UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, ~~2020~~2021

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

For the transition period from to

Commission File Number 001-31400

CACI International Inc

(Exact name of registrant as specified in its charter)

Delaware

54-1345888

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

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

(Address of principal executive offices)

(703) 841-7800

(Registrant’s telephone number, including area code)

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


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

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant 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~~.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.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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 January ~~19, 2021,~~12, 2022, there were ~~25,231,269~~23,405,590 shares outstanding of CACI International Inc’s common stock, par value $0.10 per share.

CACI INTERNATIONAL INC

		PAGE
PART I:	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Operations ~~(Unaudited) for the Three and Six Months Ended December 31, 2020 and 201~~9	3

	Condensed Consolidated Statements of Comprehensive Income ~~(Unaudited) for the Three and Six Months Ended December 31, 2020 and 201~~9	4

	Condensed Consolidated Balance Sheets ~~(Unaudited) as of December 31, 2020 and June 30, 2020~~	5

	Condensed Consolidated Statements of Cash Flows ~~(Unaudited) for the Six Months Ended December 31, 2020 and 201~~9	6

	Condensed Consolidated Statements of Shareholder’s Equity ~~(Unaudited) for the Three and Six Months Ended December 31, 2020 and 201~~9	7

	Notes to ~~Unaudited~~Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2017

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2822

Item 4.	Controls and Procedures	2822


PART II:	OTHER INFORMATION

Item 1.	Legal Proceedings	3023

Item 1A.	Risk Factors	3225

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3225

Item 3.	Defaults Upon Senior Securities	3225

Item 4.	Mine Safety Disclosures	3225

Item 5.	Other Information	3225

Item 6.	Exhibits	3226

	Signatures	3327

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(~~amounts in thousands, except per share data)~~

Three Months Ended

Six Months Ended

December 31,

December 31,

2020

2019

2020

2019

Revenue

$
1,468,711

$
1,395,469

$
2,928,217

$
2,758,861

Operating costs and expenses:

Costs of revenue

947,131

904,867

1,887,065

1,783,748

Indirect costs and selling expenses

347,807

352,448

702,811

710,040

Depreciation and amortization

32,234

27,967

62,378

54,729

Total operating costs and expenses

1,327,172

1,285,282

2,652,254

2,548,517

Income from operations

141,539

110,187

275,963

210,344

Interest expense and other, net

9,087

14,714

19,067

31,525

Income before income taxes

132,452

95,473

256,896

178,819

Income tax expense

25,974

16,278

56,774

31,647

Net income

$
106,478

$
79,195

$
200,122

$
147,172

Basic earnings per share

$
4.22

$
3.16

$
7.95

$
5.89

Diluted earnings per share

$
4.18

$
3.11

$
7.86

$
5.78

Weighted-average basic shares outstanding

25,225

25,065

25,162

24,979

Weighted-average diluted shares outstanding

25,451

25,435

25,469

25,483

~~See Notes to Unaudited Consolidated Financial Statements~~

~~CACI INTERNATIONAL INC~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)~~

~~(amounts in thousands)~~

Three Months Ended

Six Months Ended

December 31,

December 31,

2020

2019

2020

2019

Net income

$
106,478

$
79,195

$
200,122

$
147,172

Other comprehensive income (loss):

Foreign currency translation adjustment

13,713

11,215

21,506

5,907

Change in fair value of interest rate swap agreements, net of tax

2,644

3,735

4,896

(1,229
)
Other comprehensive income (loss), net of tax

16,357

14,950

26,402

4,678

Comprehensive income

$
122,835

$
94,145

$
226,524

$
151,850

~~See Notes to Unaudited Consolidated Financial Statements~~

~~CACI INTERNATIONAL INC~~

~~CONSOLIDATED BALANCE SHEETS (UNAUDITED)~~

~~(amounts~~ in thousands, except per share data)

December 31,

June 30,

2020

2020

ASSETS

Current assets:

Cash and cash equivalents

$
102,114

$
107,236

Accounts receivable, net

747,845

841,227

Prepaid expenses and other current assets

145,747

137,423

Total current assets

995,706

1,085,886

Goodwill

3,631,496

3,407,110

Intangible assets, net

510,101

406,885

Property and equipment, net

180,258

170,521

Operating lease right-of-use assets

374,310

330,767

Supplemental retirement savings plan assets

102,176

96,355

Accounts receivable, long-term

11,248

9,629

Other long-term assets

46,190

35,319

Total assets

$
5,851,485

$
5,542,472

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Current portion of long-term debt

$
46,920

$
46,920

Accounts payable

60,683

89,961

Accrued compensation and benefits

379,978

338,760

Other accrued expenses and current liabilities

285,223

293,518

Total current liabilities

772,804

769,159

Long-term debt, net of current portion

1,371,222

1,357,519

Supplemental retirement savings plan obligations, net of current portion

110,517

103,004

Deferred income taxes

208,957

213,096

Operating lease liabilities, noncurrent

376,039

309,680

Other long-term liabilities

127,667

128,704

Total liabilities

$
2,967,206

$
2,881,162

COMMITMENTS AND CONTINGENCIES

Shareholders’ equity:

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; 42,663 shares
   issued and 25,231 outstanding at December 31, 2020 and 42,525 shares
   issued and 25,093 outstanding at June 30, 2020

4,266

4,253

Additional paid-in capital

570,176

573,744

Retained earnings

2,931,766

2,731,644

Accumulated other comprehensive loss

(45,883
)

(72,285
)
Treasury stock, at cost (17,432 and 17,432 shares, respectively)

(576,181
)

(576,181
)
Total CACI shareholders’ equity

2,884,144

2,661,175

Noncontrolling interest

135

135

Total shareholders’ equity

2,884,279

2,661,310

Total liabilities and shareholders’ equity

$
5,851,485

$
5,542,472

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Revenues	$	1,485,778	$	1,468,711	$	2,976,676	$	2,928,217
Costs of revenues:
Direct costs		974,018		947,131		1,948,189		1,887,065
Indirect costs and selling expenses		354,977		347,807		712,083		702,811
Depreciation and amortization		32,676		32,234		65,268		62,378
Total costs of revenues		1,361,671		1,327,172		2,725,540		2,652,254
Income from operations		124,107		141,539		251,136		275,963
Interest expense and other, net		11,009		9,087		21,407		19,067
Income before income taxes		113,098		132,452		229,729		256,896
Income taxes		22,799		25,974		51,321		56,774
Net income	$	90,299	$	106,478	$	178,408	$	200,122
Basic earnings per share	$	3.86	$	4.22	$	7.60	$	7.95
Diluted earnings per share	$	3.83	$	4.18	$	7.52	$	7.86
Weighted-average basic shares outstanding		23,399		25,225		23,480		25,162
Weighted-average diluted shares outstanding		23,598		25,451		23,722		25,469

See Notes to Unaudited Condensed Consolidated Financial Statements

~~CACI INTERNATIONAL INC~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)~~

~~(amounts in thousands)~~

Six Months Ended

December 31,

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$
200,122

$
147,172

Reconciliation of net income to net cash provided by operating activities:

Depreciation and amortization

62,378

54,729

Amortization of deferred financing costs

1,163

1,176

Non-cash lease expense

38,436

35,850

Stock-based compensation expense

15,041

14,499

Deferred income taxes

(6,311
)

14,104

Changes in operating assets and liabilities, net of effect of business acquisitions:

Accounts receivable, net

94,292

51,458

Prepaid expenses and other assets

(20,605
)

(28,921
)
Accounts payable and other accrued expenses

(30,087
)

8,121

Accrued compensation and benefits

39,461

1,529

Income taxes payable and receivable

11,107

(21,384
)
Operating lease liabilities

(37,916
)

(37,989
)
Long-term liabilities

15,206

(3,319
)
Net cash provided by operating activities

382,287

237,025

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures

(31,873
)

(41,035
)
Cash paid for business acquisitions, net of cash acquired

(355,127
)

(102,056
)
Net cash used in investing activities

(387,000
)

(143,091
)
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings under bank credit facilities

1,174,000

1,034,000

Principal payments made under bank credit facilities

(1,161,460
)

(1,102,460
)
Proceeds from employee stock purchase plans

4,664

3,665

Repurchases of common stock

(4,420
)

(3,596
)
Payment of taxes for equity transactions

(18,649
)

(29,083
)
Net cash used in financing activities

(5,865
)

(97,474
)
Effect of exchange rate changes on cash and cash equivalents

5,456

157

Net decrease in cash and cash equivalents

(5,122
)

(3,383
)
Cash and cash equivalents at beginning of period

107,236

72,028

Cash and cash equivalents at end of period

$
102,114

$
68,645

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the period for income taxes, net of refunds

$
50,903

$
38,048

Cash paid during the period for interest

$
17,210

$
28,410

Non-cash financing and investing activities:

Landlord sponsored tenant improvement

$
13,853

$
759

Accrued capital expenditures

$
1,047

$
4,910

~~See Notes to Unaudited Consolidated Financial Statements~~

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021			2020
Net income	$	90,299	$	106,478	$	178,408		$	200,122
Other comprehensive income (loss):
Foreign currency translation adjustment		575		13,713		(6,187	)		21,506
Change in fair value of interest rate swap agreements, net of tax		5,424		2,644		7,638			4,896
Other comprehensive income, net of tax		5,999		16,357		1,451			26,402
Comprehensive income	$	96,298	$	122,835	$	179,859		$	226,524

See Notes to Unaudited Condensed Consolidated Financial Statements

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except per share data)

	December 31,			June 30,
	2021			2021
ASSETS
Current assets:
Cash and cash equivalents	$	124,103		$	88,031
Accounts receivable, net		854,415			879,851
Prepaid expenses and other current assets		356,543			363,294
Total current assets		1,335,061			1,331,176
Goodwill		4,064,968			3,632,578
Intangible assets, net		620,688			476,106
Property, plant and equipment, net		190,214			190,444
Operating lease right-of-use assets		352,242			356,887
Supplemental retirement savings plan assets		103,698			102,984
Accounts receivable, long-term		11,398			12,159
Other long-term assets		72,421			70,038
Total assets	$	6,750,690		$	6,172,372
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	30,625		$	46,920
Accounts payable		217,795			148,636
Accrued compensation and benefits		372,501			409,275
Other accrued expenses and current liabilities		316,098			279,970
Total current liabilities		937,019			884,801
Long-term debt, net of current portion		2,079,831			1,688,919
Supplemental retirement savings plan obligations, net of current portion		109,444			104,490
Deferred income taxes		339,360			327,230
Operating lease liabilities, noncurrent		355,323			363,302
Other long-term liabilities		84,003			138,352
Total liabilities	$	3,904,980		$	3,507,094
COMMITMENTS AND CONTINGENCIES
Shareholders’ equity:
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; 42,810 shares issued and 23,406 outstanding at December 31, 2021 and 42,676 shares issued and 23,554 outstanding at June 30, 2021		4,281			4,268
Additional paid-in capital		555,968			484,260
Retained earnings		3,367,495			3,189,087
Accumulated other comprehensive loss		(34,840	)		(36,291	)
Treasury stock, at cost (19,404 and 19,122 shares, respectively)		(1,047,329	)		(976,181	)
Total CACI shareholders’ equity		2,845,575			2,665,143
Noncontrolling interest		135			135
Total shareholders’ equity		2,845,710			2,665,278
Total liabilities and shareholders’ equity	$	6,750,690		$	6,172,372

