Maximus (MMS) 10-Q 10 May 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Mar. 31, 2018	May 07, 2018
Document and Entity Information
Entity Registrant Name	MAXIMUS INC
Entity Central Index Key	1,032,220
Current Fiscal Year End Date	--09-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		65,242,950

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Income Statement [Abstract]
Revenue	$ 612,787	$ 622,047	$ 1,235,935	$ 1,229,611
Cost of revenue	463,984	469,730	935,172	932,476
Gross profit	148,803	152,317	300,763	297,135
Selling, general and administrative expenses	72,559	68,596	142,118	133,994
Amortization of intangible assets	2,603	3,386	5,321	6,788
Restructuring charges	2,320
Restructuring costs		0	2,320	2,242
Operating income	71,321	80,335	151,004	154,111
Interest expense	157	744	325	1,593
Other income, net	1,392	417	1,679	680
Income before income taxes	72,556	80,008	152,358	153,198
Provision for income taxes	17,450	26,911	37,300	53,772
Net income	55,106	53,097	115,058	99,426
(Loss)/income attributable to noncontrolling interests	(386)	582	475	247
Net income attributable to MAXIMUS	$ 55,492	$ 52,515	$ 114,583	$ 99,179
Basic earnings per share attributable to MAXIMUS (in dollars per share)	$ 0.84	$ 0.80	$ 1.74	$ 1.51
Diluted earnings per share attributable to MAXIMUS (in dollars per share)	0.84	0.80	1.73	1.50
Dividends paid per share (in dollars per share)	$ 0.045	$ 0.045	$ 0.09	$ 0.09
Weighted average shares outstanding:
Basic weighted average shares outstanding (in shares)	65,856	65,549	65,857	65,669
Diluted weighted average shares outstanding (in shares)	66,268	65,947	66,223	65,989

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 55,106	$ 53,097	$ 115,058	$ 99,426
Foreign currency translation adjustments	2,869	5,623	3,184	(4,071)
Interest rate hedge, net of income taxes of $-, $5, $- and $(3), respectively	0	(7)	0	5
Comprehensive income	57,975	58,713	118,242	95,360
Comprehensive (loss)/income attributable to noncontrolling interests	(386)	582	475	247
Comprehensive income attributable to MAXIMUS	$ 58,361	$ 58,131	$ 117,767	$ 95,113

CONSOLIDATED STATEMENTS OF COM4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Statement of Comprehensive Income [Abstract]
Interest rate hedge, tax	$ 0	$ 5	$ 0	$ (3)

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2018	Sep. 30, 2017
Current assets:
Cash and cash equivalents	$ 253,227	$ 166,252
Accounts receivable — billed and billable, net of reserves of $4,356 and $6,843	415,008	394,338
Accounts receivable — unbilled	41,202	36,475
Income taxes receivable	1,677	4,528
Prepaid expenses and other current assets	47,918	55,649
Total current assets	759,032	657,242
Property and equipment, net	90,741	101,651
Capitalized software, net	22,601	26,748
Goodwill	405,082	402,976
Intangible assets, net	94,109	98,769
Deferred contract costs, net	14,673	16,298
Deferred compensation plan assets	29,703	28,548
Deferred income taxes	7,625	7,691
Other assets	6,934	10,739
Total assets	1,430,500	1,350,662
Current liabilities:
Accounts payable and accrued liabilities	119,589	122,083
Accrued compensation and benefits	81,833	105,667
Deferred revenue	52,743	71,722
Income taxes payable	11,652	4,703
Other liabilities	13,534	12,091
Total current liabilities	279,351	316,266
Deferred revenue, less current portion	23,802	28,182
Deferred income taxes	10,997	20,106
Deferred compensation plan liabilities, less current portion	30,904	30,707
Other liabilities	19,118	9,633
Total liabilities	364,172	404,894
Shareholders’ equity:
Common stock, no par value; 100,000 shares authorized; 65,243 and 65,137 shares issued and outstanding at March 31, 2018 and September 30, 2017, at stated amount, respectively	487,385	475,592
Accumulated other comprehensive loss	(24,435)	(27,619)
Retained earnings	599,630	492,112
Total MAXIMUS shareholders’ equity	1,062,580	940,085
Noncontrolling interests	3,748	5,683
Total equity	1,066,328	945,768
Total liabilities and equity	$ 1,430,500	$ 1,350,662

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2018	Sep. 30, 2017
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable, current	$ 4,356	$ 6,843
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares outstanding	65,243,000	65,137,000
Common stock, shares issued	65,243,000	65,137,000

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operations:
Net income	$ 115,058	$ 99,426
Adjustments to reconcile net income to cash flows from operations:
Depreciation and amortization of property and equipment and capitalized software	27,074	29,967
Amortization of intangible assets	5,321	6,788
Deferred income taxes	(9,179)	(5,721)
Stock compensation expense	11,324	10,234
Change in assets and liabilities:
Accounts receivable — billed and billable	(18,522)	10,030
Accounts receivable — unbilled	(4,730)	(3,445)
Prepaid expenses and other current assets	8,526	7,512
Deferred contract costs	1,794	998
Accounts payable and accrued liabilities	(3,171)	(17,719)
Accrued compensation and benefits	(15,391)	(6,293)
Deferred revenue	(23,789)	(15,853)
Income taxes	18,634	20,715
Other assets and liabilities	3,620	209
Cash flows from operations	116,569	136,848
Cash flows from investing activities:
Purchases of property and equipment and capitalized software costs	(13,175)	(12,975)
Acquisition of part of noncontrolling interest	157	0
Proceeds from the sale of a business	0	385
Other	183	218
Cash used in investing activities	(13,149)	(12,372)
Cash flows from financing activities:
Cash dividends paid to MAXIMUS shareholders	(5,865)	(5,837)
Repurchases of common stock	(1,038)	(28,858)
Tax withholding related to RSU vesting	(8,529)	(9,267)
Borrowings under credit facility	124,683	135,000
Repayment of credit facility and other long-term debt	(124,752)	(184,828)
Other	(2,130)	(1,145)
Cash used in financing activities	(17,631)	(94,935)
Effect of exchange rate changes on cash and cash equivalents	1,186	(878)
Net increase in cash and cash equivalents	86,975	28,663
Cash and cash equivalents, beginning of period	166,252	66,199
Cash and cash equivalents, end of period	$ 253,227	$ 94,862

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Accumulated Other Comprehensive Income/(Loss)	Retained Earnings	Noncontrolling Interest
Balance (in shares) at Sep. 30, 2016		65,223
Balance at Sep. 30, 2016	$ 753,140	$ 461,679	$ (36,169)	$ 323,571	$ 4,059
Increase (Decrease) in Shareholders' Equity
Net income	99,426			99,179	247
Foreign currency translation	(4,071)		(4,071)
Interest rate hedge, net of income taxes	5		5
Cash dividends	(6,454)			(5,837)	(617)
Dividends on RSUs		$ 174		(174)
Repurchases of common stock (in shares)		(558)
Repurchases of common stock	(28,858)			(28,858)
Stock compensation expense	10,234	$ 10,234
Tax withholding related to RSU vesting	(12)	$ (12)
RSUs vested (in shares)		157
RSUs vested	0	$ 0
Balance (in shares) at Mar. 31, 2017		64,822
Balance at Mar. 31, 2017	$ 823,410	$ 472,075	(40,235)	387,881	3,689
Balance (in shares) at Sep. 30, 2017	65,137	65,137
Balance at Sep. 30, 2017	$ 945,768	$ 475,592	(27,619)	492,112	5,683
Increase (Decrease) in Shareholders' Equity
Net income	115,058			114,583	475
Foreign currency translation	3,184		3,184
Interest rate hedge, net of income taxes	0
Cash dividends	(7,994)			(5,865)	(2,129)
Dividends on RSUs		$ 162		(162)
Repurchases of common stock (in shares)		(17)
Repurchases of common stock	(1,038)			(1,038)
Stock compensation expense	11,324	$ 11,324
Tax withholding related to RSU vesting	183	$ 183
RSUs vested (in shares)		123
RSUs vested	0	$ 0
Acquisition of part of noncontrolling interest	$ (157)	$ 124			(281)
Balance (in shares) at Mar. 31, 2018	65,243	65,243
Balance at Mar. 31, 2018	$ 1,066,328	$ 487,385	$ (24,435)	$ 599,630	$ 3,748

Organization and Basis of Prese

Organization and Basis of Presentation	6 Months Ended
	Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Basis of Presentation	Organization and Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. As permitted by these instructions, they do not include all of the information and notes required by generally accepted accounting principles (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the three and six months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the full fiscal year. The balance sheet at September 30, 2017 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements. Certain financial results have been reclassified to conform with our current period presentation. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expenses. On an ongoing basis, we evaluate our estimates including those related to revenue recognition and cost estimation on certain contracts, the realizability of goodwill and amounts related to income taxes, certain accrued liabilities and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates. These financial statements should be read in conjunction with the consolidated audited financial statements and the notes thereto at September 30, 2017 and 2016 and for each of the three years ended September 30, included in our Annual Report on Form 10-K which was filed with the Securities and Exchange Commission on November 20, 2017 .

