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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 March 31, 2021
OR
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: 1-12997
 

Maximus, Inc.
(Exact name of registrant as specified in its charter)
 
Virginia 54-1000588
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
  
1891 Metro Center Drive, Reston, Virginia
 20190
(Address of principal executive offices) (Zip Code)
 
(703) 251-8500
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, no par valueMMSNew 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. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
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 May 3, 2021, there were 61,471,783 shares of the registrant’s common stock (no par value) outstanding.





Maximus, Inc.
Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 2021
INDEX
PART I. FINANCIAL INFORMATION 
Item 1.
  
 
  
 
  
  
 
  
 
  
 
  
Item 2.
  
Item 3.
  
Item 4.
  
PART II. OTHER INFORMATION 
  
Item 1.
Item 1A.
Item 6.
  




Throughout this Quarterly Report on Form 10-Q, the terms “Company,” “we,” “us,” “our” and “Maximus” refer to Maximus, Inc. and its subsidiaries, unless the context requires otherwise.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Included in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “opportunity,” “could,” “potential,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will,” and similar references to future periods.
Forward-looking statements that are not historical facts, including statements about our confidence, strategies and initiatives, and our expectations about revenues, results of operations, profitability, liquidity, market demand, or the impact of the coronavirus (COVID-19) global pandemic are forward-looking statements that involve risks and uncertainties. These risks could cause our actual results to differ materially from those indicated by such forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
the extent and impact of the continuation of the global pandemic and the actions taken or to be taken by us, our customers, and the governments or jurisdictions in which we operate in response to COVID-19;
the impact of the Biden Administration on federal procurement, federal funding to states' safety-net programs, and the overall decision-making process related to our industry, including our business and customers;
the demand for our services and products, including the impacts of any economic downturns;
a failure to meet performance requirements in our contracts, which might lead to contract termination and actual or liquidated damages;
the effects of future legislative or government budgetary and spending changes;
our failure to successfully bid for and accurately price contracts to generate our desired profit;
our ability to maintain technology systems and otherwise protect confidential or protected information;
our ability to attract and retain executive officers, senior managers and other qualified personnel to execute our business;
our ability to manage capital investments and startup costs incurred before receiving related contract payments;
our ability to manage our growth, including acquired businesses;
the ability of government customers to terminate contracts on short notice, with or without cause;
our ability to maintain relationships with key government entities from whom a substantial portion of our revenue is derived;
the outcome of reviews or audits, which might result in financial penalties and impair our ability to respond to invitations for new work;
a failure to comply with laws governing our business, which might result in the Company being subject to fines, penalties, suspension, debarment, and other sanctions;
the costs and outcome of litigation;
difficulties in integrating or achieving projected revenues, earnings, and other benefits associated with acquired businesses;
the effects of changes in laws and regulations governing our business, including tax laws, and applicable interpretations and guidance thereunder, or changes in accounting policies, rules, methodologies, and practices, and our ability to estimate the impact of such changes;
matters related to business we disposed of or divested; and
other factors set forth in Item 1A of this Quarterly Report on Form 10-Q and in Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended September 30, 2020, which was filed with the Securities and Exchange Commission on November 19, 2020.
Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments, or otherwise.



PART I.  FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
Maximus, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
 Three Months Ended March 31,Six Months Ended March 31,
 2021202020212020
Revenue$959,280 $818,135 $1,904,834 $1,636,364 
Cost of revenue728,622 665,037 1,468,121 1,307,816 
Gross profit230,658 153,098 436,713 328,548 
Selling, general, and administrative expenses112,402 106,853 224,369 194,080 
Amortization of intangible assets5,070 8,934 11,586 18,022 
Operating income113,186 37,311 200,758 116,446 
Interest expense756 465 962 949 
Other (expense)/income, net(520)573 (1,295)1,292 
Income before income taxes111,910 37,419 198,501 116,789 
Provision for income taxes31,296 9,769 53,810 30,405 
Net income$80,614 $27,650 $144,691 $86,384 
Basic earnings per share$1.30 $0.43 $2.33 $1.34 
Diluted earnings per share$1.29 $0.43 $2.33 $1.34 
Dividends paid per share$0.28 $0.28 $0.56 $0.56 
Weighted average shares outstanding:  
Basic62,026 63,934 62,022 64,264 
Diluted62,294 64,125 62,212 64,446 

