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Business combinations (Tables) | 9 Months Ended
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Jun. 30, 2021
Business Combination and Asset Acquisition [Abstract] |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The balances below represent our best estimate and are subject to change:
(in thousands) |  | Estimated Fair Value of Assets and Liabilities |  |  |  |  |  |  |  |  |
Cash consideration paid, net of cash acquired |  | $ | 1,360,231 |  |  |  |  |  |  |  |  |  |
Estimated additional cash payments |  | 7,494 |  |  |  |  |  |  |  |  |  |
Estimated cash consideration, net of cash acquired |  | $ | 1,367,725 |  |  |  |  |  |  |  |  |  |
Accounts receivable - billed, billable and unbilled |  | $ | 44,078 |  |  |  |  |  |  |  |  |  |
Prepaid expenses and other current assets |  | 13,911 |  |  |  |  |  |  |  |  |  |
Property and equipment, net |  | 9,113 |  |  |  |  |  |  |  |  |  |
Operating lease right-of-use assets |  | 18,898 |  |  |  |  |  |  |  |  |  |
Intangible assets |  | 664,000 |  |  |  |  |  |  |  |  |  |
Other assets |  | 12,816 |  |  |  |  |  |  |  |  |  |
Total identifiable assets acquired |  | 762,816 |  |  |  |  |  |  |  |  |  |
Accounts payable and accrued compensation |  | 42,978 |  |  |  |  |  |  |  |  |  |
Operating lease liabilities |  | 18,898 |  |  |  |  |  |  |  |  |  |
Income taxes payable |  | 6,196 |  |  |  |  |  |  |  |  |  |
Deferred income taxes |  | 177,626 |  |  |  |  |  |  |  |  |  |
Other long-term liabilities |  | 6,667 |  |  |  |  |  |  |  |  |  |
Net identifiable assets acquired |  | 510,451 |  |  |  |  |  |  |  |  |  |
Goodwill |  | 857,274 |  |  |  |  |  |  |  |  |  |
Net assets acquired |  | $ | 1,367,725 |  |  |  |  |  |  |  |  |  |
We are in the process of finalizing 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 at acquisition date as of March 31, 2021 |  | Adjustments |  | Estimated fair value of assets and liabilities at acquisition date as of June 30, 2021
Cash consideration, net of cash acquired |  | $ | 419,864 |  |  | $ | (767) |  |  | $ | 419,097 |
Accounts receivable - billed, billable and unbilled |  | $ | 39,274 |  |  | $ | 101 |  |  | $ | 39,375 |
Prepaid expenses and other current assets |  | 1,336 |  |  | (410) |  |  | 926 |
Property and equipment, net |  | 703 |  |  | (703) |  |  | — |
Operating lease right-of-use assets |  | 25,089 |  |  | (129) |  |  | 24,960 |
Other assets |  | 84 |  |  | (10) |  |  | 74 |
Intangible assets |  | 105,000 |  |  | — |  |  | 105,000 |
Total identifiable assets acquired |  | 171,486 |  |  | (1,151) |  |  | 170,335 |
Accounts payable and other liabilities |  | 28,301 |  |  | 562 |  |  | 28,863 |
Operating lease liabilities, less current portion |  | 26,786 |  |  | (385) |  |  | 26,401 |
Net identifiable assets acquired |  | 116,399 |  |  | (1,328) |  |  | 115,071 |
Goodwill |  | 303,465 |  |  | 561 |  |  | 304,026 |
Net assets acquired |  | $ | 419,864 |  |  | $ | (767) |  |  | $ | 419,097 |
Schedule of Acquired Finite-Lived Intangible Assets by Major Class | A summary of the asset values and asset lives is as follows:
(in thousands) |  | Estimated Straight-Line Useful Life |  | Estimated Fair Value
Customer contracts and relationships |  | 12 years |  | $ | 580,000 |
Provider network |  | 12 years |  | 57,000 |
Technology-based intangible assets |  | 14 years |  | 27,000 |
Total intangible assets |  |  |  | $ | 664,000 |
Schedule of Business Acquisition, Pro Forma Information | The pro forma results below eliminate intercompany transactions, include amortization charges for acquired intangible assets, and estimates of interest expense based upon our total estimated borrowings, eliminate pre-acquisition transaction costs and reflect corresponding changes in our provision for income taxes. Acquisition related costs incurred by Maximus, VES and Attain have been excluded in the following pro forma results. These costs were $8.8 million, $52.2 million and $0.3 million, respectively.
