Company Quick10K Filing
Maximus
Price78.47 EPS4
Shares65 P/E21
MCap5,086 P/FCF14
Net Debt-116 EBIT338
TEV4,970 TEV/EBIT15
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-12-31 Filed 2021-02-04
10-K 2020-09-30 Filed 2020-11-19
10-Q 2020-06-30 Filed 2020-08-06
10-Q 2020-03-31 Filed 2020-05-07
10-Q 2019-12-31 Filed 2020-02-06
10-K 2019-09-30 Filed 2019-11-26
10-Q 2019-06-30 Filed 2019-08-08
10-Q 2019-03-31 Filed 2019-05-09
10-Q 2018-12-31 Filed 2019-02-07
10-K 2018-09-30 Filed 2018-11-20
10-Q 2018-06-30 Filed 2018-08-09
10-Q 2018-03-31 Filed 2018-05-10
10-Q 2017-12-31 Filed 2018-02-08
10-K 2017-09-30 Filed 2017-11-20
10-Q 2017-06-30 Filed 2017-08-03
10-Q 2017-03-31 Filed 2017-05-04
10-Q 2016-12-31 Filed 2017-02-09
10-K 2016-09-30 Filed 2016-11-21
10-Q 2016-06-30 Filed 2016-08-04
10-Q 2016-03-31 Filed 2016-05-06
10-Q 2015-12-31 Filed 2016-02-05
10-K 2015-09-30 Filed 2015-11-16
10-Q 2015-06-30 Filed 2015-08-07
10-Q 2015-03-31 Filed 2015-05-08
10-Q 2014-12-31 Filed 2015-02-06
10-K 2014-09-30 Filed 2014-11-17
10-Q 2014-06-30 Filed 2014-08-08
10-Q 2014-03-31 Filed 2014-05-09
10-Q 2013-12-31 Filed 2014-02-07
10-K 2013-09-30 Filed 2013-11-19
10-Q 2013-06-30 Filed 2013-08-09
10-Q 2013-03-31 Filed 2013-05-10
10-Q 2012-12-31 Filed 2013-02-08
10-K 2012-09-30 Filed 2012-11-16
10-Q 2012-06-30 Filed 2012-08-08
10-Q 2012-03-31 Filed 2012-05-04
10-Q 2011-12-31 Filed 2012-02-03
10-K 2011-09-30 Filed 2011-11-14
10-Q 2011-06-30 Filed 2011-08-09
10-Q 2011-03-31 Filed 2011-05-10
10-Q 2010-12-31 Filed 2011-02-08
10-K 2010-09-30 Filed 2010-11-19
10-Q 2010-06-30 Filed 2010-08-05
10-Q 2010-03-31 Filed 2010-05-06
10-Q 2009-12-31 Filed 2010-02-04
8-K 2020-11-23
8-K 2020-08-11
8-K 2020-06-19
8-K 2020-05-12
8-K 2020-04-03
8-K 2020-03-23
8-K 2020-02-10
8-K 2019-11-22
8-K 2019-08-12
8-K 2019-08-02
8-K 2019-05-13
8-K 2019-03-29
8-K 2019-03-22
8-K 2019-02-11
8-K 2019-01-16
8-K 2019-01-10
8-K 2018-12-14
8-K 2018-11-26
8-K 2018-10-09
8-K 2018-08-13
8-K 2018-05-14
8-K 2018-03-15
8-K 2018-02-12
8-K 2018-01-16

MMS 10Q Quarterly Report

Part I. Financial Information
Item 1. Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II. Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6. Exhibits.
EX-31.1 a311-mmsx2020x12x31xxex31x1.htm
EX-31.2 a312-mmsx2020x12x31xxex31x2.htm
EX-32.1 a321-mmsx2020x12x31xxex32x1.htm
EX-32.2 a322-mmsx2020x12x31xxex32x2.htm

Maximus Earnings 2020-12-31

Balance SheetIncome StatementCash Flow
1.81.41.10.70.40.02012201420172020
Assets, Equity
0.80.60.50.30.20.02012201420172020
Rev, G Profit, Net Income
0.20.1-0.1-0.2-0.4-0.52012201420172020
Ops, Inv, Fin

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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 December 31, 2020
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 February 1, 2021, there were 61,452,520 shares of the registrant’s common stock (no par value) outstanding.




