CACI Reports Results for Its Fiscal 2019 Third Quarter and Raises Full-Year Net Income Guidance

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CACI International Inc (NYSE: CACI),
a leading information solutions and service provider to the federal
government, announced results today for its third fiscal quarter ended
March 31, 2019.

CEO Commentary and Outlook

Ken Asbury, CACI’s President and CEO, said, “We delivered record
revenue, solid net income growth, and strong cash flow in our third
quarter. Contract awards were nearly double from a year ago, a
reflection of the investments we’ve made in the enterprise and the
success of our market-aligned strategy. The integration of LGS
Innovations and Mastodon Design is largely complete, and the synergies
with CACI’s existing capabilities are differentiating us in the
mission-essential areas of signals intelligence, cyber, and electronic
warfare. We are raising our full-year net income guidance to reflect
continued outstanding performance across our business. And we are
confident that our long-term growth strategy will continue to deliver
value for our customers and shareholders.”

Third Quarter Results as Reported


(in millions except per-share data)	Q3, FY19	Q3, FY18	% Change
Revenue	$1,265.0	$1,124.1	12.5%
Operating income	$94.9	$104.8	-9.4%
Net income	$68.1	$64.5	5.7%
Diluted earnings per share	$2.69	$2.56	5.2%

Third Quarter Results Assuming Tax Reform was in Place for Fiscal 2018


(in millions except per-share data)	Q3, FY19	Q3, FY18	% Change
Revenue	$1,265.0	$1,124.1	12.5%
Operating income	$94.9	$104.8	-9.4%
Net income, including the impact of Tax Reform ⁽¹⁾	$68.1	$71.2	-4.3%
Diluted earnings per share including the impact of Tax Reform ⁽¹⁾	$2.69	$2.82	-4.6%

(1)		See Reconciliation of FY18 Net Income to Non-GAAP Net Income Assuming a Full Year of Tax Reform on page 12.

Revenue for the third quarter of Fiscal Year 2019 (FY19) increased 12.5
percent compared with the third quarter of Fiscal Year 2018 (FY18)
driven by acquired revenue, new business wins, and on-contract growth.
Operating income includes approximately $14 million of
transaction-related expenses in the third quarter of FY19 and, as
previously indicated, approximately $22 million of non-recurring
benefits in the third quarter of FY18. Excluding the impact of these
items, operating income performance was driven by strong program
performance and recent acquisitions. Net income and diluted earnings per
share performance reflect these non-recurring items as well as lower
2019 tax rates due to Tax Reform and $4 million of previously
unanticipated tax benefits realized in the third quarter of FY19.

Third quarter FY19 net cash provided by operations excluding CACI’s
Master Accounts Receivable Purchase Agreement (MARPA facility) was
$113.3 million. For more details, see the reconciliation on page 10 of
this release.

Additional Financial Metrics


	Q3, FY19	Q3, FY18	% Change
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), a non-GAAP measure (in millions) ⁽¹⁾	$117.2	$122.9	-4.7%
Days sales outstanding ⁽²⁾	66	62

(1)		See Reconciliation of Net Income to Earnings before Interest, Taxes, Depreciation and Amortization on page 11.
(2)		DSO calculation for Q3 FY19 includes a full quarter of LGS revenue and excludes the impact of the Company’s accounts receivable purchase facility. Including the impact of the accounts receivable purchase facility, DSO was 57 days in Q3 FY19.

Closing of Mastodon Design and LGS Innovations Acquisitions

On January 29, 2019, CACI completed the acquisition of Mastodon Design
LLC (Mastodon). Mastodon specializes in the rapid design of rugged
tactical communications signals intelligence (SIGINT) and electronic
warfare (EW) equipment. On March 1, 2019, CACI completed the acquisition
of LGS Innovations (LGS). LGS is a leading provider of SIGINT and cyber
products and solutions to the Intelligence Community and Department of
Defense. In combination with CACI’s existing capabilities, these
acquisitions allow CACI to provide highly relevant and differentiated
products and solutions that address current and future requirements in
the areas of signals intelligence and spectrum management, electronic
warfare, communications, C4ISR, and cyber.

Third Quarter Awards and Contract Funding Orders

Contract awards in the third quarter were $2.7 billion, 95.3 percent
higher than the year earlier quarter. This excludes ceiling values of
multi-award, indefinite delivery, indefinite quantity (IDIQ) contracts.
Approximately 85 percent of contract awards were for new business to
CACI. Some notable awards during the quarter were:

An $810 million contract to develop, modernize, deliver, and sustain
mobile and transportable command and control systems.
A five-year, $415 million contract to design and deploy new
technologies to enhance quick-reaction capabilities in signals
intelligence, electronic warfare, and cyber security.
A five-year, $71 million task order to assist the U.S. Army in
developing, testing, and fielding the next generation of soldier
sensor and laser products and systems.
A five-year, $61 million prime contract to continue providing systems
integration, development, and sustainment for the Defense Health
Agency’s Theater Enterprise-Wide Logistics System.
A prime position on a 10-year, multiple-award IDIQ contract, with a
ceiling value of $982 million, to provide electronic warfare and cyber
capability research and development.
A prime position on the seven-year, multiple-award Cyber Mission
Engineering IDIQ contract, with a shared ceiling value of $898 million
($962 million total if all options are exercised), to provide cyber
engineering and electronic warfare solutions to the U.S. Navy.
$664 million in previously unannounced classified and unclassified
awards on contracts with customers in the federal government.

Contract funding orders in the quarter were $1.7 billion, 50.8 percent
higher than the year earlier quarter. Total backlog at March 31, 2019
was $14.9 billion, a 35.3 percent increase over the year earlier. Funded
backlog at March 31, 2019 was $2.9 billion, 51.6 percent higher than the
year earlier.

Other Highlights:

Dr. J.P. (Jack) London, CACI Executive Chairman and Chairman of the
Board, received the U.S. Naval Academy’s Distinguished Graduate Award,
honoring his lifetime commitment to service, personal character, and
distinguished contributions to our nation.
CACI’s U.S. Operations became the first U.S. organization to complete
an appraisal under the CMMI® Institute’s new model for measuring
systems and software engineering expertise, confirming CACI’s systems
and software engineering solutions meet rigorous industry standards.
CACI won two Department of Defense Nunn-Perry Awards for excellence in
the DoD Mentor-Protégé Program, recognizing the company’s support for
small business protégés Athena Technology Group and Crystal Clear
Technologies.
CACI was named a 2019 Top Workplace in both Tampa Bay and South
Carolina. This follows Top Workplace recognition for CACI locations in
Baltimore, Colorado, Memphis, Oklahoma City, San Diego, and
Washington, DC.

Nine Months Results as Reported


(in millions except per-share data)	Nine Months, FY19	Nine Months, FY18	% Change
Revenue	$3,612.5	$3,297.8	9.5%
Operating income	$296.8	$260.4	14.0%
Net income	$215.6	$249.3	-13.5%
Diluted earnings per share	$8.50	$9.88	-14.0%

Nine Months Results Assuming Tax Reform was in Place for Fiscal 2018


(in millions except per-share data)	Nine Months, FY19	Nine Months, FY18	% Change
Revenue	$3,612.5	$3,297.8	9.5%
Operating income	$296.8	$260.4	14.0%
Net income including the impact of Tax Reform ⁽¹⁾	$215.6	$178.1	21.0%
Diluted earnings per share including the impact of Tax Reform ⁽¹⁾	$8.50	$7.06	20.4%

(1)		See Reconciliation of FY18 Net Income to Non-GAAP Net Income Assuming a Full Year of Tax Reform on page 12.

Revenue in the first nine months of FY19 increased 9.5 percent compared
with the same period a year ago primarily due to acquired revenue, new
business wins, and on-contract growth. Operating income increased due to
the same factors noted above for the third quarter. Net income and
diluted earnings per share decreased due to the impact of Tax Reform in
FY18. For a more detailed comparison of our first nine months FY19 net
income, see page 12 of this release for a reconciliation of FY18 results
assuming a full year of Tax Reform. Net cash provided by operations in
the first nine months of FY19 was $252.8 million, which excludes $200
million from the Company’s MARPA facility. For more details, see the
reconciliation on page 10 of this release.