See Notes to Unaudited Condensed Consolidated Financial Statements

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Six Months Ended
	December 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	178,408		$	200,122
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		65,268			62,378
Amortization of deferred financing costs		1,147			1,163
Loss on extinguishment of debt		891			—
Non-cash lease expense		33,943			38,436
Stock-based compensation expense		14,698			15,041
Deferred income taxes		(1,962	)		(6,311	)
Changes in operating assets and liabilities, net of effect of business acquisitions:
Accounts receivable, net		72,650			94,292
Prepaid expenses and other assets		(24,701	)		(20,605	)
Accounts payable and other accrued expenses		39,535			(30,087	)
Accrued compensation and benefits		(89,752	)		39,461
Income taxes payable and receivable		46,402			11,107
Operating lease liabilities		(34,169	)		(37,916	)
Long-term liabilities		6,407			15,206
Net cash provided by operating activities		308,765			382,287
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(21,632	)		(31,873	)
Acquisition of businesses, net of cash acquired		(609,356	)		(355,127	)
Other		923			—
Net cash used in investing activities		(630,065	)		(387,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings under bank credit facilities		1,735,095			1,174,000
Principal payments made under bank credit facilities		(1,356,230	)		(1,161,460	)
Payment of financing costs under bank credit facilities		(6,286	)		—
Proceeds from employee stock purchase plans		5,221			4,664
Repurchases of common stock		(4,995	)		(4,420	)
Payment of taxes for equity transactions		(13,956	)		(18,649	)
Net cash provided by (used in) financing activities		358,849			(5,865	)
Effect of exchange rate changes on cash and cash equivalents		(1,477	)		5,456
Net change in cash and cash equivalents		36,072			(5,122	)
Cash and cash equivalents at beginning of period		88,031			107,236
Cash and cash equivalents at end of period	$	124,103		$	102,114
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for income taxes, net of refunds	$	4,509		$	50,903
Cash paid during the period for interest	$	19,042		$	17,210
Non-cash financing and investing activities:
Landlord sponsored tenant incentives	$	1,178		$	13,853
Accrued capital expenditures	$	813		$	1,047

See Notes to Unaudited Condensed Consolidated Financial Statements

CACI INTERNATIONAL INC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

(~~amounts~~ in thousands)

Common Stock
Shares Amount

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Treasury Stock
Shares Amount

Total CACI
Shareholders’
Equity

Noncontrolling
Interest

Total
Shareholders’
Equity

BALANCE, June 30, 2020

42,525

$
4,253

$
573,744

$
2,731,644

$
(72,285
)

17,432

$
(576,181
)

$
2,661,175

$
135

$
2,661,310

Net income

—

—

—

200,122

—

—

—

200,122

—

200,122

Stock-based compensation expense

—

—

15,041

—

—

—

—

15,041

—

15,041

Tax withholdings on restricted share vestings

138

13

(18,595
)

—

—

—

—

(18,582
)

—

(18,582
)
Change in fair value of interest rate swap agreements, net

—

—

—

—

4,896

—

—

4,896

—

4,896

Currency translation adjustment

—

—

—

—

21,506

—

—

21,506

—

21,506

Repurchases of common stock

—

—

(33
)

—

—

22

(4,387
)

(4,420
)

—

(4,420
)
Treasury stock issued under stock purchase plans

—

—

19

—

—

(22
)

4,387

4,406

—

4,406

BALANCE, December 31, 2020

42,663

$
4,266

$
570,176

$
2,931,766

$
(45,883
)

17,432

$
(576,181
)

$
2,884,144

$
135

$
2,884,279

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

—

—

—

147,172

—

—

—

147,172

—

147,172

Stock-based compensation expense

—

—

14,499

—

—

—

—

14,499

—

14,499

Tax withholdings on restricted share vestings

191

19

(29,089
)

—

—

—

—

(29,070
)

—

(29,070
)
Change in fair value of interest rate swap agreements, net

—

—

—

—

(1,229
)

—

—

(1,229
)

—

(1,229
)
Currency translation adjustment

—

—

—

—

5,907

—

—

5,907

—

5,907

Repurchases of common stock

—

—

(179
)

—

—

17

(3,417
)

(3,596
)

—

(3,596
)
Treasury stock issued under stock purchase plans

—

—

13

—

—

(17
)

3,418

3,431

—

3,431

BALANCE, December 31, 2019

42,505

$
4,250

$
561,521

$
2,557,336

$
(38,478
)

17,434

$
(576,184
)

$
2,508,445

$
135

$
2,508,580

BALANCE, September 30, 2020

42,537

$
4,254

$
580,513

$
2,825,288

$
(62,240
)

17,432

$
(576,181
)

$
2,771,634

$
135

$
2,771,769

Net income

—

—

—

106,478

—

—

—

106,478

—

106,478

Stock-based compensation expense

—

—

7,194

—

—

—

—

7,194

—

7,194

Tax withholdings on restricted share vestings

126

12

(17,418
)

—

—

—

—

(17,406
)

—

(17,406
)
Change in fair value of interest rate swap agreements, net

—

—

—

—

2,644

—

—

2,644

—

2,644

Currency translation adjustment

—

—

—

—

13,713

—

—

13,713

—

13,713

Repurchases of common stock

—

—

(113
)

—

—

12

(2,233
)

(2,346
)

—

(2,346
)
Treasury stock issued under stock purchase plans

—

—

—

—

—

(12
)

2,233

2,233

—

2,233

BALANCE, December 31, 2020

42,663

$
4,266

$
570,176

$
2,931,766

$
(45,883
)

17,432

$
(576,181
)

$
2,884,144

$
135

$
2,884,279

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

Net income

—

—

—

79,195

—

—

—

79,195

—

79,195

Stock-based compensation expense

—

—

7,461

—

—

—

—

7,461

—

7,461

Tax withholdings on restricted share vestings

113

11

(18,221
)

—

—

—

—

(18,210
)

—

(18,210
)
Change in fair value of interest rate swap agreements, net

—

—

—

—

3,735

—

—

3,735

—

3,735

Currency translation adjustment

—

—

—

—

11,215

—

—

11,215

—

11,215

Repurchases of common stock

—

—

(67
)

—

—

9

(1,812
)

(1,879
)

—

(1,879
)
Treasury stock issued under stock purchase plans

—

—

—

—

—

(9
)

1,812

1,812

—

1,812

BALANCE, December 31, 2019

42,505

$
4,250

$
561,521

$
2,557,336

$
(38,478
)

17,434

$
(576,184
)

$
2,508,445

$
135

$
2,508,580

	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 at September 30, 2021		42,710		4,271		561,688			3,277,196		(40,839	)		19,404			(1,047,329	)		2,754,987			135		2,755,122
Net income		—		—		—			90,299		—			—			—			90,299			—		90,299
Stock-based compensation expense		—		—		8,029			—		—			—			—			8,029			—		8,029
Tax withholdings on restricted share vestings		100		10		(13,536	)		—		—			—			—			(13,526	)		—		(13,526	)
Other comprehensive income, net of tax		—		—		—			—		5,999			—			—			5,999			—		5,999
Repurchases of common stock		—		—		(213	)		—		—			9			(2,310	)		(2,523	)		—		(2,523	)
Treasury stock issued under stock purchase plans		—		—		—			—		—			(9	)		2,310			2,310			—		2,310
Balance at December 31, 2021		42,810	$	4,281	$	555,968		$	3,367,495	$	(34,840	)		19,404		$	(1,047,329	)	$	2,845,575		$	135	$	2,845,710

Balance at September 30, 2020		42,537		4,254		580,513			2,825,288		(62,240	)		17,432			(576,181	)		2,771,634			135		2,771,769
Net income		—		—		—			106,478		—			—			—			106,478			—		106,478
Stock-based compensation expense		—		—		7,194			—		—			—			—			7,194			—		7,194
Tax withholdings on restricted share vestings		126		12		(17,418	)		—		—			—			—			(17,406	)		—		(17,406	)
Other comprehensive income, net of tax		—		—		—			—		16,357			—			—			16,357			—		16,357
Repurchases of common stock		—		—		(113	)		—		—			12			(2,233	)		(2,346	)		—		(2,346	)
Treasury stock issued under stock purchase plans		—		—		—			—		—			(12	)		2,233			2,233			—		2,233
Balance at December 31, 2020		42,663	$	4,266	$	570,176		$	2,931,766	$	(45,883	)		17,432		$	(576,181	)	$	2,884,144		$	135	$	2,884,279

Balance at June 30, 2021		42,676	$	4,268	$	484,260		$	3,189,087	$	(36,291	)		19,122		$	(976,181	)	$	2,665,143		$	135	$	2,665,278
Net income		—		—		—			178,408		—			—			—			178,408			—		178,408
Stock-based compensation expense		—		—		14,698			—		—			—			—			14,698			—		14,698
Tax withholdings on restricted share vestings		134		13		(13,812	)		—		—			—			—			(13,799	)		—		(13,799	)
Other comprehensive income, net of tax		—		—		—			—		1,451			—			—			1,451			—		1,451
Repurchases of common stock		—		—		70,761			—		—			301			(75,756	)		(4,995	)		—		(4,995	)
Treasury stock issued under stock purchase plans		—		—		61			—		—			(19	)		4,608			4,669			—		4,669
Balance at December 31, 2021		42,810	$	4,281	$	555,968		$	3,367,495	$	(34,840	)		19,404		$	(1,047,329	)	$	2,845,575		$	135	$	2,845,710

Balance at June 30, 2020		42,525	$	4,253	$	573,744		$	2,731,644	$	(72,285	)		17,432		$	(576,181	)	$	2,661,175		$	135	$	2,661,310
Net income		—		—		—			200,122		—			—			—			200,122			—		200,122
Stock-based compensation expense		—		—		15,041			—		—			—			—			15,041			—		15,041
Tax withholdings on restricted share vestings		138		13		(18,595	)		—		—			—			—			(18,582	)		—		(18,582	)
Other comprehensive income, net of tax		—		—		—			—		26,402			—			—			26,402			—		26,402
Repurchases of common stock		—		—		(33	)		—		—			22			(4,387	)		(4,420	)		—		(4,420	)
Treasury stock issued under stock purchase plans		—		—		19			—		—			(22	)		4,387			4,406			—		4,406
Balance at December 31, 2020		42,663	$	4,266	$	570,176		$	2,931,766	$	(45,883	)		17,432		$	(576,181	)	$	2,884,144		$	135	$	2,884,279

CACI INTERNATIONAL INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1.

Basis of Presentation

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

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and amounts included in other current assets and current liabilities that meet the definition of a financial instrument approximate fair value because of the short-term nature of these amounts. The fair value of the Company’s debt outstanding as of December 31, ~~2020~~2021 under its bank credit facility approximates its carrying value. The fair value of the Company’s debt under its bank credit facility was estimated using Level 2 inputs based on market data of companies with a corporate rating similar to CACI’s that have recently priced credit facilities. See Notes 1110 and ~~18.~~15.

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, ~~2020.~~2021. The results of operations for the three and six months ended December 31, ~~2020~~2021 are not necessarily indicative of the results to be expected for any subsequent interim period or for the full fiscal year.

Note 2.

Recent Accounting Pronouncements

~~Accounting Standards Updates Adopted~~

In ~~August 2018,~~March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ~~2018-15,~~ ~~Customer’s~~2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The guidance in this ASU is optional and expedients may be elected over time through December 31, 2022, as reference rate reform activities occur. During the year ended June 30, 2020, CACI elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives consistent with past presentation. Application of these expedients assisted in preserving the Company's presentation of derivatives as qualifying cash flow hedges. The Company continues to evaluate this guidance and may apply other elections as relevant contract and hedge accounting relationship modifications are made during the course of the reference rate reform transition period.

In October 2021, the FASB issued ASU 2021-08, Accounting for ~~Implementation Costs Incurred~~Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires contract assets and contract liabilities acquired in a ~~Cloud Computing Arrangement That Is a Service Contract, which aligns~~business combination to be recognized and measured by the ~~capitalization requirements~~acquirer on the acquisition date in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. Historically, such amounts were recognized by the acquirer at fair value in accordance with acquisition accounting. The standard is effective for ~~implementation costs incurred in a hosting arrangement that is a service contract~~fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with ~~the existing capitalization requirements for implementation costs associated with internal-use software (Subtopic 350-40).~~early adoption permitted. The Company early adopted this standard ~~on July 1, 2020 using the prospective method. The adoption of this standard~~in fiscal year 2022 and it did not have a material impact on our ~~operating results,~~consolidated financial ~~position or cash flows.~~

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments - Credit Losses,~~ which requires companies to record an allowance for expected credit losses over the contractual term of financial assets, including short-term trade receivables and contract assets, and expands disclosure requirements for credit quality of financial assets. The Company adopted this standard on July 1, 2020 using the modified retrospective method. The adoption of this standard did not have a material impact on our operating results, financial position or cash flows.statements.

Note 3.

~~Acquisition~~Acquisitions

~~On August 11, 2020,~~During the six months ended December 31, 2021 CACI completed ~~the acquisition of Ascent Vision Technologies (AVT)~~4 acquisitions that provide mission and enterprise technology to sensitive government customers. Their capabilities include open source intelligence solutions, specialized cyber, satellite communications, multi-domain photonics technologies for afree-space optical (FSO) communications, and commercial solutions for classified (CSfC) security technologies. The aggregate purchase ~~price of~~consideration was approximately ~~$348.8~~$616.2 million. ~~AVT specializes in Electro-Optical Infrared payloads, On-Board Computer Vision Processing and counter-unmanned aircraft system (C-UAS) solutions.~~ The Company preliminarily recognized fair values of the assets acquired and liabilities assumed and allocated ~~$211.0~~$436.4 million to goodwill and ~~$133.8~~$180.6 million to intangible assets. ~~The goodwill of $211.0 million is largely attributable to the assembled workforce of AVT and expected synergies between the Company and AVT.~~ The intangible assets consist of customer relationships of ~~$65.7~~$98.4 million and technology of ~~$68.1~~$82.2 million. The fair value attributed to intangible assets is being amortized on an accelerated basis over a range of approximately 15 to 20 years for customer relationships and over a range of approximately 5 to 10 years for technology. The fair value attributed to the intangible assets acquired was based on 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 ~~$319.7~~$485.0 million is deductible for income tax purposes.

Note 4.

Intangible Assets

Intangible assets, net including those allocated on a preliminary basis, consisted of the following (in thousands):

	December 31,			June 30,			December 31,			June 30,
	2020 (1)			2020			2021 (1)			2021
Intangible assets:
Customer contracts and related customer relationships	$	639,294		$	570,562		$	660,842		$	601,516
Acquired technologies		198,243			129,925			280,420			198,273
Other		7			8
Intangible assets		837,544			700,495			941,262			799,789
Less accumulated amortization:
Customer contracts and related customer relationships		(293,304	)		(271,708	)		(258,104	)		(276,498	)
Acquired technologies		(34,137	)		(21,900	)		(62,470	)		(47,185	)
Other		(2	)		(2	)
Less accumulated amortization		(327,443	)		(293,610	)		(320,574	)		(323,683	)
Total intangible assets, net	$	510,101		$	406,885		$	620,688		$	476,106

~~__________________~~

(1)

During the six months ended December 31, ~~2020,~~2021, the Company removed ~~$0.6~~$38.5 million in fully amortized intangible assets.

Intangible assets are primarily amortized on an accelerated basis over periods ranging from one to twenty years. The weighted-average period of amortization for all customer contracts and related customer relationships as of December 31, ~~2020~~2021 is ~~17.7~~18.3 years, and the weighted-average remaining period of amortization is ~~14.6~~15.3 years. The weighted-average period of amortization for acquired technologies as of December 31, ~~2020~~2021 is ~~10.5~~10.1 years, and the weighted-average remaining period of amortization is ~~9.2~~8.7 years.

~~Expected~~Amortization expense was $18.1 million and $35.6 million for the three and six months ended December 31, 2021, respectively, and $17.5 million and $33.6 million for the three and six months ended December 31, 2020, respectively. The estimated annual amortization expense ~~for the remainder~~as of ~~the fiscal year ending June 30,~~December 31, 2021 ~~and for each of the fiscal years thereafter, is~~was as follows (in thousands):

Fiscal year ending June 30,	Amount		Amount
2021 (six months)	$	33,878
2022		68,590
2022 (remainder of year)			$	38,514
2023		65,160		75,525
2024		57,809		72,050
2025		50,551		67,882
Thereafter		234,113
Total intangible assets, net	$	510,101
2026				60,244
2027 and thereafter				306,473
			$	620,688

Note 5.

Goodwill

The changes in the carrying amount of goodwill for the six months ended December 31, ~~2020~~2021 are as follows (in thousands):

	Domestic		International			Total		Domestic			International			Total
Balance at June 30, 2020	$	3,279,856	$	127,254		$	3,407,110
Balance at June 30, 2021								$	3,491,747		$	140,831		$	3,632,578
Goodwill acquired (1)		211,004		(1,478	)		209,526		436,439			—			436,439
Foreign currency translation		1,391		13,469			14,860		(613	)		(3,436	)		(4,049	)
Balance at December 31, 2020	$	3,492,251	$	139,245		$	3,631,496
Balance at December 31, 2021								$	3,927,573		$	137,395		$	4,064,968

(1)

Includes goodwill initially allocated to new business combinations as well as measurement period ~~adjustments.~~adjustments, when applicable.

Note 6.

~~Revenue Recognition~~Revenues from Contracts with Customers

~~We disaggregate our revenue arrangements~~Disaggregation of Revenues

The Company disaggregates revenues by contract type, customer ~~whether we perform on the contract as the~~type, prime orvs. subcontractor, and whether the solution provided is primarily expertise or ~~technology as defined herein. We believe that these~~technology. These categories ~~allow for a better understanding of~~represent how the nature, amount, timing, and uncertainty of ~~revenue~~revenues and cash flows ~~arising from our contracts.~~are affected.

~~Revenue~~Disaggregated revenues by ~~Contract Type~~

~~The Company generated revenue on our cost-plus-fee, fixed-price, and time-and-materials contracts~~contract type were as follows ~~during the three and six months ended December 31, 2020 and 2019~~ (in thousands):

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	December 31, 2020						December 31, 2020						December 31, 2021						December 31, 2021
	Domestic		International		Total		Domestic		International		Total		Domestic		International		Total		Domestic		International		Total
Cost-plus-fee	$	843,584	$	—	$	843,584	$	1,667,193	$	—	$	1,667,193	$	889,358	$	—	$	889,358	$	1,783,071	$	—	$	1,783,071
Fixed-price		411,114		29,707		440,821		820,698		53,937		874,635		400,011		33,279		433,290		774,485		66,510		840,995
Time-and-materials		172,362		11,944		184,306		357,356		29,033		386,389		148,881		14,249		163,130		324,416		28,194		352,610
Total	$	1,427,060	$	41,651	$	1,468,711	$	2,845,247	$	82,970	$	2,928,217	$	1,438,250	$	47,528	$	1,485,778	$	2,881,972	$	94,704	$	2,976,676

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	December 31, 2019						December 31, 2019						December 31, 2020						December 31, 2020
	Domestic		International		Total		Domestic		International		Total		Domestic		International		Total		Domestic		International		Total
Cost-plus-fee	$	818,477	$	—	$	818,477	$	1,566,191	$	—	$	1,566,191	$	843,584	$	—	$	843,584	$	1,667,193	$	—	$	1,667,193
Fixed-price		361,016		27,851		388,867		752,552		54,291		806,843		411,114		29,707		440,821		820,698		53,937		874,635
Time-and-materials		174,300		13,825		188,125		359,823		26,004		385,827		172,362		11,944		184,306		357,356		29,033		386,389
Total	$	1,353,793	$	41,676	$	1,395,469	$	2,678,566	$	80,295	$	2,758,861	$	1,427,060	$	41,651	$	1,468,711	$	2,845,247	$	82,970	$	2,928,217

~~Customer Group~~

~~The Company generated revenue from our primary~~Disaggregated revenues by customer ~~groups~~type were as follows ~~during the three and six months ended December 31, 2020 and 2019~~ (in thousands):

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	December 31, 2020						December 31, 2020						December 31, 2021						December 31, 2021
	Domestic		International		Total		Domestic		International		Total		Domestic		International		Total		Domestic		International		Total
Department of Defense	$	1,012,875	$	—	$	1,012,875	$	2,017,070	$	—	$	2,017,070	$	1,037,014	$	—	$	1,037,014	$	2,037,141	$	—	$	2,037,141
Federal Civilian agencies		390,034		—		390,034		780,213		—		780,213		371,897		—		371,897		785,561		—		785,561
Commercial and other		24,151		41,651		65,802		47,964		82,970		130,934		29,339		47,528		76,867		59,270		94,704		153,974
Total	$	1,427,060	$	41,651	$	1,468,711	$	2,845,247	$	82,970	$	2,928,217	$	1,438,250	$	47,528	$	1,485,778	$	2,881,972	$	94,704	$	2,976,676

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	December 31, 2019						December 31, 2019						December 31, 2020						December 31, 2020
	Domestic		International		Total		Domestic		International		Total		Domestic		International		Total		Domestic		International		Total
Department of Defense	$	990,381	$	—	$	990,381	$	1,928,021	$	—	$	1,928,021	$	1,012,875	$	—	$	1,012,875	$	2,017,070	$	—	$	2,017,070
Federal Civilian agencies		342,029		—		342,029		706,022		—		706,022		390,034		—		390,034		780,213		—		780,213
Commercial and other		21,383		41,676		63,059		44,523		80,295		124,818		24,151		41,651		65,802		47,964		82,970		130,934
Total	$	1,353,793	$	41,676	$	1,395,469	$	2,678,566	$	80,295	$	2,758,861	$	1,427,060	$	41,651	$	1,468,711	$	2,845,247	$	82,970	$	2,928,217

~~Prime or Subcontractor~~

~~The Company generated revenue as either the~~Disaggregated revenues by prime orvs. subcontractor were as follows ~~during the three and six months ended December 31, 2020 and 2019~~ (in thousands):

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	December 31, 2020						December 31, 2020						December 31, 2021						December 31, 2021
	Domestic		International		Total		Domestic		International		Total		Domestic		International		Total		Domestic		International		Total
Prime contractor	$	1,288,533	$	38,492	$	1,327,025	$	2,577,238	$	76,625	$	2,653,863	$	1,292,529	$	43,317	$	1,335,846	$	2,591,182	$	86,223	$	2,677,405
Subcontractor		138,527		3,159		141,686		268,009		6,345		274,354		145,721		4,211		149,932		290,790		8,481		299,271
Total	$	1,427,060	$	41,651	$	1,468,711	$	2,845,247	$	82,970	$	2,928,217	$	1,438,250	$	47,528	$	1,485,778	$	2,881,972	$	94,704	$	2,976,676

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	December 31, 2019						December 31, 2019						December 31, 2020						December 31, 2020
	Domestic		International		Total		Domestic		International		Total		Domestic		International		Total		Domestic		International		Total
Prime contractor	$	1,227,317	$	39,338	$	1,266,655	$	2,424,951	$	76,809	$	2,501,760	$	1,288,533	$	38,492	$	1,327,025	$	2,577,238	$	76,625	$	2,653,863
Subcontractor		126,476		2,338		128,814		253,615		3,486		257,101		138,527		3,159		141,686		268,009		6,345		274,354
Total	$	1,353,793	$	41,676	$	1,395,469	$	2,678,566	$	80,295	$	2,758,861	$	1,427,060	$	41,651	$	1,468,711	$	2,845,247	$	82,970	$	2,928,217

~~Expertise or Technology~~

~~The Company generated revenue~~Disaggregated revenues by ~~providing~~ expertise or technology ~~solutions to our customers~~were as follows ~~during the three and six months ended December 31, 2020 and 2019~~ (in thousands):

	Three Months Ended						Six Months Ended
	December 31, 2021						December 31, 2021
	Domestic		International		Total		Domestic		International		Total
Expertise	$	668,209	$	18,100	$	686,309	$	1,351,833	$	37,522	$	1,389,355
Technology		770,041		29,428		799,469		1,530,139		57,182		1,587,321
Total	$	1,438,250	$	47,528	$	1,485,778	$	2,881,972	$	94,704	$	2,976,676

	Three Months Ended						Six Months Ended
	December 31, 2020						December 31, 2020
	Domestic		International		Total		Domestic		International		Total
Expertise	$	715,812	$	16,464	$	732,276	$	1,439,009	$	33,950	$	1,472,959
Technology		711,248		25,187		736,435		1,406,238		49,020		1,455,258
Total	$	1,427,060	$	41,651	$	1,468,711	$	2,845,247	$	82,970	$	2,928,217

Three Months Ended

Six Months Ended

December 31, 2019

December 31, 2019

Domestic

International

Total

Domestic

International

Total

Expertise

$
726,476

$
15,558

$
742,034

$
1,435,501

$
28,886

$
1,464,387

Technology

627,317

26,118

653,435

1,243,065

51,409

1,294,474

Total

$
1,353,793

$
41,676

$
1,395,469

$
2,678,566

$
80,295

$
2,758,861

~~Significant~~Changes in Estimates

~~For~~The Company recognizes revenues on many of ~~our~~its fixed price, ~~revenue~~award fee, and incentive fee arrangements and for revenue arrangements that have award or incentive fees, the Company uses an estimate at completion (EAC) to measure progress towards the complete satisfaction of its performance obligations. For these revenue arrangements, revenue is recognized over time primarily using a cost-to-cost input method based on the ratio of costs incurred to date to total estimated costs at completion. The ~~EAC~~ process requires the Company to use professional judgment when assessing risks, estimating contract ~~revenue~~revenues 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,~~revenues, a provision for the entire loss on the contract is recorded in the period in which the loss is determined.