|  | Unaudited pro forma results
|  | Three Months Ended June 30, |  | Nine Months Ended June 30, |  | Trailing Twelve Months Ended June 30,
(in thousands, except per share amounts) |  | 2021 |  | 2020 |  | 2021 |  | 2020 |  | 2021
Revenue |  | $ | 1,335,780 |  |  | $ | 996,462 |  |  | $ | 3,566,466 |  |  | $ | 2,934,920 |  |  | $ | 4,645,540 |
Cost of revenue |  | 1,004,523 |  |  | 787,189 |  |  | 2,679,170 |  |  | 2,283,589 |  |  | 3,503,074 |
Gross profit |  | 331,257 |  |  | 209,273 |  |  | 887,296 |  |  | 651,331 |  |  | 1,142,466 |
Selling, general, and administrative expenses |  | 151,321 |  |  | 110,754 |  |  | 425,062 |  |  | 360,370 |  |  | 551,143 |
Amortization of intangible assets |  | 21,301 |  |  | 25,090 |  |  | 63,856 |  |  | 75,868 |  |  | 88,586 |
Operating income |  | 158,635 |  |  | 73,429 |  |  | 398,378 |  |  | 215,093 |  |  | 502,737 |
Interest expense |  | 8,701 |  |  | 9,423 |  |  | 26,715 |  |  | 28,528 |  |  | 36,426 |
Other (expense)/income, net |  | (7,320) |  |  | (2,126) |  |  | (10,401) |  |  | (11,755) |  |  | (11,437) |
Income before income taxes |  | 142,614 |  |  | 61,880 |  |  | 361,262 |  |  | 174,810 |  |  | 454,874 |
Provision for income taxes |  | 37,123 |  |  | 15,549 |  |  | 94,735 |  |  | 38,897 |  |  | 120,248 |
Net income |  | $ | 105,491 |  |  | $ | 46,331 |  |  | $ | 266,527 |  |  | $ | 135,913 |  |  | $ | 334,626 |
Basic earnings per share |  | $ | 1.70 |  |  | $ | 0.75 |  |  | $ | 4.30 |  |  | $ | 2.14 |  |  | $ | 5.40 |
Diluted earnings per share |  | $ | 1.69 |  |  | $ | 0.75 |  |  | $ | 4.28 |  |  | $ | 2.13 |  |  | $ | 5.37 |
Dividends declared per share |  | $ | 0.28 |  |  | $ | 0.28 |  |  | $ | 0.84 |  |  | $ | 0.84 |  |  | $ | 1.12 |
Weighted average shares outstanding: |  |  |  |  |  |  |  |  |  |
Basic |  | 62,064 |  |  | 61,882 |  |  | 62,028 |  |  | 63,463 |  |  | 62,001 |
Diluted |  | 62,453 |  |  | 62,102 |  |  | 62,300 |  |  | 63,666 |  |  | 62,285 |
Schedule of Goodwill | Changes in goodwill for the nine months ended June 30, 2021, were as follows:
(in thousands) |  | U.S. Services |  | U.S. Federal Services |  | Outside the U.S |  | Total
Balance as of September 30, 2020 |  | $ | 164,472 |  |  | $ | 381,719 |  |  | $ | 46,938 |  |  | $ | 593,129 |
Estimated effects of acquisitions |  | — |  |  | 1,161,300 |  |  | 623 |  |  | 1,161,923 |
Foreign currency translation |  | — |  |  | — |  |  | 2,743 |  |  | 2,743 |
Balance as of June 30, 2021 |  | $ | 164,472 |  |  | $ | 1,543,019 |  |  | $ | 50,304 |  |  | $ | 1,757,795 |
Schedule of Finite-Lived Intangible Assets | The following table sets forth the components of intangible assets (in thousands):
|  | As of June 30, 2021 |  | As of September 30, 2020
(in thousands) |  | Cost |  | Accumulated Amortization |  | Intangible Assets, net |  | Cost |  | Accumulated Amortization |  | Intangible Assets, net
Customer contracts and relationships |  | $ | 921,023 |  |  | $ | 112,546 |  |  | $ | 808,477 |  |  | $ | 235,287 |  |  | $ | 90,302 |  |  | $ | 144,985 |
VES Provider network |  | 57,000 |  |  | 396 |  |  | 56,604 |  |  | — |  |  | — |  |  | — |
Technology-based intangible assets |  | 32,400 |  |  | 4,994 |  |  | 27,406 |  |  | 5,631 |  |  | 4,723 |  |  | 908 |
Trademarks and trade names |  | 4,516 |  |  | 4,516 |  |  | — |  |  | 4,479 |  |  | 4,479 |  |  | — |
Total |  | $ | 1,014,939 |  |  | $ | 122,452 |  |  | $ | 892,487 |  |  | $ | 245,397 |  |  | $ | 99,504 |  |  | $ | 145,893 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated future amortization expense for the next five years for the intangible assets held by the Company as of June 30, 2021 is shown below. As noted above, we have not yet completed our assessment of the valuation of the intangible assets acquired with VES and Attain. These future amortization expenses represent our best estimate of future costs.
(In thousands) |  | Estimated Future Amortization Expense
Year ended September 30, 2021, Remainder of year |  | $ | 20,518 |
Year ended September 30, 2022 |  | 82,025 |
Year ended September 30, 2023 |  | 82,009 |
Year ended September 30, 2024 |  | 81,885 |
Year ended September 30, 2025 |  | 81,678 |
Year ended September 30, 2026 |  | 81,551 |

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