Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

If an emerging growth company, indicate by check mark if the 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 Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~April 22,~~October 15, 2019, there were ~~24,870,769~~25,041,979 shares outstanding of CACI International Inc’s common stock, par value $0.10 per share.

	Three Months Ended				Nine Months Ended					Three Months Ended
	March 31,				March 31,					September 30,
	2019		2018		2019		2018			2019		2018
Revenue	$	1,264,958	$	1,124,100	$	3,612,463	$	3,297,774		$	1,363,392	$	1,165,864
Costs of revenue:
Direct costs		824,024		728,444		2,397,633		2,195,282			878,881		782,760
Indirect costs and selling expenses		324,828		273,145		859,262		788,569			357,592		264,757
Depreciation and amortization		21,198		17,717		58,797		53,563			26,762		18,747
Total costs of revenue		1,170,050		1,019,306		3,315,692		3,037,414			1,263,235		1,066,264
Income from operations		94,908		104,794		296,771		260,360			100,157		99,600
Interest expense and other, net		13,466		10,566		31,773		32,769			16,811		8,886
Income before income taxes		81,442		94,228		264,998		227,591			83,346		90,714
Income tax expense (benefit)		13,297		29,729		49,424		(21,749	)
Income tax expense											15,369		11,881
Net income	$	68,145	$	64,499	$	215,574	$	249,340		$	67,977	$	78,833
Basic earnings per share	$	2.74	$	2.62	$	8.69	$	10.14		$	2.73	$	3.19
Diluted earnings per share	$	2.69	$	2.56	$	8.50	$	9.88		$	2.66	$	3.10
Weighted-average basic shares outstanding		24,866		24,656		24,819		24,588			24,894		24,737
Weighted-average diluted shares outstanding		25,348		25,234		25,369		25,229			25,532		25,424

	Three Months Ended					Nine Months Ended					Three Months Ended
	March 31,					March 31,					September 30,
	2019			2018		2019			2018		2019			2018
Net income	$	68,145		$	64,499	$	215,574		$	249,340	$	67,977		$	78,833
Other comprehensive income (loss):
Foreign currency translation adjustment		3,059			5,779		(2,372	)		11,333		(5,308	)		(1,995	)
Change in fair value of interest rate swap agreements, net of tax		(2,075	)		3,344		(5,636	)		6,465		(4,964	)		217
Other comprehensive income (loss), net of tax		984			9,123		(8,008	)		17,798
Other comprehensive loss, net of tax												(10,272	)		(1,778	)
Comprehensive income	$	69,129		$	73,622	$	207,566		$	267,138	$	57,705		$	77,055

	March 31,			June 30,			September 30,			June 30,
	2019			2018			2019			2019
ASSETS
Current assets:
Cash and cash equivalents	$	93,806		$	66,194		$	83,182		$	72,028
Accounts receivable, net		889,662			806,871			848,463			869,840
Prepaid expenses and other current assets		99,586			58,126			110,623			89,652
Total current assets		1,083,054			931,191			1,042,268			1,031,520
Goodwill		3,322,982			2,620,835			3,337,053			3,336,079
Intangible assets, net		450,838			241,755			422,006			436,115
Property and equipment, net		136,212			101,140			156,750			149,676
Operating lease right-of-use assets								346,273			—
Supplemental retirement savings plan assets		91,585			91,490			93,258			92,736
Accounts receivable, long-term		11,836			8,620			7,730			7,381
Other long-term assets		36,512			39,175			32,846			33,336
Total assets	$	5,133,019		$	4,034,206		$	5,438,184		$	5,086,843
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	46,920		$	46,920		$	46,920		$	46,920
Accounts payable		136,933			82,017			92,616			118,917
Accrued compensation and benefits		263,586			259,442			299,286			290,274
Other accrued expenses and current liabilities		255,035			150,602			334,802			235,611
Total current liabilities		702,474			538,981			773,624			691,722
Long-term debt, net of current portion		1,710,640			1,015,420			1,551,951			1,618,093
Supplemental retirement savings plan obligations, net of current portion		91,992			86,851			97,264			92,291
Deferred income taxes		204,331			200,880			209,037			205,339
Operating lease liabilities, noncurrent								324,601			—
Other long-term liabilities		92,099			85,187			56,456			107,932
Total liabilities		2,801,536			1,927,319		$	3,012,933		$	2,715,377
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; 42,304 shares issued and 24,871 outstanding at March 31, 2019 and 42,139 shares issued and 24,704 outstanding at June 30, 2018		4,230			4,214
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; 42,392 shares issued and 24,958 outstanding at September 30, 2019 and 42,314 shares issued and 24,880 outstanding at June 30, 2019								4,239			4,231
Additional paid-in capital		570,207			570,964			572,348			576,277
Retained earnings		2,360,134			2,126,790			2,478,141			2,410,164
Accumulated other comprehensive loss		(27,038	)		(19,030	)		(53,428	)		(43,156	)
Treasury stock, at cost (17,434 and 17,434 shares, respectively)		(576,185	)		(576,186	)		(576,184	)		(576,185	)
Total CACI shareholders’ equity		2,331,348			2,106,752			2,425,116			2,371,331
Noncontrolling interest		135			135			135			135
Total shareholders’ equity		2,331,483			2,106,887			2,425,251			2,371,466
Total liabilities and shareholders’ equity	$	5,133,019		$	4,034,206		$	5,438,184		$	5,086,843

	Nine Months Ended						Three Months Ended
	March 31,						September 30,
	2019			2018			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	215,574		$	249,340		$	67,977		$	78,833
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization		58,797			53,563			26,762			18,747
Amortization of deferred financing costs		1,796			3,311			589			579
Non-cash lease expense								17,825			—
Stock-based compensation expense		18,351			18,183			7,038			5,698
Deferred income taxes		(1,193	)		(69,405	)		5,485			10,086
Changes in operating assets and liabilities, net of effect of business acquisitions:
Accounts receivable, net		85,995			(53,410	)		21,589			(64,339	)
Prepaid expenses and other assets		(13,284	)		(15,583	)		(25,989	)		(12,678	)
Accounts payable and other accrued expenses		101,473			68,505			3,477			71,337
Accrued compensation and benefits		(18,536	)		(12,047	)		(1,267	)		(16,763	)
Income taxes payable and receivable		(1,945	)		(572	)		4,463			(5,218	)
Operating lease liabilities								(17,450	)		—
Long-term liabilities		5,813			8,945			(7,295	)		(3,176	)
Net cash provided by operating activities		452,841			250,830			103,204			83,106
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(29,545	)		(31,810	)		(22,536	)		(9,368	)
Cash paid for business acquisitions, net of cash acquired		(1,071,023	)		(50,368	)		(1,351	)		(89,956	)
Other		1,875			3,629			—			(409	)
Net cash used in investing activities		(1,098,693	)		(78,549	)		(23,887	)		(99,733	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings under bank credit facilities		2,109,500			397,000			439,500			465,500
Principal payments made under bank credit facilities		(1,414,690	)		(547,974	)		(506,230	)		(432,230	)
Payment of financing costs under bank credit facilities		(1,386	)		—
Payment of contingent consideration		(616	)		(11,553	)		—			(616	)
Proceeds from employee stock purchase plans		4,265			3,673			1,852			1,527
Repurchases of common stock		(4,310	)		(3,802	)		(1,717	)		(1,393	)
Payment of taxes for equity transactions		(18,837	)		(20,692	)		(467	)		(6,576	)
Net cash provided by (used in) financing activities		673,926			(183,348	)		(67,062	)		26,212
Effect of exchange rate changes on cash and cash equivalents		(462	)		1,498			(1,101	)		(292	)
Net increase (decrease) in cash and cash equivalents		27,612			(9,569	)
Net increase in cash and cash equivalents								11,154			9,293
Cash and cash equivalents at beginning of period		66,194			65,539			72,028			66,194
Cash and cash equivalents at end of period	$	93,806		$	55,970		$	83,182		$	75,487
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for income taxes, net of refunds	$	55,967		$	45,771		$	4,675		$	8,714
Cash paid during the period for interest	$	31,083		$	30,346		$	15,114		$	9,637
Non-cash financing and investing activities:
Landlord sponsored tenant improvement	$	3,518		$	—
Accrued capital expenditures	$	3,557		$	818		$	3,338		$	3,545

	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			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, December 31, 2018		42,296	$	4,230	$	564,586		$	2,291,989	$	(28,022	)		17,434		$	(576,185	)	$	2,256,598		$	135		2,256,733
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		—		—		—			68,145		—			—			—			68,145			—		68,145			—		—		—			67,977		—			—			—			67,977			—		67,977
Stock-based compensation expense		—		—		6,304			—		—			—			—			6,304			—		6,304			—		—		7,038			—		—			—			—			7,038			—		7,038
Tax withholdings on restricted share vesting		8				(567	)		—		—			—			—			(567	)		—		(567	)
Tax withholdings on restricted share vestings																												78		8		(10,868	)		—		—			—			—			(10,860	)		—		(10,860	)
Change in fair value of interest rate swap agreements, net		—		—		—			—		(2,075	)		—			—			(2,075	)		—		(2,075	)		—		—		—			—		(4,964	)		—			—			(4,964	)		—		(4,964	)
Currency translation adjustment		—		—		—			—		3,059			—			—			3,059			—		3,059			—		—		—			—		(5,308	)		—			—			(5,308	)		—		(5,308	)
Repurchases of common stock		—		—		(116	)		—		—			11			(1,438	)		(1,554	)		—		(1,554	)		—		—		(112	)		—		—			8			(1,605	)		(1,717	)		—		(1,717	)
Treasury stock issued under stock purchase plans		—		—					—		—			(11	)		1,438			1,438			—		1,438			—		—		13			—		—			(8	)		1,606			1,619			—		1,619
BALANCE, March 31, 2019		42,304		4,230		570,207			2,360,134		(27,038	)		17,434			(576,185	)		2,331,348			135		2,331,483

BALANCE, December 31, 2017		42,059		4,206		568,646			2,010,460		(20,441	)		17,434			(576,186	)		1,986,685			135		1,986,820
Net income		—		—		—			64,499		—			—			—			64,499			—		64,499
Stock-based compensation expense		—		—		5,794			—		—			—			—			5,794			—		5,794
Tax withholdings on restricted share vesting		68		7		(8,043	)		—		—			—			—			(8,036	)		—		(8,036	)
Change in fair value of interest rate swap agreements, net		—		—		—			—		3,344			—			—			3,344			—		3,344
Currency translation adjustment		—		—		—			—		5,779			—			—			5,779			—		5,779
Repurchases of common stock		—		—		(125	)		—		—			9			(1,214	)		(1,339	)		—		(1,339	)
Treasury stock issued under stock purchase plans		—		—		—			—		—			(9	)		1,214			1,214			—		1,214
BALANCE, March 31, 2018		42,127	$	4,213	$	566,272		$	2,074,959	$	(11,318	)		17,434		$	(576,186	)	$	2,057,940		$	135	$	2,058,075
BALANCE, September 30, 2019																												42,392	$	4,239	$	572,348		$	2,478,141	$	(53,428	)		17,434		$	(576,184	)	$	2,425,116		$	135	$	2,425,251