~~Based on~~Aggregate net changes in ~~a contract’s EAC, a cumulative adjustment~~estimates for the three and six months ended December 31, 2021 reflected an increase to ~~revenue will be recorded. For~~income before income taxes of $5.5 million ($0.17 per diluted share) and $8.2 million ($0.26 per diluted share), respectively, compared with $18.1 million ($0.53 per diluted share) and $25.9 million ($0.75 per diluted share), for the three and six months ended December 31, 2020, ~~we recognized an increase to income before income taxes of $18.1 million ($0.53 per diluted share) and $25.9 million ($0.75 per diluted share), respectively,~~ ~~compared with $17.2 million ($0.50 per diluted share) and $23.8 million ($0.69 per diluted share) for the three and six months ended December 31, 2019,~~ respectively ~~from EAC adjustments.~~. The Company ~~used~~uses its statutory tax rate when calculating the impact to diluted earnings per share.

~~Revenue~~Revenues recognized from previously satisfied performance obligations ~~was $1.2 million and $1.6 million~~were not material for the three and six months ended December 31, ~~2020, respectively, compared with $9.8 million and $10.2 million for~~2021 or the three and six months ended December 31, ~~2019, respectively.~~2020. The change in ~~revenue~~revenues generally relates to final true-up adjustments ~~to our~~for estimated award or incentive fees in the period in which ~~we receive~~ the customer’s final performance score was received or when weit can ~~determine~~be determined that more objective, contractually-defined criteria have been fully satisfied.

Remaining Performance Obligations

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

As of December 31, ~~2020 was $6.5 billion.~~

~~The~~2021, the Company had $7.2 billion of RPO and expects to recognize approximately 9085 percent ~~of our remaining performance obligations balance as revenue~~ over the next twelve months ~~and~~with the ~~remaining 10 percent~~ remainder to be recognized thereafter.

7.	~~Accounts Receivable~~

December 31,

June 30,

2020

2020

Billed and billable receivables

$
668,563

$
779,339

Unbilled receivables

79,282

61,888

Total accounts receivable, net – current

747,845

841,227

Unbilled receivables, long-term

11,248

9,629

Total accounts receivable

$
759,093

$
850,856

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

~~The Company’s allowance for doubtful accounts was $2.8 million and $3.0 million at December 31, 2020 and June 30, 2020, respectively.~~

8.Note 7.

Contract Balances

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

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

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

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

December 31,

June 30,

Description of Contract Related Balance

Financial Statement Classification

2020

2020

Contract assets – current:

Unbilled receivables

Accounts receivable, net

$
79,282

$
61,888

Costs to obtain – short-term

Prepaid expenses and other current assets

3,692

3,492

Contract assets – noncurrent:

Unbilled receivables

Accounts receivable, long-term

11,248

9,629

Costs to obtain – long-term

Other long-term assets

8,658

7,708

Contract liabilities – current:

Deferred revenue and other
   contract liabilities – short-term

Other accrued expenses and current
   liabilities

(68,773
)

(57,082
)
Contract liabilities – noncurrent:

Deferred revenue and other
   contract liabilities – long-term

Other long-term liabilities

(6,585
)

(6,507
)
Net contract assets (liabilities)

$
27,522

$
19,128

		December 31,			June 30,
Description of Contract Related Balance	Financial Statement Classification	2021			2021
Billed and billable receivables	Accounts receivable, net	$	757,999		$	763,921
Contract assets – current unbilled receivables	Accounts receivable, net		96,416			115,930
Contract assets – current costs to obtain	Prepaid expenses and other current assets		4,722			4,144
Contract assets – noncurrent unbilled receivables	Accounts receivable, long-term		11,398			12,159
Contract assets – noncurrent costs to obtain	Other long-term assets		11,357			9,584
Contract liabilities – current deferred revenue and other contract liabilities	Other accrued expenses and current liabilities		(102,253	)		(70,907	)
Contract liabilities – noncurrent deferred revenue and other contract liabilities	Other long-term liabilities		(7,200	)		(6,837	)

During the three and six months ended December 31, ~~2020, we~~2021, the Company recognized ~~$19.4~~$13.6 million and $68.3 million of revenues, respectively, compared with $19.4 million and $52.9 million of ~~revenue, respectively, compared with~~ ~~$12.1 million and $38.7 million of revenue~~revenues for the three and six months ended December 31, ~~2019~~2020, respectively, ~~respectively,~~ that was included in a previously recorded contract liability as of the beginning of the period.

9.Note 8.

Inventories

Inventories consisted of the following (in thousands):

	December 31,		June 30,		December 31,		June 30,
	2020		2020		2021		2021
Materials, purchased parts and supplies	$	50,120	$	36,692	$	61,179	$	52,615
Work in process		11,307		10,867		16,145		11,353
Finished goods		16,491		17,608		19,115		15,728
Total	$	77,918	$	65,167	$	96,439	$	79,696

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

~~10.~~Note 9.

Sales of Receivables

On December ~~24, 2020,~~23, 2021, the Company amended its Master Accounts Receivable Purchase Agreement (MARPA) with MUFG Bank, Ltd. (the Purchaser), for the sale of certain designated eligible U.S. government receivables. The amendment extended the term of the MARPA to December ~~23, 2021.~~22, 2022. Under the MARPA, the Company can sell eligible receivables, including certain billed and unbilled receivables up to a maximum amount of $200.0 million. The Company’s receivables are sold under the MARPA without recourse for any U.S. government credit risk.

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

The Company does not retain an ongoing financial interest in the transferred receivables other than cash collection and administrative services. The Company estimated that its servicing fee was at fair value and therefore no servicing asset or liability related to these receivables was recognized as of December 31, ~~2020.~~2021. Proceeds from the sold receivables are reflected in ~~our~~ operating cash flows on the statement of cash flows.

MARPA activity consisted of the following (in thousands):

	As of and for the Six Months Ended						As of and for the Six Months Ended
	December 31,						December 31,
	2020			2019			2021			2020
Beginning balance:	$	200,000		$	192,527		$	182,027		$	200,000
Sales of receivables		1,354,577			1,144,293			1,361,521			1,354,577
Cash collections		(1,354,819	)		(1,139,382	)		(1,356,070	)		(1,354,819	)
Outstanding balance sold to Purchaser: (1)		199,758			197,438			187,478			199,758
Cash collected, not remitted to Purchaser (2)		(43,304	)		(53,904	)		(49,166	)		(43,304	)
Remaining sold receivables	$	156,454		$	143,534		$	138,312		$	156,454

(1)

For the six months ended December 31, ~~2020~~2021 and ~~2019,~~2020, the Company recorded a net cash ~~outflow~~inflow of ~~$0.2~~$5.5 million and a net cash ~~inflow~~outflow of ~~$4.9~~$0.2 million in its cash flows from operating activities, respectively, from sold receivables. MARPA cash flows are calculated as the change in the outstanding balance during the fiscal year.

(2)

Includes the cash collected on behalf of but not yet remitted to the Purchaser as of December 31, ~~2020~~2021 and ~~2019.~~2020. This balance is included in other accrued expenses and current liabilities as of the balance sheet date.

~~11.~~Note 10.

Long-term Debt

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

	December 31,			June 30,			December 31,			June 30,
	2020			2020			2021			2021
Bank credit facility – term loans	$	821,095		$	844,555		$	1,225,000		$	797,635
Bank credit facility – revolver loans		605,000			569,000			896,500			945,000
Principal amount of long-term debt		1,426,095			1,413,555			2,121,500			1,742,635
Less unamortized discounts and debt issuance costs		(7,953	)		(9,116	)		(11,044	)		(6,796	)
Total long-term debt		1,418,142			1,404,439			2,110,456			1,735,839
Less current portion		(46,920	)		(46,920	)		(30,625	)		(46,920	)
Long-term debt, net of current portion	$	1,371,222		$	1,357,519		$	2,079,831		$	1,688,919

Bank Credit Facility

~~The~~On December 13, 2021, the Company ~~has a $2,438.4 million~~amended its credit facility (the Credit Facility)~~, which~~ primarily to extend the maturity date, increase borrowing capacity, and improve pricing. As amended, the Company’s $3,200.0 million Credit Facility consists of ~~an $1,500.0~~a $1,975.0 million revolving credit facility (the Revolving Facility) and a ~~$938.4~~$1,225.0 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~~$1,975.0 million. As of December 31, ~~2020,~~2021, the Company had ~~$605.0~~$896.5 million outstanding under the Revolving Facility and 0 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~~$7.7 million through December 31, 2023 and $15.3 million thereafter until the balance is due in full on ~~June 30, 2024.~~December 13, 2026. As of December 31, ~~2020,~~2021, the Company had ~~$821.1~~$1,225.0 million outstanding under the Term Loan.

The interest rates applicable to loans under the Credit Facility are floating interest rates that, at the Company’s option, equal a base rate or a Eurodollar rate plus, in each case, an applicable rate based upon the Company’s consolidated total leverage ratio. As of December 31, ~~2020,~~2021, the effective interest rate, including the impact of the Company’s floating-to-fixed interest rate swap agreements and excluding the effect of amortization of debt financing costs, for the outstanding borrowings under the Credit Facility was ~~2.49~~1.92 percent.

The Credit Facility requires the Company to comply with certain financial covenants, including a maximum total leverage ratio and a minimum interest coverage ratio. The Credit Facility also includes customary negative covenants restricting or limiting the Company’s ability to guarantee or incur additional indebtedness, grant liens or other security interests to third parties, make loans or investments, transfer assets, declare dividends or redeem or repurchase capital stock or make other distributions, prepay subordinated indebtedness and engage in mergers, acquisitions or other business combinations, in each case except as expressly permitted under the Credit Facility. As of December 31, ~~2020,~~2021, the Company was in compliance with all of the financial covenants. A majority of the Company’s assets serve as collateral under the Credit Facility.