Maximus, Inc.
Quarterly Report on Form 10-Q
For the Quarter Ended December 31, 2020
INDEX
PART I. FINANCIAL INFORMATION 
Item 1.
  
 
  
 
  
  
 
  
 
  
 
  
Item 2.
  
Item 3.
  
Item 4.
  
PART II. OTHER INFORMATION 
  
Item 1.
Item 1A.
Item 2.
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) 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;
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, "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 December 31,
 20202019
Revenue$945,554 $818,229 
Cost of revenue739,499 642,779 
Gross profit206,055 175,450 
Selling, general, and administrative expenses111,967 87,227 
Amortization of intangible assets6,516 9,088 
Operating income87,572 79,135 
Interest expense206 484 
Other (expense)/income, net(775)719 
Income before income taxes86,591 79,370 
Provision for income taxes22,514 20,636 
Net income$64,077 $58,734 
Basic earnings per share$1.03 $0.91 
Diluted earnings per share$1.03 $0.91 
Dividends paid per share$0.28 $0.28 
Weighted average shares outstanding:
Basic62,038 64,597 
Diluted62,135 64,758 

See notes to unaudited consolidated financial statements.
1


Maximus, Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
(Unaudited)
 Three Months Ended December 31,
 20202019
Net income$64,077 $58,734 
Foreign currency translation adjustments6,923 6,893 
Comprehensive income$71,000 $65,627 

See notes to unaudited consolidated financial statements.
2


Maximus, Inc.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
 
 December 31,
2020
September 30,
2020
 (unaudited) 
ASSETS  
Current assets:  
Cash and cash equivalents$132,597 $71,737 
Accounts receivable — billed and billable, net of allowance of $6,579 and $6,051
662,059 622,871 
Accounts receivable — unbilled120,764 163,332 
Income taxes receivable2,472 2,075 
Prepaid expenses and other current assets68,935 72,543 
Total current assets986,827 932,558 
Property and equipment, net62,548 66,721 
Capitalized software, net40,434 38,033 
Operating lease right-of-use assets165,448 177,159 
Goodwill595,927 593,129 
Intangible assets, net140,484 145,893 
Deferred contract costs, net21,294 20,891 
Deferred compensation plan assets42,350 36,819 
Deferred income taxes222 1,915 
Other assets10,699 11,584 
Total assets$2,066,233 $2,024,702 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable and accrued liabilities$266,038 $253,338 
Accrued compensation and benefits93,443 137,101 
Deferred revenue58,307 51,655 
Income taxes payable22,685 5,377 
Current portion of long-term debt and other borrowings14,159 10,878 
Operating lease liabilities72,482 80,748 
Other current liabilities20,286 22,071 
Total current liabilities547,400 561,168 
Deferred revenue, less current portion27,428 27,311 
Deferred income taxes24,417 24,737 
Long-term debt, less current portion18,481 18,017 
Deferred compensation plan liabilities, less current portion45,304 38,654 
Operating lease liabilities, less current portion95,678 104,011 
Other liabilities9,214 8,985 
Total liabilities767,922 782,883 
Shareholders’ equity:  
Common stock, no par value; 100,000 shares authorized; 61,452 and 61,504 shares issued and outstanding at December 31, 2020, and September 30, 2020, respectively
520,357 513,959 
Accumulated other comprehensive loss(35,715)(42,638)
Retained earnings813,669 770,498 
Total shareholders' equity1,298,311 1,241,819 
Total liabilities and shareholders' equity$2,066,233 $2,024,702 
 