BALANCE, June 30, 2018		42,139	$	4,214	$	570,964		$	2,126,790	$	(19,030	)		17,434		$	(576,186	)	$	2,106,752		$	135	$	2,106,887			42,139	$	4,214	$	570,964		$	2,126,790	$	(19,030	)		17,434		$	(576,186	)	$	2,106,752		$	135	$	2,106,887
Net income		—		—		—			215,574		—			—			—			215,574			—		215,574			—		—		—			78,833		—			—			—			78,833			—		78,833
Cumulative effect adjustment of ASC 606, net of taxes		—		—		—			17,770		—			—			—			17,770			—		17,770			—		—		—			17,770		—			—			—			17,770			—		17,770
Stock-based compensation expense		—		—		18,351			—		—			—			—			18,351			—		18,351			—		—		5,698			—		—			—			—			5,698			—		5,698
Tax withholdings on restricted share vesting		165		16		(18,812	)		—		—			—			—			(18,796	)		—		(18,796	)
Tax withholdings on restricted share vestings																												143		14		(17,250	)		—		—			—			—			(17,236	)		—		(17,236	)
Change in fair value of interest rate swap agreements, net		—		—		—			—		(5,636	)		—			—			(5,636	)		—		(5,636	)		—		—		—			—		217			—			—			217			—		217
Currency translation adjustment		—		—		—			—		(2,372	)		—			—			(2,372	)		—		(2,372	)		—		—		—			—		(1,995	)		—			—			(1,995	)		—		(1,995	)
Repurchases of common stock		—		—		(301	)		—		—			26			(4,009	)		(4,310	)		—		(4,310	)		—		—		(122	)		—		—			8			(1,271	)		(1,393	)		—		(1,393	)
Treasury stock issued under stock purchase plans		—		—		5			—		—			(26	)		4,010			4,015			—		4,015			—		—		5			—		—			(8	)		1,272			1,277			—		1,277
BALANCE, March 31, 2019		42,304		4,230		570,207			2,360,134		(27,038	)		17,434			(576,185	)		2,331,348			135		2,331,483

BALANCE, June 30, 2017		41,896		4,190		569,080			1,825,619		(29,116	)		17,435			(576,187	)		1,793,586			135		1,793,721
Net income		—		—		—			249,340		—			—			—			249,340			—		249,340
Stock-based compensation expense		—		—		18,183			—		—			—			—			18,183			—		18,183
Tax withholdings on restricted share vesting		231		23		(20,695	)		—		—			—			—			(20,672	)		—		(20,672	)
Change in fair value of interest rate swap agreements, net		—		—		—			—		6,465			—			—			6,465			—		6,465
Currency translation adjustment		—		—		—			—		11,333			—			—			11,333			—		11,333
Repurchases of common stock		—		—		(303	)		—		—			27			(3,499	)		(3,802	)		—		(3,802	)
Treasury stock issued under stock purchase plans		—		—		7			—		—			(28	)		3,500			3,507			—		3,507
BALANCE, March 31, 2018		42,127	$	4,213	$	566,272		$	2,074,959	$	(11,318	)		17,434		$	(576,186	)	$	2,057,940		$	135	$	2,058,075
BALANCE, September 30, 2018																												42,282	$	4,228	$	559,295		$	2,223,393	$	(20,808	)		17,434		$	(576,185	)	$	2,189,923		$	135	$	2,190,058

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 ~~March 31,~~September 30, 2019 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 10 and ~~16.~~17.

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, ~~2018.~~2019. The results of operations for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2019 are not necessarily indicative of the results to be expected for any subsequent interim period or for the full fiscal year.

~~Certain reclassifications have been made to the prior period’s financial statements to conform to the current presentation.~~

In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the capitalization requirements for implementation costs incurred in a hosting arrangement that is a service contract with the existing capitalization requirements for implementation costs associated with internal-use software (Subtopic 350-40). ASU 2018-15 becomes effective for the Company in the first quarter of FY2021 and may be adopted either retrospectively or prospectively. ~~Early adoption is permitted.~~ The Company is currently evaluating the impact of the adoption of this standard on its financial statements.

In ~~August 2017, the FASB issued ASU 2017-12,~~ ~~Targeted Improvements to Accounting for Hedge Activities~~. This ASU simplifies the application of hedge accounting and improves the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities. The Company early adopted this standard effective as of July 1, 2018. Adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~, which changes the presentation of net periodic pension and postretirement cost (net benefit cost) on the consolidated statements of operations. The service cost component of net benefit cost will continue to be part of operating income while all other components of net benefit cost (interest costs, actuarial gains and losses and amortization of prior service cost) will be shown outside of operating income. The Company adopted this standard on July 1, 2018 and applied the standard retrospectively. The adoption of this standard did not have a material impact on our consolidated financial statements.

~~In August~~June 2016, the FASB issued ASU ~~2016-15,~~ ~~Classification~~2016-13, Financial Instruments - Credit Losses, which requires companies to record an allowance for expected credit losses over the contractual term of ~~Certain Cash Receipts~~financial assets, including short-term trade receivables and ~~Cash Payments, which clarifies how certain cash receipts~~contract assets, and ~~cash payments are presented and classified on~~expands disclosure requirements for credit quality of financial assets. ASU 2016-13 becomes effective for the ~~statement~~Company in the first quarter of FY2021. We do not expect a significant impact to our operating results, financial position or cash flows ~~to reduce diversity in practice. The Company adopted this standard on July 1, 2018 and applied the standard retrospectively. As~~as a result of adoption, the Company reclassified $3.7 million of proceeds received from the settlement of corporate owned life insurance (COLI) policies from operating activities to investing activities on the Consolidated Statement of Cash Flows for the nine months ended March 31, 2018. During the nine months ended March 31, 2019, $1.9 million of COLI proceeds are presented as investing activities.adopting this new standard.

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

In February 2016, the FASB issued ASU 2016-02, Leases, which amends the existing guidance on accounting for leases. The new standard requires lessees to put virtually all leases on the balance sheet by recognizing lease assets and lease liabilities. Lessor accounting is largely unchanged from that applied under previous guidance. The amended guidance iswas effective for 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.~~

The Company ~~is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. The Company will adopt~~adopted this standard on July 1, ~~2019 and is currently in~~2019. As part of our implementation, the ~~process of accumulating~~Company accumulated data required to measure its existing leases, ~~reviewing~~reviewed lease contracts, ~~implementing~~implemented a new lease accounting solution and ~~evaluating~~evaluated accounting policy and internal control changes. ~~We expect that upon~~The Company adopted certain practical expedients provided under ASC 842, including reassessment of whether expired or existing contracts contain leases, reassessment of lease classification for expired or existing leases, reassessing initial direct costs for existing leases, and an election to separate lease from non-lease components.

Upon adoption ~~we will recognize a material right-of-use asset~~of ASC 842, the Company recorded right of use assets of $354.3 million and current and non-current lease ~~liability~~liabilities of $67.0 million and $331.8 million, respectively, on ~~our~~the consolidated balance ~~sheet. We do not expect the standard to have a material impact on our cash flows or results~~sheet, inclusive of ~~operations.~~

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~, as amended (ASC 606), which superseded nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitledrequired reclassifications 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 were required under previous GAAP. In addition, ASU 2014-09 added ASC 340-40 to codify guidance on other assetsprepaid and deferred ~~costs for contracts with customers.~~

Effective July 1, 2018, we adopted ASC 606 using the modified retrospective method, whereby the cumulative effect of applying the standard was recognized through shareholders’ equity on the date of adoption. In addition, for our fiscal year ending June 30, 2019rent, lease incentives, and the interim reporting periods therein, the Company is required to disclose the amount by which each financial statement line item was affected by the new standard. The Company’s comparative information, for prior periods presented before July 1, 2018, has not been restated and continues to be reported under ASC 605.other lease-related balances.

The impact of adoption on our consolidated balance sheet is as follows (in thousands):

	June 30, 2018 As Reported Under ASC 605		Adjustments Due to ASC 606		July 1, 2018 Balance Under ASC 606		June 30, 2019 As Reported Under ASC 840		Adjustments Due to ASC 842			July 1, 2019 Balance Under ASC 842
Assets:
Accounts receivable, net	$	806,871	$	20,454	$	827,325
Prepaid expenses and other current assets		58,126		2,342		60,468	$	89,652	$	(3,199	)	$	86,453
Other long-term assets		39,175		3,923		43,098
Operating lease right-of-use assets								—		354,317			354,317
Liabilities and Shareholders' Equity:
Other accrued expenses and current liabilities		150,602		2,212		152,814		235,611		59,034			294,645
Deferred income taxes		200,880		6,639		207,519
Operating lease liabilities, noncurrent								—		331,761			331,761
Other long-term liabilities		85,187		98		85,285		107,932		(39,677	)		68,255
Retained earnings		2,126,790		17,770		2,144,560

~~ASC 606 changed~~The standard had no impact on our results of operations or cash flows. In addition, new disclosures are provided to enable users to assess the ~~pattern~~amount, timing and uncertainty of ~~revenue recognition~~cash flows arising from leases.

The Company enters into contractual arrangements primarily for ~~some~~the use of real estate facilities, information technology equipment, and certain other equipment. These arrangements contain a lease when the Company controls the underlying asset and has the right to obtain substantially all of the economic benefits or outputs from the asset. All of our ~~contracts with customers. For our award~~leases are operating leases.

The Company records a right of use (ROU) asset and ~~incentive fee contracts, we recognize an estimated amount of variable consideration throughout the performance period rather than defer recognition~~lease liability as of the ~~relevant portion of fee until customer notification~~lease commencement date equal to the present value of the ~~amount earned. Some~~remaining lease payments. Most of our ~~fixed price services-type contracts~~leases do not provide an implicit rate that can be readily determined. Therefore, we use a discount rate based on the Company’s incremental borrowing rate, which is determined using our credit rating and information available as of the commencement date. The ROU asset is then adjusted for initial direct costs and certain lease incentives included in ~~which revenue was previously~~the contractual arrangement. The Company has elected to not apply the lease recognition guidance for short-term equipment leases and to separate lease from non-lease components. Our operating lease arrangements may contain options to extend the lease term or for early termination. We account for these options when it is reasonably certain we will exercise them. ROU assets are evaluated for impairment in a manner consistent with the treatment of other long-lived assets.

