XML 20 R9.htm IDEA: XBRL DOCUMENT
v3.19.1

Organization and Basis of Presentation | 6 Months Ended
--- | ---
Mar. 31, 2019
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. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the three and six months ended March 31, 2019, are not necessarily indicative of the results that may be expected for the full fiscal year. The balance sheet at September 30, 2018, 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. •Our consolidated statement of cash flows for the six months ended March 31, 2018, includes a reclassification to reflect the effect of new accounting guidance. •Our consolidated b alance sheet at September 30, 2018, includes a reclassification to show a comparative balance for current and long-term debt, which were previously reported within "other liabilities." 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, 2018 and 2017, and for each of the three years ended September 30, 2018, included in our Annual Report on Form 10-K which was filed with the Securities and Exchange Commission on November 20, 2018. Changes in financial reporting Segments As previously reported, effective October 1, 2018, our Chief Executive Officer reorganized our reporting segments based on the way that management intends to allocate resources, manage performance and evaluate results. This reorganization of segments responds to recent changes in the markets in which we operate, the increasing integration of health and human services programs worldwide and the evolving needs of our government clients as they aim to deliver services in a more holistic manner to their citizens. Our results for the three and six months ended March 31, 2018, were recast to conform with these new segments. See "Note 2. Segment I nformation" for more details of this change. Revenue recognition We adopted Accounting Standard Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) on October 1, 2018, using the modified retrospective method and, accordingly, we recognized the cumulative effect of adoption as an adjustment of $32.9 million to our opening retained earnings balance on October 1, 2018. We applied this standard only to contracts that had not been completed as of the date of adoption. For contracts that had been modified prior to October 1, 2018, we calculated the cumulative effect of Topic 606 on each contract based upon the aggregate effect of all of the modifications at that date. Topic 606 applies to all of our contracts with customers and supersedes all previous standards on revenue recognition. In adopting Topic 606, we are required to follow a five-step process in order to identify and recognize revenue based upon a principle that revenue should be recognized as goods and services are transferred to customers in amounts that reflect the consideration to which we expect to be entitled for those goods and services. It did not change the actual amount of revenue being recognized for the majority of our contracts but did change the methodology by which we identified that revenue. In the most significant change under Topic 606, we are required to estimate and recognize revenue on contracts over the period where we provide a service. This affects contracts where performance outcomes are achieved over time, most notably for welfare-to-work contracts where we are compensated for placing individuals in sustained employment. Under our former methodology of recognizing revenue, we deferred recognizing this outcome-based revenue until the outcome was achieved. Under Topic 606, we estimate our anticipated future fees and recognize them over the expected period of performance. As a result, more judgments and estimates are required within the process of recognizing revenue than were required under the former methodology. The adoption of Topic 606 resulted in the following changes to our opening balance sheet:
(dollars in thousands) |  | Balance at September 30, 2018 |  | Adjustments due to adoption of new standard |  | Opening balance at October 1, 2018
Assets |  |  |  |  |  |
Accounts receivable - unbilled |  | $ | 31,536 |  | $ | 35,414 |  | $ | 66,950
Deferred income taxes |  | 6,834 |  | (6,625) |  | 209
Liabilities and shareholders' equity |  |  |  |  |  |
Deferred revenue - current |  | 51,182 |  | (11,767) |  | 39,415
Deferred income taxes - long-term |  | 26,377 |  | 7,074 |  | 33,451
Retained earnings |  | 633,281 |  | 32,929 |  | 666,210
Noncontrolling interests |  | 2,552 |  | 553 |  | 3,105
The table below shows the effects of the adoption of Topic 606 on our consolidated statement of operations for the three and six months ended March 31, 2019.
|  | Three months ended March 31, 2019 |  |  |  |  |  | Six months ended March 31, 2019 |  |  |  |
(dollars in thousands) |  | Balance under previous accounting guidance |  | Adjustments due to adoption of new standard |  | Balance as reported |  | Balance under previous accounting guidance |  | Adjustments due to adoption of new standard |  | Balance as reported
Revenue |  | $ | 735,487 |  | $ | 1,033 |  | $ | 736,520 |  | $ | 1,399,372 |  | $ | 1,767 |  | $ | 1,401,139
Income before income taxes |  | 79,646 |  | 1,033 |  | 80,679 |  | 154,468 |  | 1,767 |  | 156,235
Provision for income taxes |  | 18,628 |  | 285 |  | 18,913 |  | 38,467 |  | 279 |  | 38,746
Net income |  | 61,018 |  | 748 |  | 61,766 |  | 116,001 |  | 1,488 |  | 117,489
(Loss)/income attributable to noncontrolling interests |  | (328) |  | 170 |  | (158) |  | (838) |  | 490 |  | (348)
Net income attributable to MAXIMUS |  | $ | 61,346 |  | $ | 578 |  | $ | 61,924 |  | $ | 116,839 |  | $ | 998 |  | $ | 117,837
The effect on our balance sheet would have been as follows:
(dollars in thousands) |  | Balance at March 31, 2019, under previous accounting guidance |  | Adjustments due to adoption of new standard |  | Balance at March 31, 2019, as reported
Assets |  |  |  |  |  |
Accounts receivable - unbilled |  | $ | 95,796 |  | $ | 35,454 |  | $ | 131,250
Deferred income taxes |  | 6,858 |  | (6,649) |  | 209
Liabilities and shareholders' equity |  |  |  |  |  |
Deferred revenue - current |  | 51,963 |  | (12,748) |  | 39,215
Deferred income taxes - long-term |  | 43,957 |  | 7,103 |  | 51,060
Accumulated other comprehensive loss |  | (38,617) |  | (519) |  | (39,136)
Retained earnings |  | 671,897 |  | 33,927 |  | 705,824
Noncontrolling interests |  | 1,581 |  | 1,043 |  | 2,624
Additional information and disclosures relating to this change are included within "Note 3. Revenue recognition." Statement of cash flows We adopted ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments and ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash o n October 1, 2018, using the retrospective method. The most notable change relates to the treatment of balances we consider to be "restricted cash." Restricted cash represents funds which are held in our bank accounts but which we are precluded from using for general business needs through contractual requirements; these requirements include serving as collateral for lease, credit card or letter of credit arrangements or where we hold funds on behalf of clients. As we did not consider these restricted cash balances to be cash or cash equivalents, we did not previously include them within our cash flow statement except where restrictions over cash were imposed or lapsed. Beginning on October 1, 2018, we are required to include movements in cash, cash equivalents and restricted cash within our consolidated statements of cash flows. Accordingly, we have presented our consolidated statement of cash flows using the new rules for all periods shown. Our balances for cash, cash equivalents and restricted cash are as follows:
|  | Balance as of |  |  |  |  |  |
(dollars in thousands) |  | March 31, 2019 |  | September 30, 2018 |  | March 31, 2018 |  | September 30, 2017
Cash and cash equivalents |  | $ | 46,799 |  | $ | 349,245 |  | $ | 253,227 |  | $ | 166,252
Restricted cash (recorded within "other current assets") |  | 7,679 |  | 7,314 |  | 13,908 |  | 13,475
Cash, cash equivalents and restricted cash |  | $ | 54,478 |  | $ | 356,559 |  | $ | 267,135 |  | $ | 179,727

X
- References No definition available. + Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -URI http://asc.fasb.org/topic&trid=2122149 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI http://asc.fasb.org/topic&trid=2197479 + Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration