CACI INTERNATIONAL INC /DE/

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 –Nature of Operations and Basis of Presentation

CACI International Inc (collectively, with its consolidated subsidiaries, “CACI,” the “Company,” “we,” “us,” and “our”) is a leading provider of Expertise and Technology to customers in support of national security in the intelligence, defense, and federal civilian sectors, both domestically and internationally. The Company’s customers include agencies and departments of the United States (U.S.) government, various state and local government agencies, foreign governments, and commercial enterprises.

The accompanying unaudited condensed consolidated financial statements 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 of the Company, including its subsidiaries and joint 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. Certain prior year amounts have been reclassified to conform to the current year presentation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments and reclassifications (consisting of a normal, recurring nature) necessary for the fair presentation of the periods presented. It is suggested that these unaudited condensed 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, 2025. The results of operations for the three and six months ended December 31, 2025 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

In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The ASU will be effective beginning with our fiscal 2029 annual financial statements, including interim reporting periods within that year, and may be adopted prospectively or retrospectively. We are currently evaluating the impacts of the new standard.

Note 3 –Acquisitions

ARKA Group L.P.

On December 19, 2025, the Company entered into an agreement to acquire all of the equity interests of ARKA Group L.P. (ARKA) for purchase consideration of approximately $2,600.0 million in cash, subject to adjustments for working capital and certain other items. This acquisition will enhance CACI’s ability to deliver advanced technology for its national security customers in the space domain. The Company expects the transaction to close in fiscal year 2026. The Company intends to fund the acquisition with cash on hand, borrowings under its revolving credit facility, and debt financing.

The Company entered into a commitment letter (the Commitment Letter), dated December 19, 2025, with Wells Fargo Bank, National Association (Wells Fargo), pursuant to which Wells Fargo committed to provide a senior secured bridge loan facility in an aggregate principal amount of up to $1,300.0 million. As of December 31, 2025, no amounts were funded pursuant to the Commitment Letter.

Azure Summit Technology

On October 30, 2024, CACI acquired all of the equity interests of Azure Summit Technology, LLC (Azure Summit) for purchase consideration of approximately $1,308.7 million, net of cash acquired. As of December 31, 2025, the Company recorded measurement period adjustments that resulted in a net increase to goodwill of $1.5 million, including the finalization of purchase consideration. The final allocation of the purchase consideration is as follows (in thousands):

Applied Insight

On October 1, 2024, CACI acquired all of the equity interests of AI Corporate Holdings, Inc. and Applied Insight Holdings, LLC for purchase consideration of approximately $314.3 million, net of cash acquired.

Note 4 –Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill for the six months ended December 31, 2025 are as follows (in thousands):

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

There were no impairments of goodwill during the period.

Intangible Assets

Intangible assets, net consisted of the following (in thousands):

Amortization expense related to intangible assets was $36.0 million and $72.0 million for the three and six months ended December 31, 2025, respectively, and $32.4 million and $50.4 million for the three and six months ended December 31, 2024, respectively.

Note 5 –Revenues and Contract Balances

Disaggregation of Revenues

The Company disaggregates revenues by contract type, customer type, prime or subcontractor, and whether the solution provided is primarily Expertise or Technology. These categories represent how the nature, amount, timing, and uncertainty of revenues and cash flows are affected.

Disaggregated revenues by contract type were as follows (in thousands):

Disaggregated revenues by customer type were as follows (in thousands):

Disaggregated revenues by prime or subcontractor were as follows (in thousands):

Disaggregated revenues by Expertise or Technology were as follows (in thousands):

Changes in Estimates

The aggregate net changes in estimates for the three and six months ended December 31, 2025 resulted in an increase to income before income taxes of $11.7 million ($0.39 per diluted share) and $6.7 million ($0.22 per diluted share), respectively. For the three and six months ended December 31, 2024, the aggregate net changes in estimates resulted in an increase of $4.0 million ($0.13 per diluted share) and $7.7 million ($0.26 per diluted share), respectively. The Company uses its statutory tax rate when calculating the impact to diluted earnings per share.