CACI Raises its FY19 Annual Net Income Guidance

CACI is increasing its net income guidance range for FY19 to reflect
strong performance in the Company’s core business, as well as the third
quarter FY19 tax benefits. The table below summarizes these changes and
represents the Company’s views as of May 1, 2019:


(In millions except for tax rate and earnings per share)	Current Fiscal Year 2019 Guidance	Previous Fiscal Year 2019 Guidance
Revenue	$4,900 – $5,025	$4,875 – $5,025
Net income	$262 – $270	$255 – $265
Effective corporate tax rate	19.9%	21.2%
Diluted earnings per share	$10.31 – $10.63	$9.96 – $10.35
Diluted weighted average shares	25.4	25.6

Conference Call Information

CACI has scheduled a conference call for 8:30 AM Eastern Time Thursday,
May 2, 2019 during which members of the Company’s senior management team
will be making a brief presentation focusing on third quarter results
and operating trends followed by a question-and-answer session. You can
listen to the conference call and view the accompanying exhibits by
logging on to http://investor.caci.com/news/#upcomingevent,
at the scheduled time. A replay of the call will also be available over
the Internet and can be accessed through the CACI homepage (http://www.caci.com)
by clicking on the CACI Investor Relations tab.

CACI provides information solutions and services in support of national
security missions and government transformation for Intelligence,
Defense, and Federal Civilian customers. A Fortune World’s Most
Admired Company, CACI is a member of the Fortune 1000 Largest
Companies, the Russell 2000 Index, and the S&P MidCap 400 Index. CACI’s
sustained commitment to ethics and integrity defines its corporate
culture and drives its success. With approximately 22,000 employees
worldwide, CACI provides dynamic career opportunities for military
veterans and industry professionals to support the nation’s most
critical missions. Join us! www.caci.com.

There are statements made herein which do not address historical
facts and, therefore, could be interpreted to be forward-looking
statements as that term is defined in the Private Securities Litigation
Reform Act of 1995. Such statements are subject to factors that
could cause actual results to differ materially from anticipated
results. The factors that could cause actual results to differ
materially from those anticipated include, but are not limited to, the
following: legal, regulatory, and political change successive
presidential administrations that could result in economic uncertainty;
changes in U.S. federal agencies, current agreements with other nations,
foreign events, or any other events which may affect the global economy;
regional and national economic conditions in the United States and
globally; terrorist activities or war; changes in interest rates;
currency fluctuations; significant fluctuations in the equity markets;
changes in our effective tax rate; failure to achieve contract awards in
connection with re-competes for present business and/or competition for
new business; the risks and uncertainties associated with client
interest in and purchases of new products and/or services; continued
funding of U.S. government or other public sector projects, based on a
change in spending patterns, implementation of spending cuts
(sequestration) under the Budget Control Act of 2011, or any legislation
that amends or changes discretionary spending levels under that act; changes
in budgetary priorities or in the event of a priority need for funds,
such as homeland security; government contract procurement (such as bid
protest, small business set asides, loss of work due to organizational
conflicts of interest, etc.) and termination risks; the results of
government audits and reviews conducted by the Defense Contract Audit
Agency, the Defense Contract Management Agency, or other governmental
entities with cognizant oversight; individual business decisions of our
clients; paradigm shifts in technology; competitive factors such as
pricing pressures and/or competition to hire and retain employees
(particularly those with security clearances); market speculation
regarding our continued independence; material changes in laws or
regulations applicable to our businesses, particularly in connection
with (i) government contracts for services, (ii) outsourcing of
activities that have been performed by the government, and (iii)
competition for task orders under Government Wide Acquisition Contracts
(GWACs) and/or schedule contracts with the General Services
Administration; the potential impact of the announcement or consummation
of a proposed transaction and our ability to successfully integrate the
operations of our recent and any future acquisitions; our own ability to
achieve the objectives of near term or long range business plans; and
other risks described in our Securities and Exchange Commission filings.

