax rate decreased~~ primarily due to ~~certain impacts of~~an increase in research and development credits for past and current year tax filings. For the ~~TCJA, discussed below. The~~nine months ended, the Company’s effective income tax rate was ~~also favorably affected by~~higher in the current period primarily due to a decrease in excess tax benefits ~~from~~related to employee ~~share-based payment awards under ASU 2016-09, a benefit from the~~stock-based compensation, partially offset byan increase in research and development credits for past and current year tax ~~credit, and gains from the change in value of assets invested in corporate owned life insurance (COLI) policies.~~

~~Tax Cuts and Jobs Act~~

The Tax Cuts and Jobs Act (the “TCJA”) was enacted on December 22, 2017. Among other things, the TCJA reduces the U.S. federal corporate tax rate from 35.0 percent to 21.0 percent effective on January 1, 2018. The rate change is administratively effective at the beginning of our fiscal year, using a blended rate for the annual period. As a result, the blended federal statutory tax rate for the year is 28.06 percent. Additionally, the TCJA requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, creates new taxes on certain foreign-sourced earnings and changes or limits certain tax deductions and credits. At December 31, 2017, we have not completed our accounting for the tax effects of enactment of the TCJA; however, as described below, we have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. For these items we recognized provisional amounts in income tax expense benefit as discussed below.

We remeasured deferred tax asset and liability balances at December 22, 2017 based on the rates at which they are expected to reverse in the future, which is generally 21.0 percent for reversals after FY2018 and a blended rate of 28.06 percent for reversals within FY2018. However, we are still analyzing certain aspects of the Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional amount recorded related to the remeasurement of our net deferred tax liabilities was a $94.8 million reduction to income tax expense for the three and six months ended December 31, 2017.

The one-time transition tax is based on our total post-1986 earnings and profits (“E&P”) for which we have previously deferred from U.S. income taxes. We recorded a provisional amount for our one-time transition tax liability for our foreign subsidiaries, resulting in a $9.7 million increase in income tax expense for the three and six months ended December 31, 2017. The Company expects to pay this amount over eight years. We have not yet completed our calculation of the total post-1986 foreign E&P for these foreign subsidiaries. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when we finalize the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalize the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax and any additional outside basis difference inherent in these entities as these amounts continue to be indefinitely reinvested in foreign operations.

The Company will continue to analyze the TCJA to determine the full effects of the new law, including the new lower corporate tax rate, international provisions, and the impact of the TCJA on the 162(m) limitations on its financial condition and results of operations. Additionally, the Company will continue to monitor various state law changes in reaction to the TCJA as changes are enacted.

The overall impact of the TCJA on our results of operations was a $92.3 million reduction to tax expense for the three and six months ended December 31, 2017. The corresponding increase in diluted earnings per share was $3.66 for the three and six months ended December 31, 2017, respectively.filings.

~~CACI INTERNATIONAL INC~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

~~11.~~17.

Business Segment Information

The Company reports operating results and financial data in ~~two~~2 segments: domestic operations and international operations. Domestic operations provide ~~information solutions~~Expertise and ~~services~~Technology primarily to ~~its customers. Its customers are primarily~~ U.S. federal government agencies. ~~Other customers of the Company’s domestic operations include commercial enterprises. The Company places employees in locations around the world in support of its clients.~~ International operations ~~offer services~~provide Expertise and Technology primarily to ~~both~~international government and commercial ~~and non-U.S. government customers primarily within the Company’s business systems and enterprise IT markets.~~ customers.

The Company evaluates the performance of its operating segments based on net income. Summarized financial information ~~concerning~~for the Company’s reportable segments is as follows (in thousands):

	Domestic Operations		International Operations		Total		Domestic Operations		International Operations		Total
Three Months Ended December 31, 2017
Three Months Ended March 31, 2021
Revenue from external customers	$	1,046,823	$	41,037	$	1,087,860	$	1,505,037	$	46,881	$	1,551,918
Net income		138,930		3,865		142,795		113,536		6,808		120,344
Three Months Ended December 31, 2016
Three Months Ended March 31, 2020
Revenue from external customers	$	1,024,025	$	33,505	$	1,057,530	$	1,419,358	$	46,242	$	1,465,600
Net income		38,732		3,688		42,420		74,885		5,692		80,577
Six Months Ended December 31, 2017
Nine Months Ended March 31, 2021
Revenue from external customers	$	2,097,706	$	75,968	$	2,173,674	$	4,350,284	$	129,851	$	4,480,135
Net income attributable to CACI		177,763		7,078		184,841
Six Months Ended December 31, 2016
Net income								301,594		18,872		320,466
Nine Months Ended March 31, 2020
Revenue from external customers	$	2,062,916	$	67,894	$	2,130,810	$	4,097,924	$	126,537	$	4,224,461
Net income attributable to CACI		72,374		6,709		79,083
Net income								213,780		13,969		227,749

~~12.~~18.

Fair Value of Financial Instruments

ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability between market participants in an orderly transaction. The market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability is known as the principal market. When no principal market exists, the most advantageous market is used. This is the market in which the reporting entity would sell the asset or transfer the liability with the price that maximizes the amount that would be received or minimizes the amount that would be paid. Fair value is based on assumptions market participants would make in pricing the asset or liability. Generally, fair value is based on observable quoted market prices or derived from observable market data when such market prices or data are available. When such prices or inputs are not available, the reporting entity should use valuation models.

The Company’s financial assets and liabilities recorded at fair value on a recurring basis are categorized based on the priority of the inputs used to measure fair value. The inputs used in measuring fair value are categorized into three levels, as follows:

~~Level 1 Inputs – unadjusted quoted prices in active markets for identical assets or liabilities.~~

•

Level 1 Inputs – unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs – unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

•

Level 3 Inputs – amounts derived from valuation models in which unobservable inputs reflect the reporting entity’s own assumptions about the assumptions of market participants that would be used in pricing the asset or liability.

•

~~CACI INTERNATIONAL INC~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)~~

~~The Company’s financial instruments measured at fair value included interest rate swap agreements and contingent consideration in connection with business combinations.~~ The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of ~~December~~March 31, ~~2017~~2021 and June 30, ~~2017,~~2020, and the level they fall within the fair value hierarchy (in thousands):

			December 31,		June 30,				March 31,		June 30,
	Financial Statement	Fair Value	2017		2017		Financial Statement	Fair Value	2021		2020
Description of Financial Instrument	Classification	Hierarchy	Fair Value				Classification	Hierarchy	Fair Value
Contingent consideration	Other accrued expenses and current liabilities	Level 3	$	9,600	$	14,889
Contingent consideration	Other long-term liabilities	Level 3	$	9,100	$	658
Interest rate swap agreements	Other long-term assets	Level 2	$	8,121	$	5,559	Other accrued expenses and current liabilities	Level 2	$	1,934	$	—
Interest rate swap agreements	Other accrued expenses and current liabilities	Level 2	$	23	$	3	Other long-term liabilities	Level 2	$	25,817	$	43,168
Interest rate swap agreements	Other long-term liabilities	Level 2	$	506	$	3,110

Changes in the fair value of the interest rate swap agreements are recorded as a component of accumulated other comprehensive income or loss.

~~Various acquisitions completed during prior fiscal years contained provisions requiring that~~

19.	Accelerated Share Repurchase

On March 12, 2021, CACI entered into an accelerated share repurchase agreement (the “ASR Agreement”) with JPMorgan Chase Bank, National Association (JPMorgan). Under the ~~Company pay contingent consideration in~~ASR Agreement, we paid $500.0 million to JPMorgan and received an initial delivery of approximately 1.7 million shares of our common stock, which shares were recorded as a $400.0 million increase to treasury stock. The final number of shares to be repurchased will be based on the ~~event the acquired businesses achieved certain specified earnings results~~volume-weighted average stock price of our common stock during the ~~two and three year periods subsequent to each acquisition. The Company determined the fair value~~term of the ~~contingent consideration~~agreement, less a discount. This is evaluated as ~~of each acquisition date using a valuation model which included the evaluation of the most likely outcome and the application of~~ an ~~appropriate discount rate. At~~unsettled forward contract indexed to our own stock, with $100.0 million classified within stockholders’ equity as additional paid-in-capital. The ASR Agreement is scheduled to settle prior to the end of ~~each reporting period,~~ the ~~fair value~~second quarter of the contingent consideration was remeasured and any changes were recorded in indirect costs and selling expenses. During the three and six months ended December 31, 2017 this remeasurement resulted inFY2022. At final settlement, JPMorgan may be required to deliver additional shares of our common stock to us or, under certain circumstances, we may elect to make a ~~$1.1 million and $2.0 million change~~cash payment or deliver shares of our common stock to ~~the liability recorded.~~JPMorgan.

Item 2. Management’s Discussion a~~nd Analysis~~and Analysis of Financial Condition and Results of Operations

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: legal, regulatory, and political change as a result of transitioning to a new presidential administration that could result in economic uncertainty; changes in U.S. federal agencies, current agreements with other nations, foreign events, or any other events which may affect the global economy; regional and national economic conditions in the United States and globally; terrorist activities or war; changes in interest rates; currency fluctuations; significant fluctuations in the equity markets; changes in our effective tax rate; failure to achieve contract awards in connection with re-competes for present business and/or competition for new business; the risks and uncertainties associated with client interest in and purchases of new products and/or services; continued funding of U.S. government or other public sector projects, based on a change in spending patterns under the Budget Control Act of 2011 (BCA), or any legislation that amends or changes discretionary spending levels under that act; changes in budgetary priorities or in the event of a priority need for funds, such as homeland security; government contract procurement (such as bid protest, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks; the results of government audits and reviews conducted by the Defense Contract Audit Agency, the Defense Contract Management Agency, or other governmental entities with cognizant oversight; individual business decisions of our clients; paradigm shifts in technology; competitive factors such as pricing pressures and/or competition to hire and retain employees (particularly those with security clearances); market speculation regarding our continued independence; material changes in laws or regulations applicable to our businesses, particularly in connection with (i) government contracts for services, (ii) outsourcing of activities that have been performed by the government, and (iii) competition for task orders under Government Wide Acquisition Contracts (GWACs) and/or schedule contracts with the General Services Administration; the ability to successfully integrate the operations of our recent and any future acquisitions; our own ability to achieve the objectives of near term or long range business plans; and other risks described in our SEC filings.

~~Overview~~

The following discussion and analysis of our financial condition and results of operations is provided to enhance the understanding of, and should be read together with, our unaudited consolidated financial statements and the notes to those statements that appear elsewhere in this Quarterly Report on Form 10-Q.

During the six months ended December 31, 2017, 93.7 percent of our revenue was derived from contracts with U.S. government agencies versus 93.8 percent in same period in 2016. These were derived through both primeInformation Relating to Forward-Looking Statements

There are statements made herein that do not address historical facts and, ~~subcontractor relationships. We also provide services~~therefore, could be interpreted to ~~commercial customers, and through our international operations, to non-U.S. government agencies. We provide our services and solutions to our customers~~be forward-looking statements as that term is defined in the ~~following market areas:~~

~~Business Systems~~ – CACI’s business systems solutions enable efficiency, innovation, and compliance by applying focused federal domain expertise, combined with best-fit technology solutions, all integrated, implemented, and operatedPrivate Securities Litigation Reform Act of 1995. Such statements are subject to improve the organizational performance of our customers. Our solutions in financial management, human capital management, asset and materials management, and administrative management help customers improve their efficiency. CACI is a full-service federal systems integrator, implementing the foundational system solutions for both mission and business support, and providing the consulting assistance and business intelligence/analyticsrisk factors that ~~convert data into actionable information~~could cause actual results to ~~support smart decisions for over 100 federal military, intelligence, and federal civilian organizations.~~

~~Command and Control (C2)~~ – CACI develops, integrates, sustains, and operates agile and flexible C2 solutions, consisting of hardware, software, and interfaces that enhance our customers’ situational awareness, planning, execution, and assessment. CACI’s solutions enable network-centric operations to generate decision advantage in the most demanding environments.

~~Communications~~ – CACI’s broad-based solutions offer communications capabilities for soldier systems, mobile platforms, fixed facilities, and the enterprise. We leverage our expertise to design, develop, integrate, and provide field support to deliver rapidly deployable communications solutions when theybe materially different from anticipated results. These risk factors include, but are required anywhere in the world. CACI develops and integrates solutions that deliver secure multi-level unified communications from the enterprise directly to and from the tactical edge. We rapidly tailor and implement our products, services, and solutions to fit the specific missions and operating contexts of our customers.

~~Cyber Security~~ – CACI’s cyber security solutions combine years of cyber and electronic warfare experience with cutting-edge signals intelligence and radio frequency (RF) expertise. We help protect vulnerable platforms – including airplanes, cell phones, weapons systems, and unmanned aerial vehicles – from cyber attacks, and provide comprehensive cyber support to a number of federal customers and the Intelligence Community (IC). We also have a world-class cyber team that provides tailored supportnot limited to, the IC and Department of Defense (DoD). CACI’s full spectrum cyber security capabilities span platform defense and exploitation, advanced network operations, and cyber engineering of resilient systems. Our rapid research and development, prototyping, and integration capabilities enable us to combat shifting and emerging threats.

following:

•

~~Enterprise Information Technology (IT)~~ ~~– CACI’s Enterprise IT solutions enable~~ our ~~customers’ missions. Our experts secure operational IT environments~~reliance on U.S. government contracts, which includes general risk around the government contract procurement process (such as bid protest, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks;

•	significant delays or reductions in appropriations for our programs and broader changes in U.S. government funding and spending patterns;

•	legislation that amends or changes discretionary spending levels or budget priorities, such as for homeland security or to address global pandemics like COVID-19;

•	legal, regulatory, and political change from successive presidential administrations that could result in economic uncertainty;

•	changes in U.S. federal agencies, current agreements with other nations, foreign events, or any other events which may affect the global economy, including the impact of global pandemics like COVID-19;

•	the results of government audits and reviews conducted by the Defense Contract Audit Agency, the Defense Contract Management Agency, or other governmental entities with cognizant oversight;

•	competitive factors such as pricing pressures and/or competition to hire and retain employees (particularly those with security clearances);

•	failure to achieve contract awards in connection with re-competes for present business and/or competition for new business;

•

regional and national economic conditions in the ~~defense, intelligence, homeland security,~~United States and ~~civilian communities. We provide tailored, end-to-end, enterprise-wide information solutions~~globally, including but not limited to: terrorist activities or war, changes in interest rates, currency fluctuations, significant fluctuations in the equity markets, and ~~services~~market speculation regarding our continued independence;

•	our ability to meet contractual performance obligations, including technologically complex obligations dependent on factors not wholly within our control;

•	limited access to certain facilities required for us to perform our work, including during a global pandemic like COVID-19;

•	changes in tax law, the ~~design, development, integration, deployment,~~interpretation of associated rules and regulations, or any other events impacting our effective tax rate;

•	changes in technology;

•	the potential impact of the announcement or consummation of a proposed transaction and our ability to successfully integrate the operations ~~and management, sustainment, and security~~ of our ~~customers’~~recent and any future acquisitions;

•	our ability to achieve the objectives of near term or long-term business plans; and

•	the effects of health epidemics, pandemics and similar outbreaks may have material adverse effects on our business, financial position, results of operations and/or cash flows.

The above non-inclusive list of risk factors may impact the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, other risk factors include, but are not limited to, those described in “Item 1A. Risk Factors” within our Annual Report on Form 10-K. The forward-looking statements contained in this Quarterly Report on Form 10-Q are as of the date of its filing.

Overview

The Company provides Expertise and Technology to Enterprise and Mission customers in support of national security missions and government transformation.

•

Enterprise – CACI provides capabilities that enable the internal operations of a government agency. This includes business systems, business process reengineering, and enterprise information technology (IT). For example, CACI customizes, implements, and maintains commercial-off-the-shelf (COTS) and custom enterprise resource planning (ERP) systems. This includes financial, human capital, asset and material, and logistics and supply chain management systems. CACI also designs, develops, integrates, deploys and sustains enterprise-wide IT ~~solutions. Our~~systems in a variety of models. As an Amazon Web Services (AWS) Premier Consulting Partner and Microsoft Cloud Solution Provider for Government, we deliver cloud-powered solutions, ~~include cloud-powered solutions;~~ performance-based service ~~management; development operations~~management, mobility, defensive cyber and ~~mobility; defensive cyber;~~network security, end-user ~~services;~~services, and infrastructure services. We support customers in the adoption of virtualized cloud services and mobile solutions that are revolutionizing the efficiency, reliability, and cost-effectiveness of IT services. We provide managed services and technical services that enhance efficiency, improve mission uptime, and reduce costs. Our operational, analytic, consulting, and transformational services use industry leading-edge practices, standards, and innovations to enable and optimize the full lifecycle of the enterprise IT environment.

~~Health~~ – CACI supports federal civilian and military health missions to improve healthcare delivery systems, integrate electronic health records, improve health outcomes for communities, and enhance the speed and efficiency of emergency responsiveness. To improve cost efficiencies in healthcare, we use data analytics to better predict clinical, financial, and operational needs to reduce financial waste and fraud. We solve challenges in bio-surveillance, outbreak detection, disease prevention systems, health systems security, medical supply logistics and rapid disaster/emergency response. We provide capabilities that address evolving healthcare regulations and establish more efficient and interoperable healthcare delivery systems through program management, strategic planning, software engineering, operation and maintenance, and IT facility support.

~~Intelligence Services~~ – CACI’s intelligence specialists support our customers’ mission to convert data collected from all information sources into knowledge that enables event forecasting and empowers decisions. Our support is provided at the strategic and tactical levels, and consists of intelligence analysis, operations and planning, policy, doctrine, and security support. We work within the United States and internationally, providing analysis of data received from a variety of sources, and we provide direct support such as ground truth and intelligence gathering internationally.