See notes to unaudited consolidated financial statements.
3


Maximus, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
 Three Months Ended December 31,
 20202019
Cash flows from operations:  
Net income$64,077 $58,734 
Adjustments to reconcile net income to cash flows from operations:  
Depreciation and amortization of property and equipment and
capitalized software
11,817 15,318 
Amortization of intangible assets6,516 9,088 
Deferred income taxes1,298 422 
Stock compensation expense6,062 5,397 
Change in assets and liabilities, net of effects of business combinations  
Accounts receivable — billed and billable(35,729)(31,016)
Accounts receivable — unbilled43,538 2,013 
Prepaid expenses and other current assets4,893 4,063 
Deferred contract costs(205)848 
Accounts payable and accrued liabilities11,199 2,403 
Accrued compensation and benefits(35,682)6,842 
Deferred revenue5,757 (1,345)
Income taxes16,947 13,984 
Operating lease right-of-use assets and liabilities(4,927)(1,622)
Other assets and liabilities2,554 2,138 
Cash flows from operations98,115 87,267 
Cash flows from investing activities:  
Purchases of property and equipment and capitalized software costs(9,094)(10,487)
Other(159)25 
Cash used in investing activities(9,253)(10,462)
Cash flows from financing activities:  
Cash dividends paid to Maximus shareholders(17,207)(17,913)
Purchases of Maximus common stock(3,363)(1,898)
Tax withholding related to RSU vesting(9,818)(10,614)
Borrowings of debt147,852 83,419 
Repayment of debt(146,188)(86,301)
Other(2,763)(493)
Cash used in financing activities(31,487)(33,800)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash3,882 1,452 
Net increase in cash, cash equivalents, and restricted cash61,257 44,457 
Cash, cash equivalents, and restricted cash, beginning of period88,561 116,492 
Cash, cash equivalents, and restricted cash, end of period$149,818 $160,949 

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
Noncontrolling
Interest
Total
Balance at September 30, 202061,504 $513,959 $(42,638)$770,498 $ $1,241,819 
Net income— — — 64,077 — 64,077 
Foreign currency translation— — 6,923 — — 6,923 
Cash dividends— — — (17,207)— (17,207)
Dividends on RSUs— 336 — (336)—  
Purchases of Maximus common stock(52)— — (3,363)— (3,363)
Stock compensation expense— 6,062 — — — 6,062 
Balance at December 31, 202061,452 $520,357 $(35,715)$813,669 $ $1,298,311 


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— — — 58,734 — 58,734 
Foreign currency translation— — 6,893 — — 6,893 
Cash dividends— — — (17,913)(409)(18,322)
Dividends on RSUs— 354 — (354)—  
Purchases of Maximus common stock(26)— — (1,898)— (1,898)
Stock compensation expense— 5,397 — — — 5,397 
Balance at December 31, 201963,953 $504,184 $(38,487)$833,308 $ $1,299,005 











See notes to unaudited consolidated financial statements.

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Maximus, Inc.
Notes to Unaudited Consolidated Financial Statements
For the Three Months Ended December 31, 2020 and 2019

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 (consisting of 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 months ended December 31, 2020, 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) 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 $595.9 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 amount may not be recoverable. At this time, there are no balances which we believe are not recoverable.
Our balance sheet includes $782.8 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 months ended December 31, 2020, we recorded changes to our estimated credit losses of $0.6 million.
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 suffered a significant shock during fiscal year 2020 and remain disrupted.
Many of our contracts in the United States are cost-plus contracts, where we are reimbursed for costs that are allowable, allocable and reasonable. Due to the global pandemic, we are incurring incremental and
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unusual costs, including additional sick pay and idle labor for employees who are unable to perform services due to their health issues, child care issues, or physical restrictions imposed on their workplace. Although the U.S. Federal Government, which provides the majority of our cost-plus contracts, has provided regular guidance, there is some uncertainty within other contracts as to recoverable costs.