CACI-Earnings Release


Selected Financial Data

CACI International Inc
Condensed Consolidated Statements of Operations (Unaudited)
(Amounts in thousands, except per share amounts)

	Quarter Ended							Nine Months Ended
	3/31/2019			3/31/2018			% Change	3/31/2019			3/31/2018			% Change
Revenue	$	1,264,958		$	1,124,100		12.5%	$	3,612,463		$	3,297,774		9.5%
Costs of revenue
Direct costs		824,024			728,444		13.1%		2,397,633			2,195,282		9.2%
Indirect costs and selling expenses		324,828			273,145		18.9%		859,262			788,569		9.0%
Depreciation and amortization		21,198			17,717		19.6%		58,797			53,563		9.8%
Total costs of revenue		1,170,050			1,019,306		14.8%		3,315,692			3,037,414		9.2%
Operating income		94,908			104,794		-9.4%		296,771			260,360		14.0%
Interest expense and other, net		13,466			10,566		27.4%		31,773			32,769		-3.0%
Income before income taxes		81,442			94,228		-13.6%		264,998			227,591		16.4%
Income taxes		13,297			29,729		-55.3%		49,424			(21,749	)	-327.2%
Net income	$	68,145		$	64,499		5.7%	$	215,574		$	249,340		-13.5%

Basic earnings per share	$	2.74		$	2.62		4.8%	$	8.69		$	10.14		-14.3%
Diluted earnings per share	$	2.69		$	2.56		5.2%	$	8.50		$	9.88		-14.0%

Weighted average shares used in per share computations:
Basic		24,866			24,656				24,819			24,588
Diluted		25,348			25,234				25,369			25,229

Statement of Operations Data (Unaudited)
	Quarter Ended							Nine Months Ended
	3/31/2019			3/31/2018			% Change	3/31/2019			3/31/2018			% Change

Operating income margin		7.5	%		9.3	%			8.2	%		7.9	%
Tax rate		16.3	%		31.6	%			18.7	%		-9.6	%
Net income margin		5.4	%		5.7	%			6.0	%		7.6	%

Adjusted EBITDA*	$	117,206		$	122,927		-4.7%	$	355,868		$	312,326		13.9%
Adjusted EBITDA Margin		9.3	%		10.9	%			9.9	%		9.5	%

*See Reconciliation of Net Income to Adjusted Earnings before Interest, Taxes, Depreciation and Amortization on page 11


Selected Financial Data (Continued)

CACI International Inc
Condensed Consolidated Balance Sheets (Unaudited)
(Amounts in thousands)

	3/31/2019		6/30/2018
ASSETS:
Current assets
Cash and cash equivalents	$	93,806	$	66,194
Accounts receivable, net		889,662		806,871
Prepaid expenses and other current assets		99,586		58,126
Total current assets		1,083,054		931,191

Goodwill and intangible assets, net		3,773,820		2,862,590
Property and equipment, net		136,212		101,140
Other long-term assets		139,933		139,285
Total assets	$	5,133,019	$	4,034,206

LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities
Current portion of long-term debt	$	46,920	$	46,920
Accounts payable		136,933		82,017
Accrued compensation and benefits		263,586		259,442
Other accrued expenses and current liabilities		255,035		150,602
Total current liabilities		702,474		538,981

Long-term debt, net of current portion		1,710,640		1,015,420
Other long-term liabilities		388,422		372,918
Total liabilities		2,801,536		1,927,319

Shareholders’ equity		2,331,483		2,106,887
Total liabilities and shareholders’ equity	$	5,133,019	$	4,034,206


Selected Financial Data (Continued)

CACI International Inc
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Amounts in thousands)