Operating lease expense is recognized on a straight-line basis over the performance period converted to recognition of revenue using a cost-to-cost input method to measure our progress towards the complete satisfaction of the performance obligation. The cumulative effect of these changes in the pattern of revenue recognition resulted in an increase to accounts receivable with an offset to retained earnings.

In addition, ASC 606 changed the timing of revenue recognition for license renewal performance obligations. Under prior GAAP, license renewals were generally recognized in the period the renewal contract was executed. However, upon adoption of ASC 606, revenue for a license renewal may not be recognized until the start of thelease term ~~of the renewal. The cumulative effect of this change resulted in an increase to contract liabilities with an offset to retained earnings.~~

~~The adoption of ASC 606 did not have a material impact~~and is recorded primarily within indirect costs and selling expenses on the Company’s revenue recognition for cost-plus-fee, fixed price/level-of-effort, time-and-materials (T&M), fixed price contracts previously recognized under ASC 605-35, and fixed price product revenue arrangements.

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

Under ASC 340-40, the Company capitalizes certain costs to fulfill and obtain a contract. The cumulative effect of this change resulted in an increase to contract assets with an offset to retained earnings. These capitalized costs are amortized over the period of contract performance as revenue is recognized from the transfer of goods or services and the underlying performance obligation is satisfied.

~~The table below presents the impact of adoption of ASC 606 on our~~ consolidated statement of ~~operations for the three and nine months ended March 31, 2019 (in thousands, except per share data):~~

For the three months ended March 31, 2019, the effect of ASC 606 was primarily related to certain fixed price services-type contracts in which revenue was previously recognized on a straight-line basis that converted to a cost-to-cost input method to measure the Company’s progress towards the complete satisfaction of the performance obligation. For the nine months ended March 31, 2019, the effect of ASC 606 was primarily related to the timing of award and incentive fee revenue recognition.

~~The table below presents the impact of adoption of ASC 606 on our consolidated balance sheet as of March 31, 2019 (in thousands):~~

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

The Company generates almost all of our revenue from three different types of contractual arrangements with the U.S. government: cost-plus-fee, time-and-materials (T&M), and fixed-price contracts. Our contracts with the U.S. governmentoperations. Variable lease expenses are generally ~~subject to the Federal Acquisition Regulation (FAR) and are competitively priced based on estimated costs of providing the contractual goods or services.~~

We account for a contract when the parties have approved the contract and are committed to perform on it, the rights of each party and the payment terms are identified, the contract has commercial substance, and it is probable that we will collect substantially all of the consideration.

At contract inception, the Company determines whether the goods or services to be provided are to be accounted for as a single performance obligation or as multiple performance obligations. This evaluation requires significant professional judgment as it may impact the timing and pattern of revenue recognition. If multiple performance obligations are identified, we generally use the cost plus a margin approach to determine the relative standalone selling price of each performance obligation.

When determining the total transaction price, the Company identifies both fixed and variable consideration elements within the contract. Variable consideration includes any amount within the transaction price that is not fixed, such as: award or incentive fees; performance penalties; unfunded contract value; or other similar items. For our contracts with award or incentive fees, the Company estimates the total amount of award or incentive fee expected to be recognized into revenue. Throughout the performance period, we recognize as revenue a constrained amount of variable consideration only to the extent that it is probable that a significant reversal of the cumulative amount recognized to date will not be required in a subsequent period. Our estimate of variable consideration is periodically adjusted based on significant changes in relevant facts and circumstances. In the period in which we can calculate the final amount of award or incentive fee earned - based on the receipt of the customer’s final performance score or determining that more objective, contractually-defined criteria have been fully satisfied - the Company will adjust our cumulative revenue recognized to date on the contract. This adjustment to revenue will be disclosed as the amount of revenue recognized in the current period for a previously satisfied performance obligation.

We generally recognize revenue over time throughout the performance period as the customer simultaneously receives and consumes the benefits provided on our services-type revenue arrangements. This continuous transfer of control for our U.S. government contracts is supported by the unilateral right of our customer to terminate the contract for a variety of reasons without having to provide justification for its decision. For our services-type revenue arrangements in which there are a repetitive amount of services that are substantially the same from one month to the next, the Company applies the series guidance. We use a variety of input and output methods that approximate the progress towards complete satisfaction of the performance obligation, including: costs incurred, labor hours expended, and time-elapsed measures for our fixed-price stand ready obligations. For certain contracts, primarily our cost-plus and T&M services-type revenue arrangements, we apply the right-to-invoice practical expedient in which revenue is recognized in direct proportion to our present right to consideration for progress towards the complete satisfaction of the performance obligation.

When a performance obligation has a significant degree of interrelation or interdependence between one month’s deliverables and the next, when there is an award or incentive fee, or when there is a significant degree of customization or modification, the Company generally records revenue using a percentage of completion methodology. For these revenue arrangements, substantially all revenue is recognized over time using a cost-to-cost input method based on the ratio of costs incurred to date to total estimated costs at completion. 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.~~

~~Contract modifications are reviewed to determine whether~~ they should be accounted for as part of the original performance obligation or as a separate contract. When a contract modification changes the scope or price and the additional performance obligations are at their standalone selling price, the original contract is terminated and the Company accounts for the change prospectively when the new goods or services to be transferred are distinct from those already provided. When the contract modification includes goods or services that are not distinct from those already provided, the Company records a cumulative adjustment to revenue based on a remeasurement of progress towards the complete satisfaction of the not yet fully delivered performance obligation.

Based on the critical nature of our contractual performance obligations, the Company may proceed with work based on customer direction prior to the completion and signing of formal contract documents. The Company has a formal review process for approving any such work that considers previous experiences with the customer, communications with the customer regarding funding status, and our knowledge of available funding for the contract or program.

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

~~Contract assets include unbilled receivables in which our right to consideration is conditional on factors other than the passage of time. Contract assets exclude billed and billable receivables.~~

In addition, the costs to fulfill a contract are considered for capitalization based on contract specific facts and circumstances. The incremental costs to fulfill a contract (e.g. ramp up costs at the beginning of the period of performance) may be capitalized when expenses are incurred ~~prior to satisfying a performance obligation.~~

~~The incremental costs of obtaining a contract (e.g. sales commissions)~~and 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. The Company has elected to apply the practical expedient to immediately expense the costs to obtain a contract when the performance obligation will be completed within twelve months of contract inception.

~~Contract assets are periodically reassessed based on reasonably available information as of the balance sheet date to ensure they do not exceed their net realizable value.~~

~~Contract liabilities include advance payments received~~excluded from the ~~customer in excess of revenue that may be recognized as of the balance sheet date. The advance payment is subsequently recognized into revenue as the performance obligation is satisfied.~~

The Company’s remaining performance obligations balance represents the expected revenue to be recognized for the satisfaction of remaining performance obligations on our existing contracts as of period end. The remaining performance obligations balance excludes unexercised contract option yearsROU asset and task orders that may be issued underneath an Indefinite Delivery/Indefinite Quantity (IDIQ) vehicle. 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 our remaining performance obligations 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.lease liability.

On August 15, 2018, CACI acquired certain assets of the systems engineering and acquisition support services business unit (SE&A BU) of CSRA LLC, a managed affiliate of General Dynamics Information Technology, Inc. The initial purchase consideration paid at closing to acquire the SE&A BU was $84.0 million plus $6.0 million representing a preliminary net working capital adjustment. Subsequent to closing, CACI estimated that an additional payment may be due to the sellers for the final net working capital adjustment. The Company recognized fair values of the assets acquired and liabilities assumed and allocated $42.8 million to goodwill and $8.9 million to intangible assets. The intangible assets consist of customer relationships. The final purchase price allocation, which is provisional and is expected to be completed by Q1 FY2020, will be based on final appraisals and other analysis of fair values of acquired 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.

On January 29, 2019, CACI acquired all of the equity interests of Mastodon Design LLC (Mastodon) for a purchase consideration of $225.0 million, which includes a $220.0 million initial cash payment and $5.0 million of deferred consideration. Mastodon specializes in the rapid design of rugged tactical communications, signals intelligence (SIGINT) and electronic warfare (EW) equipment.

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

The Company recognized fair values of the assets acquired and liabilities assumed and allocated $139.3 million to goodwill and $83.9 million to intangible assets. The goodwill of $139.3 million is largely attributable to the assembled workforce of Mastodon and expected synergies between the Company and Mastodon. The intangible assets consist of customer relationships of $19.8 million and technology of $64.1 million. The estimated fair value attributed to intangible assets is being amortized on an accelerated basis over approximately 20 years for customer relationships and over a range of approximately 5 to 9 years for technology. The fair value attributed to the intangible assets acquired was based on preliminary estimates, assumptions, and other information compiled by management, including independent valuations that utilized established valuation techniques. Of the value attributed to goodwill and intangible assets, approximately $223.1 million is deductible for income tax purposes. The final purchase price allocation, which is provisional and is expected to be completed by Q3 FY2020, will be based on final appraisals and other analysis of fair values of acquired assets and liabilities.

On March 1, 2019, CACI acquired all of the equity interests of Legos Intermediate Holdings, LLC and MDCP Legos Blocker, Inc., the parent companies of LGS Innovations (LGS). The purchase consideration iswas approximately ~~$759.5~~$757.1 million, which includes $759.9 million of cash paid at close net of cash acquired and a ~~$0.4~~$2.8 million ~~estimated~~ net purchase price ~~reduction~~payment for returnable consideration due from the seller, deferred consideration, and ~~estimated~~ post-close net working capital adjustments. LGS is a leading provider of SIGINT and cyber products and solutions to the Intelligence Community and Department of Defense.

CACI is in the process of finalizing its valuation of all the assets acquired and liabilities assumed. As the amounts recorded for certain assets and liabilities are preliminary in nature, they are subject to adjustment as additional information is obtained about the facts and circumstances that existed at the acquisition date. The final determination of fair values of certain assets and liabilities will be completed within the measurement period of up to one-year from the acquisition date as permitted under GAAP. The LGS acquisition could necessitate the need to use the full one-year measurement period to adequately analyze and assess several factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, receivables, inventory, deferred revenue, deferred taxes, income tax obligations, and certain reserves. Any potential adjustments made could be material in relation to the preliminary ~~values presented in~~values.