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 replaces 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 such as program administration, appeals and assessments work 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 government's COVID-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 software development 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 Federal Government's COVID-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 test result, and increased support for the IRS Wage and Investment Division's response efforts to
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general inquiries regarding the Coronavirus Aid Relief & Economic Security (CARES) Act and Economic Impact Payment Service Plan.
Our Outside the U.S. Segment provides business process services (BPS) solutions 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 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 December 31,
(in thousands)2020% (1)2019% (1)
Revenue:
U.S. Services$384,934 $312,281 
U.S. Federal Services405,245 366,571 
Outside the U.S.155,375 139,377 
Total$945,554 $818,229 
Gross profit:
U.S. Services$99,002 25.7%$89,590 28.7%
U.S. Federal Services82,496 20.4%70,821 19.3%
Outside the U.S.24,557 15.8%15,039 10.8%
Total$206,055 21.8%$175,450 21.4%
Selling, general & administrative expense:
U.S. Services$37,456 9.7%$31,398 10.1%
U.S. Federal Services52,252 12.9%39,239 10.7%
Outside the U.S.20,032 12.9%16,053 11.5%
Other (2)2,227 NM537 NM
Total$111,967 11.8%$87,227 10.7%
Operating income:
U.S. Services$61,546 16.0%$58,192 18.6%
U.S. Federal Services30,244 7.5%31,582 8.6%
Outside the U.S.4,525 2.9%(1,014)(0.7)%
Amortization of intangible assets(6,516)NM(9,088)NM
Acquisition-related expenses(1,873)NM NM
Other (2)(354)NM(537)NM
Total$87,572 9.3%$79,135 9.7%

(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.

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Identifiable assets for the segments are shown below:
(in thousands)December 31, 2020September 30, 2020
U.S. Services$729,573 $702,728 
U.S. Federal Services889,220 937,477 
Outside the U.S.228,779 224,532 
Corporate218,661 159,965 
Total$2,066,233 $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 December 31,
(in thousands)20202019
Program administration$293,844 $236,907 
Assessments and appeals32,615 33,831 
Workforce and children services47,821 29,386 
Other10,654 12,157 
Total U.S. Services$384,934 $312,281 
Program administration$327,790 $281,688 
Technology solutions34,664 43,606 
Assessments and appeals42,791 41,277 
Total U.S. Federal Services$405,245 $366,571 
Workforce and children services$77,462 $57,239 
Assessments and appeals53,123 62,643 
Program administration23,056 17,094 
Other1,734 2,401 
Total Outside the U.S.$155,375 $139,377 
Total revenue$945,554 $818,229 

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By contract type
Three Months Ended December 31,
(in thousands)20202019
Performance-based$293,960 $292,758 
Cost-plus384,483 362,811 
Fixed price120,777 119,216 
Time and materials146,334 43,444 
Total revenue$945,554 $818,229 

By customer type
Three Months Ended December 31,
(in thousands)20202019
New York State government agencies$75,356 $97,223 
Other U.S. state government agencies312,758 209,886 
Total U.S. state government agencies388,114 307,109 
United States Federal Government agencies385,573 351,833 
International government agencies147,342 130,816 
Other, including local municipalities and commercial customers24,525 28,471 
Total revenue$945,554 $818,229 

By geography
Three Months Ended December 31,
(in thousands)20202019
United States$790,179 $678,852 
United Kingdom64,786 73,002 
Australia55,932 37,435 
Rest of world34,657 28,940 
Total revenue$945,554 $818,229 

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. Funds 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
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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 months ended December 31, 2020, approximately $14.0 million was from cash payments made to us prior to October 1, 2020. For the three months ended December 31, 2019, we recognized revenue of $18.0 million 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 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 pandemic. For our existing program participants, many employment opportunities have been terminated or are no longer available. Our volume of new program participants is beginning to increase as governments shift their focus to tackling 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. However, it is unclear as to when employers will begin filling roles in industries that remain curtailed. In some cases, we anticipate that we may be unable to place individuals in employment in the short-term.
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 months ended December 31, 2020, we reported a benefit to revenue of $10.2 million and a benefit to diluted earnings per share of $0.12 from changes in estimates. The corresponding change in fiscal year 2020 was a decline of $1.4 million.
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 which 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.
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Three Months Ended December 31,
(in thousands)20202019
Deferred contract cost capitalization$2,491 $1,300 
Deferred contract cost amortization2,287 2,200 
This amortization was recorded within our "cost of revenue" on our consolidated statements of operations.
Remaining performance obligations
At December 31, 2020, we had approximately $400 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 December 31,
(shares in thousands)20202019
Basic weighted average shares outstanding62,038 64,597 
Dilutive effect of unvested RSUs97 161 
Denominator for diluted earnings per share62,135 64,758 

Our dilutive earnings per share for the three months ended December 31, 2020 and 2019, excludes any effect from approximately 0.6 million and 0.3 million unvested restricted stock units, respectively, as adding them to our calculation would be antidilutive.