Revenues recognized from previously satisfied performance obligations were not material for the three and six months ended December 31, 2025 and 2024, respectively. The change in revenues recognized from previously satisfied performance obligations generally relates to final true-up adjustments for estimated award or incentive fees in the period in which the customer’s final performance score was received or when it can be determined that more objective, contractually-defined criteria have been fully satisfied.

Remaining Performance Obligations

As of December 31, 2025, the Company had $11.3 billion of remaining performance obligations and expects to recognize approximately 44% and 62% as revenue over the next 12 and 24 months, respectively, with the remainder to be recognized thereafter.

Contract Balances

Contract balances consisted of the following (in thousands):

Revenue recognized from amounts included in the contract liability balance at the beginning of the period was $39.8 million and $131.5 million for the three and six months ended December 31, 2025, respectively. Such revenue was $29.4 million and $93.5 million for the three and six months ended December 31, 2024, respectively.

Note 6 –Inventories

Inventories, net consisted of the following (in thousands):

Inventories, net are included in prepaid expenses and other current assets on the condensed consolidated balance sheets.

Note 7 –Sales of Receivables

On December 19, 2025, the Company amended its Master Accounts Receivable Purchase Agreement (MARPA) with MUFG Bank, Ltd. (Purchaser) for the sale of certain designated eligible U.S. government receivables. The amendment extended the term of the MARPA to December 18, 2026. Under the MARPA, the Company can sell eligible receivables, including certain billed and unbilled receivables up to a maximum amount of $350.0 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 consolidated 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, 2025. Proceeds from the sold receivables are reflected within operating activities on the condensed consolidated statements of cash flows.

MARPA activity consisted of the following (in thousands):

(1)For the six months ended December 31, 2025 and 2024, the Company recorded net cash inflows of $11.1 million and $23.8 million from operating activities, respectively, from sold receivables.

(2)This balance is included in other accrued expenses and current liabilities as of the balance sheet date.

Note 8 –Long-term Debt

Long-term debt consisted of the following at the periods presented below (dollars in thousands):

On November 25, 2025, the Company amended its senior secured credit facility (the Credit Facility) primarily to extend the maturity date. As amended, the Company's $3,250.0 million credit facility consists of a $2,000.0 million revolving credit facility (the Revolving Facility) and a $1,250.0 million term loan (the Term Loan). The Revolving Facility permits renewable borrowings and has sub-facilities of $150.0 million for same-day swing line loan borrowings and $25.0 million for stand-by letters of credit. 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 Secured Overnight Financing Rate (SOFR) rate plus, in each case, an applicable margin based upon the Company’s consolidated total net leverage ratio.

As of December 31, 2025, the Company hadno outstanding borrowings under the Revolving Facility, swing line, and stand-by letters of credit. The Company pays a quarterly facility fee for the unused portion of the Revolving Facility.

The Term Loan is afive-year facility under which principal payments are due in quarterly installments of $7.8 million through December 31, 2027 and $15.6 million thereafter until the balance is due in full at maturity.

The Credit Facility requires the Company to comply with certain financial covenants, including a maximum total net 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.

The secured term loan (the Term Loan B Facility) was issued with an aggregate principal amount of $750.0 million, under which principal payments are due in quarterly installments of $1.9 million until the balance is due in full at maturity. The interest rates applicable to the Term Loan B Facility are floating interest rates that, at the Company’s option, equal a base rate or a term SOFR rate plus an applicable margin.

A majority of our assets serve as collateral under the Credit Facility and Term Loan B Facility.

The senior unsecured notes (the 2033 Notes) are 6.375% fixed-rate senior unsecured notes with an aggregate principal amount of $1,000.0 million. Interest is payable semi-annually, and principal is due in full at maturity.

As of December 31, 2025, the Company was in compliance with all of its financial covenants.

The aggregate maturities of long-term debt as of December 31, 2025 are as follows (dollars in thousands):

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 a total notional amount of $900.0 million, which hedge a portion of the Company’s floating rate indebtedness. Under these agreements, the Company pays a fixed rate and receives SOFR. The counterparties to all swap agreements are financial institutions.