During the ~~table below. Based on~~three months ended September 30, 2019, we continued to obtain information to refine estimated fair values. As a result of the ~~Company’s preliminary valuation, the total estimated consideration of $759.5 million has been allocated to assets acquired and liabilities assumed as follows (in thousands):~~

~~The goodwill of $521.6 million is largely attributable to the assembled workforce of LGS and expected synergies between~~additional information, the Company recorded measurement period adjustments that increased receivables and ~~LGS. The intangible assets consist of customer relationships of $86.9~~goodwill by $1.4 million and technology of $60.8 million. The estimated fair value attributed to intangible assets is being amortized on an accelerated basis over approximately 20 years for customer relationships and over a range of approximately 5 to 15 years for technology. The fair value attributed to the intangible assets acquired was based on preliminary estimates, assumptions,$3.3 million, respectively, reduced accrued expenses and other ~~information compiled~~current liabilities by ~~management, including independent valuations that utilized established valuation techniques. Of the value attributed to goodwill~~$1.9 million, and ~~intangible assets, approximately $615.8~~increased purchase consideration by $6.6 million ~~is deductible for income tax purposes.~~

From the March 1, 2019 acquisition date through March 31, 2019, LGS generated $32.8 million of revenue and $1.3 million of net income. LGS’ net income includes the impact of $1.3 million of amortization of intangibles. LGS’ net income does not include the impact of acquisition-related expenses incurred by CACI.

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

CACI incurred $11.3 million of acquisition-related expenses during the nine months ended March 31, 2019, which are included in indirect costs and selling expenses. Additionally, CACI incurred $2.7 million of integration and restructuring costs from the acquisition date through March 31, 2019.

The following pro forma results are prepared for comparative purposes only and do not necessarily reflect the results that would have occurred had the acquisition occurred at the beginning of the years presented or the results which may occur in the future. The following unaudited pro forma results of operations assume the LGS acquisition had occurred on July 1, 2017 (in thousands, except per share amounts):

Significant pro forma adjustments incorporated into the pro forma results above include the recognition of additional amortization expense related to acquired intangible assets and additional interest expense related to debt incurred to finance the acquisition. Significant nonrecurring adjustments include the elimination of non-recurring acquisition-related expenses incurred during the nine months ended March 31, 2019..

	March 31,			June 30,			September 30,			June 30,
	2019 (1)			2018			2019 (1)			2019
Intangible assets:
Customer contracts and related customer relationships	$	550,646		$	435,933		$	547,801		$	549,552
Acquired technologies		138,010			13,237			138,031			137,959
Other		800			804			810			800
Intangible assets		689,456			449,974			686,642			688,311
Less accumulated amortization:
Customer contracts and related customer relationships		(226,769	)		(199,018	)		(245,547	)		(236,935	)
Acquired technologies		(11,357	)		(8,761	)		(18,558	)		(14,750	)
Other		(492	)		(440	)		(531	)		(511	)
Less accumulated amortization		(238,618	)		(208,219	)		(264,636	)		(252,196	)
Total intangible assets, net	$	450,838		$	241,755		$	422,006		$	436,115

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 ~~March 31,~~September 30, 2019 is 16.6 years, and the weighted-average remaining period of amortization is ~~14.0~~13.7 years. The weighted-average period of amortization for acquired technologies as of ~~March 31,~~September 30, 2019 is ~~10.2~~10.3 years, and the weighted-average remaining period of amortization is ~~10.1~~9.7 years.

14Expected amortization expense for the remainder of the fiscal year ending June 30, 2020, and for each of the fiscal years thereafter, is as follows (in thousands):

~~Expected amortization expense for the remainder of the fiscal year ending June 30, 2019, and for each of the fiscal years thereafter, is as follows (in thousands):~~

The changes in the carrying amount of goodwill for the year ended June 30, ~~2018~~2019 and the ~~nine~~three months ended ~~March 31,~~September 30, 2019 are as follows (in thousands):

	Domestic		International			Total			Domestic		International			Total
Balance at June 30, 2017	$	2,479,496	$	97,939		$	2,577,435
Goodwill acquired (1)		35,024		6,867			41,891
Foreign currency translation		—		1,509			1,509
Balance at June 30, 2018		2,514,520		106,315			2,620,835		$	2,514,520	$	106,315		$	2,620,835
Goodwill acquired (1)		703,825		(99	)		703,726			710,165		9,038			719,203
Foreign currency translation		—		(1,579	)		(1,579	)		—		(3,959	)		(3,959	)
Balance at March 31, 2019	$	3,218,345	$	104,637		$	3,322,982
Balance at June 30, 2019									$	3,224,685	$	111,394		$	3,336,079
Goodwill acquired (1)										5,663		(1,170	)		4,493
Foreign currency translation										—		(3,519	)		(3,519	)
Balance at September 30, 2019									$	3,230,348	$	106,705		$	3,337,053

We disaggregate our revenue arrangements by contract type, customer, and whether the Company performs on the contract as the prime or subcontractor. 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.

The Company generated revenue on our cost-plus-fee, firm fixed-price, ~~(including proprietary software product sales),~~ and time-and-materials contracts as follows during the three ~~and nine~~ months ended ~~March 31,~~September 30, 2019 and 2018 (in thousands):

	Three Months Ended						Nine Months Ended						Three Months Ended						Three Months Ended
	March 31, 2019						March 31, 2019						September 30, 2019						September 30, 2018
	Domestic		International		Total		Domestic		International		Total		Domestic		International		Total		Domestic		International		Total
Cost-plus-fee	$	704,627	$	—	$	704,627	$	2,003,204	$	—	$	2,003,204	$	747,714	$	—	$	747,714	$	641,527	$	—	$	641,527
Firm fixed-price		348,143		25,863		374,006		982,232		73,152		1,055,384		391,536		26,440		417,976		321,071		22,933		344,004
Time and materials		172,761		13,564		186,325		509,170		44,705		553,875		185,523		12,179		197,702		163,925		16,408		180,333
Total	$	1,225,531	$	39,427	$	1,264,958	$	3,494,606	$	117,857	$	3,612,463	$	1,324,773	$	38,619	$	1,363,392	$	1,126,523	$	39,341	$	1,165,864

The Company generated revenue from our primary customer groups as follows during the three months ended September 30, 2019 and 2018 (in thousands):

~~The Company generated revenue from our primary customer groups as follows during the three and nine months ended March 31, 2019 (in thousands):~~

The Company generated revenue as either the prime or subcontractor as follows during the three ~~and nine~~ months ended ~~March 31,~~September 30, 2019 and 2018 (in thousands):

	Three Months Ended						Nine Months Ended						Three Months Ended						Three Months Ended
	March 31, 2019						March 31, 2019						September 30, 2019						September 30, 2018
	Domestic		International		Total		Domestic		International		Total		Domestic		International		Total		Domestic		International		Total
Prime contractor	$	1,114,172	$	39,427	$	1,153,599	$	3,217,570	$	117,857	$	3,335,427	$	1,197,634	$	38,619	$	1,236,253	$	1,050,531	$	39,341	$	1,089,872
Subcontractor		111,359		—		111,359		277,036		—		277,036		127,139		—		127,139		75,992		—		75,992
Total	$	1,225,531	$	39,427	$	1,264,958	$	3,494,606	$	117,857	$	3,612,463	$	1,324,773	$	38,619	$	1,363,392	$	1,126,523	$	39,341	$	1,165,864

~~The~~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) ~~as the basis~~ to measure progress towards the complete satisfaction of its ~~contractual~~ performance ~~obligations, for each of its contracts in which~~obligations. For these revenue arrangements, revenue is recognized over time primarily using a ~~percentage~~cost-to-cost input method based on the ratio of costs incurred to date to total estimated costs at completion ~~calculation.~~. 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. During the three ~~and nine~~ months ended ~~March 31,~~September 30, 2019 and 2018, we recognized an increase to income before income taxes of ~~$6.3~~$6.5 million ($~~0.18~~0.19 per diluted share) and ~~$16.9~~$6.4 million ($~~0.49~~0.19 per diluted share), respectively, from EAC adjustments. The Company used its statutory tax rate when calculating the impact to diluted earnings per share.

The Company records final true-up adjustments to its 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. These final true-up adjustments are disclosed as revenue recognized from previously satisfied performance obligations. For the three and nine months ended March 31, 2019, the revenue recognized from previously satisfied performance obligations was $0.8 million and $1.1 million, respectively.

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 ~~IDIQ vehicle.~~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,~~September 30, 2019 was ~~$6.7~~$7.1 billion.

The Company expects to recognize approximately ~~72.0~~73 percent of our remaining performance obligations balance as revenue over the next year and the remaining ~~28.0~~27 percent thereafter.

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

Contract assets are primarily comprised of ~~conditional~~ unbilled receivables in which revenue has been recognized but ~~an invoice has not yet been issued~~our right to consideration is conditional on factors other than the ~~customer as~~passage of ~~the balance sheet date.~~time. Contract assets exclude billed and billable ~~receivables and~~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.

		March 31,			July 1,				September 30,			June 30,
Description of Contract Related Balance	Financial Statement Classification	2019			2018 (1)			Financial Statement Classification	2019			2019
Contract assets – current:
Unbilled receivables	Accounts receivable, net	$	82,105		$	72,511		Accounts receivable, net	$	103,860		$	90,073
Costs to obtain – short-term	Prepaid expenses and other current assets		2,624			2,342		Prepaid expenses and other current assets		2,786			2,685
Contract assets – noncurrent:
Unbilled receivables	Accounts receivable, long-term		9,647			8,620		Accounts receivable, long-term		7,730			7,381
Costs to obtain – long-term	Other long-term assets		4,672			3,923		Other long-term assets		5,927			5,353
Contract liabilities – current:
Deferred revenue	Other accrued expenses and current liabilities		(48,106	)		(43,940	)
Deferred revenue and other contract liabilities – short-term								Other accrued expenses and current liabilities		(71,216	)		(55,667	)
Contract liabilities – noncurrent:
Deferred revenue	Other long-term liabilities		(7,041	)		(4,740	)
Deferred revenue and other contract liabilities – long-term								Other long-term liabilities		(7,247	)		(7,445	)
Net contract assets (liabilities)		$	43,901		$	38,716			$	41,840		$	42,380

During the three ~~and nine~~ months ended ~~March 31,~~September 30, 2019 and 2018, we recognized ~~$6.6~~$25.7 million and ~~$33.3~~$17.1 million of revenue, respectively, that was included in a previously recorded contract liability as of the beginning of the period.

On December 28, 2018, the Company entered into a Master Accounts Receivable Purchase Agreement (MARPA Facility) with MUFG Bank, Ltd. (the Purchaser), for the sale of certain designated eligible U.S. government receivables. The MARPA Facility has an initial term of one-year. Under the MARPA Facility, 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 Facility without recourse for any U.S. government credit risk.

The Company accounts for receivable transfers under the MARPA Facility 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. ~~As such, there were no gains or losses related to sales of these receivables.~~

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,~~September 30, 2019. Proceeds from the sold receivables are reflected in our operating cash flows on the statement of cash flows.