See notes to unaudited consolidated financial statements.
1


Maximus, Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
(Unaudited)
 Three Months Ended March 31,Six Months Ended March 31,
 2021202020212020
Net income$80,614 $27,650 $144,691 $86,384 
Foreign currency translation adjustments770 (11,629)7,693 (4,736)
Comprehensive income$81,384 $16,021 $152,384 $81,648 

See notes to unaudited consolidated financial statements.
2


Maximus, Inc.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
 March 31,
2021
September 30,
2020
 (unaudited) 
ASSETS  
Current assets:  
Cash and cash equivalents$101,683 $71,737 
Accounts receivable — billed and billable, net of allowance of $6,821 and $6,051
582,474 622,871 
Accounts receivable — unbilled177,938 163,332 
Income taxes receivable1,685 2,075 
Prepaid expenses and other current assets68,357 72,543 
Total current assets932,137 932,558 
Property and equipment, net62,087 66,721 
Capitalized software, net45,351 38,033 
Operating lease right-of-use assets176,826 177,159 
Goodwill899,796 593,129 
Intangible assets, net240,463 145,893 
Deferred contract costs, net30,309 20,891 
Deferred compensation plan assets43,747 36,819 
Deferred income taxes222 1,915 
Other assets10,457 11,584 
Total assets$2,441,395 $2,024,702 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable and accrued liabilities$278,629 $253,338 
Accrued compensation and benefits124,279 137,101 
Deferred revenue61,475 51,655 
Income taxes payable8,051 5,377 
Current portion of long-term debt and other borrowings16,551 10,878 
Operating lease liabilities79,430 80,748 
Other current liabilities25,309 22,071 
Total current liabilities593,724 561,168 
Deferred revenue, less current portion32,926 27,311 
Deferred income taxes31,044 24,737 
Long-term debt, less current portion250,601 18,017 
Deferred compensation plan liabilities, less current portion44,076 38,654 
Operating lease liabilities, less current portion110,124 104,011 
Other liabilities8,995 8,985 
Total liabilities1,071,490 782,883 
Shareholders’ equity:  
Common stock, no par value; 100,000 shares authorized; 61,472 and 61,504 shares issued and outstanding at March 31, 2021, and September 30, 2020, respectively
528,205 513,959 
Accumulated other comprehensive loss(34,945)(42,638)
Retained earnings876,645 770,498 
Total shareholders' equity1,369,905 1,241,819 
Total liabilities and shareholders' equity$2,441,395 $2,024,702 