~~Intelligence Systems and Support~~ – CACI designs, develops, integrates, deploys, and rapidly prototypes hardware- and software-enabled tools and applications which in support of data collection, processing and analysis for our IC and DoD customers. An industry leader in signals intelligence (SIGINT) collection, processing, and dissemination systems, we deliver end-to-end SIGINT capabilities, including virtualized signal processing. We also provide significant support to the federal government in foreign instrumentation signals intelligence. We employ multi-intelligence fusion analysis of vast data from multiple intelligence sources, displayed using robust visualization techniques, to support a wide range of intelligence products and services for our customers to deliver actionable information in near real-time. We design and develop software-defined radio systems capable of hosting a range of SIGINT capabilities. We also deliver quick reaction capabilities for integrating SIGINT and RF systems into platforms to meet the rising tempo of missions.

~~Investigation and Litigation Support~~ – CACI assists the U.S. government in investigating and litigating cases. We continually monitor and develop new document and data capture methodologies that increase efficiency and lower costs for our customers in high-stakes situations such as trials, investigations, hearings, and regulatory and enforcement activities. We are a proven provider with decades of experience delivering start-to-finish investigation and litigation support, leveraging technology to help customers manage documents and acquire and present evidence from pre-filing investigation through complaint, discovery, and trial; then post-trial and appeals. With our American Society of Crime Laboratory Directors/Laboratory Accreditation Board (ASCLD/LAB) International-accredited computer and audio/video forensics lab, we analyze digital evidence to support criminal and civil investigations, litigations, and security inquiries. We offer scalable cloud hosting solutions that are stable, secure, and fast, with access to industry-leading e-Discovery tools. As the premier contractor for delivering background investigations to the U.S. federal government, our fully trained and cleared investigators provide cost-efficient, high-quality personnel security investigations.

~~Logistics and Material Readiness~~ – CACI provides a full suite of logistics and material readiness solutions and professional service offerings that ensure the efficient, effective, and secure global flow and storage of materials, services, and information in support of U.S. government agencies. We provide complete product lifecycle management to make certain that provisions, equipment, and systems are ready anytime, anywhere. We deploy comprehensive supply chain solutions to enhance visibility, facilitate readiness-based sparing, and analyze readiness in near-real time. To advance the secure flow of supplies, we optimize efficiency while minimizing the time and cost of meeting readiness requirements across the enterprise. We provide our customers with workforce readiness by tailoring solutions to achieve the optimal capability of the organization and individual. We develop and manage logistics information systems as well as specialized simulation and modeling toolsets, and provide logistics engineering services.

•

~~Space Operations and Resiliency~~Mission – CACI provides ~~the advanced technology and mission support~~ capabilities required to launch, operate, and exploit systems in the space domain. Our unique solutions predict outcomes, allowing decision-makers more time and better options for executing the mission. Our advanced analytics capabilities are used across the mission space ranging fromthat enable the execution of ~~launch operations planning to the mission management of complex on orbit systems. We utilize advanced big data~~a government agency’s primary function, or “mission”. For example, we support strategic and ~~deep learning solutions to enhance the ability of our mission partners to solve their most complex problems. We also provide Engineering, Logistics~~tactical Mission customers with capabilities in areas such as command and ~~Modification solutions to globally deployed ground systems used to provide critical mission capabilities to ongoing missions as well as launch~~control, communications, intelligence collection and ~~early orbit events.~~analysis, signals intelligence (SIGINT), electronic warfare (EW), and cyber operations. CACI develops tools and offerings in an open, software-defined architecture with multi-domain and multi-mission capabilities.

•

Expertise – CACI provides Expertise to both Enterprise and Mission customers. For Enterprise customers, we deliver talent with the specific technical and functional knowledge to support internal agency operations. And for Mission customers, we deliver talent with technical and domain knowledge to support the execution of an agency’s mission.

~~Surveillance and Reconnaissance~~ – CACI integrates surveillance and reconnaissance technologies into platforms that support identification of potential targets and enhance troop safety. We develop and integrate state-of-the-art surveillance and reconnaissance sensors into air and ground systems, leveraging our mission-customized software and electronics. We provide integration, development, quick-reaction solutions and technical support services in support of military, intelligence, and homeland security missions throughout the U.S. and around the world.

•

Technology – CACI delivers Technology to both Enterprise and Mission customers. For Enterprise customers, Technology includes developing and implementing business systems, enterprise applications, and end-to-end IT systems. We also modernize infrastructure through migration to the cloud and IT or software as-a-service. For Mission customers, Technology includes developing and deploying multi-domain offerings for signals intelligence, electronic warfare, and cyber operations. We also deliver actionable intelligence through multi-source collection and analysis. And we generate unique intellectual property through advanced research and development.

Budgetary Environment

We ~~continue to~~ carefully follow federal budget, legislative and contracting trends and activities and evolve our strategies to take these into consideration. Since March 2013, the federal government has been operating under sequestration required by the BCA. Under sequestration, constraints on discretionary expenditures have taken place each of the government’s fiscal years since 2013 and, unless the BCA is amended or repealed, will continue through the government’s Fiscal Year 2021. At the end of October 2015,On August 2, 2019, the Bipartisan Budget Act of ~~2015 (BBA)~~2019 (BBA 2019) was signed into law. BBA 2019 called for defense spending, including Overseas Contingency Operations (OCO) funds, of $738 billion in government fiscal year (GFY) 2020 and $740.5 billion in GFY 2021. Both represent increases from GFY 2019 levels of $716 billion. On January 1, 2021, the $740 billion National Defense Authorization Act (NDAA) for GFY 2021 became law. While a detailed GFY 2022 budget proposal has not yet been released, the Biden administration has released a top-line proposal for GFY 2022, which proposes aggregate defense spending of $753 billion, up 1.7% from GFY 2021. We believe that bipartisan support remains for continued investment in the areas of defense and national security.

While we view the budget environment as stable and believe there is bipartisan support for continued investment in the areas of defense and national security, it is uncertain when in any particular GFY that appropriations bills will be passed. During those periods of time when appropriations bills have not been passed and signed into law, ~~which raised the discretionary spending caps under the BCA in the government’s Fiscal Years 2016 and 2017, respectively. During the government’s Fiscal Year 2017, the U.S. Government operated~~government agencies operate under a ~~series of~~ continuing ~~resolutions (CRs) until early May~~resolution (CR). Depending on their scope, duration, and ~~under omnibus~~other factors, CRs can negatively impact our business due to delays in new program starts, delays in contract award decisions, and other factors. When a CR expires, unless appropriations ~~legislation from then until September 30, 2017. Since October 1, 2017,~~bills have been passed by Congress and signed by the ~~U.S Government has been operating under~~President, or a ~~series of CRs until January 19, 2018. Between January 20~~^thnew CR is passed and 22^ndsigned into law, the government shutdown until Congress passed another CR which will expire on February 8, 2018. Before the February date, Congress must pass and the president must sign legislation that will fund federal agencies and programs either by discretionary funding through annual appropriations acts or interim CRs. When federal agencies and programs lack either appropriated or interim funding, they experience a funding gap and, under the Antideficiency Act, passed in 1870 and amended several times, they must cease operations, or shutdown, except in certain emergency situations or when the law authorizes continued activity. ~~Government shutdowns necessitate furloughs of several hundred thousand federal employees, require cessation or reduction of many government activities, and affect numerous sectors of the economy.~~ We ~~expect the impact of the above legislation and actions Congress will take on contracts and task orders we hold, and may receive, to continue throughout our FY18.~~

~~We are~~ continuously ~~reviewing~~review our operations in an attempt to identify ~~those~~ programs ~~that are~~ potentially at risk from ~~the consequences of~~ ~~sequestration~~ ~~beyond the coverage of the current legislation~~ CRs so that we can ~~make~~consider appropriate contingency ~~plans, should that~~plans.

Impact of COVID-19

As travel restrictions, social distancing advisories, and other requirements began to be ~~necessary. We are experiencing reduced funding on some~~implemented in March 2020, we instructed our workforce to begin to work remotely to the extent possible. While a majority of our ~~programs, and may experience further reductions, but we do not expect the cancellation of any of our major programs.~~

In July, the Treasury Department determined that the federal government would exceed the statutory debt limit set by law in October 2015 at the end of September 2017. The Treasury Department also determined that at that time it would have exhausted all financing options and would no longer beworkforce is able to ~~pay for all federal obligations. When~~work remotely, some employees must still travel to client or company facilities in order to work. While CACI employees were deemed part of the ~~debt limit is exceeded,~~‘critical infrastructure workforce’, ensuring their ability to work despite state travel limitations, our business still experienced some ~~federal payments~~impacts as a result of COVID-19 risk mitigation efforts. For example, in order to ~~creditors, vendors, contractors, state~~reduce personnel concentration and ~~local governments, beneficiaries,~~ensure social distancing in classified environments, shift work was implemented, which reduced the number of hours our employees could work and ~~other entities would either be delayed or limited. These delays in payments would, in effect, be borrowings from contractors such as us,~~we could bill customers on certain programs. The Coronavirus Aid, Relief, and would create a backlog of unpaid bills until the government collects more revenue or other sources of cash than its outlays. In some cases, delaying federal payments incurs interest penalties under some statutes such as the Prompt PaymentEconomic Security (CARES) Act, which ~~directs the government to pay interest penalties to contractors if it does not pay them~~was passed by Congress and signed by the President on March 27, 2020, provided a mechanism to bill hours where our employees are ready and able to work but unable to access required ~~payment date. Were there~~facilities due to ~~be a delay in paying for all federal obligations, it is expected that this would result in significant economic and financial consequences that may have a lasting impact on federal programs and~~COVID-19. This support was subsequently extended through September 30, 2021 as part of the ~~federal government’s ability to borrow in the future. To mitigate the possibility~~American Rescue Plan Act of ~~these events from happening, on September 8~~^th ~~Congress passed and the president~~2021, which was signed into law ~~legislation that suspended~~on March 11, 2021. We continue to work with our customers to implement the ~~debt limit until December 8, 2017. Once that suspension lapsed, the Secretary~~related provisions of the ~~Treasury invoked authorities~~CARES Act, as well as appropriate risk mitigation efforts and alternative work arrangements.