During the three and nine months ended March 31, 2019, the Company sold $563.5 million of receivables. The amount outstanding as of March 31, 2019 was $200.0 million. As of March 31, 2019, collections not remitted to the Purchaser related to the sold receivables were $72.0 million. This amount represents an obligation to the Purchaser and is included in other accrued expenses and current liabilities in the accompanying consolidated balance sheet.

During the three and nine months ended March 31, 2019, the Company incurred purchase discount fees of $1.4 million, which are recorded within interest expense and other, net in our accompanying consolidated statements of operations.

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

	As of and for the			As of and for the			As of and for the
	Three Months Ended			Nine Months Ended			Three Months Ended
	March 31, 2019			March 31, 2019			September 30, 2019
Beginning balance:
Outstanding balance – June 30, 2019:							$	192,527
Sales of receivables	$	563,502		$	563,502			493,879
Cash collections		(363,502	)		(363,502	)		(505,303	)
Outstanding balance sold to Purchaser: (1)		200,000			200,000
Outstanding balance sold to Purchaser – September 30, 2019: (1)								181,103
Cash collected, not remitted to Purchaser (2)		(71,970	)		(71,970	)		(90,850	)
Remaining sold receivables	$	128,030		$	128,030		$	90,253

	March 31,			June 30,			September 30,			June 30,
	2019			2018			2019			2019
Bank credit facility – term loans	$	903,204		$	938,394		$	879,744		$	891,475
Bank credit facility – revolver loans		865,000			135,000			730,000			785,000
Principal amount of long-term debt		1,768,204			1,073,394			1,609,744			1,676,475
Less unamortized discounts and debt issuance costs		(10,644	)		(11,054	)		(10,873	)		(11,462	)
Total long-term debt		1,757,560			1,062,340			1,598,871			1,665,013
Less current portion		(46,920	)		(46,920	)		(46,920	)		(46,920	)
Long-term debt, net of current portion	$	1,710,640		$	1,015,420		$	1,551,951		$	1,618,093

The Company has a $2,438.4 million credit facility (the Credit Facility), which consists of an $1,500.0 million revolving credit facility (the Revolving Facility) and a $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.

The Revolving Facility is a secured facility that permits continuously renewable borrowings of up to $1,500.0 million. As of ~~March 31,~~September 30, 2019, the Company had ~~$865.0~~$730.0 million outstanding under the Revolving Facility and no0 borrowings on the swing 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 $11.7 million ~~through June 30, 2021 and $23.5 million thereafter~~ until the balance is due in full on June 30, ~~2023.~~2024. As of ~~March 31,~~September 30, 2019, the Company had ~~$903.2~~$879.7 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 ~~March 31,~~September 30, 2019, 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 ~~3.53~~3.09 percent.

The Credit Facility requires the Company to comply with certain financial covenants, including 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 ~~March 31,~~September 30, 2019, 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.

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

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

The aggregate maturities of long-term debt at September 30, 2019 are as follows (in thousands):

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 ~~$400.0~~$900.0 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. 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 nine~~ months ended ~~March 31,~~September 30, 2019 and 2018 is as follows (in thousands):

All of the Company’s leases are operating leases. The ~~aggregate maturities~~current portion of ~~long-term debt at March 31, 2019~~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):

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):

The Company’s future minimum lease payments under non-cancelable operating leases for the remainder of the fiscal year ending June 30, 2020, and for each of the fiscal years thereafter, are as follows (in thousands):

The weighted-average remaining lease term (in years) and weighted-average discount rate was 6.62 years and 3.39 percent, respectively.

Cash paid for operating leases was $20.9 million for the three months ended September 30, 2019.

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.

Payments to the Company on cost-plus-fee and 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~~proposals through fiscal year ~~2016 and is auditing the Company’s incurred cost submissions for its fiscal years 2017 and~~ 2018. 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.

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

~~Stock-based~~For the three months ended September 30, 2019 and 2018, the Company recognized $7.0 million and $5.7 million of stock-based compensation, ~~expense recognized, together with~~respectively, that was related to restricted stock units (RSUs). The stock-based compensation was included in indirect costs and selling expenses in the ~~income tax benefits recognized, is as follows (in thousands):~~

Under the terms of the 2016 Amended and Restated Incentive Compensation Plan (the 2016 Plan), the Company may issue, among others, non-qualified stock options, restricted stock, ~~restricted stock units (RSUs),~~RSUs, stock settled appreciation rights (SSARs), 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 made in the form 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.

The Company granted performance-based stock awards to key employees in October of 2018 and September of 2017 and 2016. The final number of PRSUs that are earned by participants and vest is based on the achievement of a specified EPS for the fiscal year and on the average share price for the 90-day period ended for the following three years. If the 90-day average share price of the Company’s stock in years one, two and three exceeds the 90-day average share price at the grant date by 100 percent or more the number of shares ultimately awarded could range up to 200 percent of the specified target award. In addition to the performance and market conditions, there is a service vesting condition that stipulates 50 percent of the award will vest approximately three years from the grant date and 50 percent will vest approximately four years from the grant date, depending on the award date. During the second quarter of FY2020, the Company granted its annual performance-based stock awards to key employees.

The annual performance-based awards granted for each of the fiscal years presented were as follows:

	Performance-based stock awards granted		Number of additional shares earned under performance-based stock awards		Performance-based stock awards granted		Number of additional shares earned under performance-based stock awards
Fiscal year 2019		101,976		—		129,108		5,874
Fiscal year 2018		185,056		20,116		185,056		51,808
Fiscal year 2017		193,420		73,065		193,420		133,308

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 ~~March 31,~~September 30, 2019, cumulative grants of ~~589,893~~716,480 equity instruments underlying the shares authorized have been awarded, and ~~134,010~~145,189 of these instruments have been forfeited.

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

Activity related to RSUs during the ~~nine~~three months ended ~~March 31,~~September 30, 2019 is as follows:

As of ~~March 31,~~September 30, 2019, there was ~~$48.8~~$31.8 million of total unrecognized compensation costs related to RSUs scheduled to be recognized over a weighted-average period of ~~2.7~~2.4 years.

~~ASC 260,~~ Earnings ~~Per Share, 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~~diluted 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 chart below shows the calculation of basic and diluted earnings per sharecomputed as follows (in thousands, except per share ~~amounts)~~data):

	Three Months Ended				Nine Months Ended				Three Months Ended
	March 31,				March 31,				September 30,
	2019		2018		2019		2018		2019		2018
Net income	$	68,145	$	64,499	$	215,574	$	249,340	$	67,977	$	78,833
Weighted-average number of basic shares outstanding during the period		24,866		24,656		24,819		24,588		24,894		24,737
Dilutive effect of RSUs after application of treasury stock method		482		578		550		641		638		687
Weighted-average number of diluted shares outstanding during the period		25,348		25,234		25,369		25,229		25,532		25,424
Basic earnings per share	$	2.74	$	2.62	$	8.69	$	10.14	$	2.73	$	3.19
Diluted earnings per share	$	2.69	$	2.56	$	8.50	$	9.88	$	2.66	$	3.10

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 the Internal Revenue Service for the year 2015, ~~one~~two state ~~jurisdiction~~jurisdictions for the years ~~2015~~2011 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.

The Company’s total liability for unrecognized tax benefits as of ~~March 31,~~September 30, 2019 and June 30, ~~2018~~2019 was ~~$4.4~~$1.7 million and ~~$4.1~~$1.5 million, respectively. The ~~$4.4~~$1.7 million unrecognized tax benefit at ~~March 31,~~September 30, 2019, if recognized, would impact the Company’s effective tax rate.

For the three months ended ~~March 31,~~September 30, 2019, the effective income tax rate was ~~16.3~~18.4 percent compared with ~~31.6~~13.1 percent for the same period last year. The Company’s effective income tax rate ~~decreased~~increased primarily due ~~to: the full-year impact of the lower U.S. income tax rate pursuant~~ to the ~~Tax Cuts and Jobs Act~~timing of ~~2017 (TCJA); writing off certain historic deferred~~excess tax ~~balances due to an internal reorganization related to the integration of an acquired company; and from changes in our estimated benefit from the federal research and development tax credit.~~benefits under ASU 2016-09, Stock Compensation. For both comparative reporting periods, the Company’s effective tax rate was impacted by excess tax benefits under ASU 2016-09, Stock Compensation, and the change in value of assets invested in COLI policies. If gains or losses on the COLI investments throughout the rest of the current fiscal year vary from our estimates, our ~~FY2019~~FY2020 effective tax rate will fluctuate in future quarters for the year ending June 30, ~~2019.~~

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

~~For the nine months ended March 31, 2019, the effective income tax rate was 18.7 percent compared with (9.6) percent for the same period last year.~~ For the nine months ended March 31, 2019, the Company’s effective income tax rate increased year-over-year due to the favorable remeasurement of the Company's deferred tax liability pursuant to the TCJA in the prior year, partially offset by: the full-year impact of the lower U.S. income tax rate pursuant to the TCJA; writing off certain historic deferred tax balances due to an internal reorganization related to the integration of an acquired company; and from changes in our estimated benefit from the federal research and development tax credit. For both comparative reporting periods, the Company’s effective tax rate was impacted by excess tax benefits under ASU 2016-09 and the change in value of assets invested in COLI policies. If gains or losses on the COLI investments throughout the rest of the current fiscal year vary from our estimates, our FY2019 effective tax rate will fluctuate in future quarters for the year ending June 30, 2019.

The TCJA was enacted on December 22, 2017. Among other things, the TCJA reduced the U.S. federal corporate tax rate from 35.0 percent to 21.0 percent effective January 1, 2018. Prior to the expiration of the one-year measurement period of Staff Accounting Bulletin No. 118 on December 22, 2018, the Company finalized its tax reform positions related to: (1) transition tax liability; (2) remeasurement of deferred taxes; and (3) the limitation on the deductibility of certain executive compensation. In prior periods, the Company was able to make reasonable estimates and record provisional amounts for each of these elements.

During the nine months ended March 31, 2019, the Company recognized a $2.2 million tax benefit related to the reduction of our provisional calculation of the one-time transition tax liability and a $0.5 million tax benefit related to its final analysis of its deferred tax remeasurement. No other adjustments were made to FY2018 provisional amounts during the nine months ended March 31, 2019.2020.