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

The aggregate maturities of long-term debt at December 31, ~~2020 are~~2021 were as follows (in thousands):

Twelve months ending December 31,
2021	$	46,920
2022		46,920		$	30,625
2023		46,920			30,625
2024		1,285,335			61,250
2025					61,250
2026					1,937,750
Principal amount of long-term debt		1,426,095			2,121,500
Less unamortized discounts and debt issuance costs		(7,953	)		(11,044	)
Total long-term debt	$	1,418,142		$	2,110,456

Cash Flow Hedges

The Company periodically uses derivative financial instruments as part of a strategy to manage exposure to market risks associated with interest rate fluctuations. The Company has entered into several floating-to-fixed interest rate swap agreements for an aggregate notional amount of ~~$800.0~~$650.0 million which hedge a portion of the Company’s floating rate indebtedness. The swaps mature at various dates through 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 six months ended December 31, ~~2020~~2021 and ~~2019~~2020 is as follows (in thousands):

	Three Months Ended					Six Months Ended						Three Months Ended					Six Months Ended
	December 31,					December 31,						December 31,					December 31,
	2020			2019		2020			2019			2021		2020			2021		2020
Gain (loss) recognized in other comprehensive income	$	(908	)	$	3,557	$	(2,188	)	$	(639	)	$	2,194	$	(908	)	$	1,186	$	(2,188	)
Amounts reclassified to earnings from accumulated other comprehensive loss		3,552			178		7,084			(590	)		3,230		3,552			6,452		7,084
Net current period other comprehensive income (loss)	$	2,644		$	3,735	$	4,896		$	(1,229	)
Net current period other comprehensive income												$	5,424	$	2,644		$	7,638	$	4,896

~~12.~~Note 11.

~~Leases~~

All of the Company’s leases are operating leases. The current portion of 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):

December 31, 2020

June 30, 2020

Operating lease right-of-use assets

$
374,310

$
330,767

Operating lease liabilities, current

60,175

67,549

Operating lease liabilities, noncurrent

376,039

309,680

$
436,214

$
377,229

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

Three Months Ended

Six Months Ended

December 31,

December 31,

2020

2019

2020

2019

Operating lease cost

$
22,615

$
21,382

$
44,587

$
42,588

Short-term and variable lease cost

3,611

3,623

7,279

6,993

Sublease income

(86
)

(438
)

(212
)

(902
)
Total lease cost

$
26,140

$
24,567

$
51,654

$
48,679

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

Fiscal year ending June 30,

2021 (six months)

$
33,167

2022

77,286

2023

73,707

2024

66,459

2025

58,069

Thereafter

174,510

Total undiscounted lease payments

483,198

Less: imputed interest

(46,984
)
Total discounted lease liabilities

$
436,214

~~The weighted-average remaining lease term (in years) and weighted-average discount rate was 7.09 years and 2.85 percent, respectively.~~

Cash paid for operating leases was $44.2 million for the six months ended December 31, 2020. During the six months ended December 31, 2020 operating lease liabilities arising from obtaining new ROU assets was $81.8 million, which includes all noncash changes arising from new or remeasured operating lease arrangements.

~~13.~~

Legal Proceedings and Other Commitments and Contingencies

Legal Proceedings

The Company is involved in various claims, lawsuits, ~~claims,~~ and administrative proceedings arising in the normal course of ~~business. Management is~~business, none of ~~the opinion that any liability or loss associated with such matters, either individually or in the aggregate, will not~~which, based on current information, are expected to have a material adverse effect on the Company’s financial position, results of operations ~~and liquidity.~~or cash flows.

Government Contracting

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 has completed audits of the Company’s annual incurred cost proposals through fiscal year 2019. ~~We are~~The Company is still negotiating the results of prior years’ audits with the respective cognizant contracting officers and believe ~~our~~its reserves for such are adequate. ~~In the opinion of management, adjustments~~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 asand 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~~may be identified, discussed and settled.

~~14.~~

~~Stock-Based Compensation~~

For the six months ended December 31, 2020 and 2019, the Company recognized $15.0 million and $14.5 million of stock-based compensation, respectively, related to restricted stock units (RSUs). The stock-based compensation was included in indirect costs and selling expenses in the consolidated statements of operations.

~~Activity related to RSUs during the six months ended December 31, 2020 is as follows:~~

	~~RSUs~~
~~Unvested at June 30, 2020~~		~~501,923~~
~~Granted~~		~~184,319~~
~~Vested~~		~~(223,180~~	)
~~Forfeited~~		~~(17,207~~	)
~~Unvested at December 31, 2020~~		~~445,855~~

~~As of December 31, 2020, there was $54.4 million of total unrecognized compensation costs related to RSUs scheduled to be recognized over a weighted-average period of 2.8 years.~~

~~15.~~Note 12.

Earnings Per Share

Earnings per share and the weighted-average number of diluted shares are computed as follows (in thousands, except per share ~~data~~)data):

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	December 31,				December 31,				December 31,				December 31,
	2020		2019		2020		2019		2021		2020		2021		2020
Net income	$	106,478	$	79,195	$	200,122	$	147,172	$	90,299	$	106,478	$	178,408	$	200,122
Weighted-average number of basic shares outstanding during the period		25,225		25,065		25,162		24,979		23,399		25,225		23,480		25,162
Dilutive effect of RSUs after application of treasury stock method		226		370		307		504		199		226		242		307
Weighted-average number of diluted shares outstanding during the period		25,451		25,435		25,469		25,483		23,598		25,451		23,722		25,469
Basic earnings per share	$	4.22	$	3.16	$	7.95	$	5.89	$	3.86	$	4.22	$	7.60	$	7.95
Diluted earnings per share	$	4.18	$	3.11	$	7.86	$	5.78	$	3.83	$	4.18	$	7.52	$	7.86

~~16.~~Note 13.

Income Taxes

The Company is subject to income taxes in the U.S. and various state and foreign jurisdictions. Tax statutes and regulations within each jurisdiction are subject to interpretation and require the application of significant judgment. The Company is currently under examination by the Internal Revenue Service for ~~year 2016.~~fiscal years 2017 through 2021. The Company does not expect the resolution of ~~this examination~~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 December 31, ~~2020~~2021 and June 30, ~~2020~~2021 was ~~$9.5~~$34.3 million and ~~$8.8~~$31.5 million, respectively. The ~~$9.5~~$34.3 million unrecognized tax benefit at December 31, ~~2020,~~2021, if recognized, would positively impact the Company’s effective tax rate.

The Company’s effective income tax rate was 20.2 percent and 22.3 percent for the three and six months ended December 31, ~~2020~~2021, respectively, and ~~2019 are reflected below (in thousands):~~

Three Months Ended

Six Months Ended

December 31,

December 31,

2020

2019

2020

2019

Income tax expense

$
25,974

$
16,278

$
56,774

$
31,647

Effective income tax rate

19.6
%

17.1
%

22.1
%

17.7
%

~~The effective income tax rate was~~ 19.6 percent and 22.1 percent for the three and six months ended December 31, 2020, ~~respectively, compared with 17.1 percent and 17.7 percent, respectively, for the same periods last year. For both comparative reporting periods, the increase~~respectively. Increases in the effective income tax rate ~~was~~were primarily due to ~~a decrease~~decreases in excess tax benefits related to employee stock-based ~~compensation, partially offset~~compensation.

On January 1, 2022, a provision of the Tax Cuts and Jobs Act of 2017 went into effect which eliminates the option to deduct domestic research and development costs in the year incurred and instead requires taxpayers to amortize such costs over five years. The House Ways and Means Committee has proposed tax legislation to delay the effective date of this change to 2026, but it is uncertain whether the proposed delay will ultimately be enacted into law. If no new legislation is passed, the provision would go into effect for the Company’s fiscal year 2023 and is expected to decrease cash flows from operations and increase net deferred tax assets by ~~favorable changes related to~~a similar amount. The Company is currently evaluating the ~~value of assets invested in COLI policies~~potential impact on cash flows from operations.

~~17.~~Note 14.

Business Segment Information

The Company reports operating results and financial data in 2 segments: domestic operations and international operations. Domestic operations provide Expertise and Technology primarily to U.S. federal government agencies. International operations provide Expertise and Technology primarily to international government and commercial customers.

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

Domestic
Operations

International
Operations

Total

Three Months Ended December 31, 2020

Revenue from external customers

$
1,427,060

$
41,651

$
1,468,711

Net income

99,921

6,557

106,478

Three Months Ended December 31, 2019

Revenue from external customers

$
1,353,793

$
41,676

$
1,395,469

Net income

74,684

4,511

79,195

Six Months Ended December 31, 2020

Revenue from external customers

$
2,845,247

$
82,970

$
2,928,217

Net income

188,058

12,064

200,122

Six Months Ended December 31, 2019

Revenue from external customers

$
2,678,566

$
80,295

$
2,758,861

Net income

138,895

8,277

147,172

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Revenues:
Domestic	$	1,438,250	$	1,427,060	$	2,881,972	$	2,845,247
International		47,528		41,651		94,704		82,970
Total revenues	$	1,485,778	$	1,468,711	$	2,976,676	$	2,928,217

Net income:
Domestic	$	83,407	$	99,921	$	165,104	$	188,058
International		6,892		6,557		13,304		12,064
Total net income	$	90,299	$	106,478	$	178,408	$	200,122

~~18.~~Note 15.

Fair Value of Financial Instruments

ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.

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

•

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

•

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

•

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

The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of December 31, ~~2020~~2021 and June 30, ~~2020,~~2021, and the level they fall within the fair value hierarchy (in thousands):

			December 31,		June 30,				December 31,		June 30,
	Financial Statement	Fair Value	2020		2020		Financial Statement	Fair Value	2021		2021
Description of Financial Instrument	Classification	Hierarchy	Fair Value				Classification	Hierarchy	Fair Value
Interest rate swap agreements	Other accrued expenses and current liabilities	Level 2	$	847	$	—	Other accrued expenses and current liabilities	Level 2	$	17	$	1,028
Interest rate swap agreements	Other long-term liabilities	Level 2	$	35,678	$	43,168	Other long-term liabilities	Level 2	$	15,486	$	24,838

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

Note 16.

Accelerated Share Repurchase

On March 12, 2021, the Company entered into an accelerated share repurchase agreement (ASR Agreement) with JPMorgan Chase Bank, National Association (JPMorgan). Under the ASR Agreement, the Company paid $500.0 million to JPMorgan and received an initial delivery of 1.7 million shares of common stock which became treasury shares. During the six months ended December 31, 2021, the ASR Agreement was completed and an additional 0.3 million shares of common stock were received which became treasury shares. In total, 2.0 million shares were repurchased at an average price per share of $253.47.

Note 17.

Subsequent Event

In January 2022, the Company entered into two additional floating-to-fixed interest rate swap agreements including a 5 year $50.0 million swap effective July 1, 2022 and a 4 year $50.0 million swap effective January 1, 2023. The Company has designated these swaps as cash flow hedges.

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

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 condensed consolidated financial statements and the notes to those statements that appear elsewhere in this Quarterly Report on Form 10-Q.

Information Relating to Forward-Looking Statements

There are statements made herein that 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 risk factors that could cause actual results to be materially different from anticipated results. These risk factors include, but are not limited to, the following:

•	our reliance on U.S. government contracts, which includes general risk around the government contract procurement process (such as bid protest, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks;

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

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

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

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

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

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

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

•	regional and national economic conditions in the United States and globally, including but not limited to: terrorist activities or war, changes in interest rates, currency fluctuations, significant fluctuations in the equity markets, and market speculation regarding our continued independence;

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

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

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

•	changes in technology;

•	the potential impact of the announcement or consummation of a proposed transaction and our ability to successfully integrate the operations of our recent and any future acquisitions;

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

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

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

Overview

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

•

Enterprise – CACI provides capabilities that enable the internal operations of ana government agency. This includes digital solutions (e.g., business systems, ~~business process reengineering,~~agency-unique agency-enabling applications, investigative solutions) and enterprise information technology (IT). For example, CACI customizes, implements, and maintains commercial-off-the-shelf (COTS) and custom enterprise resource planning (ERP) systems. This includes financial, human capital, asset and material, and logistics and supply chain management systems. CACI also designs, develops, integrates, deploys and sustains enterprise-wide including networks, infrastructure, IT systems ~~in a variety of models. As an Amazon Web Services (AWS) Premier Consulting Partner~~ and Microsoft Cloud Solution Provider for Government, we deliver cloud-powered solutions, performance-based service management, mobility, defensive cyber and network security, end-user services, and infrastructure services.support.

•

Mission – CACI provides capabilities that enable the execution of ana government agency’s primary function, or “mission”. ~~For example, we~~This includes mission support, ~~strategic and tactical Mission customers with capabilities in areas such as command~~engineering services, C4ISR (command and control, communications, intelligence, ~~collection~~surveillance, and ~~analysis, signals intelligence (SIGINT), electronic warfare (EW),~~reconnaissance) and cyber ~~operations. CACI develops tools~~operations for land, air, sea, and ~~offerings in an open, software-defined architecture with multi-domain and multi-mission capabilities.~~space domains.