	Nine Months Ended
	3/31/2019			3/31/2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	215,574		$	249,340
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization		58,797			53,563
Amortization of deferred financing costs		1,796			3,311
Stock-based compensation expense		18,351			18,183
Deferred income taxes		(1,193	)		(69,405	)
Changes in operating assets and liabilities, net of effect of business acquisitions:
Accounts receivable, net		85,995			(53,410	)
Prepaid expenses and other assets		(13,284	)		(15,583	)
Accounts payable and accrued expenses		101,473			68,505
Accrued compensation and benefits		(18,536	)		(12,047	)
Income taxes receivable and payable		(1,945	)		(572	)
Long-term liabilities		5,813			8,945
Net cash provided by operating activities		452,841			250,830

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(29,545	)		(31,810	)
Cash paid for business acquisitions, net of cash acquired		(1,071,023	)		(50,368	)
Other		1,875			3,629
Net cash used in investing activities		(1,098,693	)		(78,549	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) under credit facilities		693,424			(150,974	)
Payment of contingent consideration		(616	)		(11,553	)
Proceeds from employee stock purchase plans		4,265			3,673
Repurchase of common stock		(4,310	)		(3,802	)
Payment of taxes for equity transactions		(18,837	)		(20,692	)
Net cash provided by (used in) financing activities		673,926			(183,348	)
Effect of exchange rate changes on cash and cash equivalents		(462	)		1,498
Net increase (decrease) in cash and cash equivalents		27,612			(9,569	)
Cash and cash equivalents, beginning of period		66,194			65,539
Cash and cash equivalents, end of period	$	93,806		$	55,970


Selected Financial Data (Continued)

Revenue by Customer Type (Unaudited)
	Quarter Ended
(dollars in thousands)	3/31/2019				3/31/2018				$ Change			% Change
Department of Defense	$	887,030	70.1	%	$	762,752	67.9	%	$	124,278		16.3	%
Federal civilian agencies		318,374	25.2	%		299,349	26.6	%		19,025		6.4	%
Commercial and other		59,554	4.7	%		61,999	5.5	%		(2,445	)	-3.9	%
Total	$	1,264,958	100.0	%	$	1,124,100	100.0	%	$	140,858		12.5	%

	Nine Months Ended
(dollars in thousands)	3/31/2019				3/31/2018				$ Change			% Change
Department of Defense	$	2,540,093	70.3	%	$	2,224,469	67.4	%	$	315,624		14.2	%
Federal civilian agencies		898,491	24.9	%		902,185	27.4	%		(3,694	)	-0.4	%
Commercial and other		173,879	4.8	%		171,120	5.2	%		2,759		1.6	%
Total	$	3,612,463	100.0	%	$	3,297,774	100.0	%	$	314,689		9.5	%

Revenue by Contract Type (Unaudited)
	Quarter Ended
(dollars in thousands)	3/31/2019				3/31/2018				$ Change			% Change
Cost-plus-fee	$	704,627	55.7	%	$	558,937	49.7	%	$	145,690		26.1	%
Firm fixed price		374,006	29.6	%		367,869	32.7	%		6,137		1.7	%
Time and materials		186,325	14.7	%		197,294	17.6	%		(10,969	)	-5.6	%
Total	$	1,264,958	100.0	%	$	1,124,100	100.0	%	$	140,858		12.5	%

	Nine Months Ended
(dollars in thousands)	3/31/2019				3/31/2018				$ Change			% Change
Cost-plus-fee	$	2,003,204	55.5	%	$	1,662,066	50.4	%	$	341,138		20.5	%
Firm fixed price		1,055,384	29.2	%		1,091,152	33.1	%		(35,768	)	-3.3	%
Time and materials		553,875	15.3	%		544,556	16.5	%		9,319		1.7	%
Total	$	3,612,463	100.0	%	$	3,297,774	100.0	%	$	314,689		9.5	%

Revenue Generated as a Prime versus Subcontractor (Unaudited)
	Quarter Ended
(dollars in thousands)	3/31/2019				3/31/2018				$ Change			% Change
Prime contractor	$	1,153,599	91.2	%	$	1,049,584	93.4	%	$	104,015		9.9	%
Subcontractor		111,359	8.8	%		74,516	6.6	%		36,843		49.4	%
Total	$	1,264,958	100.0	%	$	1,124,100	100.0	%	$	140,858		12.5	%