See notes to unaudited consolidated financial statements.
3


Maximus, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
 Six Months Ended March 31,
 20212020
Cash flows from operations:  
Net income$144,691 $86,384 
Adjustments to reconcile net income to cash flows from operations:  
Depreciation and amortization of property and equipment and
capitalized software
22,835 31,218 
Amortization of intangible assets11,586 18,022 
Deferred income taxes7,951 3,038 
Stock compensation expense13,479 11,800 
Change in assets and liabilities, net of effects of business combinations  
Accounts receivable — billed and billable83,711 (52,870)
Accounts receivable — unbilled(13,494)2,289 
Prepaid expenses and other current assets8,074 4,262 
Deferred contract costs(9,184)(497)
Accounts payable and accrued liabilities12,395 22,322 
Accrued compensation and benefits(16,761)3,839 
Deferred revenue13,296 5,300 
Income taxes3,230 (27,706)
Operating lease right-of-use assets and liabilities(414)166 
Other assets and liabilities(1,697)1,705 
Cash flows from operations279,698 109,272 
Cash flows from investing activities:  
Purchases of property and equipment and capitalized software costs(23,584)(19,122)
Acquisitions of businesses, net of cash acquired(413,940)(2,551)
Other 98 
Cash used in investing activities(437,524)(21,575)
Cash flows from financing activities:  
Cash dividends paid to Maximus shareholders(34,414)(35,813)
Purchases of Maximus common stock(3,363)(166,959)
Tax withholding related to RSU vesting(9,818)(10,614)
Borrowings of debt500,162 341,715 
Repayment of debt(263,838)(191,256)
Other(2,762)(652)
Cash provided by/(used in) financing activities185,967 (63,579)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash3,263 (1,868)
Net increase in cash, cash equivalents, and restricted cash31,404 22,250 
Cash, cash equivalents, and restricted cash, beginning of period88,561 116,492 
Cash, cash equivalents, and restricted cash, end of period$119,965 $138,742 

See notes to unaudited consolidated financial statements.
4


Maximus, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts in thousands)
(Unaudited)
 
 Common
Shares
Outstanding
Common
Stock
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Balance at December 31, 202061,452 $520,357 $(35,715)$813,669 $1,298,311 
Net income— — — 80,614 80,614 
Foreign currency translation— — 770 — 770 
Cash dividends— — — (17,207)(17,207)
Dividends on RSUs— 431 — (431)— 
Stock compensation expense— 7,417 — — 7,417 
RSUs vested20 — — — — 
Balance at March 31, 202161,472 $528,205 $(34,945)$876,645 $1,369,905 

 
Common
Shares
Outstanding
Common
Stock
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Balance at September 30, 202061,504 $513,959 $(42,638)$770,498 $1,241,819 
Net income— — — 144,691 144,691 
Foreign currency translation— — 7,693 — 7,693 
Cash dividends— — — (34,414)(34,414)
Dividends on RSUs— 767 — (767)— 
Purchases of Maximus common stock(52)— — (3,363)(3,363)
Stock compensation expense— 13,479 — — 13,479 
RSUs vested20 — — — — 
Balance at March 31, 202161,472 $528,205 $(34,945)$876,645 $1,369,905 




















See notes to unaudited consolidated financial statements.
5


Maximus, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts in thousands)
(Unaudited)

Common
Shares
Outstanding
Common
Stock
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Balance at December 31, 201963,953 $504,184 $(38,487)$833,308 $1,299,005 
Net income— — — 27,650 27,650 
Foreign currency translation— — (11,629)— (11,629)
Cash dividends— — — (17,900)(17,900)
Dividends on RSUs— 436 — (436) 
Purchases of Maximus common stock(2,741)— — (165,061)(165,061)
Stock compensation expense— 6,403 — — 6,403 
RSUs vested101 — — — — 
Balance at March 31, 202061,313 $511,023 $(50,116)$677,561 $1,138,468 


Common
Shares
Outstanding
Common
Stock
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Noncontrolling
Interest
Total
Balance at September 30, 201963,979 $498,433 $(45,380)$794,739 $409 $1,248,201 
Net income— — — 86,384  86,384 
Foreign currency translation— — (4,736)— — (4,736)
Cash dividends— — — (35,813)(409)(36,222)
Dividends on RSUs— 790 — (790)— — 
Purchases of Maximus common stock(2,767)— — (166,959)— (166,959)
Stock compensation expense— 11,800 — — — 11,800 
RSUs vested101 — — — — — 
Balance at March 31, 202061,313 $511,023 $(50,116)$677,561 $ $1,138,468 











See notes to unaudited consolidated financial statements.
6




Maximus, Inc.
Notes to Unaudited Consolidated Financial Statements
For the Three and Six Months Ended March 31, 2021 and 2020