Segment Information

Segment Information	6 Months Ended
	Mar. 31, 2018
Segment Reporting [Abstract]
Segment Information	Segment Information The table below provides certain financial information for each of our business segments. Three Months Ended March 31, Six Months Ended March 31, (dollars in thousands) 2018 % (1) 2017 % (1) 2018 % (1) 2017 % (1) Revenue: Health Services $ 365,633 100 % $ 348,994 100 % $ 717,723 100 % $ 689,723 100 % U.S. Federal Services 116,327 100 % 145,370 100 % 249,310 100 % 286,668 100 % Human Services 130,827 100 % 127,683 100 % 268,902 100 % 253,220 100 % Total $ 612,787 100 % $ 622,047 100 % $ 1,235,935 100 % $ 1,229,611 100 % Gross profit: Health Services $ 98,207 26.9 % $ 86,454 24.8 % $ 189,263 26.4 % $ 164,688 23.9 % U.S. Federal Services 27,374 23.5 % 36,571 25.2 % 60,732 24.4 % 74,147 25.9 % Human Services 23,222 17.8 % 29,292 22.9 % 50,768 18.9 % 58,300 23.0 % Total $ 148,803 24.3 % $ 152,317 24.5 % $ 300,763 24.3 % $ 297,135 24.2 % Selling, general and administrative expense: Health Services $ 35,190 9.6 % $ 29,914 8.6 % $ 68,606 9.6 % $ 58,021 8.4 % U.S. Federal Services 17,540 15.1 % 18,927 13.0 % 34,188 13.7 % 38,622 13.5 % Human Services 19,829 15.2 % 19,663 15.4 % 39,324 14.6 % 36,902 14.6 % Other (2) — NM 92 NM — NM 449 NM Total $ 72,559 11.8 % $ 68,596 11.0 % $ 142,118 11.5 % $ 133,994 10.9 % Operating income: Health Services $ 63,017 17.2 % $ 56,540 16.2 % $ 120,657 16.8 % $ 106,667 15.5 % U.S. Federal Services 9,834 8.5 % 17,644 12.1 % 26,544 10.6 % 35,525 12.4 % Human Services 3,393 2.6 % 9,629 7.5 % 11,444 4.3 % 21,398 8.5 % Amortization of intangible assets (2,603 ) NM (3,386 ) NM (5,321 ) NM (6,788 ) NM Restructuring costs (3) (2,320 ) NM — NM (2,320 ) NM (2,242 ) NM Other (2) — NM (92 ) NM — NM (449 ) NM Total $ 71,321 11.6 % $ 80,335 12.9 % $ 151,004 12.2 % $ 154,111 12.5 % (1) Percentage of respective segment revenue. Percentages not considered meaningful are marked “NM.” (2) Other costs and credits relate to SG&A balances that do not relate directly to segment business activities. During the six months ended March 31, 2017 we incurred $0.4 million of legal costs pertaining to a matter which occurred in fiscal year 2009. (3) During fiscal years 2018 and 2017, we incurred costs in restructuring our United Kingdom Human Services business. See "Note 5. Supplemental disclosures" for more information.

Earnings Per Share

Earnings Per Share	6 Months Ended
	Mar. 31, 2018
Earnings Per Share [Abstract]
Earnings Per Share	Earnings Per Share The weighted average number of shares outstanding used to compute earnings per share was as follows: Three Months Ended March 31, Six Months Ended March 31, (shares in thousands) 2018 2017 2018 2017 Basic weighted average shares outstanding 65,856 65,549 65,857 65,669 Dilutive effect of employee stock options and unvested RSUs 412 398 366 320 Denominator for diluted earnings per share 66,268 65,947 66,223 65,989 All of our unvested restricted stock units (RSUs) are included in the calculations of dilution above.

Income Tax

Income Tax	6 Months Ended
	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Income Tax	Income Tax Our results for the three and six months ended March 31, 2018 benefited from the estimated effects of the Tax Cuts and Jobs Act (the Act), which was signed on December 22, 2017 and was effective from January 1, 2018. Our results for the six months ended March 31, 2018 were affected by: • A one-time "toll tax" on our undistributed and previously untaxed earnings in foreign locations, of approximately $9.5 million , recorded in the three months ended December 31, 2017; • A one-time benefit from the reduction of our deferred tax liabilities of $11.7 million , of which $1.1 million was recorded in the three months ended March 31, 2018, to reflect the new U.S. federal tax rates; and • A reduced provision for income taxes to reflect the new lower U.S. corporate tax rates of approximately $12.8 million for the six months ended March 31, 2018, split evenly between both quarters, compared to our tax provision under previous law. The calculations of deferred tax assets and liabilities and the toll tax are complicated by two factors: • Our U.S. federal income tax return for fiscal year 2017, which ended on September 30, 2017, is required to be filed on or before July 15, 2018, and certain estimates of differences between recorded amounts for financial reporting purposes and for tax reporting purposes will continue to be refined for the next several months; and • The “toll tax” requires the gathering of detailed information previously not required to be filed with our U.S. federal tax returns; both the IRS and U.S. Treasury Department will be providing interpretations and guidance over the next several months to assist tax payers in calculating the toll tax. In addition, many U.S. states continue to issue their interpretations of the Act, which may change our estimates of our charge. Accordingly, the accounting for certain income tax effects of the Act is provisional. We believe that we have a reasonable basis for our estimates. Our effective income tax rate for the three and six months ended March 31, 2018 was 24.1% and 24.5% , respectively, compared to our effective income tax rate for the three and six months ended March 31, 2017 of 33.6% and 35.1% , respectively. The net effect of our toll charge and reduction of deferred tax liabilities reduced the effective income tax rate by approximately 1.5% and 1.4% for the three and six months ended March 31, 2018, respectively. During the six months ended March 31, 2018 and 2017 , we made income tax payments of $28.5 million and $38.8 million , respectively.