5. Business combinations
InjuryNet Australia Pty Limited
On February 28, 2020, we acquired 100% of the share capital of InjuryNet Australia Pty Limited (InjuryNet) for an estimated purchase price of $4.4 million ($6.7 million Australian Dollars), which included acquisition-related contingent consideration estimated at $2.1 million ($3.1 million Australian Dollars) based upon future earnings. The purchase price was subject to adjustment for a working capital true-up and acquisition-related contingent consideration. InjuryNet provides workplace medical services in Australia. The business was integrated into our Outside the U.S. Segment. We have completed our assessment of all acquired assets and liabilities assumed, with the exception of matters related to taxation. We recorded estimated goodwill and intangible assets of $2.6 million and $0.9 million, respectively, related to the acquisition.
Index Root Korea Co. Ltd.
On August 21, 2020, we acquired 100% of the share capital of Index Root Korea Co. Ltd (Index Root) for an estimated purchase price of $5.4 million (6.3 billion South Korean Won), which includes acquisition-related contingent consideration estimated at $0.9 million (1.1 billion South Korean Won) based upon future earnings. We acquired Index Root to expand our geographic presence to South Korea. The business was integrated into our Outside the U.S. Segment. We are still in the process of finalizing the allocation of assets acquired and liabilities assumed. We recorded estimated goodwill and intangible assets of $4.6 million and $1.4 million, respectively, related to the acquisition.

6. Leases
Lease expense is recorded within our consolidated statements of operations based upon the nature of the assets. Where assets are used to directly serve our customers, such as facilities dedicated to customer contracts,
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lease costs are recorded in "cost of revenue." Facilities and equipment which serve management and support functions are expensed through "selling, general and administrative expenses." Costs recorded in the three months ended December 31, 2020 and 2019, are summarized below.
Three Months Ended December 31,
(in thousands)20202019
Operating lease cost$27,734 $25,250 
Short-term lease cost1,889 2,110 
Variable lease cost3,015 3,334 
Total operating lease costs$32,638 $30,694 

Future minimum lease payments for noncancelable operating leases as of December 31, 2020, are shown below.
(in thousands)Office spaceEquipmentTotal
For the years ended September 30
Remainder of 2021$52,375 $6,661 $59,036 
202256,388 3,701 60,089 
202331,731 537 32,268 
202414,715 54 14,769 
20259,788 9 9,797 
Thereafter2,219  2,219 
Total minimum lease payments$167,216 $10,962 $178,178 
Less: imputed interest(9,748)(270)(10,018)
Total lease liabilities$157,468 $10,692 $168,160 

Other information related to leases was as follows:
December 31, 2020
Weighted average remaining lease term (in years)2.8
Weighted average incremental borrowing rate3.81 %

Supplemental cash flow information related to leases was as follows:
Three Months Ended December 31,
(in thousands)20202019
Cash payments included in the measurement of lease liabilities$28,513 $28,100 
Operating lease liabilities arising from new or remeasured right-of-use assets 9,004 17,300 

7. Supplemental Disclosures
Under a resolution adopted in March 2020, the Board of Directors authorized the purchase, at management's discretion, of up to $200 million of our common stock. This supplemented a similar resolution adopted in June 2018. During the three months ended December 31, 2020, we purchased approximately 52,000 of our common shares at a cost of $3.4 million. During the three months ended December 31, 2019, we purchased approximately 26,000 common shares at a cost of $1.9 million. At December 31, 2020, $146.7 million remained available for future stock repurchases.
During the three months ended December 31, 2020, we granted approximately 257,000 restricted stock units (RSUs) to our employees. Most of these awards will vest ratably over four years, as opposed to five years in
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previous years. In addition, we awarded approximately 85,000 performance stock units in the three months ended December 31, 2020, to certain executives that will vest at the end of a three-year performance period with the actual number of vested units dependent upon the Company's achievement of certain performance targets.