	Nine Months Ended
(dollars in thousands)	3/31/2019				3/31/2018				$ Change			% Change
Prime contractor	$	3,335,427	92.3	%	$	3,076,503	93.3	%	$	258,924		8.4	%
Subcontractor		277,036	7.7	%		221,271	6.7	%		55,765		25.2	%
Total	$	3,612,463	100.0	%	$	3,297,774	100.0	%	$	314,689		9.5	%


Selected Financial Data (Continued)

Contract Awards Received (Unaudited)
	Quarter Ended
(dollars in thousands)	3/31/2019		3/31/2018		$ Change		% Change
Contract Awards	$	2,665,317	$	1,364,660	$	1,300,657	95.3	%
	Nine Months Ended
(dollars in thousands)	3/31/2019		3/31/2018		$ Change		% Change
Contract Awards	$	6,512,352	$	3,690,132	$	2,822,220	76.5	%


Contract Funding Orders Received (Unaudited)
	Quarter Ended
(dollars in thousands)	3/31/2019		3/31/2018		$ Change		% Change
Contract Funding Orders	$	1,658,024	$	1,099,394	$	558,629	50.8	%
	Nine Months Ended
(dollars in thousands)	3/31/2019		3/31/2018		$ Change		% Change
Contract Funding Orders	$	4,342,517	$	3,322,097	$	1,020,420	30.7	%

Reconciliation of Net Cash Provided by Operating Activities to

Net Cash Provided by Operating Activities Excluding MARPA
Facility

(Unaudited)

The Company defines net cash provided by operating activities
excluding CACI’s Master Accounts Receivable Purchase Agreement
(MARPA facility) as net cash provided by operating activities
calculated in accordance with GAAP, adjusted to exclude net cash
received from CACI’s MARPA facility for the sale of certain
designated eligible U.S. government receivables. Under the MARPA
facility, the Company can sell eligible receivables, including
certain billed and unbilled receivables up to a maximum amount of
$200.0 million. The Company uses net cash provided by operating
activities excluding MARPA facility to allow investors to more
easily compare current period results to prior period results and to
results of our peers. This non-GAAP measure should not be considered
in isolation or as a substitute for performance measures prepared in
accordance with GAAP.


(dollars in thousands)	Quarter Ended 3/31/2019			Nine Months Ended 3/31/2019
Net cash provided by operating activities	$	313,301		$	452,841
Less:
Cash from MARPA facility		(200,000	)		(200,000	)
Net cash provided by operating activities excluding MARPA facility	$	113,301		$	252,841

Reconciliation of Net Income to Adjusted Earnings Before
Interest, Taxes, Depreciation

and Amortization (EBITDA)

(Unaudited)

The Company views Adjusted EBITDA and Adjusted EBITDA margin, both
of which are defined as non-GAAP measures, as important indicators
of performance, consistent with the manner in which management
measures and forecasts the Company’s performance. Adjusted EBITDA is
a commonly used non-GAAP measure when comparing our results with
those of other companies. We define Adjusted EBITDA as GAAP net
income plus net interest expense, income taxes, depreciation and
amortization, and earnout adjustments. We consider Adjusted EBITDA
to be a useful metric for management and investors to evaluate and
compare the ongoing operating performance of our business on a
consistent basis across reporting periods, as it eliminates the
effect of non-cash items such as depreciation of tangible assets,
amortization of intangible assets primarily recognized in business
combinations, as well as the effect of earnout gains and losses,
which we do not believe are indicative of our core operating
performance. Adjusted EBITDA margin is Adjusted EBITDA divided by
revenue. These non-GAAP measures should not be considered in
isolation or as a substitute for performance measures prepared in
accordance with GAAP.