Supplemental disclosures

Supplemental disclosures	6 Months Ended
	Mar. 31, 2018
Supplemental Cash Flow Elements [Abstract]
Supplemental disclosures	Supplemental disclosures Under a resolution adopted in August 2015, the Board of Directors authorized the repurchase, at management's discretion, of up to an aggregate of $200 million of our common stock. The resolution also authorizes the use of option exercise proceeds for the repurchase of our common stock. During the six months ended March 31, 2018 , we repurchased approximately 17,000 common shares at a cost of $1.0 million . During the six months ended March 31, 2017 , we acquired 0.6 million common shares at a cost of $28.9 million . At March 31, 2018 , $108.8 million remained available for future stock repurchases. Our deferred compensation plan assets inclu de $16.3 million i nvested in mutual funds that have quoted prices in active markets. These assets are recorded at fair value with changes in fair value being recorded in the Statement of Operations. During the six months ended March 31, 2018 , we granted 0.3 million RSUs to our employees. These awards will vest ratably over five years. During the three months ended March 31, 2018 , we granted approximately 22,000 RSU's to members of our Board of Directors. These awards vest over one year. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and other amounts included within current assets and liabilities that meet the definition of a financial instrument are shown at values equivalent to fair value due to the short-term nature of these items. Our accounts receivable balance includes both amounts invoiced and amounts that are ready to be invoiced and the funds are collectible within standard invoice terms. During the six months ended March 31, 2017 , we undertook a restructuring of our United Kingdom Human Services operations as part of the ongoing integration of Remploy. During the six months ended March 31, 2017 , we recorded restructuring costs of $2.2 million , principally severance expenses. During the three and six months ended March 31, 2018 , we recorded additional restructuring costs of $2.3 million . As part of our work for the U.S. Federal Government and many states, we allocate costs to individual projects and segments using a methodology driven by the Federal Cost Accounting Standards. During fiscal year 2018, we updated our methodology for allocation of costs which resulted in certain costs which had been within Cost of Revenue now being classified as Selling, General and Administrative Expenses (SG&A). If we had utilized the same methodology in fiscal year 2018 as we had in fiscal year 2017, we estimate that SG&A would have been lower by approximately $1.3 million and $2.5 million during the three and six months ended March 31, 2018 , respectively. This change in methodology did not affect our operating income. Securities Class Action Lawsuit On August 4, 2017, the Company and certain officers were named as defendants in a putative class action lawsuit filed in the U.S. District Court for the Eastern District of Virginia, Steamfitters Local 449 Pension Plan v. MAXIMUS . The plaintiff alleges the defendants made a variety of materially false and misleading statements, or failed to disclose material information, concerning the status of the Company’s Health Assessment Advisory Services project for the U.K. Department for Work and Pensions from the period October 20, 2014 through February 3, 2016, and seeks damages to be proved at trial. We deny the allegations and intend to defend the matter vigorously. At this time, it is not possible to reasonably predict whether this matter will be permitted to proceed as a class or to reasonably estimate the value of the claims asserted and we are unable to estimate the potential loss or range of loss.

Debt

Debt	6 Months Ended
	Mar. 31, 2018
Debt Disclosure [Abstract]
Debt	Debt Credit Facilities Our credit agreement provides for a revolving line of credit up to $400 million that may be used for revolving loans, swingline loans (subject to a sublimit of $5 million ), and to request letters of credit, subject to a sublimit of $50 million . The line of credit is available for general corporate purposes, including working capital, capital expenditures and acquisitions. Borrowings are permitted in currencies other than the U.S. Dollar. In September 2017, we extended the term of our credit agreement to September 2022, at which time all outstanding borrowings must be repaid. At March 31, 2018 , we had no borrowings under the credit agreement. At March 31, 2018 , we held three letters of credit under our credit agreement totaling $2.7 million . Each of these letters of credit may be called by vendors or customers in the event that we default under the terms of a contract, the probability of which we believe is remote. In addition, two letters of credit totaling $3.0 million , secured with restricted cash balances, are held with another financial institution to cover similar obligations to customers. Our credit agreement requires us to comply with certain financial covenants and other covenants including a maximum total leverage ratio and a minimum fixed charge coverage ratio. We were in compliance with all covenants as of March 31, 2018 . Our obligations under the credit agreement are guaranteed by material domestic subsidiaries of the Company, but are otherwise unsecured. In the event that our total leverage ratio, as defined in the credit agreement, exceeds 2.50 :1, we would be obliged to provide security in the form of the assets of the parent company and certain of its subsidiaries. Our credit agreement contains no restrictions on the payment of dividends as long as our leverage ratio does not exceed 2.50 :1. At March 31, 2018 , our total leverage ratio was less than 1.0 :1.0. We do not believe that the provisions of the credit agreement represent a significant restriction to the successful operation of the business or to our ability to pay dividends. The credit agreement provides for an annual commitment fee payable on funds not borrowed or utilized for letters of credit. This charge is based upon our leverage and varies between 0.125% and 0.275% . Borrowings under the credit agreement bear interest at our choice at either (a) a Base Rate plus a margin that varies between 0.0% and 0.75% per year, (b) a Eurocurrency Rate plus an applicable margin that varies between 1.0% and 1.75% per year or (c) an Index Rate plus an applicable margin which varies between 1.0% and 1.75% per year. The Base Rate, Eurocurrency Rate and Index Rate are defined by the credit agreement. Derivative Arrangement In order to add stability to our interest expense and manage our exposure to interest rate movements, we may enter into derivative arrangements to fix payments on part of an outstanding loan balance. We agree to pay a fixed rate of interest to a financial institution and receive a balance equivalent to the floating rate payable. Our outstanding derivative instruments expired during fiscal year 2017. As this cash flow hedge was considered effective, the gains and losses in the fair value of this derivative instrument were reported in accumulated other comprehensive income (AOCI) in the consolidated statement of comprehensive income. Interest Payments During the six months ended March 31, 2018 and 2017 , we made interest payments of less than $0.1 million and $1.6 million , respectively.