1. 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, including normal recurring adjustments, considered necessary for a fair presentation are included. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the three and six months ended March 31, 2021, are not necessarily indicative of the results that may be expected for the full fiscal year. The balance sheet at September 30, 2020, 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.
These financial statements should be read in conjunction with the consolidated audited financial statements and the notes thereto at September 30, 2020 and 2019, and for each of the three years in the period ended September 30, 2020, included in our Annual Report on Form 10-K which was filed with the Securities and Exchange Commission on November 19, 2020.
Estimates
The preparation of these financial statements, in conformity with GAAP in the United States, 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. At each reporting period end, we make 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 expectations of the future that we believe to be reasonable. The economic and political effects of the coronavirus (COVID-19) global pandemic increase uncertainty, which has reduced our ability to use past results to estimate future performance. Accordingly, our estimates may be subject to greater volatility than has been the case in the past.
Our balance sheet includes goodwill valued at $899.8 million. This balance is allocated between reporting units, which are consistent with our three operating segments. Goodwill is not amortized but is tested for impairment when necessary and no less than once per year. We performed our last annual goodwill impairment test as of July 1, 2020, using a qualitative assessment. There has been no indication of impairment of any reporting unit at this time or since.
Our balance sheet includes a number of long-lived assets, including property and equipment, capitalized software, operating lease right-of-use assets, deferred contract costs and intangible assets. These assets are depreciated or amortized over their estimated useful economic lives but are subject to impairment if events indicate that the carrying amounts may not be recoverable. At this time, there are no balances which we believe are not recoverable.
Included within our long-lived assets are $240.5 million of intangible assets, which have been acquired through business combinations. We use judgment in identifying, valuing, and assigning a useful economic life to assets as they are acquired. The judgments required vary with the type of asset but may include projections of future results, estimated costs to recreate or replace assets, the cost of utilizing other, similar assets provided by a third party and an appropriate cost of capital. Where appropriate, we utilize the services of a third-party specialist to assist us in these valuations.
Our balance sheet includes $760.4 million of billed, billable and unbilled accounts receivable, net of allowance for credit losses. Beginning October 1, 2020, we have evaluated credit risk under ASC Topic 326, as further described below. Credit risk has not historically been significant to our business due to the nature of our customers. During the three and six months ended March 31, 2021, we recorded changes to our estimated credit losses of $0.3 million and $0.9 million, respectively.
As disclosed in "Note 3. Revenue Recognition," revenue for some of our employment services contracts in the Outside the U.S. Segment is based upon achievement of future outcomes as defined in each contract. Specifically, we are paid as individuals attain employment goals, which may take many months to achieve. Revenue is recognized on these contracts over the period of performance. Employment markets worldwide
7


suffered a significant shock during fiscal year 2020 due to COVID-19, which resulted in significant reductions in work performed and outcomes reached. Although we are seeing recovery in fiscal year 2021, this revenue remains subject to volatility.
Changes in financial reporting
In August 2018, the Financial Accounting Standards Board (FASB) issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This accounting guidance requires customers in cloud-computing arrangements to identify and defer certain implementation costs in a manner broadly consistent with that of existing guidance on the costs to develop or obtain internal-use software. Costs capitalized under this guidance will be expensed over the term of the cloud computing arrangement. We adopted this guidance on October 1, 2020, using a prospective approach.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update introduces a new model for recognizing credit losses on financial instruments, including losses on accounts receivable. This update replaced the existing incurred loss impairment model with an expected loss model. We adopted this guidance on October 1, 2020, with no material impact to our financial statements.
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 any subsequent calculation of an impairment charge. We adopted this standard on October 1, 2020. The effect of this new standard will depend upon the outcome of future goodwill impairment tests.
We are subject to agreements that reference the London Interbank Offering Rate (LIBOR). Between now and December 2022, we anticipate that agreements with LIBOR will be updated to reflect the transition from this rate to alternative reference rates. In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard is intended to provide temporary optional expedients and exceptions on contract modifications and hedge accounting to ease the financial reporting burdens related to this expected market transition. This standard is effective for all entities upon issuance through December 31, 2022. We are assessing the impact of the market transition and this standard.