Market Environment

Across our addressable market, we provide expertise and technology to ~~employ extraordinary measures, which are estimated to last until sometime in late March or early April 2018. The Treasury Secretary has asked some congressional leaders to act~~government enterprise and mission customers. Based on the ~~debt limit before~~analysis of an independent market consultant retained by the ~~end~~Company, we believe that the total addressable market for our offerings is approximately $230 billion. Our addressable market is expected to continue to grow over the next several years. Approximately 70 percent of ~~February 2018. We expect that Congress will address~~our revenue comes from defense-related customers, including those in the ~~debt limit issue prior to that date.~~Intelligence Community (IC), with additional revenue coming from non-defense IC, homeland security, and other federal civilian customers.

We ~~also~~ continue to ~~face some uncertainties due~~align the Company’s capabilities with well-funded budget priorities and took steps to maintain a competitive cost structure in line with our expectations of future business opportunities. In light of these actions, as well as the ~~current general~~budgetary environment discussed above, we believe we are well positioned to continue to win new business ~~environment, and we~~in our large addressable market. We believe that the following trends will influence the USG’s spending in our addressable market:

•	A stable USG budget environment, particularly in defense and intelligence-related areas;

•	A shift in focus from readiness toward increased capabilities, effectiveness, and responsiveness;

•	Increased USG interest in faster contracting and acquisition processes;

•	Increased focus on cyber, space, and the electromagnetic spectrum as key domains for National Security;

•	Continued focus on counterterrorism, counterintelligence, and counter proliferation as key U.S. security concerns;

•	Balanced focus on enterprise cost reductions through efficiency, with increased spend on IT infrastructure modernization and enhancements to cyber security protections; and

•	Increased investments in advanced technologies (e.g., Artificial Intelligence, 5G).

We believe that our customers' use of lowest price/technically acceptable (LPTA) procurements, which contributed to pricing pressures in prior years, has moderated, though price still remains an important factor in procurements. We also continue to see protests of major contract awards and delays in ~~government~~USG procurement activities. In addition, many of our federal government contracts require us to employ personnel with security clearances, specific levels of education and specific past work experience. Depending on the level of clearance, security clearances can be difficult and time-consuming to obtain and competition for skilled personnel in the information technology services industry is intense. In addition, a shift of expenditures away from programs that we support could cause federal government agencies to reduce their purchases under contracts, to exercise their right to terminate contracts at any time without penalty, or to decide not to exercise options to renew contracts. Additional factors that could affect USG spending in our ~~federal government contracting business~~addressable market include ~~an increase~~changes in set-asides for small businesses, changes in budget priorities as a result of the COVID-19 pandemic, and budgetary priorities limiting or delaying federal government spending in general.

Results of Operations for the Three Months Ended ~~December~~March 31, ~~2017~~2021 and ~~2016~~2020

The following table provides our results of operations:

	Dollar Amount				Percentage of Revenue
	Three Months Ended				Three Months Ended
	March 31,				March 31,						Change
(dollars in thousands)	2021		2020		2021			2020			$			%
Revenue	$	1,551,918	$	1,465,600		100.0	%		100.0	%	$	86,318			5.9	%
Operating costs and expenses:
Costs of revenue		1,000,235		953,630		64.4			65.1			46,605			4.9
Indirect costs and selling expenses		369,015		371,135		23.8			25.2			(2,120	)		(0.6	)
Depreciation and amortization		31,230		27,159		2.0			1.9			4,071			15.0
Total operating costs and expenses		1,400,480		1,351,924		90.2			92.2			48,556			3.6
Income from operations		151,438		113,676		9.8			7.8			37,762			33.2
Interest expense and other, net		8,954		14,087		0.6			1.0			(5,133	)		(36.4	)
Income before income taxes		142,484		99,589		9.2			6.8			42,895			43.1
Income tax expense		22,140		19,012		1.4			1.3			3,128			16.5
Net income	$	120,344	$	80,577		7.8	%		5.5	%	$	39,767			49.4	%

Revenue. For the three months ended March 31, 2021, total revenue was $1.6 billion, 5.9 percent greater than last year with 5.3 percent from organic growth. The remaining growth in revenue was attributable to acquired revenues. Out of our primary customer groups, Department of Defense and Federal Civilian revenue increased by $36.8 million (2.8 percent organic) and $44.5 million (12.3 percent organic), respectively, compared with the same period a year ago.

The following table ~~below sets forth~~summarizes revenue by customer type with related percentages of ~~total~~ revenue for the three months ended ~~December~~March 31, ~~2017~~2021 and ~~2016,~~2020, respectively:

															Dollar Amount				Percentage of Revenue
															Three Months Ended				Three Months Ended
	Three Months Ended December 31,								Change						March 31,				March 31,						Change
(dollars in thousands)	2017				2016				$			%			2021		2020		2021			2020			$		%
Department of Defense	$	720,239	66.2	%	$	684,673	64.8	%	$	35,566			5.2	%	$	1,074,056	$	1,037,242		69.2	%		70.7	%	$	36,814		3.5	%
Federal civilian agencies		296,230	27.2			308,053	29.1			(11,823	)		(3.8	)
Federal Civilian Agencies																405,855		361,320		26.2			24.7			44,535		12.3
Commercial and other		71,391	6.6			64,804	6.1			6,587			10.2			72,007		67,038		4.6			4.6			4,969		7.4
Total	$	1,087,860	100.0	%	$	1,057,530	100.0	%	$	30,330			2.9	%	$	1,551,918	$	1,465,600		100.0	%		100.0	%	$	86,318		5.9	%

•	DoD revenue includes services and products provided to the U.S. Army, our single largest customer, where our services focus on supporting readiness, tactical military intelligence, and communications systems. DoD revenue also includes contracts with the U.S. Navy and other DoD agencies.

•	Federal civilian agencies’ revenue primarily includes services and products provided to non-DoD agencies and departments of the U.S. federal government, including intelligence agencies and Departments of Justice, Agriculture, Health and Human Services, and State.

•	Commercial and other revenue primarily includes services and products provided to U.S. state and local governments, commercial customers, and certain foreign governments and agencies through our International reportable segment.

Costs of Revenue. For the three months ended ~~December~~March 31, ~~2017, total~~2021, costs of revenue increased ~~by 2.9~~$46.6 million or 4.9 percent, ~~or $30.3 million,~~ compared towith the same period a year ago. ~~This~~The increase is primarily related to direct and subcontractor labor costs from organic growth inon existing programs and acquired contracts and higher other direct costs against our revenue ~~resulted primarily from new business~~arrangements, partially offset by ~~contract completions.~~

~~DoD~~a reduction in travel related expenses. As a percentage of revenue, ~~increased 5.2~~costs of revenue were 64.4 percent ~~or $35.6 million,~~and 65.1 percent for the three months ended ~~December~~March 31, ~~2017, as compared to~~2021 and 2020, respectively. The improvement in margins against the ~~same~~comparative period ~~a year ago~~is primarily due to ~~new intelligence services~~strong program performance and ~~satellite network support business. DoD~~our ability to deliver on certain fixed-price contracts with less costs than originally estimated. In addition, the Company’s margins increased from a higher percentage of Technology revenue ~~includes services provided to~~as compared against the ~~U.S. Army, our largest customer, where our services focus on supporting readiness, tactical military intelligence,~~prior period.

Indirect Costs and ~~communications systems. DoD revenue also includes work with the U.S. Navy and other DoD agencies across all of our major service offerings.~~

~~Revenue from federal civilian agencies decreased 3.8 percent, or $11.8 million, for~~Selling Expenses. For the three months ended ~~December~~March 31, ~~2017, as~~2021, indirect costs and selling expenses decreased $2.1 million or 0.6 percent, compared towith the same period a year ago. ~~This~~The decrease ~~was~~is primarily ~~attributable~~related to reduced ~~material sales~~labor-related expenses, including lower incentive compensation expense and ~~customer requirements~~fringe benefits, and reduced indirect travel, partially offset by ~~growth~~increases in ~~security services support. Federal civilian agency revenue also includes services provided to non-DoD national intelligence agencies.~~

~~Commercial~~bid and proposal (B&P) costs and other ~~revenue increased 10.2 percent, or $6.6 million for~~professional services.