Recent accounting pronouncement

Recent accounting pronouncements	6 Months Ended
	Mar. 31, 2018
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Recent accounting pronouncements	Recent accounting pronouncements We are evaluating the effects of guidance issued in three significant areas of financial reporting. In May 2014, the Financial Accounting Standards Board (the FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers. In addition, the FASB has issued additional updates covering technical items and changing the date of adoption. This new standard will change the manner in which we evaluate revenue recognition for all contracts with customers, although the effect of the changes on revenue recognition will vary from contract to contract. We will adopt this standard at the beginning of our 2019 fiscal year. The standard is required to be applied either retrospectively to each prior period presented (the full retrospective approach) or retrospectively with the cumulative effect of the initial application recognized at the date of initial application (the modified retrospective approach). While we previously disclosed that we anticipated using the full retrospective approach, we have further evaluated both approaches and have concluded that we will adopt the standard using the modified retrospective approach. We have established a cross-functional steering committee which includes representatives from across all our business and support segments. The steering committee is responsible for evaluating the impact of the standard on our operations including accounting, taxation, internal audit and financial systems. Our approach to analyzing these impacts includes reviewing our current accounting policies and practices to identify potential differences that will result from applying the requirements of the new standard to our existing contracts. We are in the process of evaluating the changes needed to our business processes, systems and controls in order to support revenue recognition and the related disclosures under the new standard. While we are still evaluating the changes that the new standard will have, we expect the standard will affect the timing of revenue recognition for certain of our variable fee contracts. In February 2016, the FASB issued ASU No. 2016-02, Leases . The new standard requires that assets and liabilities arising under leases be recognized on the balance sheet. The standard also requires additional quantitative and qualitative disclosures that provide the amount, timing and uncertainty of cash flows relating to lease arrangements. This standard is effective for annual reporting periods beginning after December 15, 2018, using a modified retrospective approach. The modified retrospective approach requires retrospective application to the earliest period presented in the respective financial statements. This approach also provides practical expedients related to leases that commenced prior to the effective date and allows the use of hindsight when evaluating lease options. We will adopt this standard at the beginning of our 2020 fiscal year. We are currently evaluating the likely effects on our business. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. This standard will not change the manner in which we would identify a goodwill impairment but would change the manner of the calculation of any resulting impairment. Under existing guidance, we would calculate goodwill for each of our reporting units by calculating the fair value of all existing assets and liabilities within that reporting unit and comparing this to the fair value of the reporting unit; to the extent that this difference is less than our existing goodwill balance related to that reporting unit, we would record an impairment. The new standard will require us to calculate goodwill based upon the difference between the fair value and reported value of a reporting unit. This standard would be effective for our 2021 fiscal year, although early adoption is permitted. The impact of the new standard will depend on the outcomes of future goodwill impairment tests. With the exception of the new accounting standards discussed above, there have been no new accounting pronouncements that have significance, or potential significance, to the Company's consolidated financial statements.

Subsequent event

Subsequent event	6 Months Ended
	Mar. 31, 2018
Subsequent Events [Abstract]
Subsequent Event	Subsequent events On April 6, 2018 , our Board of Directors declared a quarterly cash dividend of $0.045 for each share of our common stock outstanding. The dividend is payable on May 31, 2018 to shareholders of record on May 15, 2018 .