The Company reports operating results and financial data in ~~two~~2 segments: domestic operations and international operations. Domestic operations provide information solutions and services 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 customers. International operations offer services to both commercial and non-U.S. government customers primarily within the Company’s business systems and enterprise IT markets. The Company evaluates the performance of its operating segments based on net income. Summarized financial information concerning the Company’s reportable segments is as follows (in thousands):

	Domestic Operations		International Operations		Total		Domestic Operations		International Operations		Total
Three Months Ended March 31, 2019
Three Months Ended September 30, 2019
Revenue from external customers	$	1,225,531	$	39,427	$	1,264,958	$	1,324,773	$	38,619	$	1,363,392
Net income		63,759		4,386		68,145		64,211		3,766		67,977
Three Months Ended March 31, 2018
Three Months Ended September 30, 2018
Revenue from external customers	$	1,079,953	$	44,147	$	1,124,100	$	1,126,523	$	39,341	$	1,165,864
Net income		60,779		3,720		64,499		75,449		3,384		78,833
Nine Months Ended March 31, 2019
Revenue from external customers	$	3,494,606	$	117,857	$	3,612,463
Net income		203,765		11,809		215,574
Nine Months Ended March 31, 2018
Revenue from external customers	$	3,177,659	$	120,115	$	3,297,774
Net income		238,542		10,798		249,340

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

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:

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 ~~March 31,~~September 30, 2019 and June 30, ~~2018,~~2019, and the level they fall within the fair value hierarchy (in thousands):

			March 31,		June 30,				September 30,		June 30,
	Financial Statement	Fair Value	2019		2018		Financial Statement	Fair Value	2019		2019
Description of Financial Instrument	Classification	Hierarchy	Fair Value				Classification	Hierarchy	Fair Value
Contingent consideration	Other accrued expenses and current liabilities	Level 3	$	11,300	$	693	Other accrued expenses and current liabilities	Level 3	$	12,800	$	12,000
Contingent consideration	Other long-term liabilities	Level 3	$	—	$	11,000
Interest rate swap agreements	Prepaid expenses and other current assets	Level 2	$	227	$	672	Other long-term assets	Level 2	$	892	$	2,081
Interest rate swap agreements	Other long-term assets	Level 2	$	6,203	$	13,405	Other accrued expenses and current liabilities	Level 2	$	49	$	43
Interest rate swap agreements							Other long-term liabilities	Level 2	$	17,804	$	12,264

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 the Company pay contingent consideration in the event the acquired businesses achieved certain specified earnings results during the two and three year periods subsequent to each acquisition. The Company determined the fair value of the contingent consideration 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 the end of each reporting period, the fair value of the contingent consideration was remeasured and any changes were recorded in indirect costs and selling expenses. During the ~~nine~~three months ended ~~March 31,~~September 30, 2019, this remeasurement resulted in a ~~$0.3~~$0.8 million change to the liability recorded.

~~In April 2019,~~During the second quarter of FY2020, the Company ~~entered into three additional floating-to-fixed interest rate swap agreements~~completed 3 acquisitions for an aggregate ~~notional amount~~purchase price of ~~$300.0~~approximately $105.0 million. ~~These swaps will become effective on July 1, 2019 and mature at various dates through FY2026. The Company has designated these swaps as cash flow hedges.~~

Item 2. Management’s Discussion and A~~nalysis~~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 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; 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, implementation of spending cuts (sequestration) 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 and/or schedule contracts with the General Services Administration; the potential impact of the announcement or consummation of a proposed transaction and our 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.

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 ~~nine~~three months ended ~~March 31,~~September 30, 2019, ~~$3.4~~the Company generated $1.3 billion or ~~95.2~~95.5 percent of our revenue ~~was derived~~ from contracts with U.S. government agencies compared with ~~$3.1~~$1.1 billion or ~~94.8~~95.2 percent for the same period in 2018. Our contract revenues were generated from both prime and subcontractor relationships. WeIn addition to U.S. government agencies, we also provide services to commercial customers and, through our international operations, to non-U.S. government agencies. ~~We provide our services~~

The Company provides Expertise and ~~solutions~~Technology to ~~our~~Enterprise and Mission customers in ~~the following market areas:~~

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.In late July 2019, Congress has amended the BCA primarily through the passage of bipartisan budget acts in 2013, 2015, and 2018. Each of these acts raised discretionary spending caps for the government fiscal years 2014 through 2019. In particular,passed the Bipartisan Budget Act of 2019 (BBA 2019), which increased the caps for defense and non-defense spending for GFY 2020 and GFY 2021, established discretionary spending caps for GFY 2020 and GFY 2021, and suspended the national debt limit through July 2021. On August 2, 2019, the President signed the measure into law. While Congress has yet to determine the final allocations for the 12 appropriation bills for GFY 2020, bipartisan support remains for continued investment in the areas of defense and national security. Specifically, the BBA 2019 calls for defense spending, including Overseas Contingency Operations funds, of $738 billion in GFY 2020 and $740.5 billion in GFY 2021. Both represent increases from GFY 2019 levels of $716 billion, which itself represented an increase over GFY 2018 ~~(BBA 2018),~~levels.

During those periods of time when appropriations bills have not been passed and signed into law, government agencies operate under a continuing resolution (CR). Depending on their scope, duration, and other factors, CRs can negatively impact our business due to delays in ~~February 2018, established a framework~~new program starts, delays in contract award decisions, and increased the caps on defense and non-defense discretionary spending for the government’s FY2018 and FY2019. Defense caps were increased by $80 billion for FY2018 and $85 billion for FY2019, while non-defense caps were increased by $63 billion and $68 billion, respectively.

other factors. We continuously review our operations in an attempt to identify programs potentially at risk from CRs so that we can consider appropriate contingency plans. On September ~~21, 2018,~~27, 2019, the ~~president~~President signed into law a ~~$148 billion “minibus” of three FY2019~~continuing resolution that funds federal agencies at GFY19 levels through November 21, 2019. After this date, unless appropriations bills ~~which included military construction~~have been passed by Congress and ~~Veterans Affairs. On September 28, 2018,~~signed by the ~~president~~President, or a new CR is passed and signed into law, the government must cease operations, or shutdown, except in certain emergency situations or when the law authorizes continued activity.

Across our addressable market, we provide expertise and technology to government enterprise and mission customers. Based on the analysis of an ~~$855~~independent market consultant retained by the Company, we believe that the total addressable market for our offerings is approximately $220 billion, ~~“minibus”~~comprised of ~~two more FY2019 appropriations bills, Defense and Labor-HHS-Education, along with a continuing resolution (CR)~~approximately $130 billion for the ~~remaining appropriations bills that kept~~enterprise market area and approximately $90 billion for the ~~entire government operating through December 7, 2018. From December 8~~mission market area. Our addressable market is expected to ~~December 21, 2018,~~continue to grow over the ~~nine Cabinet departments~~next several years. Approximately 70 percent of our revenue comes from defense-related customers, including those in the Intelligence Community (IC), with additional revenue coming from non-defense IC, homeland security, and ~~dozens of smaller agencies whose appropriations bills were not passed operated under a CR. From December 22, 2018~~other federal civilian customers.

We continue to January 25, 2019, these departments and agencies were shutdown. On January 25, 2019, the president signed into law a short-term measure that funded the government through February 15, 2019. 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. The government shutdown that ended in January 2019 did not have a material impact onalign the Company’s ~~results~~capabilities with well-funded budget priorities and took steps to maintain a competitive cost structure in line with our expectations of ~~operations for the three and nine months ended March 31, 2019. On February 15, 2019, the president signed into law a $333 billion omnibus appropriations bill that funded for the remainder~~future business opportunities. In light of ~~the government fiscal year the nine Cabinet departments and dozens of smaller agencies that were affected by the government shutdown.~~

With the passage of the BBA 2018, the statutory debt limit of the federal government was suspended through March 1, 2019, allowing the government to borrow whatever it needed through that time to fully finance operations. On March 2, 2019, the statutory debt limit was reinstated, at which time the Secretary of the Treasury declared a “debt issuance suspension” and began implementing “extraordinary measures” to borrow additional funds without breaching the debt limit. The Congressional Budget Office estimates that, if the debt limit remains unchanged, the ability of the Department of Treasury to borrow using these measures will be exhausted near the end of this government fiscal year or early in the next one. When the debt limit is exceeded, some federal payments to creditors, vendors, contractors, state and local governments, beneficiaries, and other entities would either be delayed or limited. These delays in payments would, in effect, be borrowings from contractors suchactions, as us, 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 suchwell as the ~~Prompt Payment Act, which directs the government~~budgetary environment discussed above, we believe we are well positioned to pay interest penalties to contractors if it does not pay them by the required payment date. Were there 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 the federal government’s ability to borrow in the future.

~~We also~~ continue to ~~face some uncertainties due~~win new business in our large addressable market. We believe that the following trends will influence the USG’s spending in our addressable market:

We believe that our customers' use of lowest price/technically acceptable (LPTA) procurements, which contributed to ~~the current general business environment, and we~~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 and budgetary priorities limiting or delaying federal government spending in general.

Results of Operations for the Three Months Ended ~~March 31,~~September 30, 2019 and 2018

~~Revenue. The table below sets forth revenue by customer type with related percentages of total revenue for the three months ended March 31, 2019 and 2018, respectively:~~

For the three months ended March 31, 2019, total revenue increased by 12.5 percent, or $140.9 million, compared with the same period a year ago. This increase was attributable to both acquired revenues and organic growth. Acquired revenues accounted for $110.7 million of the increase while organic growth accounted for $30.2 million.

DoD revenue increased 16.3 percent, or $124.3 million, for the three months ended March 31, 2019, compared with the same period a year ago. Acquired revenues accounted for $94.7 million of this increase while organic growth accounted for $29.6 million. DoD revenue includes services provided to the U.S. Army, our largest customer, where our services focus on tactical military intelligence 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 increased 6.4 percent, or $19.0 million, for the three months ended March 31, 2019, compared with the same period a year ago. This increase was primarily attributable to $15.9 million of acquired revenues and organic growth in enterprise information technology support services. Federal civilian agency revenue also includes services provided to non-DoD national intelligence agencies.

Commercial and other revenue decreased 3.9 percent, or $2.4 million for the three months ended March 31, 2019, compared with the same period a year ago. This decrease was primarily attributable to lower international and state and local services partially offset by acquired businesses within both our international and domestic operations. Of the total commercial and other revenue, international operations accounted for 66.2 percent, or $39.5 million for the three months ended March 31, 2019, compared with 71.2 percent or $44.1 million for the same period a year ago. Domestic operations accounted for 33.8 percent or $20.1 million, compared with 28.8 percent or $17.9 million for the same period a year ago.

Income from Operations. The following table ~~sets forth~~provides the relative percentage that certain items of expense and earnings bear to revenue for the three months ended ~~March 31,~~September 30, 2019 and 2018, respectively.