Depreciation and Amortization. For the three months ended ~~December~~March 31, ~~2017, as~~2021, depreciation and amortization expense increased $4.1 million or 15.0 percent, compared towith the same period a year ago. ~~This~~The increase ~~was~~is primarily attributable to intangible amortization from recent acquisitions and increased ~~new managed services business~~depreciation from ~~our international acquisitions. Commercial revenue~~the Company’s higher average property and ~~other is derived from both international~~equipment balances.

Interest Expense and ~~domestic operations. Of the total commercial and other revenue, international operations accounted for 57.5 percent, or $41.0 million for~~Other, Net. For the three months ended ~~December~~March 31, 2017 as compared to 51.7 percent or $33.5 million over the same period a year ago due to growth of managed services business from acquisitions. Domestic operations accounted for 42.5 percent or $30.4 million as compared to 48.3 percent or $31.3 million over those same periods a year ago, due to reduced technology support on state and local contracts.

~~Income from Operations. The following table sets forth the relative percentage that certain items of expense and earnings bear to revenue for the three months ended December 31, 2017 and 2016, respectively.~~

Dollar Amount

Percentage of Revenue

Three Months Ended

Three Months Ended

December 31,

December 31,

Change

(dollars in thousands)

2017

2016

2017

2016

$

%

Revenue

$
1,087,860

$
1,057,530

100.0
%

100.0
%

$
30,330

2.9
%
Costs of revenue

Direct costs

727,160

705,321

66.8

66.7

21,839

3.1

Indirect costs and selling expenses

254,180

253,822

23.4

24.0

358

0.1

Depreciation and amortization

18,258

18,132

1.7

1.7

126

0.7

Total costs of revenue

999,598

977,275

91.9

92.4

22,323

2.3

Income from operations

88,262

80,255

8.1

7.6

8,007

10.0

Interest expense and other, net

10,956

12,325

1.0

1.2

(1,369
)

(11.1
)
Income before income taxes

77,306

67,930

7.1

6.4

9,376

13.8

Income tax expense (benefit)

(65,489
)

25,510

(6.0
)

2.4

(90,999
)

(365.7
)
Net income

$
142,795

$
42,420

13.1
%

4.0
%

$
100,375

236.6
%

Income from operations for the three months ended December 31, 2017 was $88.3 million. This was an increase of $8.0 million, or 10.0 percent, from income from operations of $80.3 million for the three months ended December 31, 2016. Our operating margin of 8.1 percent for the period ended December 31, 2017 increased from 7.6 percent during the period ended December 31, 2016. This increase is due to lower indirect costs and higher margin work on new business.

As a percentage of revenue, direct costs were 66.8 percent and 66.7 percent for the three months ended December 31, 2017 and 2016, respectively. Direct costs include direct labor and ODCs, which include, among other costs, subcontracted labor and material purchases.

Indirect costs and selling expenses include fringe benefits (attributable to both direct and indirect labor), marketing and bid and proposal costs, indirect labor, and other discretionary expenses. Indirect costs and selling expenses remained at the same percentages, increasing $0.4 million or 0.1 percent comparing the three months ended December 31, 2017 to the three months ended December 31, 2016.

Depreciation and amortization expense increased $0.1 million or 0.7 percent for the three months ended December 31, 2017 as compared to the same period a year ago. This change was primarily due to an increase in depreciation, offset by a decrease in amortization due to the run-off of amortization expense related to prior acquisitions.

~~Interest~~2021, interest expense and other, net decreased ~~$1.4~~$5.1 million or ~~11.1~~36.4 percent, ~~during the three months ended December 31, 2017 as~~ compared towith the same period a year ago. The decrease in interest expense is primarily ~~relates~~attributable to lower average outstanding debt ~~balances.~~balances on the Company’s Credit Facility and lower interest rates.

~~The~~Income Tax Expense. For the three months ended March 31, 2021, the effective income tax rate ~~for the three months ended December 31, 2017 generated a benefit of $65.5 million resulting in a decreased~~was 15.5 percent compared to ~~(84.7) percent from 37.6~~19.1 percent for the same period ~~last year.~~a year ago. The decrease in the effective income tax rate ~~decreased~~in the current period was primarily due to ~~certain impacts of the TCJA discussed~~an increase in ~~Note 10. The effective tax rate was also favorably affected by a benefit from the~~ research and development credits for past and current year tax ~~credit and gains from the change in value of assets invested in corporate owned life insurance (COLI) policies.~~
filings.

Results of Operations for the ~~Six~~Nine Months Ended ~~December~~March 31, ~~2017~~2021 and ~~2016~~2020

The following table provides our results of operations:

	Dollar Amount				Percentage of Revenue
	Nine Months Ended				Nine Months Ended
	March 31,				March 31,						Change
(dollars in thousands)	2021		2020		2021			2020			$			%
Revenue	$	4,480,135	$	4,224,461		100.0	%		100.0	%	$	255,674			6.1	%
Operating costs and expenses:
Costs of revenue		2,887,300		2,737,378		64.5			64.8			149,922			5.5
Indirect costs and selling expenses		1,071,826		1,081,175		23.9			25.6			(9,349	)		(0.9	)
Depreciation and amortization		93,608		81,888		2.1			1.9			11,720			14.3
Total operating costs and expenses		4,052,734		3,900,441		90.5			92.3			152,293			3.9
Income from operations		427,401		324,020		9.5			7.7			103,381			31.9
Interest expense and other, net		28,021		45,612		0.6			1.1			(17,591	)		(38.6	)
Income before income taxes		399,380		278,408		8.9			6.6			120,972			43.5
Income tax expense		78,914		50,659		1.7			1.2			28,255			55.8
Net income	$	320,466	$	227,749		7.2	%		5.4	%	$	92,717			40.7	%

Revenue. For the nine months ended March 31, 2021, total revenue was $4.5 billion, 6.1 percent greater than last year with 5.2 percent from organic growth. The remaining growth in revenue was attributable to acquired revenues. Out of our primary customer groups, Department of Defense and Federal Civilian revenue increased by $125.9 million (3.3 percent organic) and $118.7 million (11.0 percent organic), respectively, compared with the same period a year ago.

The following table ~~below sets forth~~summarizes revenue by customer type with related percentages of ~~total~~ revenue for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021 and ~~2016,~~2020, respectively:

															Dollar Amount				Percentage of Revenue
															Nine Months Ended				Nine Months Ended
	Six Months Ended December 31,								Change						March 31,				March 31,						Change
(dollars in thousands)	2017				2016				$			%			2021		2020		2021			2020			$		%
Department of Defense	$	1,434,292	66.0	%	$	1,376,876	64.6	%	$	57,416			4.2	%	$	3,091,126	$	2,965,263		69.0	%		70.2	%	$	125,863		4.2	%
Federal civilian agencies		602,766	27.7			621,846	29.2			(19,080	)		(3.1	)
Federal Civilian Agencies																1,186,068		1,067,342		26.5			25.3			118,726		11.1
Commercial and other		136,616	6.3			132,088	6.2			4,528			3.4			202,941		191,856		4.5			4.5			11,085		5.8
Total	$	2,173,674	100.0	%	$	2,130,810	100.0	%	$	42,864			2.0	%	$	4,480,135	$	4,224,461		100.0	%		100.0	%	$	255,674		6.1	%

•	DoD revenue includes services and products provided to the U.S. Army, our single largest customer, where our services focus on supporting readiness, tactical military intelligence, and communications systems. DoD revenue also includes contracts with the U.S. Navy and other DoD agencies.

•	Federal civilian agencies’ revenue primarily includes services and products provided to non-DoD agencies and departments of the U.S. federal government, including intelligence agencies and Departments of Justice, Agriculture, Health and Human Services, and State.

•	Commercial and other revenue primarily includes services and products provided to U.S. state and local governments, commercial customers, and certain foreign governments and agencies through our International reportable segment.

Costs of Revenue. For the ~~six~~nine months ended ~~December~~March 31, ~~2017, total~~2021, costs of revenue increased ~~by 2.0~~$149.9 million or 5.5 percent, ~~or $42.9 million, over~~compared with the same period a year ago. ~~This~~The increase is primarily related to direct and subcontractor labor costs from organic growth inon existing programs and acquired contracts and higher other direct costs against our revenue ~~resulted primarily from new business~~arrangements, partially offset by ~~contract completions.~~

~~DoD~~a reduction in travel related expenses. As a percentage of revenue, ~~increased 4.2~~costs of revenue were 64.5 percent ~~or $57.4 million,~~and 64.8 percent for the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2021 and 2020, respectively. The improvement in margins against the comparative period is primarily due to strong program performance and our ability to deliver on certain fixed-price contracts with less costs than originally estimated. In addition, the Company’s margins increased from a higher percentage of Technology revenue as compared toagainst the prior period.

Indirect Costs and Selling Expenses. For the nine months ended March 31, 2021, indirect costs and selling expenses decreased $9.3 million or 0.9 percent, compared with the same period a year ago. ~~This growth was~~The decrease is primarily ~~from new business in intelligence~~related to reduced B&P costs, indirect travel, and technology support services. DoD revenue includes services provided to the U.S. Army, our largest customer, where our services focus on supporting readiness, tactical military intelligence, and communications systems. DoD revenue also includes work with the U.S. Navyincentive compensation, partially offset by increased indirect labor and other ~~DoD agencies across all of our major service offerings.~~professional services.