Our deferred compensation plan uses both mutual fund and life insurance investments to fund its obligations. The mutual funds are recorded at fair value, based upon quoted prices in active markets (Level 1), and the life insurance investments at cash surrender value; changes in value are reported in our consolidated statements of operations. At December 31, 2020, the deferred compensation plan held $26.1 million of the mutual fund investments.
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 debt balances are principally from credit facilities which can be utilized and repaid as required and whose rates are based upon prevailing market conditions; accordingly, we believe the balance disclosed approximates the fair value. Our accounts receivable billed and billable balance includes both amounts invoiced and amounts that are ready to be invoiced where the funds are collectible within standard invoice terms. Our accounts receivable unbilled balance includes balances where revenue has been earned but no invoice was issued on or before December 31, 2020. 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. Restricted cash is included within "prepaid expenses and other current assets" on our consolidated balance sheets and is included within "cash, cash equivalents, and restricted cash" in our consolidated statements of cash flows. A reconciliation of these balances is shown below.
 Balance as of
(in thousands)December 31,
2020
September 30, 2020December 31,
2019
Cash and cash equivalents$132,597 $71,737 $149,515 
Restricted cash (recorded within "prepaid expenses and other current assets")17,221 16,824 11,434 
Cash, cash equivalents, and restricted cash$149,818 $88,561 $160,949 

During each of the three months ended December 31, 2020 and 2019, we made interest payments of $0.2 million.
During the three months ended December 31, 2020 and 2019, we made income tax payments of $4.1 million and $6.3 million, respectively.

8. Litigation
We are subject to audits, investigations and reviews relating to compliance with the laws and regulations that govern our role as a contractor to agencies and departments of the United States Federal Government, state, local, and foreign governments, and otherwise in connection with performing services in countries outside of the U.S. Adverse findings could lead to criminal, civil, or administrative proceedings, and we could be faced with penalties, fines, suspension, or debarment. Adverse findings could also have a material adverse effect on us because of our reliance on government contracts. We are subject to periodic audits by federal, state, local, and foreign governments for taxes. We are also involved in various claims, arbitrations, and lawsuits arising in the normal conduct of our business. These include but are not limited to bid protests, employment matters, contractual disputes, and charges before administrative agencies. Although we can give no assurance, based upon our evaluation and taking into account the advice of legal counsel, we do not believe that the outcome of any existing matter would likely have a material adverse effect on our consolidated financial position, results of operations, or cash flows.
Medicaid claims
The Centers for Medicare and Medicaid Services (CMS) has asserted two disallowances against a state Medicaid agency totaling approximately $31 million. From 2004 through 2009, we had a contract with the state
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agency in support of its school-based Medicaid claims. We entered into separate agreements with the school districts under which we assisted the districts with preparing and submitting claims to the state Medicaid agency which, in turn, submitted claims for reimbursement to CMS. The state has asserted that its agreement with us requires us to reimburse the state for the amounts owed to CMS. However, our agreements with the school districts require them to reimburse us for such amounts, and therefore we believe the school districts are responsible for any amounts that ultimately must be refunded to CMS. Although it is reasonably possible that a court could conclude we are responsible for the full balance of the disallowances, we believe our exposure in this matter is limited to our fees associated with this work and that the school districts will be responsible for the remainder. We have reserved our estimated fees earned from this engagement relating to the disallowances. We exited the federal healthcare-claiming business in 2009 and no longer provide the services at issue in this matter. The state contested the first disallowance of approximately $12 million in U.S. District Court. In February 2020, the District Court upheld that disallowance, and the state has appealed the case to the U.S. Circuit Court of Appeals. The second disallowance of approximately $19 million is still pending at the U.S. Health and Human Services Departmental Appeals Board. No legal action has been initiated against us with respect to either disallowance.