	Dollar Amount				Percentage of Revenue												Dollar Amount				Percentage of Revenue
	Three Months Ended				Three Months Ended												Three Months Ended				Three Months Ended
	March 31,				March 31,						Change						September 30,				September 30,						Change
(dollars in thousands)	2019		2018		2019			2018			$			%			2019		2018		2019			2018			$			%
Revenue	$	1,264,958	$	1,124,100		100.0	%		100.0	%	$	140,858			12.5	%	$	1,363,392	$	1,165,864		100.0	%		100.0	%	$	197,528			16.9	%
Costs of revenue
Direct costs		824,024		728,444		65.1			64.8			95,580			13.1			878,881		782,760		64.5			67.2			96,121			12.3
Indirect costs and selling expenses		324,828		273,145		25.7			24.3			51,683			18.9			357,592		264,757		26.2			22.7			92,835			35.1
Depreciation and amortization		21,198		17,717		1.7			1.6			3,481			19.6			26,762		18,747		2.0			1.6			8,015			42.8
Total costs of revenue		1,170,050		1,019,306		92.5			90.7			150,744			14.8			1,263,235		1,066,264		92.7			91.5			196,971			18.5
Income from operations		94,908		104,794		7.5			9.3			(9,886	)		(9.4	)		100,157		99,600		7.3			8.5			557			0.6
Interest expense and other, net		13,466		10,566		1.1			0.9			2,900			27.4			16,811		8,886		1.2			0.7			7,925			89.2
Income before income taxes		81,442		94,228		6.4			8.4			(12,786	)		(13.6	)		83,346		90,714		6.1			7.8			(7,368	)		(8.1	)
Income tax expense		13,297		29,729		1.0			2.7			(16,432	)		(55.3	)		15,369		11,881		1.1			1.0			3,488			29.4
Net income	$	68,145	$	64,499		5.4	%		5.7	%	$	3,646			5.7	%	$	67,977	$	78,833		5.0	%		6.8	%	$	(10,856	)		(13.8	)%

For the three months ended ~~March 31,~~September 30, 2019, ~~income from operations was $94.9 million. This represents a decrease of $9.9~~total revenue increased by 16.9 percent, or $197.5 million, ~~or 9.4 percent,~~ compared with the same period a year ago. ~~Our operating margin~~This increase was attributable to organic growth on existing programs, new contract awards, and acquired revenues, partially offset by the completion of ~~7.5 percent for~~certain contracts. Out of our primary customer groups, Department of Defense and Federal Civilian revenue increased by $119.4 million and $71.8 million, respectively, compared with the same period ended March 31, 2019 decreased from 9.3 percent during the period ended March 31, 2018. This decrease in operating margins for the three months ended March 31, 2019, is primarily related to an increase in indirect costs and selling expenses related to the LGS acquisition. In addition, for the three months ended March 31, 2018, the Company had increased profitability in program performance on fixed price and fixed unit price contracts.a year ago.

For the three months ended ~~March 31,~~September 30, 2019, direct costs increased ~~13.1~~12.3 percent or ~~$95.6~~$96.1 million, compared with the same period a year ago. The increase in direct costs is related to organic growth ofon existing programs and ~~acquisitions.~~acquired contracts. As a percentage of revenue, direct costs were ~~65.1~~64.5 percent and ~~64.8~~67.2 percent for the three months ended ~~March 31,~~September 30, 2019 and 2018, respectively. Direct costs include direct labor and other direct costs (ODCs), which include, among other expenses, subcontracted labor and material purchases.

Indirect costs and selling expenses include fringe benefits (attributable to both direct and indirect labor), facilities, marketing and bid and proposal (B&P) costs, indirect labor, and other discretionary expenses. Indirect costs and selling expenses increased ~~$51.7~~$92.8 million or ~~18.9~~35.1 percent for the three months ended ~~March 31,~~September 30, 2019, compared with the same period a year ago. As a percentage of revenue, indirect costs and selling expenses were ~~25.7~~26.2 percent and ~~24.3~~22.7 percent for the three months ended ~~March 31,~~September 30, 2019 and 2018, respectively. This percentage increase is driven primarily by ~~transaction~~increased independent research and development (IR&D) efforts, increased B&P costs, ~~related~~increased indirect labor and additional fringe benefits for our large workforce, partially offset by reduced overhead expenses with the transition to ~~the LGS acquisition.~~our shared service center.

Depreciation and amortization expense increased ~~$3.5~~$8.0 million or ~~19.6~~42.8 percent for the three months ended ~~March 31,~~September 30, 2019, compared with the same period a year ago. The increase is primarily attributable to intangible amortization from recent acquisitions and depreciation from the Company’s higher average property and equipment.

For the three months ended ~~March 31,~~September 30, 2019, interest expense and other, net increased ~~$2.9~~$7.9 million or ~~27.4~~89.2 percent, compared with the same period a year ago. The increase isin interest expense is primarily attributable to higher outstanding debt balances on the Company’s Credit Facility ~~that occurred in the three months ended March 31, 2019 in support~~as a result of recent acquisitions. ~~In addition, the Company incurred $1.4 million of purchase discount fees on its MARPA Facility.~~

For the three months ended ~~March 31,~~September 30, 2019, the effective income tax rate was ~~16.3~~18.4 percent compared with ~~31.6~~13.1 percent for the same period last year. The Company’s effective income tax rate ~~decreased~~increased primarily due ~~to: the full-year impact of the lower U.S. income tax rate pursuant~~ to the ~~TCJA; writing off certain historic deferred~~timing of excess tax ~~balances due to an internal reorganization related to the integration of an acquired company; and from changes in our estimated benefit from the federal research and development tax credit.~~benefits under ASU 2016-09, Stock Compensation. For both comparative reporting periods, the Company’s effective tax rate was impacted by excess tax benefits under ASU 2016-09, Stock Compensation, and the change in value of assets invested in COLI policies. If gains or losses on the COLI investments throughout the rest of the current fiscal year vary from our estimates, our ~~FY2019~~FY2020 effective tax rate will fluctuate in future quarters for the year ending June 30, ~~2019.~~2020.

~~Revenue. The table below sets forth revenue by customer type with related percentages of total revenue for the nine months ended March 31, 2019 and 2018, respectively:~~

For the nine months ended March 31, 2019, total revenue increased by 9.5 percent, or $314.7 million, compared with the same period a year ago. This increase was attributable to both acquired revenues and organic growth. Acquired revenues accounted for $222.9 million of the increase while organic growth accounted for $91.8 million.

DoD revenue increased 14.2 percent, or $315.6 million, for the nine months ended March 31, 2019, compared with the same period a year ago. Acquired revenues accounted for $199.7 million of this increase while organic growth accounted for $115.9. DoD revenue includes services provided to the U.S. Army, our largest customer, where our services focus on tactical military intelligence 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 0.4 percent, or $3.7 million, for the nine months ended March 31, 2019, compared with the same period a year ago. This decrease was primarily attributable to reduced intelligence and litigation support services offset by $16.0 million in acquisition revenue and organic growth in enterprise information technology support services. Federal civilian agency revenue also includes services provided to non-DoD national intelligence agencies.

Commercial and other revenue increased 1.6 percent, or $2.8 million for the nine months ended March 31, 2019, compared with the same period a year ago. This increase was primarily attributable to acquired businesses within both our international and domestic operations. Of the total commercial and other revenue, international operations accounted for 67.8 percent, or $117.9 million for the nine months ended March 31, 2019, compared with 70.2 percent or $120.1 million for the same period a year ago. Domestic operations accounted for 32.2 percent or $56.0 million, compared with 29.8 percent or $51.0 million for 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 nine months ended March 31, 2019 and 2018, respectively.~~

For the nine months ended March 31, 2019, income from operations was $296.8 million. This represents an increase of $36.4 million, or 14.0 percent, compared with the same period a year ago. Our operating margin of 8.2 percent for the period ended March 31, 2019 increased from 7.9 percent during the period ended March 31, 2018. This increase is primarily attributable to increased gross margins on our revenue arrangements from program performance and acquisitions.

For the nine months ended March 31, 2019, direct costs increased 9.2 percent or $202.4 million, compared with the same period a year ago. The increase in direct costs is related to organic growth of programs and acquisitions. As a percentage of revenue, direct costs were 66.4 percent and 66.6 percent for the nine months ended March 31, 2019 and 2018, respectively. Direct costs include direct labor and ODCs, which include, among other expenses, subcontracted labor and material purchases.

Indirect costs and selling expenses include fringe benefits (attributable to both direct and indirect labor), facilities, marketing and B&P costs, indirect labor, and other discretionary expenses. Indirect costs and selling expenses increased $70.7 million or 9.0 percent for the nine months ended March 31, 2019, compared with the same period a year ago. As a percentage of revenue, indirect costs and selling expenses were 23.8 percent and 23.9 percent for the nine months ended March 31, 2019 and 2018, respectively.

Depreciation and amortization expense increased $5.2 million or 9.8 percent for the nine months ended March 31, 2019, compared with the same period a year ago. The increase is primarily attributable to intangible amortization from recent acquisitions and depreciation from the Company’s higher average property and equipment.

For the nine months ended March 31, 2019, interest expense and other, net decreased $1.0 million or 3.0 percent, compared with the same period a year ago. The decrease is primarily attributable to lower average outstanding debt balances.

For the nine months ended March 31, 2019, the effective income tax rate was 18.7 percent compared with (9.6) percent for the same period last year. For the nine months ended March 31, 2019, the Company’s effective income tax rate increased year-over-year due to the favorable remeasurement of the Company's deferred tax liability pursuant to the TCJA in the prior year, partially offset by: the full-year impact of the lower U.S. income tax rate pursuant to the TCJA; writing off certain historic deferred tax balances due to an internal reorganization related to the integration of an acquired company; and from changes in our estimated benefit from the federal research and development tax credit. For both comparative reporting periods, the Company’s effective tax rate was impacted by excess tax benefits under ASU 2016-09 and the change in value of assets invested in COLI policies. If gains or losses on the COLI investments throughout the rest of the current fiscal year vary from our estimates, our FY2019 effective tax rate will fluctuate in future quarters for the year ending June 30, 2019.

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.~~vehicle until such task orders are issued.

As of ~~March 31,~~September 30, 2019, the Company had total backlog of ~~$14.9~~$19.5 billion, of which ~~$2.9~~$3.3 billion was funded. The total backlog consists of remaining performance obligations (see Note 7 – Revenue Recognition) 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.

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 Facility (as defined and discussed in Note 9)10) and available borrowings under our Credit Facility (as defined in Note ~~10)~~11) described below.

The Company has a $2,438.4 million Credit Facility, which consists of an $1,500.0 million Revolving Facility and a $938.4 million 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 ~~March 31,~~September 30, 2019, we had ~~$865.0~~$730.0 million outstanding under the Revolving Facility and no borrowings on the swing line.