The Company has designated the swaps as cash flow hedges, which are recorded on the consolidated balance sheets at fair value. Unrealized gains are recognized as assets while unrealized losses are recognized as liabilities. Unrealized gains and losses on derivatives designated as cash flow hedges are reported in other comprehensive income (loss) and reclassified to earnings to interest expense in a manner that matches the timing of the earnings impact of the hedged transactions.

The effect of cash flow hedges on the condensed consolidated statements of operations and comprehensive income for the three and six months ended December 31, 2025 and 2024 is as follows (in thousands):

Note 9 –Legal Proceedings and Other Commitments and Contingencies

Legal Proceedings

The Company is involved in various claims, lawsuits, and administrative proceedings arising in the normal course of business, none of which, based on current information, are expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

On November 12, 2024, a jury reached a $42 million judgment against the Company in an ongoing civil suit alleging that the Company’s employees had conspired with the U.S. military, which led to acts of wrongdoing committed by the U.S. military against the plaintiffs. On November 25, 2024, the Company filed a motion for dismissal as a matter of law, enumerating numerous grounds. On January 10, 2025, the motion was denied, and the Company filed a notice of appeal to the U.S. Court of Appeals. The Court of Appeals established a briefing schedule, which concluded on July 25, 2025. The Court of Appeals heard oral argument on September 9, 2025. The Company is vigorously defending the proceedings and continues to believe that the plaintiffs’ position is completely without merit. No amounts have been recognized in our condensed consolidated financial statements.

Government Contracting

Payments to the Company on cost-plus-fee and time-and-materials 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 2023. The Company is still negotiating the results of prior years’ audits with the respective cognizant contracting officers and believes its reserves for such are adequate. 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. 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 may be identified, discussed, and settled.

Note 10 –Earnings Per Share

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

Note 11 –Income Taxes

The Company’s effective income tax rate was 23.3% and 24.1% for the three and six months ended December 31, 2025, respectively, and 19.9% and 21.5% for the three and six months ended December 31, 2024, respectively. The effective tax rates for the three and six months ended December 31, 2025 and 2024 differ from the statutory rate of 21.0% primarily due to state income taxes offset by research and development tax credits and stock-based compensation.

The Company is subject to income taxes in the U.S. and various 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 for fiscal 2019 and 2020 in one state jurisdiction and fiscal 2022 and 2023 in another state. The Company does not expect the resolution of either state examination to have a material impact on its condensed consolidated financial statements.

Note 12 –Business Segments

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

Segment information for the periods presented is as follows (in thousands):

Asset information by segment is not a key measure of performance.

Note 13 –Fair Value Measurements

ASC 820, Fair Value Measurements, establishes a framework for measuring fair value and categorizes the inputs used in measuring fair value as follows: observable inputs such as quoted prices in active markets (Level 1); inputs other than quoted prices in active markets that are observable, either directly or indirectly, or quoted prices that are not active (Level 2); and unobservable inputs in which there is little or no market data which requires development of assumptions that market participants would use in pricing the asset or liability (Level 3).

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 financial instruments measured at fair value on a recurring basis consist of the following (in thousands):

The outstanding principal amount of the Company’s debt approximates its fair value at December 31, 2025. The fair value of the Company’s debt was estimated using Level 2 inputs based on market data on companies with a corporate rating similar to the Company’s that have recently priced credit facilities.

The Company uses interest rate swap agreements to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves.

The Company recognizes contingent consideration liabilities in connection with certain acquisitions, representing potential earnout payments and other contingent payments. The fair values of these liabilities are determined using a valuation model, which includes an assessment of the most likely outcome, assumptions related to projected earnings of the acquired company, and the application of a discount rate, when applicable. Fair value of contingent consideration is reassessed quarterly, including an analysis of the significant inputs used in the evaluation, as well as the accretion of the discount. The changes in the fair value of contingent consideration were zero and $8.7 million for the six months ended December 31, 2025 and 2024, respectively. Changes in the fair value of contingent consideration are reflected within indirect costs and selling expenses.