Organization and Basis of Pre17

Organization and Basis of Presentation (Policies)	6 Months Ended
	Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Accounting	The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. As permitted by these instructions, they do not include all of the information and notes required by generally accepted accounting principles (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the three and six months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the full fiscal year. The balance sheet at September 30, 2017 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements. Certain financial results have been reclassified to conform with our current period presentation.
Use of Estimates	The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expenses. On an ongoing basis, we evaluate our estimates including those related to revenue recognition and cost estimation on certain contracts, the realizability of goodwill and amounts related to income taxes, certain accrued liabilities and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates.
New accounting pronouncements	Recent accounting pronouncements We are evaluating the effects of guidance issued in three significant areas of financial reporting. In May 2014, the Financial Accounting Standards Board (the FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers. In addition, the FASB has issued additional updates covering technical items and changing the date of adoption. This new standard will change the manner in which we evaluate revenue recognition for all contracts with customers, although the effect of the changes on revenue recognition will vary from contract to contract. We will adopt this standard at the beginning of our 2019 fiscal year. The standard is required to be applied either retrospectively to each prior period presented (the full retrospective approach) or retrospectively with the cumulative effect of the initial application recognized at the date of initial application (the modified retrospective approach). While we previously disclosed that we anticipated using the full retrospective approach, we have further evaluated both approaches and have concluded that we will adopt the standard using the modified retrospective approach. We have established a cross-functional steering committee which includes representatives from across all our business and support segments. The steering committee is responsible for evaluating the impact of the standard on our operations including accounting, taxation, internal audit and financial systems. Our approach to analyzing these impacts includes reviewing our current accounting policies and practices to identify potential differences that will result from applying the requirements of the new standard to our existing contracts. We are in the process of evaluating the changes needed to our business processes, systems and controls in order to support revenue recognition and the related disclosures under the new standard. While we are still evaluating the changes that the new standard will have, we expect the standard will affect the timing of revenue recognition for certain of our variable fee contracts. In February 2016, the FASB issued ASU No. 2016-02, Leases . The new standard requires that assets and liabilities arising under leases be recognized on the balance sheet. The standard also requires additional quantitative and qualitative disclosures that provide the amount, timing and uncertainty of cash flows relating to lease arrangements. This standard is effective for annual reporting periods beginning after December 15, 2018, using a modified retrospective approach. The modified retrospective approach requires retrospective application to the earliest period presented in the respective financial statements. This approach also provides practical expedients related to leases that commenced prior to the effective date and allows the use of hindsight when evaluating lease options. We will adopt this standard at the beginning of our 2020 fiscal year. We are currently evaluating the likely effects on our business. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. This standard will not change the manner in which we would identify a goodwill impairment but would change the manner of the calculation of any resulting impairment. Under existing guidance, we would calculate goodwill for each of our reporting units by calculating the fair value of all existing assets and liabilities within that reporting unit and comparing this to the fair value of the reporting unit; to the extent that this difference is less than our existing goodwill balance related to that reporting unit, we would record an impairment. The new standard will require us to calculate goodwill based upon the difference between the fair value and reported value of a reporting unit. This standard would be effective for our 2021 fiscal year, although early adoption is permitted. The impact of the new standard will depend on the outcomes of future goodwill impairment tests. With the exception of the new accounting standards discussed above, there have been no new accounting pronouncements that have significance, or potential significance, to the Company's consolidated financial statements.

Segment Information (Tables)

Segment Information (Tables)	6 Months Ended
	Mar. 31, 2018
Segment Reporting [Abstract]
Schedule of financial information for each of the Company's business segments	The table below provides certain financial information for each of our business segments. Three Months Ended March 31, Six Months Ended March 31, (dollars in thousands) 2018 % (1) 2017 % (1) 2018 % (1) 2017 % (1) Revenue: Health Services $ 365,633 100 % $ 348,994 100 % $ 717,723 100 % $ 689,723 100 % U.S. Federal Services 116,327 100 % 145,370 100 % 249,310 100 % 286,668 100 % Human Services 130,827 100 % 127,683 100 % 268,902 100 % 253,220 100 % Total $ 612,787 100 % $ 622,047 100 % $ 1,235,935 100 % $ 1,229,611 100 % Gross profit: Health Services $ 98,207 26.9 % $ 86,454 24.8 % $ 189,263 26.4 % $ 164,688 23.9 % U.S. Federal Services 27,374 23.5 % 36,571 25.2 % 60,732 24.4 % 74,147 25.9 % Human Services 23,222 17.8 % 29,292 22.9 % 50,768 18.9 % 58,300 23.0 % Total $ 148,803 24.3 % $ 152,317 24.5 % $ 300,763 24.3 % $ 297,135 24.2 % Selling, general and administrative expense: Health Services $ 35,190 9.6 % $ 29,914 8.6 % $ 68,606 9.6 % $ 58,021 8.4 % U.S. Federal Services 17,540 15.1 % 18,927 13.0 % 34,188 13.7 % 38,622 13.5 % Human Services 19,829 15.2 % 19,663 15.4 % 39,324 14.6 % 36,902 14.6 % Other (2) — NM 92 NM — NM 449 NM Total $ 72,559 11.8 % $ 68,596 11.0 % $ 142,118 11.5 % $ 133,994 10.9 % Operating income: Health Services $ 63,017 17.2 % $ 56,540 16.2 % $ 120,657 16.8 % $ 106,667 15.5 % U.S. Federal Services 9,834 8.5 % 17,644 12.1 % 26,544 10.6 % 35,525 12.4 % Human Services 3,393 2.6 % 9,629 7.5 % 11,444 4.3 % 21,398 8.5 % Amortization of intangible assets (2,603 ) NM (3,386 ) NM (5,321 ) NM (6,788 ) NM Restructuring costs (3) (2,320 ) NM — NM (2,320 ) NM (2,242 ) NM Other (2) — NM (92 ) NM — NM (449 ) NM Total $ 71,321 11.6 % $ 80,335 12.9 % $ 151,004 12.2 % $ 154,111 12.5 % (1) Percentage of respective segment revenue. Percentages not considered meaningful are marked “NM.” (2) Other costs and credits relate to SG&A balances that do not relate directly to segment business activities. During the six months ended March 31, 2017 we incurred $0.4 million of legal costs pertaining to a matter which occurred in fiscal year 2009. (3) During fiscal years 2018 and 2017, we incurred costs in restructuring our United Kingdom Human Services business. See "Note 5. Supplemental disclosures" for more information.