	Quarter Ended								Nine Months Ended
(dollars in thousands)	3/31/2019			3/31/2018			% Change		3/31/2019			3/31/2018			% Change
Net income	$	68,145		$	64,499		5.7	%	$	215,574		$	249,340		-13.5	%
Plus:
Income taxes		13,297			29,729		-55.3	%		49,424			(21,749	)	-327.2	%
Interest income and expense, net		13,466			10,566		27.4	%		31,773			32,769		-3.0	%
Depreciation and amortization		21,198			17,717		19.6	%		58,797			53,563		9.8	%
Earnout adjustments		1,100			416		164.4	%		300			(1,597	)	-118.8	%
Adjusted EBITDA	$	117,206		$	122,927		-4.7	%	$	355,868		$	312,326		13.9	%

	Quarter Ended								Nine Months Ended
(dollars in thousands)	3/31/2019			3/31/2018			% Change		3/31/2019			3/31/2018			% Change
Revenue, as reported	$	1,264,958		$	1,124,100		12.5	%	$	3,612,463		$	3,297,774		9.5	%
Adjusted EBITDA		117,206			122,927		-4.7	%		355,868			312,326		13.9	%
Adjusted EBITDA margin		9.3	%		10.9	%				9.9	%		9.5	%

Selected Financial Data (Continued)

Reconciliation of FY18 Net Income to Non-GAAP Net Income
Assuming a

Full Year of Tax Reform

(Unaudited)

The Company views FY18 Non-GAAP Net Income Assuming a Full Year of
Tax Reform, a non-GAAP measure, as an important indicator of
performance, consistent with the manner in which management measures
and forecasts the Company’s performance. FY18 Non-GAAP Net Income
Assuming a Full Year of Tax Reform is defined as GAAP net income
excluding (1) the one-time net benefit from Tax Reform consisting of
the remeasurement of deferred taxes, partially offset by transition
tax on cumulative foreign earnings, and including (2) the
application of the new lower federal tax rate of 21% to all of FY18
as if the rate was in effect at that time. We believe that FY18
Non-GAAP Net Income Assuming a Full Year of Tax Reform is useful to
investors as it allows investors to more easily compare FY19 results
and guidance to FY18 results with a normalized tax rate. This
non-GAAP measure should not be considered in isolation or as a
substitute for performance measures prepared in accordance with GAAP.

	Q1				Q2						Q3						Q4
	9/30/2017				12/31/2017						3/31/2018						6/30/2018
(Amounts in thousands, except per share amounts)	Net Income		Diluted EPS		Net Income			Diluted EPS			Net Income			Diluted EPS			Net Income			Diluted EPS
Net income, as reported	$	42,046	$	1.67	$	142,795		$	5.66		$	64,499		$	2.56		$	51,831		$	2.05
Remeasurement of deferred taxes		–		–		(94,831	)		(3.76	)		–			–			(1,438	)		(0.06	)
Transition tax on foreign earnings		–		–		9,676			0.38			–			–			–			–
Impact of tax rate change for full year		4,853		0.19		2,347			0.10			6,737			0.26			3,716			0.15

FY18 Adjusted Net Income Assuming a Full Year of Tax Reform	$	46,899	$	1.86	$	59,987		$	2.38		$	71,236		$	2.82		$	54,109		$	2.14

	Three Months Ended				Six Months Ended						Nine Months Ended						Twelve Months Ended
	9/30/2017				12/31/2017						3/31/2018						6/30/2018
(Amounts in thousands, except per share amounts)	Net Income		Diluted EPS		Net Income			Diluted EPS			Net Income			Diluted EPS			Net Income			Diluted EPS
Net income, as reported	$	42,046	$	1.67	$	184,841		$	7.33		$	249,340		$	9.88		$	301,171		$	11.93
Remeasurement of deferred taxes		–		–		(94,831	)		(3.76	)	$	(94,831	)		(3.76	)		(96,269	)		(3.81	)
Transition tax on foreign earnings		–		–		9,676			0.38			9,676			0.38			9,676			0.38
Impact of tax rate change for full year		4,853		0.19		7,200			0.29			13,937			0.55			17,653			0.70

FY18 Adjusted Net Income Assuming a Full Year of Tax Reform	$	46,899	$	1.86	$	106,886		$	4.24		$	178,122		$	7.06		$	232,231		$	9.20

Note: Amounts may not add due to rounding

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