~~Revenue from federal civilian agencies decreased 3.1 percent, or $19.1 million, for~~Depreciation and Amortization. For the ~~six~~nine months ended ~~December~~March 31, ~~2017, as~~2021, depreciation and amortization expense increased $11.7 million or 14.3 percent, compared towith the same period a year ago. ~~This decrease was~~The increase is primarily attributable to ~~reduced material sales~~intangible amortization from recent acquisitions and ~~customer requirements offset by growth in security services support. Federal civilian agency revenue also includes services provided to non-DoD national intelligence agencies.~~increased depreciation from the Company’s higher average property and equipment balances.

~~Commercial~~Interest Expense and other revenue increased 3.4 percent, or $4.5 million primarily from our international and domestic technology services and cyber security products. This increase was primarily attributable to increased product orders and managed services revenue from acquisitions within our international operations. Commercial and other revenue is derived from both international and domestic operations. OfOther, Net. For the ~~total commercial and other revenue, international operations accounted for 55.6 percent, or $76.0 million for the six~~nine months ended ~~December~~March 31, 2017 as compared to 51.4 percent, or $67.9 million over the same period a year ago. Domestic operations accounted for 44.4 percent, or $60.6 million as compared to 48.6 percent, or $64.2 million over the same period a year ago.

~~Income from Operations. The following table sets forth the relative percentage that certain items of expense and earnings bear to revenue for the six months ended December 31, 2017 and 2016, respectively.~~

Dollar Amount

Percentage of Revenue

Six Months Ended

Six Months Ended

December 31,

December 31,

Change

(dollars in thousands)

2017

2016

2017

2016

$

%

Revenue

$
2,173,674

$
2,130,810

100.0
%

100.0
%

$
42,864

2.0
%
Costs of revenue

Direct costs

1,466,838

1,433,542

67.5

67.3

33,296

2.3

Indirect costs and selling expenses

515,424

511,160

23.7

24.0

4,264

0.8

Depreciation and amortization

35,846

36,195

1.6

1.7

(349
)

(1.0
)
Total costs of revenue

2,018,108

1,980,897

92.8

93.0

37,211

1.9

Income from operations

155,566

149,913

7.2

7.0

5,653

3.8

Interest expense and other, net

22,203

24,814

1.0

1.1

(2,611
)

(10.5
)
Income before income taxes

133,363

125,099

6.2

5.9

8,264

6.6

Income tax expense (benefit)

(51,478
)

46,016

(2.3
)

2.2

(97,494
)

(211.9
)
Net income

$
184,841

$
79,083

8.5
%

3.7
%

$
105,758

133.7
%

Income from operations for the six months ended December 31, 2017 was $155.6 million. This was an increase of $5.7 million, or 3.8 percent, from income from operations of $149.9 million for the six months ended December 31, 2016. Our operating margin of 7.2 percent for the period ended December 31, 2017 increased from 7.0 percent during the period ended December 31, 2016. This increase was due to lower indirect costs and higher margin work on new business.

As a percentage of revenue, direct costs were 67.5 percent and 67.3 percent for the six months ended December 31, 2017 and 2016, respectively. Direct costs include direct labor and ODCs, which include, among other costs, subcontracted labor and material purchases.

Indirect costs and selling expenses include fringe benefits (attributable to both direct and indirect labor), marketing and bid and proposal costs (B&P), indirect labor, and other discretionary expenses. Indirect costs and selling expenses increased less than 1.0 percent or $4.3 million comparing the six months ended December 31, 2017 to the six months ended December 31, 2016. This increase was driven by increased fringe benefits relating to insurance costs offset by cost savings initiatives and lower B&P.

Depreciation and amortization expense decreased $0.3 million or 1.0 percent for the six months ended December 31, 2017 as compared to the same period a year ago. This decrease was the result of the run-off of amortization expense related to prior acquisitions, partially offset by increased depreciation expense.

~~Interest~~2021, interest expense and other, net decreased ~~$2.6~~$17.6 million or ~~10.5~~38.6 percent, ~~during the six months ended December 31, 2017 as~~ compared towith the same period a year ago. The decrease in interest expense is primarily ~~relates~~attributable to lower average outstanding debt ~~balances.~~balances on the Company’s Credit Facility and lower interest rates.

~~The~~Income Tax Expense. For the nine months ended March 31, 2021, the effective income tax rate ~~for the six months ended December 31, 2017 generated a benefit of $51.5 million resulting in a decreased~~was 19.8 percent compared to ~~(38.6) percent from 36.8~~18.2 percent for the same period ~~last year.~~a year ago. The increase in the effective income tax rate ~~decreased~~in the current period was primarily due to ~~certain impacts~~a decrease in excess tax benefits related to employee stock-based compensation, partially offset byan increase in research and development credits for past and current year tax filings.

Contract Backlog

The Company’s backlog represents total value on our existing contracts that has the potential to be recognized into revenue as work is performed. The Company includes unexercised option years in its backlog amount and excludes task orders that may be issued underneath a multiple award IDIQ vehicle until such task orders are issued.

The Company’s backlog as of period end is either funded or unfunded:

•	Funded backlog represents contract value appropriated by a customer that is expected to be recognized into revenue.

•	Unfunded backlog represents the sum of unappropriated contract value on executed contracts and unexercised option years that is expected to be recognized into revenue.

As of March 31, 2021, the ~~TCJA,~~Company had total backlog of $22.3 billion, compared with $19.9 billion a year ago, an increase of 12.3 percent. Contract awards were $1.6 billion for the three months ended March 31, 2021. Funded backlog as of March 31, 2021 was $3.0 billion, compared with $2.96 billion a year ago, an increase of 1.3 percent. The total backlog consists of remaining performance obligations (see Note 6) plus unexercised options.

There is no assurance that all funded or potential contract value will result in revenue being recognized. The Company continues to monitor our backlog as it is subject to change from execution of new contracts, contract modifications or extensions, government deobligations, or early terminations. Based on this analysis, an adjustment to the period end balance may be required.

Liquidity and Capital Resources

To date, COVID-19 has not had a significant impact on our liquidity, cash flows or capital resources. However, the continued spread of COVID-19 has led to disruption and volatility in the global capital markets, which, depending on future developments, could impact our capital resources and liquidity in the future.

Existing cash and cash equivalents and cash generated by operations are our primary sources of liquidity, as well as sales of receivables under our MARPA (as defined and discussed in Note ~~10. The effective tax rate was also favorably affected by excess tax benefits from employee share-based payment awards under ASU 2016-09, a benefit from the research~~10) and ~~development tax credit, and gains from the change in value of assets invested in corporate owned life insurance (COLI) policies.~~

~~Liquidity and Capital Resources~~

~~As of December 31, 2017, the aggregate amount of committed financing~~available borrowings under our Credit Facility ~~was $1,981.3~~(as defined in Note 11) described below.

The Company has a $2,438.4 million Credit Facility, which ~~included~~consists of an ~~$850.0~~$1,500.0 million ~~revolving credit facility,~~Revolving Facility and a ~~$1,131.3~~$938.4 million ~~term loan. The Credit Facility matures on June 1, 2020.~~

Term Loan. The Revolving Facility is a secured facility that permits continuously renewable borrowings and has subfacilities of $100.0 million for same-day swing line borrowings and $25.0 million for stand-by letters of credit. As of ~~December~~March 31, ~~2017,~~2021, we had ~~$210.0~~$1,020.0 million outstanding under the Revolving Facility and no borrowings on the swing ~~line and an outstanding letter of credit of $0.4 million.~~line.

The Term Loan is a five-year secured facility under which principal payments are due in quarterly installments of ~~$13.5~~$11.7 million ~~through June 30, 2018 and $27.0 million thereafter~~ until the balance is due in full on June ~~1, 2020.~~30, 2024. As of ~~December~~March 31, ~~2017, $951.9~~2021, $809.4 million was outstanding under the Term Loan.

At any time and so long as no default has occurred, we have the right to increase the Term Loan or Revolving Facility in an aggregate principal amount of up to the greater of $400.0 million or an amount subject to 2.75 times secured leverage, calculated assuming the Revolving Facility is fully drawn, with applicable lender approvals.

The interest rates applicable to loans under the Credit Facility are floating interest rates that, at our option, equal a base rate or a Eurodollar rate plus, in each case, an applicable margin based upon our consolidated total leverage ratio.

The Credit Facility requires us to comply with certain financial covenants, including a maximum ~~senior secured leverage ratio, a maximum~~ total leverage ratio and a minimum ~~fixed charge~~interest coverage ratio. The Credit Facility also includes customary negative covenants restricting or limiting our ability to guarantee or incur additional indebtedness, grant liens or other security interests to third parties, make loans or investments, transfer assets, declare dividends or redeem or repurchase capital stock or make other distributions, prepay subordinated indebtedness and engage in mergers, acquisitions or other business combinations, in each case except as expressly permitted under the Credit Facility. Since the inception of the Credit Facility, we have been in compliance with all of the financial covenants. A majority of our assets serve as collateral under the Credit Facility.