•

Expertise – CACI provides Expertise to both Enterprise and Mission customers. For Enterprise customers, we deliver talent with the specific technical and functional knowledge to support internal agency operations. ~~And for~~Examples include functional software development expertise, data and business analysis, and IT operations support. For Mission customers, we deliver talent with technical and domain knowledge to support the execution of an agency’s mission. Examples include engineering expertise such as naval architecture, marine engineering, and life cycle support; and mission support expertise such as intelligence and special operations support.

•

Technology – CACI delivers Technology, informed by Expertise, to both Enterprise and Mission customers. For both Enterprise ~~customers, Technology includes developing~~ and ~~implementing business systems, enterprise applications,~~Mission, CACI provides: Software development at scale using open modern architectures, DevSecOps, and ~~end-to-end IT systems. We also modernize infrastructure through migration to the cloud~~agile methodologies; and advanced data platforms, data operations and analyst-centric analytics including application of Artificial Intelligence and multi-source analysis. Additional examples of Enterprise technology include: Network and IT ~~or software as-a-service. For~~modernization; The customization, implementation, and maintenance of commercial-off-the-shelf (COTS) and enterprise resource planning (ERP) systems including financial, human capital, and supply chain management systems; and cyber security active defense and zero trust architectures. Additional examples of Mission ~~customers, Technology includes developing~~technology include: Developing and deploying multi-domain offerings for signals intelligence, resilient communications, free space optical communications, electronic warfare including Counter-UAS, cyber operations, and ~~cyber operations. We also deliver actionable intelligence through multi-source collection~~Radio Frequency (RF) and ~~analysis. And we~~5G spectrum awareness, agility and usage. CACI invests ahead of customer need with research and development to generate unique intellectual property ~~through advanced research~~ and ~~development.~~differentiated technology addressing critical national security and government modernization needs.

Budgetary Environment

We carefully follow federal budget, legislative and contracting trends and activities and evolve our strategies to take these into consideration. ~~In late July 2019, Congress passed~~Defense spending has generally increased over the ~~Bipartisan Budget Act of 2019 (BBA 2019), which increased the caps for defense~~past several years, and ~~non-defense spending for~~indications are that will continue in government fiscal year (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. BBA 20192022. The Biden administration’s initial GFY22 budget proposal called for an increase in aggregate defense spending ~~including Overseas Contingency Operations funds,~~ of ~~$738 billion in GFY 2020 and $740.5 billion in~~approximately 2% from GFY 2021. ~~Both represent increases from GFY 2019 levels of $716 billion, which itself represented an increase over GFY 2018 levels. On December 28, 2020,~~However, the ~~House of Representatives voted to override a Presidential veto of the $740 billion~~recently-enacted GFY22 National Defense Authorization Act (NDAA) ~~for GFY~~, signed by the President on December 27, 2021, ~~which specifies the annual budget and expenditures of the U.S.~~authorizes Department of ~~Defense. On January 1, 2021,~~Defense (DoD) funding of $740 billion, which represents an increase of 5% from GFY21 enacted levels of $704 billion. However, GFY 2022 appropriations bills have not yet been passed by Congress and signed by the ~~Senate voted to override the Presidential veto of the NDAA, and the bill became law. We believe that bipartisan support remains for continued investment~~President, which limits funding in the ~~areas of defense and national security.~~current GFY.

While we view the budget environment as ~~favorable~~constructive and believe there is bipartisan support for continued investment in the areas of defense and national security, it is uncertain when in any particular GFY that appropriations bills will be passed. During those periods of time when appropriations bills have not been passed and signed into law, government agencies operate under a continuing resolution (CR). On September 30, 2021, the President signed a CR, a temporary measure allowing the government to continue operations through December 3, 2021 at prior year funding levels. A second CR was signed on December 3, 2021 that funds government operations through February 18, 2022.

Depending on their scope, duration, and other factors, CRs can negatively impact our business due to delays in new program starts, delays in contract award decisions, and other factors. When a CR expires, unless appropriations bills have been passed by Congress and signed by the 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. We continuously review our operations in an attempt to identify programs potentially at risk from CRs so that we can consider appropriate contingency plans.

Impact of COVID-19

We continue to take steps to mitigate the impact of COVID-19 on our employees and our business. The impact of the continued spread of COVID-19 on our business will depend on future developments, which are uncertain and cannot be predicted, as well as other known factors outside our control. The recent surge of the Omicron variant of COVID-19, for example, has resulted in increased positive cases broadly, including within the employee base of some of our government customers. As ~~travel restrictions, social distancing advisories,~~a result, some of our government customers have limited in-person meetings, reduced access to customer facilities, and ~~other requirements began to be implemented in March 2020, we instructed our workforce to begin to work remotely~~seen impacts to the ~~extent possible. While a majority~~normal operation of our workforce is able to work remotely, some employees must still travel to client or company facilities in order to work. While CACI employees were deemed part of the ‘critical infrastructure workforce’, ensuring their ability to work despite state travel limitations, our business still experienced some impacts as a result of COVID-19 risk mitigation efforts. For example, in order to reduce personnel concentration and ensure social distancing in classified environments, shift work was implemented, which reduced the number of hours our employees could work and we could bill customers on certain programs. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed by Congress and signed by the President on March 27, 2020, provided a mechanism to bill hours where our employees are ready and able to work but unable to access required facilities due to COVID-19. This support was extended through December 11, 2020 under the CR signed by the President on October 1, 2020, and then extended again through March 31, 2021 when the President signed a combined COVID-relief and omnibus spending bill (The Consolidated Appropriations Act of 2021), which funds the federal government for GFY 2021.business. We continue to work with our customers to implement ~~the related provisions of the CARES Act, as well as~~ appropriate risk mitigation efforts and alternative work ~~arrangements.~~arrangements, as necessary.

Market Environment

Across our addressable market, we provide expertise and technology to government enterprise and mission customers. Based on the analysis of an independent market consultant retained by the Company, we believe that the total addressable market for our offerings is approximately ~~$230~~$240 billion. Our addressable market is expected to continue to grow over the next several years. ~~Approximately~~Nearly 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 other federal civilian customers.

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

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

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

•	Increased ~~USG interest in faster contracting and acquisition processes;~~

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

•	~~Continued focus on counterterrorism, counterintelligence, and counter proliferation as key U.S. security concerns;~~Increased investments in advanced technologies (e.g., Artificial Intelligence, 5G), particularly software-based technologies;

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

•	Increasing focus on near-peer competitors and other nation state threats;

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

•	Increased ~~investments~~USG interest in ~~advanced technologies (e.g., Artificial Intelligence, 5G).~~faster contracting and acquisition processes.

We believe that our customers' use of lowest price/technically acceptable (LPTA) procurements, which contributed to pricing pressures in ~~prior~~past 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 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. Additional factors that could affect USG spending in our addressable market include changes in set-asides for small businesses, changes in budget priorities as a result of the COVID-19 pandemic, and budgetary priorities limiting or delaying federal government spending in general.

Results of Operations for the Three and Six Months Ended December 31, ~~2020~~2021 and ~~2019~~2020

The following table provides ~~the relative percentage that certain items~~our results of ~~expense and earnings bear to revenue~~operations (in thousands):

	Dollar Amount								Dollar Amount
	Three Months Ended								Six Months Ended
	December 31,				Change				December 31,				Change
	2021		2020		Dollar			Percent	2021		2020		Dollar			Percent
Revenues	$	1,485,778	$	1,468,711	$	17,067		1.2%	$	2,976,676	$	2,928,217	$	48,459		1.7%
Costs of revenues:
Direct costs		974,018		947,131		26,887		2.8%		1,948,189		1,887,065		61,124		3.2%
Indirect costs and selling expenses		354,977		347,807		7,170		2.1%		712,083		702,811		9,272		1.3%
Depreciation and amortization		32,676		32,234		442		1.4%		65,268		62,378		2,890		4.6%
Total costs of revenues		1,361,671		1,327,172		34,499		2.6%		2,725,540		2,652,254		73,286		2.8%
Income from operations		124,107		141,539		(17,432	)	(12.3)%		251,136		275,963		(24,827	)	(9.0)%
Interest expense and other, net		11,009		9,087		1,922		21.2%		21,407		19,067		2,340		12.3%
Income before income taxes		113,098		132,452		(19,354	)	(14.6)%		229,729		256,896		(27,167	)	(10.6)%
Income taxes		22,799		25,974		(3,175	)	(12.2)%		51,321		56,774		(5,453	)	(9.6)%
Net income	$	90,299	$	106,478	$	(16,179	)	(15.2)%	$	178,408	$	200,122	$	(21,714	)	(10.9)%

Revenues. The increase in revenues for the three and six months ended December 31, 2021, as compared to the three and six months ended December 31, 2020, ~~and 2019, respectively.~~

Dollar Amount

Percentage of Revenue

Three Months Ended

Three Months Ended

December 31,

December 31,

Change

(dollars in thousands)

2020

2019

2020

2019

$

%

Revenue

$
1,468,711

$
1,395,469

100.0
%

100.0
%

$
73,242

5.2
%
Operating costs and expenses:

Costs of revenue

947,131

904,867

64.5

64.8

42,264

4.7

Indirect costs and selling expenses

347,807

352,448

23.7

25.3

(4,641
)

(1.3
)
Depreciation and amortization

32,234

27,967

2.2

2.0

4,267

15.3

Total operating costs and expenses

1,327,172

1,285,282

90.4

92.1

41,890

3.3

Income from operations

141,539

110,187

9.6

7.9

31,352

28.5

Interest expense and other, net

9,087

14,714

0.6

1.1

(5,627
)

(38.2
)
Income before income taxes

132,452

95,473

9.0

6.8

36,979

38.7

Income tax expense

25,974

16,278

1.8

1.2

9,696

59.6

Net income

$
106,478

$
79,195

7.2
%

5.7
%

$
27,283

34.5
%

~~Revenue. For the three months ended December 31, 2020, total revenue~~ was ~~$1.5 billion, 5.2 percent greater than last year with 4.3 percent from organic growth. The remaining growth in revenue was~~primarily attributable to organic growth from existing programs and acquired ~~revenues. Out~~revenues partially offset by the completion of our primary customer groups, Department of Defense and Federal Civilian revenue increased by $22.5 million (1.1 percent organic) and $48.0 million (13.9 percent organic), respectively, compared with the same period a year ago.certain contracts.

The following table summarizes ~~revenue~~revenues by customer type with related percentages of ~~revenue~~revenues for the three and six months ended December 31, 2021 and 2020, ~~and 2019, respectively:~~respectively (in thousands):

	Dollar Amount				Percentage of Revenue											Dollar Amount								Dollar Amount
	Three Months Ended				Three Months Ended											Three Months Ended								Six Months Ended
	December 31,				December 31,						Change					December 31,				Change				December 31,				Change
(dollars in thousands)	2020		2019		2020			2019			$		%
																2021		2020		Dollar			Percent	2021		2020		Dollar		Percent
Department of Defense	$	1,012,875	$	990,381		68.9	%		71.0	%	$	22,494		2.3	%	$	1,037,014	$	1,012,875	$	24,139		2.4%	$	2,037,141	$	2,017,070	$	20,071	1.0%
Federal Civilian Agencies		390,034		342,029		26.6			24.5			48,005		14.0			371,897		390,034		(18,137	)	(4.7)%		785,561		780,213		5,348	0.7%
Commercial and other		65,802		63,059		4.5			4.5			2,743		4.3			76,867		65,802		11,065		16.8%		153,974		130,934		23,040	17.6%
Total	$	1,468,711	$	1,395,469		100.0	%		100.0	%	$	73,242		5.2	%	$	1,485,778	$	1,468,711	$	17,067		1.2%	$	2,976,676	$	2,928,217	$	48,459	1.7%

•

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

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

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

Direct Costs ~~of Revenue~~. ~~For~~The increase in direct costs for the three and six months ended December 31, 2021, as compared to the three and six months ended December 31, 2020, ~~costs~~was primarily attributable to the increased revenues and a higher volume of ~~revenue increased $42.3 million or 4.7 percent, compared with the same period a year ago. The increase is primarily related to direct~~materials and ~~subcontractor labor costs from organic growth on existing programs and acquired contracts, partially offset by a reduction in~~ other direct ~~and travel related expenses.~~costs. As a percentage of revenue, direct costs ~~of revenue~~ were 65.6 percent and 65.4 percent for the three and six months ended December 31, 2021, respectively and 64.5 percent and ~~64.8~~64.4 percent for the three and six months ended December 31, 2020, respectively. Direct costs include direct labor, subcontractor costs, materials, and 2019, respectively. The improvement in margins against the comparative period is primarily due to strong program performance and our ability to deliver on certain fixed-price contracts with less costs than originally estimated. In addition, the Company’s margins increased from a higher percentage of Technology revenue as compared against the prior period.other direct costs.