2. Segment Information
We conduct our operations through three business segments: U.S. Services, U.S. Federal Services, and Outside the U.S.
Our U.S. Services Segment provides a variety of business process services (BPS) such as program administration, appeals and assessments, and related consulting work for U.S. state and local government programs. These services support a variety of programs, including the Affordable Care Act (ACA), Medicaid, the Children’s Health Insurance Program (CHIP), Temporary Assistance to Needy Families (TANF), and child support programs. The segment continues to execute on its clinical evolution strategy by expanding its clinical offerings in public health with new work in contact tracing, disease investigation, and vaccine distribution support services as part of the governments' COVID-19 response efforts. We also successfully expanded into the unemployment insurance market, supporting more than 15 states in their unemployment insurance programs.
Our U.S. Federal Services Segment provides program administration, appeals and assessments services, and technology solutions, including system and application development, modernization, and maintenance services, for various U.S. federal civilian programs. The segment also contains certain state-based assessments and appeals work that is part of the segment's heritage within the Medicare Appeals portfolio and continues to be managed within this segment. The segment recently expanded its clinical offerings in public health with new work supporting the U.S. Federal Government's COVID-19 response efforts. This included expanded work with the Centers for Disease Control and Prevention (CDC) for their helpline, an outbound customer support center for the Office of the Assistant Secretary for Health to notify individuals throughout the U.S. of their COVID-19 test result, and increased support for the IRS Wage and Investment Division's response efforts to general inquiries regarding the Coronavirus Aid Relief & Economic Security (CARES) Act and Economic Impact Payment Service Plan.
Our Outside the U.S. Segment provides BPS for international governments and commercial clients. These services include health and disability assessments, program administration for employment services, and other job seeker related services. We support programs and deliver services in the United Kingdom (U.K.), including the Health Assessment Advisory Service (HAAS), the Work & Health Programme and Fair Start; Australia, including jobactive and the Disability Employment Service; Canada, including Health Insurance
8


British Columbia and the Employment Program of British Columbia; in addition to Italy, Saudi Arabia, Singapore, South Korea, and Sweden, where we predominantly provide employment support and job seeker services.
Expenses that are not specifically included in the segments are included in other categories, including amortization of intangible assets and the direct costs of acquisitions. These costs are excluded from measuring each segment's operating performance.
 Three Months Ended March 31,Six Months Ended March 31,
(in thousands)2021% (1)2020% (1)2021% (1)2020% (1)
Revenue:    
U.S. Services$448,215 $308,698 $833,149 $620,979 
U.S. Federal Services330,136 393,391 735,381 759,962 
Outside the U.S.180,929 116,046 336,304 255,423 
Total$959,280 $818,135 $1,904,834 $1,636,364 
Gross profit:    
U.S. Services$119,440 26.6%$85,454 27.7%$218,442 26.2%$175,044 28.2%
U.S. Federal Services74,133 22.5%76,958 19.6%156,629 21.3%147,779 19.4%
Outside the U.S.37,085 20.5%(9,314)(8.0)%61,642 18.3%5,725 2.2%
Total$230,658 24.0%$153,098 18.7%$436,713 22.9%$328,548 20.1%
Selling, general & administrative expense:    
U.S. Services$36,593 8.2%$39,239 12.7%$74,049 8.9%$70,637 11.4%
U.S. Federal Services50,978 15.4%46,726 11.9%103,230 14.0%85,965 11.3%
Outside the U.S.22,013 12.2%17,404 15.0%42,045 12.5%33,457 13.1%
Other (2)2,818 NM3,484 NM5,045 NM4,021 NM
Total$112,402 11.7%$106,853 13.1%$224,369 11.8%$194,080 11.9%
Operating income:    
U.S. Services$82,847 18.5%$46,215 15.0%$144,393 17.3%$104,407 16.8%
U.S. Federal Services23,155 7.0%30,232 7.7%53,399 7.3%61,814 8.1%
Outside the U.S.15,072 8.3%(26,718)(23.0)%19,597 5.8%(27,732)(10.9)%
Amortization of intangible assets(5,070)NM(8,934)NM(11,586)NM(18,022)NM
Other (2)(2,818)NM(3,484)NM(5,045)NM(4,021)NM
Total$113,186 11.8%$37,311 4.6%$200,758 10.5%$116,446 7.1%