~~Cash~~A summary of the change in cash and cash equivalents ~~were $56.3 million and $65.5 million as of December 31, 2017 and June 30, 2017, respectively.~~ is presented below:

	Nine Months Ended
	March 31,
	2021			2020
Net cash provided by operating activities	$	500,516		$	357,825
Net cash used in investing activities		(403,981	)		(156,768	)
Net cash used in financing activities		(103,546	)		(194,627	)
Effect of exchange rate changes on cash and cash equivalents		5,366			(1,302	)
Net increase (decrease) in cash and cash equivalents	$	(1,645	)	$	5,128

Our operating cash flow was ~~$155.8~~$500.5 million for the ~~six~~nine months ended ~~December~~March 31, ~~2017 compared to $135.4~~2021. This represents an increase of $142.7 million or 39.9 percent, from our operating cash flows of $357.8 million for the ~~same period a year ago.~~nine months ended March 31, 2020. The year-over-year increase is primarily ~~due~~relates to increases of $92.7 million in FY2021 net income, $52.5 million related to deferrals of employer related social security taxes under the ~~timing~~CARES Act, and $8.6 million of ~~vendor payables and receivable collections. Days-sales outstanding (DSO) was 61 days at December 31, 2017, compared to 60 days at December 31, 2016 due to normal fluctuations~~other net favorable working capital changes, partially offset by $11.1 million decrease in ~~collections.~~net cash received from the Company's MARPA.

Cash used in investing activities was ~~$67.8~~$404.0 million and ~~$8.1~~$156.8 million during the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021 and ~~2016,~~2020, respectively. During the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021, we paid ~~$45.6~~$355.5 million for business acquisitions, as compared to ~~$5.6~~$102.4 million during the same period a year ago. ~~For the six months ended December 31, 2016 we received a net working capital refund from our NSS acquisition~~Capital expenditures of ~~$13.6 million. We also received $4.7~~$51.3 million ~~of capital contributions relating to our joint ventures. We had no similar proceeds~~and $54.3 million during the ~~six~~first nine months ~~ended December 31, 2017.~~ of FY2021 and FY2020, respectively, accounted for the remaining funds used in investing activities.

Cash ~~flows~~ used in financing activities ~~were $98.3~~was $103.5 million and ~~$102.1~~$194.6 million during the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021 and ~~December 31, 2016,~~2020, respectively. During the ~~six~~nine months ended ~~December~~March 31, ~~2017 and December 31, 2016~~2021, we had net ~~payments~~borrowings under our ~~credit facility~~Credit Facility of ~~$82.0~~$415.8 million ~~and $98.5~~compared to net repayments of $155.2 million ~~respectively.~~during the same period a year ago. During FY2021, our net borrowings were primarily used to finance the $500.0 million repurchase of our common stock. During the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021 and ~~December~~March 31, ~~2016~~2020, we also used cash ~~within financing activities~~ of ~~$12.7~~$19.6 million and ~~$3.6~~$30.6 million, respectively, to pay taxes on equity transactions.

We believe that the combination of internally generated funds, available bank borrowings and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund on-going operations, customary capital expenditures, debt service obligations, share repurchases, and other working capital requirements over the next twelve months. We may in the future seek to borrow additional amounts under a long-term debt security. Over the longer term, our ability to generate sufficient cash flows from operations necessary to fulfill the obligations under the Credit Facility and any other indebtedness we may incur will depend on our future financial performance which will be affected by many factors outside of our control, including worldwide economic and financial market conditions.

~~The TCJA was enacted on December 22, 2017. Among other things, the TCJA reduces the U.S. federal corporate tax rate from 35 percent~~Critical Accounting Policies

There have been no significant changes to 21 percent, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, creates new taxes on certain foreign-sourced earnings and changes or limits certain tax deductions. The Company expects that these changes will have a net favorable impact on the Company’s future after-tax earnings, primarily due to the lower federal tax rate, however, we have not fully analyzed the potential benefit the TCJA could have on our free cash flow. The Company will continue to assess the expected impacts of the TCJA on our consolidated financial statements.

~~Off-Balance Sheet Arrangements and Contractual Obligations~~

We use off-balance sheet arrangements to finance the lease of operating facilities. We have financed the use of all of our current office and warehouse facilities through operating leases. Operating leases are also used to finance the use of computers, servers, phone systems, motor vehicles in the U.K., and to a lesser extent, other fixed assets, suchcritical accounting policies as furnishings, that are obtained in connection with business acquisitions. We generally assume the lease rights and obligations of companies acquired in business combinations and continue financing equipment under operating leases until the end of the lease term following the acquisition date. We generally do not finance capital expenditures with operating leases, but instead finance such purchases with available cash balances. For additional information regarding our operating lease commitments, see Note 14 in the Notes to Consolidated Financial Statements containeddisclosed in our Annual Report on Form 10-K for the year ended June 30, 2017. The Credit Facility provides for stand-by letters of credit aggregating up to $25.0 million that reduce the funds available under the Revolving Facility when issued. As of December 31, 2017, we had an outstanding letter of credit of $0.4 million. 2020.

Off-Balance Sheet Arrangements and Contractual Obligations

We have no ~~other~~ material off-balance sheet financing arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The interest rates on both the Term Loan and the Revolving Facility are affected by changes in market interest rates. We have the ability to manage these fluctuations in part through interest rate hedging alternatives in the form of interest rate swaps. We have entered into floating-to-fixed interest rate swap agreements for an aggregate notional amount of $800.0 million related to a portion of our floating rate indebtedness. All remaining balances under our Term Loan, and any additional amounts that may be borrowed under our Revolving Facility, are currently subject to interest rate fluctuations. With every one percent fluctuation in the applicable interest rates, interest expense on our variable rate debt for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021 would have fluctuated by approximately ~~$2.1~~$4.9 million.

Approximately ~~3.5~~2.9 percent and ~~3.2~~3.0 percent of our total revenue in ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021 and ~~2016,~~2020, respectively, was derived from our international operations headquartered in the U.K. Our practice in our international operations is to negotiate contracts in the same currency in which the predominant expenses are incurred, thereby mitigating the exposure to foreign currency exchange fluctuations. It is not possible to accomplish this in all cases; thus, there is some risk that profits will be affected by foreign currency exchange fluctuations. As of ~~December~~March 31, ~~2017,~~2021, we held a combination of euros and pounds sterling in the U.K. and in the Netherlands equivalent to approximately ~~$26.6~~$57.3 million. This allows us to better utilize our cash resources on behalf of our foreign subsidiaries, thereby mitigating foreign currency conversion risks.

Item 4. Controls and Procedures

As of the end of the ~~three month~~three-month period covered by this report, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. The effectiveness of a system of disclosure controls and procedures is subject to various inherent limitations, including cost limitation, judgments used in decision making, assumptions about the likelihood of future events, the soundness of internal controls, and fraud. Due to such inherent limitations, there can be only reasonable, and not absolute, assurance that any system of disclosure controls and procedures will be successful in preventing all errors or fraud, or in making all material information known in a timely manner to appropriate levels of management.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were operating and effective at ~~December~~March 31, ~~2017.~~2021.

The Company reports that no changes in its internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended ~~December~~March 31, ~~2017.~~2021.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

Al Shimari, et al. v. L-3 Services, Inc. et al.

Reference is made to Part I, Item 3, Legal Proceedings in the Registrant’s Annual Report on Form 10-K for the year ended June 30, ~~2017~~2020 for the most recently filed information concerning the suit filed in the United States District Court for the Southern District of Ohio. The lawsuit names CACI International Inc, CACI Premier Technology, Inc. and former CACI employee Timothy Dugan as Defendants, along with L-3 Services, Inc. Plaintiffs seek, inter alia, compensatory damages, punitive damages, and attorney’s fees.

~~Since the filing of Registrant’s report described above, on remand,~~In 2015, Defendant CACI Premier Technology, Inc. moved to dismiss Plaintiffs’ claims based upon the political question doctrine. On June 18, 2015, the Court issued an Order granting Defendant CACI Premier Technology, Inc.’s motion to dismiss, and on June 26, 2015 entered a final judgment in favor of Defendant CACI Premier Technology, Inc.

On July 23, 2015, Plaintiffs filed a Notice of Appeal of the district court’s June 2015 decision. On October 21, 2016, the Court of Appeals vacated and remanded the District Court’s judgment with instructions for the District Court to make further determinations regarding the political question doctrine. The District Court conducted an initial status conference on December 16, 2016. On June 9, 2017, the District Court dismissed Plaintiff Rashid without prejudice from the action based upon his inability to participate. On July 19, 2017, CACI Premier Technology, Inc. filed a motion to dismiss the action on numerous legal grounds. The Court held a hearing on that motion on September 22, 2017, and denied the motion pending issuance of a written decision. On January 17, 2018, CACI filed a third-party complaint naming the United States and John Does 1-60, asserting claims for contribution, indemnification, exoneration and breach of contract in the event that CACI PTPremier Technology, Inc. is held liable to Plaintiffs, as Plaintiffs are seeking to hold CACI PTPremier Technology, Inc. liable on a co-conspirator theory and a theory of aiding and abetting. On April 13, 2018, the Court held a hearing on the United States’ motion to dismiss and took the matter under advisement. The Court subsequently stayed the part of the action against John Does 1-60.