Indirect Costs and Selling Expenses. ~~For~~The increase in indirect costs and selling expenses for the three and six months ended December 31, 2021, as compared to the three and six months ended December 31, 2020, was primarily attributable to an increase in fringe benefit, conference, and travel expenses partially offset by reductions in indirect ~~costs and selling expenses decreased $4.6 million or 1.3 percent, compared with the same period a year ago.~~labor costs. As a percentage of revenue, indirect costs and selling expenses were ~~23.7~~23.9 percent and ~~25.3~~23.9 percent for the three and six months ended December 31, 2021, respectively and 23.7 percent and 24.0 percent for the three and six months ended December 31, 2020, ~~and 2019,~~ respectively.This percentage decrease is driven primarily by reduced bid and proposal (B&P) costs, indirect travel, and other professional services, partially offset by increased expenses due to a larger workforce, resulting in increased labor, fringe benefits and facility costs.

Depreciation and Amortization. ~~For~~The increase in depreciation and amortization for the three and six months ended December 31, 2021, as compared to the three and six months ended December 31, 2020, ~~depreciation and amortization expense increased $4.3 million or 15.3 percent, compared with the same period a year ago. The increase is~~was primarily attributable to intangible amortization from recent ~~acquisitions and increased depreciation from the Company’s higher average property and equipment balances.~~acquisitions.

Interest Expense and Other, Net. ~~For~~The increase in interest expense and other, net for the three and six months ended December 31, 2021, as compared to the three and six months ended December 31, 2020, ~~interest expense and other, net decreased $5.6 million or 38.2 percent, compared with the same period a year ago. The decrease in interest expense is~~was primarily attributable to ~~lower~~higher average outstanding debt balances onand the ~~Company’s~~write-off of unamortized deferred financing costs related to the December 13, 2021 Credit Facility ~~and lower interest rates.~~amendment.

Income Tax Expense. ~~For~~The income tax provisions represent an effective tax rate of 20.2 percent and 22.3 percent for the three and six months ended December 31, 2021, respectively and 19.6 percent and 22.1 percent for the three and six months ended December 31, 2020, ~~the effective tax rate was 19.6 percent compared to 17.1 percent for the same period last year.~~respectively. The ~~increase~~increases in the effective income tax rate ~~was~~were primarily due to ~~a decrease~~decreases in excess tax benefits related to employee stock-based compensation, partially offset by favorable changes related to the 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 FY2021 effective tax rate will fluctuate.compensation.

~~Results of Operations for the Six Months Ended December 31, 2020 and 2019~~

~~The following table provides the relative percentage that certain items of expense and earnings bear to revenue for the six months ended December 31, 2020 and 2019, respectively.~~

Dollar Amount

Percentage of Revenue

Six Months Ended

Six Months Ended

December 31,

December 31,

Change

(dollars in thousands)

2020

2019

2020

2019

$

%

Revenue

$
2,928,217

$
2,758,861

100.0
%

100.0
%

$
169,356

6.1
%
Operating costs and expenses:

Costs of revenue

1,887,065

1,783,748

64.5

64.7

103,317

5.8

Indirect costs and selling expenses

702,811

710,040

24.0

25.7

(7,229
)

(1.0
)
Depreciation and amortization

62,378

54,729

2.1

2.0

7,649

14.0

Total operating costs and expenses

2,652,254

2,548,517

90.6

92.4

103,737

4.1

Income from operations

275,963

210,344

9.4

7.6

65,619

31.2

Interest expense and other, net

19,067

31,525

0.6

1.1

(12,458
)

(39.5
)
Income before income taxes

256,896

178,819

8.8

6.5

78,077

43.7

Income tax expense

56,774

31,647

2.0

1.1

25,127

79.4

Net income

$
200,122

$
147,172

6.8
%

5.3
%

$
52,950

36.0
%

~~Revenue~~. For the six months ended December 31, 2020, total revenue was $2.9 billion, 6.1 percent greater than last year with 5.2 percent from organic growth. The remaining growth in revenue was attributable to acquired revenues. Out of our primary customer groups, Department of Defense and Federal Civilian revenue increased by $89.0 million (3.5 percent organic) and $74.2 million (10.3 percent organic), respectively, compared with the same period a year ago.

~~The following table summarizes revenue by customer type with related percentages of revenue for the six months ended December 30, 2020 and 2019, respectively:~~

Dollar Amount

Percentage of Revenue

Six Months Ended

Six Months Ended

December 31,

December 31,

Change

(dollars in thousands)

2020

2019

2020

2019

$

%

Department of Defense

$
2,017,070

$
1,928,021

68.9
%

69.9
%

$
89,049

4.6
%
Federal Civilian Agencies

780,213

706,022

26.6

25.6

74,191

10.5

Commercial and other

130,934

124,818

4.5

4.5

6,116

4.9

Total

$
2,928,217

$
2,758,861

100.0
%

100.0
%

$
169,356

6.1
%

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

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

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

~~Costs of Revenue~~. For the six months ended December 31, 2020, costs of revenue increased $103.3 million or 5.8 percent, compared with the same period a year ago. The increase is primarily related to direct and subcontractor labor costs from organic growth on existing programs and acquired contracts, partially offset by a reduction in other direct and travel related expenses. As a percentage of revenue, costs of revenue were 64.5 percent and 64.7 percent for the six months ended December 31, 2020 and 2019, respectively. The improvement in margins against the comparative period is primarily due to strong program performance and our ability to deliver on certain fixed-price contracts with less costs than originally estimated. In addition, the Company’s margins increased from a higher percentage of Technology revenue as compared against the prior period.

~~Indirect Costs and Selling Expenses~~. For the six months ended December 31, 2020, indirect costs and selling expenses decreased $7.2 million or 1.0 percent, compared with the same period a year ago. As a percentage of revenue, indirect costs and selling expenses were 24.0 percent and 25.7 percent for the six months ended December 31, 2020 and 2019, respectively. This percentage decrease is driven primarily by reduced bid and proposal (B&P) costs, indirect travel, other professional services, and recruiting expenses, partially offset by increased expenses due to a larger workforce, resulting in increased labor, fringe benefits and facility costs.

~~Depreciation and Amortization~~. For the six months ended December 31, 2020, depreciation and amortization expense increased $7.6 million or 14.0 percent, compared with the same period a year ago. The increase is primarily attributable to intangible amortization from recent acquisitions and increased depreciation from the Company’s higher average property and equipment balances.

~~Interest Expense and Other, Net~~. For the six months ended December 31, 2020, interest expense and other, net decreased $12.5 million or 39.5 percent, compared with the same period a year ago. The decrease in interest expense is primarily attributable to lower average outstanding debt balances on the Company’s Credit Facility and lower interest rates.

~~Income Tax Expense~~. For the six months ended December 31, 2020, the effective tax rate was 22.1 percent compared to 17.7 percent for the same period last year. The increase in the effective tax rate was primarily due to a decrease in excess tax benefits related to employee stock-based compensation, partially offset by favorable changes related to the 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 FY2021 effective tax rate will fluctuate.

Contract Backlog

The Company’s backlog represents ~~total~~ value on ~~our~~ existing contracts that has the potential to be recognized into ~~revenue~~revenues as work is performed. The Company includes unexercised option years in its backlog ~~amount~~ and excludes the value of task orders that may be ~~issued underneath a~~awarded under multiple award ~~IDIQ vehicle~~indefinite delivery/indefinite quantity (“IDIQ”) vehicles until such task orders are issued.

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

•	Funded backlog represents contract value for which funding has been appropriated ~~by a customer that is expected to be~~less revenues previously recognized ~~into revenue.~~on these contracts.

•

Unfunded backlog represents estimated values that have the ~~sum of unappropriated contract value on executed contracts and unexercised option years that is expected~~potential to be recognized into ~~revenue.~~revenue from executed contracts for which funding has not been appropriated and unexercised priced contract options.

As of December 31, ~~2020,~~2021, the Company had total backlog of ~~$22.4~~$24.1 billion, compared with ~~$20.3~~$22.4 billion a year ago, an increase of ~~10.4~~7.6 percent. Contract awards were ~~$2.1~~$2.0 billion for the three months ended December 31, ~~2020.~~2021. Funded backlog as of December 31, ~~2020~~2021 was ~~$2.9~~$3.1 billion, compared with ~~$2.8~~$2.9 billion a year ago, an increase of ~~2.8~~6.9 percent. The total backlog consists of remaining performance obligations (see Note ~~6 – Revenue Recognition)~~6) plus unexercised options.

There is no assurance that all funded or potential contract value will result in ~~revenue~~revenues 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, early terminations, or ~~early terminations.~~other factors. Based on this analysis, an adjustment to the period end balance may be required.

Liquidity and Capital Resources

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

Existing cash and cash equivalents and cash generated by operations are our primary sources of liquidity, as well as sales of receivables under our MARPA (as defined and discussed in Note ~~10)~~9) and available borrowings under our Credit Facility (as defined in Note ~~11)~~10) described below.

The Company has a ~~$2,438.4~~$3,200.0 million Credit Facility, which consists of ~~an $1,500.0~~a $1,975.0 million Revolving Facility and a ~~$938.4~~$1,225.0 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 December 31, ~~2020,~~2021, we had ~~$605.0~~$896.5 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~~$7.7 million through December 31, 2023 and $15.3 million thereafter until the balance is due in full on ~~June 30, 2024.~~December 13, 2026. As of December 31, ~~2020, $821.1~~2021, $1,225.0 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 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.

A summary of the change in cash and cash equivalents is presented ~~below:~~below (in thousands):

	Six Months Ended						Six Months Ended
	December 31,						December 31,
	2020			2019			2021			2020
Net cash provided by operating activities	$	382,287		$	237,025		$	308,765		$	382,287
Net cash used in investing activities		(387,000	)		(143,091	)		(630,065	)		(387,000	)
Net cash used in financing activities		(5,865	)		(97,474	)
Net cash provided by (used in) financing activities								358,849			(5,865	)
Effect of exchange rate changes on cash and cash equivalents		5,456			157			(1,477	)		5,456
Net decrease in cash and cash equivalents	$	(5,122	)	$	(3,383	)
Net change in cash and cash equivalents							$	36,072		$	(5,122	)

~~Our~~Net cash provided by operating ~~cash flow was $382.3~~activities decreased $73.5 million for the six months ended December 31, ~~2020. This represents an increase of $145.3 million or 61.3 percent, from our operating cash flows of $237.0 million for~~2021, when compared to the six months ended December 31, ~~2019. The year-over-year increase is~~2020, primarily ~~related to increases~~as a result of ~~$53.0 million in FY2021 net income,~~a $52.5 million ~~related to~~benefit in the prior year from deferrals of employer related social security taxes under the CARES Act ~~$34.9~~compared to a payment of $46.5 million ~~due to more favorable timing of~~in the current year and a $18.4 million decrease in net income after adding back non-cash adjustments, partially offset by a $46.4 million reduction in cash ~~collections and $4.9 million of other net favorable working capital changes. Days sales outstanding (DSO) was 43 days at December 31, 2020, compared with 51 days at December 31, 2019.~~paid for income taxes.