Earnings Per Share (Tables)

Earnings Per Share (Tables)	6 Months Ended
	Mar. 31, 2018
Earnings Per Share [Abstract]
Schedule of the components of basic and diluted earnings per share	The weighted average number of shares outstanding used to compute earnings per share was as follows: Three Months Ended March 31, Six Months Ended March 31, (shares in thousands) 2018 2017 2018 2017 Basic weighted average shares outstanding 65,856 65,549 65,857 65,669 Dilutive effect of employee stock options and unvested RSUs 412 398 366 320 Denominator for diluted earnings per share 66,268 65,947 66,223 65,989

Segment Information (Details)

Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Revenue:
Revenue	$ 612,787	$ 622,047	$ 1,235,935	$ 1,229,611
Revenue (as a percent)	100.00%	100.00%	100.00%	100.00%
Gross profit:
Gross profit	$ 148,803	$ 152,317	$ 300,763	$ 297,135
Gross profit (as a percent)	24.30%	24.50%	24.30%	24.20%
Selling, general and administrative expense:
Selling, general and administrative expenses	$ 72,559	$ 68,596	$ 142,118	$ 133,994
Selling, general, and administrative expense (as a percent)	11.80%	11.00%	11.50%	10.90%
Operating income:
Operating income	$ 71,321	$ 80,335	$ 151,004	$ 154,111
Operating income (as a percent)	11.60%	12.90%	12.20%	12.50%
Amortization of intangible assets	$ (2,603)	$ (3,386)	$ (5,321)	$ (6,788)
Restructuring cost		0	(2,320)	(2,242)
Segment Reconciling Items
Operating income:
Amortization of intangible assets	(2,603)	(3,386)	(5,321)	(6,788)
Restructuring cost	(2,320)	0	(2,320)	(2,242)
Other
Selling, general and administrative expense:
Selling, general and administrative expenses	0	92	0	449
Operating income:
Operating income	0	(92)	0	(449)
Legal costs				400
Health Services | Operating Segments
Revenue:
Revenue	$ 365,633	$ 348,994	$ 717,723	$ 689,723
Revenue (as a percent)	100.00%	100.00%	100.00%	100.00%
Gross profit:
Gross profit	$ 98,207	$ 86,454	$ 189,263	$ 164,688
Gross profit (as a percent)	26.90%	24.80%	26.40%	23.90%
Selling, general and administrative expense:
Selling, general and administrative expenses	$ 35,190	$ 29,914	$ 68,606	$ 58,021
Selling, general, and administrative expense (as a percent)	9.60%	8.60%	9.60%	8.40%
Operating income:
Operating income	$ 63,017	$ 56,540	$ 120,657	$ 106,667
Operating income (as a percent)	17.20%	16.20%	16.80%	15.50%
U.S. Federal Services | Operating Segments
Revenue:
Revenue	$ 116,327	$ 145,370	$ 249,310	$ 286,668
Revenue (as a percent)	100.00%	100.00%	100.00%	100.00%
Gross profit:
Gross profit	$ 27,374	$ 36,571	$ 60,732	$ 74,147
Gross profit (as a percent)	23.50%	25.20%	24.40%	25.90%
Selling, general and administrative expense:
Selling, general and administrative expenses	$ 17,540	$ 18,927	$ 34,188	$ 38,622
Selling, general, and administrative expense (as a percent)	15.10%	13.00%	13.70%	13.50%
Operating income:
Operating income	$ 9,834	$ 17,644	$ 26,544	$ 35,525
Operating income (as a percent)	8.50%	12.10%	10.60%	12.40%
Human Services | Operating Segments
Revenue:
Revenue	$ 130,827	$ 127,683	$ 268,902	$ 253,220
Revenue (as a percent)	100.00%	100.00%	100.00%	100.00%
Gross profit:
Gross profit	$ 23,222	$ 29,292	$ 50,768	$ 58,300
Gross profit (as a percent)	17.80%	22.90%	18.90%	23.00%
Selling, general and administrative expense:
Selling, general and administrative expenses	$ 19,829	$ 19,663	$ 39,324	$ 36,902
Selling, general, and administrative expense (as a percent)	15.20%	15.40%	14.60%	14.60%
Operating income:
Operating income	$ 3,393	$ 9,629	$ 11,444	$ 21,398
Operating income (as a percent)	2.60%	7.50%	4.30%	8.50%

Earnings Per Share (Details)

Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Earnings Per Share [Abstract]
Basic weighted average shares outstanding	65,856	65,549	65,857	65,669
Dilutive effect of employee stock options and unvested RSUs	412	398	366	320
Denominator for diluted earnings per share	66,268	65,947	66,223	65,989

Income Tax (Details)