(1) Percentage of respective segment revenue. Percentages not considered meaningful are marked “NM.”
(2) Other selling, general, and administrative expenses includes credits and costs that are not allocated to a particular segment. This includes expenses incurred as part of our acquisitions, as well as potential acquisitions which have not been or may not be completed. Our results for the three and six months ended March 31, 2021, included $2.5 million and $4.3 million, respectively, of expenses relating to the acquisitions of Attain, LLC, and VES Group, Inc., as well as the benefit of a reversal of acquisition-related contingent consideration. For more information, see "Note 5. Business combinations."
9


Identifiable assets for the segments are shown below. Identifiable assets for U.S. Federal Services increased due to the acquisition of Attain, LLC on March 1, 2021. Refer to "Note 5. Business combinations" for details.
(in thousands)March 31, 2021September 30, 2020
U.S. Services$743,791 $702,728 
U.S. Federal Services1,256,188 937,477 
Outside the U.S.253,871 224,532 
Corporate187,545 159,965 
Total$2,441,395 $2,024,702 

3. Revenue Recognition
We recognize revenue as, or when, we satisfy performance obligations under a contract. The majority of our contracts have performance obligations which are satisfied over time. In most cases, we view our performance obligations as promises to transfer a series of distinct services to our customer that are substantially the same and which have the same pattern of service. We recognize revenue over the performance period as a customer receives the benefits of our services.
Disaggregation of revenue
In addition to our segment reporting, we disaggregate our revenues by service, contract type, customer type, and geography. Our operating segments represent the manner in which our Chief Executive Officer reviews our financial results which is further discussed in "Note 2. Segment Information."
By operating segment and service
Three Months Ended March 31,Six Months Ended March 31,
(in thousands)2021202020212020
Program administration$345,383 $236,436 $639,227 $473,343 
Assessments and appeals35,416 29,916 68,031 63,747 
Workforce and children services55,045 28,734 102,866 58,120 
Other12,371 13,612 23,025 25,769 
Total U.S. Services$448,215 $308,698 $833,149 $620,979 
Program administration$226,322 $304,367 $554,112 $586,055 
Technology solutions62,784 44,508 97,448 88,114 
Assessments and appeals41,030 44,516 83,821 85,793 
Total U.S. Federal Services$330,136 $393,391 $735,381 $759,962 
Workforce and children services$97,971 $34,683 $175,433 $91,922 
Assessments and appeals57,966 62,286 111,089 124,929 
Program administration22,932 16,945 45,988 34,039 
Other2,060 2,132 3,794 4,533 
Total Outside the U.S.$180,929 $116,046 $336,304 $255,423 
Total revenue$959,280 $818,135 $1,904,834 $1,636,364 

10


By contract type
Three Months Ended March 31,Six Months Ended March 31,
(in thousands)2021202020212020
Performance-based$349,749 $275,669 $643,709 $568,427 
Cost-plus286,082 398,973 670,565 761,784 
Fixed price146,344 100,504 267,121 219,720 
Time and materials177,105 42,989 323,439 86,433 
Total revenue$959,280 $818,135 $1,904,834 $1,636,364 