~~Cash~~Net cash used in investing activities ~~was $387.0~~increased $243.1 million ~~and $143.1 million during~~for the six months ended December 31, 2021, when compared to the six months ended December 31, 2020, ~~and 2019, respectively. During~~as a result of a $254.2 million increase in cash used in acquisitions of businesses partially offset by a $10.2 million reduction in capital expenditures.

Net cash provided by financing activities increased $364.7 million for the six months ended December 31, 2021, when compared to the six months ended December 31, 2020, ~~we paid $355.1~~primarily as a result of a $366.3 million for business acquisitions, as compared to $102.1 million during the same period a year ago. Capital expenditures of $31.9 million and $41.0 million during the first six months of FY2021 and FY2020, respectively, accounted for the remaining funds usedincrease in ~~investing activities.~~

~~Cash used in financing activities was $5.9 million and $97.5 million during the six months ended December 31, 2020 and 2019, respectively. During the six months ended December 31, 2020, we had~~ net borrowings under our Credit Facility of $12.5 million compared to net repayments of $68.5 million during the same period a year ago. During the six months ended December 31, 2020 and December 31, 2019, we also used cash of $18.6 million and $29.1 million, respectively, to pay taxes on equity transactions. Facility.

We believe that the combination of internally generated funds, available bank borrowings, and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund on-going operations, customary capital expenditures, debt service obligations, share repurchases, and other working capital requirements over the next twelve months. ~~We may in~~In the future we may 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.

Critical Accounting Policies

There have been no significant changes to the Company’s critical accounting policies as disclosed in our Annual Report on Form 10-K for the year ended June 30, ~~2020.~~2021.

Off-Balance Sheet Arrangements and Contractual Obligations

We have no material off-balance sheet financing arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The interest rates on both the Term Loan and the Revolving Facility are affected by changes in market interest rates. We have the ability to manage these fluctuations in part through interest rate hedging alternatives in the form of interest rate swaps. We have entered into floating-to-fixed interest rate swap agreements for an aggregate notional amount of ~~$800.0~~$650.0 million related to a portion of our floating rate indebtedness. All remaining balances under our Term Loan, and any additional amounts that may be borrowed under our Revolving Facility, are currently subject to interest rate fluctuations. With every one percent fluctuation in the applicable interest rates, interest expense on our variable rate debt for the six months ended December 31, ~~2020~~2021 would have fluctuated by approximately ~~$3.4~~$5.4 million.

Approximately ~~2.8~~3.2 percent and ~~2.9~~2.8 percent of our total ~~revenue in~~revenues during the six months ended December 31, 2021 and 2020, ~~and 2019,~~ respectively, ~~was~~were derived from our international operations headquartered in the U.K. Our practice in our international operations is to negotiate contracts in the same currency in which the predominant expenses are incurred, thereby mitigating the exposure to foreign currency exchange fluctuations. It is not possible to accomplish this in all cases; thus, there is some risk that profits will be affected by foreign currency exchange fluctuations. As of December 31, ~~2020,~~2021, we held a combination of euros and pounds sterling in the U.K. and the Netherlands equivalent to approximately ~~$60.8~~$59.5 million. This allows us to better utilize our cash resources on behalf of our foreign subsidiaries, thereby mitigating foreign currency conversion risks.

Item 4. Controls and Procedures

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

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

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were operating and effective at December 31, ~~2020.~~2021.

The Company reports that no changes in its internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended December 31, ~~2020.~~

2021.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

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

Reference is made to Part I, Item 3, Legal Proceedings in the Registrant’s Annual Report on Form 10-K for the year ended June 30, ~~2020~~2021 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.

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 then filed a motion in the district court to stay the action pending filing and disposition of a petition for a writ of certiorari. On November 1, 2019, the district court granted CACI’s motion and issued an Order staying the action until further order of the court. On November 15, 2019, CACI filed a petition for a writ of certiorari in the U.S. Supreme Court. On January 27, 2020, the U.S. Supreme Court issued an Order inviting the Solicitor General to file a brief in the case expressing the views of the United States. On August 26, 2020, the Solicitor General filed a brief recommending that CACI’s petition for a writ of certiorari be held pending the Supreme Court’s disposition of Nestle USA, Inc. v. Doe, cert. granted, No. 19-416 (July 2, 2020), and Cargill, Inc. v. Doe, cert. granted, No. 19-453 (July 2, 2020). The United States’ brief recommended that if the Supreme Court’s decisions in Nestle and Cargill did not effectively eliminate the claims in Al Shimari, then the Supreme Court should grant CACI’s petition for a writ of certiorari. On June 17, 2021, the Supreme Court issued its decision in the Nestle and Cargill cases, holding that the allegations of domestic conduct in the cases were general corporate activity insufficient to establish subject matter jurisdiction. As a result, the Supreme Court remanded the cases for dismissal. On June 28, 2021, the Supreme Court denied CACI’s petition for a writ of certiorari.

On July 16, 2021, the District Court granted CACI’s consent motion to lift the stay of the action, and ordered the parties to submit status reports to the District Court by August 4, 2021. On July 23, 2021, CACI filed a motion to dismiss the action for lack of subject matter jurisdiction based on, among other things, the recent Supreme Court decision in the Nestle and Cargill cases. On August 4, 2021, the parties submitted status reports to the District Court.

On September 10, 2021, the Court conducted a hearing on CACI’s motion to dismiss for lack of subject matter jurisdiction and took the motion under advisement. The Court issued an Order directing the plaintiffs to provide the Court with a calculation of specific damages sought by each plaintiff. In response, plaintiffs advised the Court that, if the case is tried, they do not intend to request a specific amount of damages.

On October 1, 2021, the plaintiffs filed an estimate of compensatory damages between $6.0 million and $9.0 million ($2.0 million to $3.0 million per plaintiff) and an estimate of punitive damages between $23.5 million and $64.0 million.

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, ~~2020~~2021 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.

On September 13, 2021, the Court issued an Order directing plaintiffs’ counsel to file a report advising the Court of the status of each plaintiff, and indicating that any plaintiff whom counsel is unable to contact may be dismissed from the action. On October 4, 2021, plaintiffs’ counsel filed a memorandum stating that the action was brought by forty-six plaintiffs, and that plaintiffs’ counsel was in contact with many of the plaintiffs but needed additional time to provide the Court with a final report. On October 4, 2021, the Court entered an Order extending plaintiffs’ response to October 25, 2021. On October 25, 2021, plaintiffs’ counsel filed a memorandum stating that he was in communication with 46 plaintiffs or their representatives.

Item 1A. Risk Factors

Reference is made to Part I, Item 1A, Risk Factors, in the Registrant’s Annual Report on Form 10-K for the year ended June 30, ~~2020. There~~2021. Except as set forth below, there have been no material changes from the risk factors described in that report.

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

We face various risks related to health epidemics, pandemics and similar outbreaks, including the global outbreak of COVID-19. The COVID-19 pandemic and the mitigation efforts to control its spread have adversely impacted the U.S. and global economies, leading to disruptions and volatility in global capital markets. While we have taken steps to mitigate the impact of the COVID-19 pandemic on our employees and our business, the continued spread of COVID-19 may have a material adverse effect on our business, financial position, results of operations and/or cash flows as the result of significant portions of our workforce being unable to work due to illness, quarantines, government actions, facility closures, vaccination status, or other restrictions; the inability for us to fully perform on our contracts as a result of government actions or reduction in personnel due to government mandates which may require our employees to be vaccinated; delays or limits to the ability of the U.S. Government or other customers to make timely payments; incurrence of increased costs which may not be recoverable; adverse impacts on our access to capital; or other unpredictable events. We continue to monitor the effect of COVID-19 on our business, but we cannot predict the full impact of COVID-19 as the extent of the impact will depend on the duration and spread of the pandemic and the actions taken by federal, state, local and foreign governments to prevent the spread of COVID-19.

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

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

Period

Total Number
of Shares
Purchased

Average Price
Paid Per Share

Total Number of Shares Purchased As Part of
Publicly Announced
Programs

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

October 2020

11,023

$
212.76

1,238,882

261,118

November 2020

—

—

—

—

December 2020

—

—

—

—

Total

11,023

$
212.76

1,238,882

261,118

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased As Part of Publicly Announced Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 2021		9,277	$	271.98		1,276,814		223,186
November 2021		—		—		—		—
December 2021		—	$	-		—		—
Total		9,277				1,276,814

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

Item 6. Exhibits

Incorporated by Reference

Exhibit No.

Description

Filed with this Form 10-Q

Form

Filing Date

Exhibit No.

Description

Filed with this Form 10-Q

Form

Filing Date

Exhibit No.

10.1

Amendment No. 2 to the Master Accounts Receivable Purchase Agreement dated December 28, 2018, among CACI, International Inc, CACI, Inc.-Federal, certain subsidiaries from time to time party thereto, MUFG Bank, Ltd., as Administrative Agent, and certain purchasers from time to time party thereto

8-K

December 30, 2020

10.1

Amended and Restated Credit Agreement, dated December 13, 2021, by and among CACI International Inc, the subsidiaries of CACI International Inc named therein, Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer, and each of the lenders named therein.

8-K

December 17, 2021

10.1

10.2

Amendment No. 3 to the Master Accounts Receivable Purchase Agreement dated December 28, 2018, among CACI, International Inc, CACI, Inc. – Federal, certain subsidiaries from time to time party thereto, MUFG Bank, Ltd., as Administrative Agent, and certain purchasers from time to time party thereto.

8-K

December 29, 2021

10.1

10.3

Form of RSU Grant Agreement pursuant to the CACI International Inc 2016 Incentive Compensation Plan.

10.4

Form of Performance RSU Grant Agreement pursuant to the CACI International Inc 2016 Incentive Compensation Plan.

31.1

Section 302 Certification John S. Mengucci

31.2

Section 302 Certification Thomas A. Mutryn

32.1

Section 906 Certification John S. Mengucci

32.2

Section 906 Certification Thomas A. Mutryn

101.INS

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SIGNATURES

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

	CACI International Inc
	Registrant

Date: January ~~28, 2021~~27, 2022	By:	/s/ John S. Mengucci
		John S. Mengucci
		President,
		Chief Executive Officer and Director
		(Principal Executive Officer)

Date: January ~~28, 2021~~27, 2022	By:	/s/ Thomas A. Mutryn
		Thomas A. Mutryn
		Executive Vice President,
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)

Date: January ~~28, 2021~~27, 2022	By:	/s/ ~~Christopher A. Voci~~Travis B. Johnson
		~~Christopher A. Voci~~Travis B. Johnson
		Senior Vice President, Corporate Controller
		and Chief Accounting Officer
		(Principal Accounting Officer)

	December 31, 2020		June 30, 2020
Operating lease right-of-use assets	$	374,310	$	330,767

Operating lease liabilities, current		60,175		67,549
Operating lease liabilities, noncurrent		376,039		309,680
	$	436,214	$	377,229

Fiscal year ending June 30,
2021 (six months)	$	33,167
2022		77,286
2023		73,707
2024		66,459
2025		58,069
Thereafter		174,510
Total undiscounted lease payments		483,198
Less: imputed interest		(46,984	)
Total discounted lease liabilities	$	436,214

	Domestic Operations		International Operations		Total
Three Months Ended December 31, 2020
Revenue from external customers	$	1,427,060	$	41,651	$	1,468,711
Net income		99,921		6,557		106,478
Three Months Ended December 31, 2019
Revenue from external customers	$	1,353,793	$	41,676	$	1,395,469
Net income		74,684		4,511		79,195
Six Months Ended December 31, 2020
Revenue from external customers	$	2,845,247	$	82,970	$	2,928,217
Net income		188,058		12,064		200,122
Six Months Ended December 31, 2019
Revenue from external customers	$	2,678,566	$	80,295	$	2,758,861
Net income		138,895		8,277		147,172