Income Tax (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Income Tax Disclosure [Abstract]
Tax cuts and jobs act of 2017, transition tax for accumulated foreign earnings income tax expense (benefit)		$ 9.5		$ 9.5
Tax Cuts And Jobs Act Of 2017, incomplete accounting, change in tax rate, deferred tax liability, provisional income tax (expense) benefit	$ 1.1			11.7
Tax cuts and jobs act of 2017, income tax expense (benefit)	$ 6.4	$ 6.4		$ 12.8
Effective income tax rate, percent	24.10%		33.60%	24.50%	35.10%
Tax cuts and jobs act of 2017, income (decrease) in the effective income tax rate	1.50%			1.40%
Income taxes paid				$ 28.5	$ 38.8

Supplemental disclosures (Detai

Supplemental disclosures (Details) - USD ($) shares in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Aug. 31, 2015
Payments for Repurchase of Equity [Abstract]
Repurchases of common stock			$ 1,038,000	$ 28,858,000
Restructuring Charges [Abstract]
Restructuring charges	$ 2,320,000
Selling, general and administrative expense:
Change in selling, general and administrative expenses	72,559,000	$ 68,596,000	$ 142,118,000	$ 133,994,000
Restricted Stock Units (RSUs)
Employee Benefits and Share-based Compensation, Noncash [Abstract]
Granted (in shares)			300
Vesting period			5 years
Common Stock
Payments for Repurchase of Equity [Abstract]
Common shares repurchased			17	558
United Kingdom
Restructuring Charges [Abstract]
Restructuring charges	2,300,000		$ 2,300,000	$ 2,200,000
Mutual Fund
Retirement Benefits [Abstract]
Investments in mutual funds	16,300,000		16,300,000
Estimated Revision Had Accounting Principle Been Adopted Previous Fiscal Year [Member]
Selling, general and administrative expense:
Change in selling, general and administrative expenses	(1,300,000)		(2,500,000)
Stock Repurchase Program, August 2015
Payments for Repurchase of Equity [Abstract]
Stock repurchase programs, authorized amount					$ 200,000,000
Amount remaining available for future stock repurchases	$ 108,800,000		$ 108,800,000
Stock Repurchase Program, August 2015 | Common Stock
Payments for Repurchase of Equity [Abstract]
Common shares repurchased			17	600
Repurchases of common stock			$ 1,000,000	$ 28,900,000
Board of Directors | Restricted Stock Units (RSUs)
Employee Benefits and Share-based Compensation, Noncash [Abstract]
Granted (in shares)	22
Vesting period	1 year

Debt (Details)

Debt (Details)	6 Months Ended
	Mar. 31, 2018USD ($)letter_of_credit	Mar. 31, 2017USD ($)
Credit Agreement Expiring 2022
Debt Instrument [Line Items]
Dividend payment restriction ratio (less than)	2.5
Total leverage ratio (less than)	1
Interest paid	$ 100,000	$ 1,600,000
Letters of Credit
Debt Instrument [Line Items]
Number of letters of credit issued | letter_of_credit	3
Outstanding borrowings	$ 2,700,000
Letters of Credit (Other than Revolving Credit Agreement)
Debt Instrument [Line Items]
Number of letters of credit issued | letter_of_credit	2
Outstanding borrowings	$ 3,000,000
Line of Credit | Credit Agreement Expiring 2022 | Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	400,000,000
Line of Credit | Credit Agreement Expiring 2022 | Bridge Loan
Debt Instrument [Line Items]
Maximum borrowing capacity	5,000,000
Line of Credit | Credit Agreement Expiring 2022 | Letters of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 50,000,000
Minimum | Credit Agreement Expiring 2022 | Letters of Credit
Debt Instrument [Line Items]
Commitment fee percentage	0.125%
Maximum | Credit Agreement Expiring 2022 | Letters of Credit
Debt Instrument [Line Items]
Commitment fee percentage	0.275%
Base Rate | Minimum | Credit Agreement Expiring 2022 | Letters of Credit
Debt Instrument [Line Items]
Basis spread on variable rate	0.00%
Base Rate | Maximum | Credit Agreement Expiring 2022 | Letters of Credit
Debt Instrument [Line Items]
Basis spread on variable rate	0.75%
Eurocurrency Rate | Minimum | Credit Agreement Expiring 2022 | Letters of Credit
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%
Eurocurrency Rate | Maximum | Credit Agreement Expiring 2022 | Letters of Credit
Debt Instrument [Line Items]
Basis spread on variable rate	1.75%
Index Rate | Minimum | Credit Agreement Expiring 2022 | Letters of Credit
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%
Index Rate | Maximum | Credit Agreement Expiring 2022 | Letters of Credit
Debt Instrument [Line Items]
Basis spread on variable rate	1.75%

Subsequent event (Details)

Subsequent event (Details) - Subsequent Event - $ / shares	May 31, 2018	May 15, 2018	Apr. 06, 2018
Subsequent Event [Line Items]
Dividend declared date			Apr. 6, 2018
Cash dividend declared (in dollars per share)			$ 0.045
Dividends payable date	May 31, 2018
Dividends payable date of record		May 15, 2018