9. Subsequent Events
On January 8, 2021, our Board of Directors declared a quarterly cash dividend of $0.28 for each share of our common stock outstanding. The dividend is payable on February 26, 2021, to shareholders of record on February 12, 2021. Based upon the number of shares outstanding, we anticipate a cash payment of approximately $17 million.
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Item 2.                   Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of financial condition and results of operations is provided to enhance the understanding of, and should be read in conjunction with, our Consolidated Financial Statements and related Notes included both herein and 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.

Business Overview
We are a U.S.-based global company with approximately 34,000 employees dedicated to helping governments on four continents administer their health and human services programs. We help people connect to and interact with vital government programs so that they receive the necessary support they are eligible to receive. The demand for the provision of these services is driven by numerous factors including aging populations with complex health care needs; rising living standards in emerging markets creating new demands for our services; growing complexity of programs, such as evolving eligibility requirements; the creation of new programs and initiatives such as long-term services and support, and the urgent need to support a surge in demand to help governments respond to the public health emergency. The pandemic has required governments to implement new operational models to ensure public safety and this has led to an increased appetite for public-private partnerships due to availability of increased flexibility, scalability, and accountability, particularly in a time when government customers are looking for ways to dramatically increase services to meet the surging demand and subsequent strain on their agencies.
Maximus operates in a sector with relatively few environmental and social-issue risks but many opportunities, particularly ones that enable us to improve the lives of individuals and families, and provide meaningful opportunities to our employees. We run programs that connect people with disabilities and long-term health conditions to sustainable, long-term employment and we help people, including many of society's most vulnerable populations, access, connect to, and use government benefit programs, such as Medicaid and Medicare.
2020 was an unprecedented year for the world as a result of the Coronavirus (COVID) global pandemic, and Maximus experienced both favorable and unfavorable impacts as a result. Underscoring the importance of the services we provide, many of our U.S. contracts were designated as ‘‘essential’’ by government agencies in the midst of COVID. Continued operations of these programs ensure vulnerable individuals and families can access vital healthcare and safety-net services during these uncertain times.
Our primary objective amidst this pandemic is to protect our employees while ensuring global business continuity of our essential services to help vulnerable individuals and taking responsible action to stop the virus from spreading further. The safety and well-being of our employees are paramount, and we made several sweeping changes to better serve our employees.
Some of the programs we support experienced temporary changes at the direction of our customers which reduced volume, revenue and profit on certain large programs due to the pandemic. However, we have also been successful in winning new contracts tied to the urgent need to support public health initiatives such as contact tracing, disease investigation, unemployment insurance programs, and supporting efforts around vaccine administration, scheduling, and registration to help governments slow the spread of the COVID pandemic. The individuals and families served under these programs are those considered some of the most vulnerable to COVID, and we believe our operations support programs that are essential for their safety and well-being.
Acquisitions
To supplement our core business, we have an active program to identify potential strategic acquisitions. Our acquisitions have successfully enabled us to increase future organic growth, as well as expand our business processes, knowledge and client relationships into adjacent markets and new geographies. In November 2018, we acquired the citizen engagement centers business previously operated by General Dynamics Information Technology. This acquisition, coupled with our 2015 acquisition of Acentia, LLC, has provided scale, customer base and competitive advantages in our business with the United States Federal Government. In fiscal year 2020, we acquired InjuryNet in Australia and Index Root in South Korea, which we integrated into our Outside the U.S. Segment. These acquisitions supplement our existing businesses in this segment.

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Financial Overview
Our results for the first quarter of fiscal year 2021 were affected by the following factors:

We experienced organic revenue growth across all segments. Much of this work is principally driven from new services we performed to assist governments in the U.S. in their COVID-response efforts and increased seasonal volumes in employment services and job seeker support in Australia. The COVID-response work in the U.S.contributed approximately $160 million of revenue. We anticipate that COVID-response related revenue will be between $425 million and $475 million for the full fiscal year 2021.
The COVID pandemic continued to have an unfavorable impact on some of our core U.S.-based programs where our customers instituted temporary changes to ensure that individuals and families retained access to vital services. This resulted in reduced volumes, leading to declines in revenue and profits within our core business.
Our Outside the U.S. Segment experienced growth in the first quarter due to an increased seasonal need and pent-up demand for our role to support more people into employment opportunities, primarily in Australia.
As the pandemic subsides and restrictions are lifted, we anticipate that many of our programs which have suffered reduced volumes will return to their historical levels while our short-term COVID-response work will decline. The timing of both the upside and downside of this remains uncertain. Our assumptions are subject to changes as we understand more about the duration of the pandemic and related regulations, the recovery pattern of our core programs, the effects of budget challenges, and other changes in policies or legislation.

Results of Operations
Consolidated
The following table sets forth, for the periods indicated, selected statements of operations data:
 Three Months Ended December 31,
(dollars in thousands, except per share data)20202019
Revenue$945,554 $818,229 
Cost of revenue739,499 642,779 
Gross profit206,055 175,450 
Gross profit percentage21.8 %21.4 %
Selling, general and administrative expenses111,967 87,227 
Selling, general and administrative expense as a percentage of revenue11.8 %10.7 %
Amortization of intangible assets6,516 9,088 
Operating income87,572 79,135 
Operating income percentage9.3 %9.7 %
Interest expense206 484 
Other (expense)/income, net(775)719 
Income before income taxes86,591 79,370 
Provision for income taxes22,514 20,636 
Effective income tax rate26.0 %26.0 %
Net income$64,077 $58,734 
Basic earnings per share$1.03 $0.91 
Diluted earnings per share$1.03 $0.91 

Our business segments have different factors driving revenue fluctuations and profitability. The sections that follow cover these segments in greater detail.
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Changes in revenue, cost of revenue and gross profit for the three months ended December 31, 2020, are summarized below.
RevenueCost of RevenueGross Profit
Dollars in thousandsPercentage changeDollars in thousandsPercentage changeDollars in thousandsPercentage change
Three months ended December 31, 2019$818,229 $642,779 $175,450 
Effect of Census Questionnaire Assistance 2020 (CQA) contract(9,633)(1.2)%(12,736)(2.0)%3,103 1.8 %
Organic effect128,754 15.7 %102,633 16.0 %26,121 14.9 %
Net acquired growth/(decline)2,352 0.3 %2,439 0.4 %(87)— %
Currency effect compared to the prior period5,852 0.7 %4,384 0.7 %1,468 0.8 %
Three months ended December 31, 2020$945,554 15.6 %$739,499 15.0 %$206,055 17.4 %

Our cost of revenue includes direct costs related to labor, subcontractor labor, outside vendors, rent, and other direct costs.
Selling, general and administrative expense (SG&A) consists of indirect costs related to general management, marketing, and administration. It is primarily composed of labor costs. These costs may be incurred at a segment level, for dedicated resources that are not client-facing, or at a corporate level. Corporate costs are allocated to segments on a consistent and rational basis. Fluctuations in our SG&A are primarily driven by changes in our administrative cost base, which is not directly driven by changes in our revenue. As part of our work for the United States Federal Government and many states, we allocate these costs using a methodology driven by the Federal Cost Accounting Standards.
Our SG&A expense has increased year-over-year due primarily to:
approximately $5.4 million of severance expenses in the United States, which is expected to provide a benefit for the remainder of the fiscal year;
information technology initiatives, including migration of data to the cloud;
additional costs to address the COVID pandemic;
increases in business development activity to both bolster our technical skills and plan for increased bidding activity; and
increases in our scope of operations, which increases our administrative base.

Other expense/income, net included expenses incurred from foreign currency fluctuations on intercompany loans.
Our effective income tax rate for the three months ended December 31, 2020 and 2019, was 26.0% for both periods. Our expectations for the effective income tax rate for the full fiscal year 2021 is between 25.75% and 26.5%.
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U.S. Services Segment
Our U.S. Services Segment provides a variety of business process services such as program administration, appeals and assessments work 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 government's COVID-response efforts. We also successfully expanded into the unemployment insurance market as Maximus supported more than 15 states in their unemployment insurance programs.