By customer type
Three Months Ended March 31,Six Months Ended March 31,
(in thousands)2021202020212020
New York State government agencies$111,911 $100,222 $187,267 $197,445 
Other U.S. state government agencies333,786 217,195 646,544 427,081 
Total U.S. state government agencies445,697 317,417 833,811 624,526 
U.S. Federal Government agencies307,870 374,909 693,442 726,742 
International government agencies171,700 107,460 319,042 238,276 
Other, including local municipalities and commercial customers34,013 18,349 58,539 46,820 
Total revenue$959,280 $818,135 $1,904,834 $1,636,364 

By geography
Three Months Ended March 31,Six Months Ended March 31,
(in thousands)2021202020212020
United States$778,350 $702,089 $1,568,529 $1,380,941 
United Kingdom72,882 63,722 137,668 136,724 
Australia70,947 24,540 126,878 61,975 
Rest of world37,101 27,784 71,759 56,724 
Total revenue$959,280 $818,135 $1,904,834 $1,636,364 

Contract balances
Differences in timing between revenue recognition and cash collection result in contract assets and contract liabilities. We classify these assets as accounts receivable — billed and billable and unbilled receivables; the liabilities are classified as deferred revenue.
In many contracts, we bill our customers on a monthly basis shortly after the month end for work performed in that month and such balances are considered collectible and are included within accounts receivable — billed and billable.
Exceptions to this pattern will arise for various reasons, including those listed below.
Under cost-plus contracts, we are typically required to estimate a contract’s share of our general and administrative expenses. This share is based upon estimates of total costs which may vary over time. We typically invoice our customers at an agreed provisional billing rate which may differ from actual rates incurred. If our actual rates are higher than the provisional billing rates, an asset is recorded for this variance; if the provisional billing rates are higher than our actual rates, we record a liability.
Certain contracts include retainage balances, whereby revenue is earned but some portion of cash payments are held back by the customer for a period of time, typically to allow the customer to confirm the
11


objective criteria laid out by the contract have been met. This balance is classified as accounts receivable - unbilled until restrictions on billing are lifted.
In certain contracts, we may receive funds from our customers prior to performing operations. These funds are typically referred to as “set-up costs” and reflect the need for us to make investments in infrastructure prior to providing a service. This investment in infrastructure is not a performance obligation which is distinct from the service that is subsequently provided and, as a result, revenue is not recognized based upon the establishment of this infrastructure, but rather over the course of the contractual relationship. The funds are initially recorded as deferred revenue and recognized over the term of the contract. Other contracts may not include set-up fees but will provide higher fees in earlier periods of the contract. The premium on these fees is deferred.
Some of our contracts, notably our employment services contracts in the Outside the U.S. Segment, include payments for desired outcomes, such as job placement and job retention and these outcome payments occur over several months. We are required to estimate these outcome fees ahead of their realization and recognize this estimated fee over the period of delivery.
Of our revenue for the three and six months ended March 31, 2021, approximately $15.2 million and $29.1 million, respectively, were from cash payments made to us prior to October 1, 2020. For the three and six months ended March 31, 2020, we recognized revenue of $22.1 million and $40.1 million, respectively, from payments made prior to October 1, 2019.
Contract estimates
We are required to use estimates in recognizing revenue from some of our contracts. As discussed in "Note 1. Organization and Basis of Presentation," the calculation of these estimates has been complicated by the COVID-19 pandemic, which has reduced our ability to use past results to estimate future performance.
Some of our performance-based contract revenue is recognized based upon future outcomes defined in each contract. This is the case in many of our employment services contracts in the Outside the U.S. Segment, where we are paid as individuals attain employment goals, which may take many months to achieve. We recognize revenue on these contracts over the period of performance. Our estimates vary from contract to contract but may include estimates of the number of participants, the length of the contract, and the participants reaching employment milestones. We are required to estimate these outcome fees ahead of their realization and recognize this estimated fee over the period of delivery. In almost all of the jurisdictions in which we operate, the employment markets have experienced significant changes due to the COVID-19 pandemic. As the pandemic commenced, many employment opportunities were terminated. Our volume of new program participants is beginning to increase as governments shift their focus to addressing the residual impacts of the pandemic such as the economy and unemployment, particularly in those countries where the pandemic has stabilized and economies are beginning to reopen.
Other performance-based contracts with future outcomes include those where we recognize an average effective rate per participant based upon the total volume of expected participants. In this instance, we are required to estimate the amount of discount applied to determine the average rate of revenue per participant. Our revised estimates of participant numbers are based upon our updated evaluation of probable future volumes.
Where we make changes to our estimates, these are recognized on a cumulative catch-up basis. In the three and six months ended March 31, 2021, we reported a benefit to revenue of $7.6 million and $16.0 million, respectively, and a benefit to diluted earnings per share of $0.09 and $0.19, respectively, from changes in estimates. The corresponding change in fiscal year 2020 was a decline of $6.3 million and $7.7 million for the three and six months ended March 31, 2020, respectively.
Deferred contract costs
For many contracts, we incur significant incremental costs at the beginning of an arrangement. Typically, these costs relate to the establishment of infrastructure that we utilize to satisfy our performance obligations with the contract. We report these costs as deferred contract costs and amortize them on a straight-line basis over the shorter of the useful economic life of the asset or the anticipated term of the contract.
Three Months Ended March 31,Six Months Ended March 31,
(in thousands)2021202020212020
Deferred contract cost capitalization$11,123 $2,666 $13,614 $3,995 
Deferred contract cost amortization2,143 1,321 4,430 3,497 
This amortization was recorded within our "cost of revenue" on our consolidated statements of operations.
12


Remaining performance obligations
At March 31, 2021, we had approximately $425 million of remaining performance obligations. We anticipate that we will recognize revenue on approximately 55% of this balance within the next 12 months. This balance excludes contracts with an original duration of twelve months or less, including contracts with a penalty-free termination for convenience clause, and any variable consideration which is allocated entirely to future performance obligations including variable transaction fees or fees tied directly to costs incurred.

4. 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)2021202020212020
Basic weighted average shares outstanding62,026 63,934 62,022 64,264 
Dilutive effect of unvested RSUs268 191 190 182 
Denominator for diluted earnings per share62,294 64,125 62,212 64,446 

Our diluted earnings per share for the three and six months ended March 31, 2020, excludes any effect from approximately 0.3 million and 0.3 million unvested restricted stock units, respectively, as adding them to our calculation would have been antidilutive. Our dilutive earnings per share for the three and six months ended March 31, 2021, excludes any effect from approximately 0.2 million and 0.2 million unvested restricted stock units, respectively, as adding them to our calculation would be antidilutive.

5. Business combinations
Attain, LLC
On March 1, 2021, we acquired all of the Federal division of Attain, LLC for an estimated cash purchase price of $419.9 million (the "Acquisition"). The final purchase price is subject to adjustment and is expected to be finalized during our third fiscal quarter of 2021. This business is being integrated into our U.S. Federal Services Segment and is expected to strengthen our position to further design, develop, and deliver more innovative, impactful solutions and drive automation of processes to improve citizen engagement and the delivery of critical federal programs, as well as expand our presence in the U.S. federal market. To fund the acquisition, we utilized borrowings on our corporate credit facility and cash on the consolidated balance sheet. The results of operations for the Federal division of Attain, LLC are included in the consolidated results of Maximus, Inc. starting March 1, 2021.
At this time, we are in the process of finalizing our purchase price and the valuation, as of March 1, 2021, of all acquired assets and assumed liabilities and, accordingly, the balances below represent our best estimate and are subject to change:
(in thousands)Estimated fair value of
assets and liabilities
Cash consideration, net of cash acquired$419,864 
Accounts receivable - billed, billable and unbilled$