The Term Loan is a five-year secured facility under which principal payments are due in quarterly installments of $11.7 million ~~through June 30, 2021 and $23.5 million thereafter~~ until the balance is due in full on June 30, ~~2023.~~2024. As of ~~March 31,~~September 30, 2019, ~~$903.2~~$879.7 million was outstanding under the Term Loan.

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 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 and cash equivalents were ~~$93.8~~$83.2 million and ~~$66.2~~$75.5 million as of ~~March 31,~~September 30, 2019 and ~~June 30,~~ 2018, respectively. A summary of cash flow information is presented below:

Our operating cash flow was ~~$452.8~~$103.2 million for the ~~nine~~three months ended ~~March 31,~~September 30, 2019. This represents an increase of ~~$202.0~~$20.1 million or ~~80.5~~24.2 percent, from our operating cash flows of ~~$250.8~~$83.1 million for the ~~nine~~three months ended ~~March 31,~~September 30, 2018. The year-over-year increase is primarily related to ~~the proceeds from sold receivables to the Company’s MARPA Facility.~~strong cash collections on our accounts receivable. Days sales outstanding (DSO) was 5753 days at ~~March 31,~~September 30, 2019, compared with 6267 days at ~~March 31,~~September 30, 2018.

Cash used in investing activities was ~~$1.1 billion~~$23.9 million and ~~$78.5~~$99.7 million during the ~~nine~~three months ended ~~March 31,~~September 30, 2019 and 2018, respectively. During the ~~nine~~three months ended ~~March 31,~~September 30, 2019, we paid ~~$1.07 billion~~$1.4 million for business acquisitions, as compared to ~~$50.4~~$90.1 million during the same period a year ago. Purchases of office and computer related equipment of ~~$29.5~~$22.5 million and ~~$31.8~~$9.4 million in the ~~nine months~~first quarter of ~~FY2019~~FY2020 and ~~FY2018,~~FY2019, respectively, accounted for a majority of the remaining funds used in investing activities.

Cash used in financing activities was $67.1 million during the three months ended September 30, 2019, while cash provided by financing activities was ~~$673.9~~$26.2 million during the ~~nine~~three months ended ~~March 31, 2019, while cash used in financing activities was $183.3 million during~~September 30, 2019. During the ~~nine~~three months ended ~~March 31, 2018. During the nine months ended March 31,~~September 30, 2019, we had net ~~borrowings~~repayments under our Credit Facility of ~~$693.4~~$66.7 million as compared to net ~~repayments~~borrowings of ~~$151.0~~$33.3 million for the period ended ~~March 31,~~September 30, 2018. During the ~~nine~~three months ended ~~March 31,~~September 30, 2019 and ~~2018, we paid contingent consideration related to various prior acquisitions of $0.6 million and $11.6 million, respectively. During the nine months ended March 31, 2019 and March 31,~~September 30, 2018, we also used cash within financing activities of ~~$18.8~~$0.5 million and ~~$20.7~~$6.6 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, 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.

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, such 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. For domestic operations, 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 contained in our Annual Report on Form 10-K for the year ended June 30, 2018. 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. We have no other material off-balance sheet financing arrangements.

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 ~~$400.0~~$900.0 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 ~~nine~~three months ended ~~March 31,~~September 30, 2019 would have fluctuated by approximately ~~$4.3~~$1.8 million.

Approximately ~~3.3~~2.8 percent and ~~3.6~~3.4 percent of our total revenue in ~~nine~~three months ended ~~March 31,~~September 30, 2019 and 2018, 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 ~~March 31,~~September 30, 2019, we held a combination of euros and pounds sterling in the U.K. and in the Netherlands equivalent to approximately ~~$37.4~~$36.7 million. This allows us to better utilize our cash resources on behalf of our foreign subsidiaries, thereby mitigating foreign currency conversion risks.

As of the end of the 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 ~~March 31,~~September 30, 2019.

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 ~~March 31,~~September 30, 2019.

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, ~~2018~~2019 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 Premier Technology, Inc. is held liable to Plaintiffs, as Plaintiffs are seeking to hold CACI Premier 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 intends to file a motion to stay the proceedings in the district court pending filing and disposition of a 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, ~~2018~~2019 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.

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, ~~2018.~~2019. There have been no material changes from the risk factors described in that report.

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

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.


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


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

		PAGE
PART I:	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Statements of Operations (Unaudited) for the Three ~~and Nine Months~~ Ended ~~March 31,~~September 30, 2019 and 2018	3

	Consolidated Statements of Comprehensive Income (Unaudited) for the Three ~~and Nine Months~~ Ended ~~March 31,~~September 30, 2019 and 2018	4

	Consolidated Balance Sheets (Unaudited) as of ~~March 31,~~September 30, 2019 and June 30, ~~2018~~2019	5

	Consolidated Statements of Cash Flows (Unaudited) for the ~~Nine~~Three Months Ended ~~March 31,~~September 30, 2019 and 2018	6

	Consolidated Statements of Shareholder’s Equity (Unaudited) for the Three ~~and Nine~~ Months Ended ~~March 31,~~September 30, 2019 and 2018	7

	Notes to Unaudited Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2420

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3325

Item 4.	Controls and Procedures	3325


PART II:	OTHER INFORMATION

Item 1.	Legal Proceedings	3427

Item 1A.	Risk Factors	3428

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3528

Item 3.	Defaults Upon Senior Securities	3528

Item 4.	Mine Safety Disclosures	3528

Item 5.	Other Information	3528

Item 6.	Exhibits	3529

	Signatures	3630

	Nine Months Ended March 31,
	2019		2018
Revenue	$	3,897,994	$	3,558,381
Net income		225,538		238,453
Basic EPS		9.09		9.70
Diluted EPS		8.89		9.45

Fiscal year ending June 30,	Amount
2020 (nine months)	$	43,219
2021		56,520
2022		53,358
2023		48,181
2024		41,436
Thereafter		179,292
Total intangible assets, net	$	422,006

	As Adjusted Under ASC 605		Effect of ASC 606		As Reported Under ASC 606
Assets:
Accounts receivable, net	$	858,963	$	30,699	$	889,662
Prepaid expenses and other current assets		96,962		2,624		99,586
Other long-term assets		31,840		4,672		36,512
Liabilities and Shareholders' Equity:
Other accrued expenses and current liabilities		251,007		4,028		255,035
Deferred income taxes		198,513		5,818		204,331
Other long-term liabilities		92,099		—		92,099
Retained earnings		2,331,985		28,149		2,360,134

Accounts receivable	$	92,876
Prepaid expenses and other current assets		21,033
Property and equipment		23,282
Intangible assets		147,650
Goodwill		521,630
Accounts receivable, long-term		2,180
Other long-term assets		877
Accounts payable		(10,309	)
Accrued compensation and benefits		(22,339	)
Other accrued expenses and current liabilities		(9,185	)
Deferred income taxes		71
Other long-term liabilities		(8,288	)
Total estimated consideration	$	759,478

Fiscal year ending June 30,	Amount
2019 (three months)	$	14,620
2020		57,638
2021		56,486
2022		53,335
2023		48,158
Thereafter		220,601
Total intangible assets, net	$	450,838

Twelve months ending September 30,
2020	$	46,920
2021		46,920
2022		46,920
2023		46,920
2024		1,422,064
Principal amount of long-term debt		1,609,744
Less unamortized discounts and debt issuance costs		(10,873	)
Total long-term debt	$	1,598,871

Twelve months ending March 31,
2020	$	46,920
2021		46,920
2022		82,109
2023		93,839
2024		1,498,416
Principal amount of long-term debt		1,768,204
Less unamortized discounts and debt issuance costs		(10,644	)
Total long-term debt	$	1,757,560

	September 30, 2019
Operating lease right-of-use assets	$	346,273

Operating lease liabilities, current		69,715
Operating lease liabilities, noncurrent		324,601
	$	394,316

	Three Months Ended September 30, 2019
Operating lease cost	$	21,206
Short-term and variable lease cost		3,370
Sublease income		(464	)
	$	24,112

Fiscal year ending June 30,
2020 (nine months)	$	61,044
2021		76,464
2022		67,172
2023		57,465
2024		45,953
Thereafter		134,390
Total undiscounted lease payments		442,488
Less: imputed interest		(48,172	)
Total discounted lease liabilities	$	394,316

	RSUs
Unvested at June 30, 2018		663,987
Granted		271,266
Vested		(263,702	)
Forfeited		(28,643	)
Unvested at March 31, 2019		642,908
Weighted-average grant date fair value for RSUs	$	201.31

	RSUs
Unvested at June 30, 2019		628,806
Granted		123,592
Vested		(126,140	)
Forfeited		(7,006	)
Unvested at September 30, 2019		619,252

	Three Months Ended March 31,								Change
(dollars in thousands)	2019				2018				$			%
Department of Defense	$	887,030	70.1	%	$	762,752	67.9	%	$	124,278			16.3	%
Federal civilian agencies		318,374	25.2			299,349	26.6			19,025			6.4
Commercial and other		59,554	4.7			61,999	5.5			(2,445	)		(3.9	)
Total	$	1,264,958	100.0	%	$	1,124,100	100.0	%	$	140,858			12.5	%

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 2019		10,506	$	147.92		1,175,201		74,799
February 2019		—		—		—		—
March 2019		—		—		—		—
Total		10,506	$	147.92		1,175,201		74,799

			Incorporated by Reference
Exhibit No.	Description	Filed with this Form 10-Q	Form	Filing Date	Exhibit No.

10.1	Incremental Facility Amendment dated January 17, 2019, to the Credit Agreement, dated October 21, 2010, between CACI International Inc, Bank of America, N.A. and a consortium of participating banks		8-K	January 24, 2019	10.1

10.2	Purchase and Sale Agreement dated January 25, 2019, by and among Legos Holdings, LLC, Legos Intermediate Holdings, LLC, CoVant Technologies II LLC – Series LGS, Madison Dearborn Capital Partners VI-C, L.P., MDCP Legos Blocker, Inc., CACI, Inc.-Federal and Legos Holdings, LLC in its capacity as the initial seller representative		8-K	January 30, 2019	10.2

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 March 31, 2019 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. *

	CACI International Inc
	Registrant

Date: ~~May 2,~~November 1, 2019	By:	/s/ ~~Kenneth Asbury~~John S. Mengucci
		~~Kenneth Asbury~~John S. Mengucci
		President,
		Chief Executive Officer and Director
		(Principal Executive Officer)

Date: ~~May 2,~~November 1, 2019	By:	/s/ Thomas A. Mutryn
		Thomas A. Mutryn
		Executive Vice President,
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)

Date: ~~May 2,~~November 1, 2019	By:	/s/ Christopher A. Voci
		Christopher A. Voci
		Senior Vice President, Corporate Controller
		and Chief Accounting Officer
		(Principal Accounting Officer)

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