On April 13, 2018, the Plaintiffs filed a motion to reinstate Plaintiff Rashid, which CACI opposed. On April 20, 2018, the District Court granted that motion subject to Plaintiff Rashid appearing for a deposition. On May 21, 2018, CACI filed a motion to dismiss for lack of subject matter jurisdiction based on a recent Supreme Court decision. On June 25, 2018, the District Court denied that motion. On October 25, 2018, the District Court conducted a pre-trial conference at which the District Court addressed remaining discovery matters, the scheduling for dispositive motions that CACI intends to file, and set a date of April 23, 2019 for trial, if needed, to start. On December 20, 2018, CACI filed a motion for summary judgment and a motion to dismiss based on the state secrets privilege. On January 3, 2019, CACI filed a motion to dismiss for lack of subject matter jurisdiction. On February 15, 2019, the United States filed a motion for summary judgment with respect to CACI’s third-party complaint. On February 27, 2019, the District Court denied CACI’s motion for summary judgment and motions to dismiss for lack of subject matter jurisdiction and on the state secrets privilege. On February 28, 2019, CACI filed a motion seeking dismissal on grounds of derivative sovereign immunity.

On March 22, 2019, the District Court denied the United States’ motion to dismiss on grounds of sovereign immunity and CACI’s motion to dismiss on grounds of derivative sovereign immunity. The District Court also granted the United States’ motion for summary judgment with respect to CACI’s third-party complaint. On March 26, 2019, CACI filed a Notice of Appeal of the District Court’s March 22, 2019 decision. On April 2, 2019, the U.S. Court of Appeals for the Fourth Circuit issued an Accelerated Briefing Order for the appeal. On April 3, 2019, the District Court issued an Order cancelling the trial schedule and holding matters in abeyance pending disposition of the appeal. On July 10, 2019, the U.S. Court of Appeals for the Fourth Circuit heard oral argument in Spartanburg, South Carolina on CACI’s appeal. On August 23, 2019, the Court of Appeals issued an unpublished opinion dismissing the appeal. A majority of the panel that heard the appeal held that rulings denying derivative sovereign immunity are not immediately appealable even where they present pure questions of law. The panel also ruled, in the alternative, that even if such a ruling was immediately appealable, review was barred because there remained disputes of material fact with respect to CACI’s derivative sovereign immunity defenses. The Court of Appeals subsequently denied CACI’s request for rehearing en banc. CACI then filed a motion to stay issuance of the mandate pending the filing of a petition for a writ of certiorari. On October 11, 2019, the Court of Appeals, by a 2-1 vote, denied the motion to stay issuance of the mandate. CACI then filed an application to stay issuance of the mandate with Chief Justice Roberts in his capacity as Circuit Justice for the U.S. Court of Appeals for the Fourth Circuit. After CACI filed that application, the Court of Appeals issued the mandate on October 21, 2019, returning jurisdiction to the district court. On October 23, Chief Justice Roberts denied the stay application “without prejudice to applicants filing a new application after seeking relief in the district court.” CACI then filed a motion in the district court to stay the action pending filing and disposition of a petition for a writ of certiorari. On November 1, 2019, the district court granted CACI’s motion and issued an Order staying the action until further order of the court. On November 15, 2019, CACI filed a petition for a writ of certiorari in the U.S. Supreme Court. On January 27, 2020, the U.S. Supreme Court issued an Order inviting the Solicitor General to file a brief in the case expressing the views of the United States. On August 26, 2020, the Solicitor General filed a brief recommending that CACI’s petition for a writ of certiorari be held pending the Supreme Court’s disposition of Nestle USA, Inc. v. Doe, cert. granted, No. 19-416 (July 2, 2020), and Cargill, Inc. v. Doe, cert. granted, No. 19-453 (July 2, 2020). The United States’ brief recommended that if the Supreme Court’s decisions in Nestle and Cargill did not effectively eliminate the claims in Al Shimari, then the Supreme Court should grant CACI’s petition for a writ of certiorari.

Abbass, et al v. CACI Premier Technology, Inc. and CACI International Inc, Case No. 1:13CV1186-LMB/JFA (EDVA)

Reference is made to Part I, Item 3, Legal Proceedings in the Registrant’s Annual Report on Form 10-K for the year ended June 30, ~~2017~~2020 for the most recently filed information concerning the suit filed in the United States District Court for the Eastern District of Virginia. The lawsuit names CACI International Inc and CACI Premier Technology, Inc. as Defendants. Plaintiffs seeks, inter alia, compensatory damages, punitive damages, and attorney’s fees.

Since the filing of Registrant’s report described above, the case remains stayed pending the outcome in the Al Shimari appeal.

We are vigorously defending the above-described legal proceedings, and based on our present knowledge of the facts, believe the lawsuits are completely without merit.

Item 1A. Risk Factors

Reference is made to Part I, Item 1A, Risk Factors, in the Registrant’s Annual Report on Form 10-K for the year ended June 30, ~~2017.~~2020. There have been no material changes from the risk factors described in that report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides certain information with respect to our purchases of shares of CACI International Inc’s common stock:

Period

Total Number
of Shares
Purchased

Average Price
Paid Per Share

Total Number of Shares Purchased As Part of
Publicly Announced
Programs

Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs

October 2017

8,753

$
143.19

1,130,930

119,070

November 2017

—

—

—

—

December 2017

—

—

—

—

Total

8,753

$
143.19

1,130,930

119,070

Period	Total Number of Shares Purchased		Average Price Paid Per Share			Total Number of Shares Purchased As Part of Publicly Announced Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 2021		9,190	$	240.31			1,248,072		251,928
February 2021		—		—			—		—
March 2021 (1)		1,689,831		(1	)		1,689,831		(1	)
Total		1,699,021					2,937,903

(1)

On March 12, 2021, the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) with JPMorgan. Pursuant to the ASR Agreement, during the quarter ended March 31, 2021, we made an upfront payment of $500.0 million and received an initial delivery of 1.7 million shares of our common stock which became treasury shares. The final number of shares to be repurchased and the average purchase price will be determined at the end of the applicable purchase period, which will occur will prior to the end of the second quarter of FY2022. See Note 19.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine ~~Safety~~Safety Disclosures

Not applicable

Item 5. Other Information

None

Item 6. Exhibits

Incorporated by Reference
Exhibit No.

Description

Filed with this Form 10-Q

Form

Filing Date

Exhibit No.

10.1

Performance Restricted Stock Unit Grant Agreement

8-K

November 28, 2017

10.1

31.1

Section 302 Certification Kenneth Asbury

X

31.2

Section 302 Certification Thomas A. Mutryn

X

32.1

Section 906 Certification Kenneth Asbury

X

32.2

Section 906 Certification Thomas A. Mutryn

X

101

The following materials from the CACI International Inc Quarterly Report on Form 10-Q for the quarter ended December 31, 2017 formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements. *

*	~~Submitted electronically herewith.~~			Incorporated by Reference
Exhibit No.		Description	Filed with this Form 10-Q	Form	Filing Date	Exhibit No.

10.1		Master Confirmation by and between CACI International Inc and JPMorgan Chase Bank dated March 12, 2021	X

10.2		Supplemental Confirmation by and between CACI International Inc and JPMorgan Chase Bank dated March 12, 2021	X

31.1		Section 302 Certification John S. Mengucci	X

31.2		Section 302 Certification Thomas A. Mutryn	X

32.1		Section 906 Certification John S. Mengucci	X

32.2		Section 906 Certification Thomas A. Mutryn	X

101.INS		XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)

~~SIGNATURES~~SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CACI International Inc
	Registrant

Date: ~~February 1, 2018~~April 22, 2021	By:	/s/ ~~Kenneth Asbury~~John S. Mengucci
		~~Kenneth Asbury~~John S. Mengucci
		President,
		Chief Executive Officer and Director
		(Principal Executive Officer)

Date: ~~February 1, 2018~~April 22, 2021	By:	/s/ Thomas A. Mutryn
		Thomas A. Mutryn
		Executive Vice President,
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)

Date: ~~February 1, 2018~~April 22, 2021	By:	/s/ ~~Gregory W. Buckis, Sr.~~Christopher A. Voci
		~~Gregory W. Buckis, Sr.~~Christopher A. Voci
		Senior Vice President, Corporate Controller
		and Chief Accounting Officer
		(Principal Accounting Officer)

Twelve months ending December 31,
2018	$	80,947
2019		107,930
2020		973,008
Principal amount of long-term debt		1,161,885
Less unamortized debt issuance costs		(10,092	)
Total long-term debt	$	1,151,793

	RSUs
Unvested at June 30, 2017		834,607
Granted		269,631
Vested		(256,589	)
Forfeited		(27,161	)
Unvested at December 31, 2017		820,488
Weighted-average grant date fair value for RSUs	$	145.94

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company