CACI 10-K & 10-Q changes, risk factors and insider trading

The federal government is our primary customer, with revenues from federal government contracts, either as a prime contractor or a subcontractor, accounting for 95.7%95.6% and 95.1%95.7% of our total revenues in fiscal 20252026 and 2024,2025, respectively. Specifically, we generated 75.4%53.6% and 74.4%53.5% of our total revenues in fiscal 20252026 and 2024,2025, respectively, from contracts with agencies of the DoD.Department of War (DoW). We also generated 24.6% and 25.6% of our total revenues in fiscal 2026 and 2025, respectively, from contracts with the Intelligence Community (IC). We expect that federal government contracts will continue to be the primary source of our revenues for the foreseeable future. If we were suspended or debarred from contracting with the federal government or any significant agency in the Intelligence Community (IC) or the DoD,DoW, if our reputation or relationship with government agencies was impaired, or if the government otherwise ceased doing business with us or significantly decreased the amount of business it does with us, our business, prospects, financial condition and operating results would be materially and adversely affected.

Federal government contracts contain termination rights and numerous other provisions that are unfavorable to us.

If the government terminates a contract for convenience, we may recover only our incurred or committed costs, settlement expenses, and profit on work completed prior to the termination. If the government terminates a contract for default, we may be unable to recover even those amounts and instead may be liable for excess costs incurred by the government in procuring undelivered items and services from another source. Depending on the value of a contract, such termination could cause our actual results to differ materially and adversely from those anticipated. Certain contracts also contain organizational conflict of interest (OCI) clauses that limit our ability to compete for or perform certain other contracts. OCIs arise any time we engage in activities that (i) make us unable or potentially unable to render impartial assistance or advice to the government; (ii) impair or might impair our objectivity in performing contract work; or (iii) provide us with an unfair competitive advantage. For example, when we work on the design of a particular system, we may be precluded from competing for the contract to develop and install that system. Depending upon the value of the matters affected, an OCI issue that precludes our participation in or performance of a program or contract could cause our actual results to differ materially and adversely from those anticipated.

As is common with government contractors, we have experienced and continue to experience occasional performance issues under certain of our contracts. Depending upon the value of the matters affected, a performance problem that impacts our performance of a program or contract could cause our actual results to differ materially and adversely from those anticipated.anticipated and impair our prospects for future contract awards.

We derive significant revenues from contracts and task orders awarded through a competitive bidding process. If we are unable to consistently win new awards over any extended period, or if we face significant delays due to competitor protests, our business and prospects will be adversely affected.

Our contracts and task orders with the federal government are typically awarded through a competitive bidding process. We expect that much of the business that we will seek in the foreseeable future will continue to be awarded through competitive bidding. Budgetary pressures and changes in the procurement process have caused many government customers to increasingly purchase goods and services through IDIQ contracts, GSA schedule contracts and other government-wide acquisition contracts. These contracts, some of which are awarded to multiple contractors, have increased competition and pricing pressure, requiring that we make sustained post-award efforts to realize revenues under each such contract. In addition, in consideration of the practice of agencies awarding work under such contracts that is arguably outside the intended scope of the contracts, both the GSA and the DoDDoW have initiated programs aimed to ensure that all work fits properly within the scope of the contract under which it is awarded. The net effect of such programs may reduce the number of bidding opportunities available to us. Moreover, even if we are highly qualified to work on a particular new contract, we might not be awarded business because of the federal government’s policy and practice of maintaining a diverse contracting base.

•we expend substantial cost and managerial time and effort to prepare bids and proposals for contracts that we may not win; and

•we may be unable to estimate accurately the resources and cost structure that will be required to service any contract we win; andwin.

The federal government may change its procurement practices, or adopt new contracting rules and regulations, such as thosea relatedresult of an increased focus on affordability, efficiencies, business systems and recovery of costs. Any initiatives or changes to costcurrent accountingprocurement standards.practices, Itincluding, couldbut alsonot adopt new contracting methods relatinglimited to GSAincreased contractsusage orof other government-widefixed-price contracts, adoptmultiple-award contracts, small business set-aside contracts, new socio-economic requirements, or changechanges to the basis upon which it reimburses our compensation and other expenses or otherwise limit such reimbursements.reimbursements could have adverse effects on our business. In alladdition, suchalthough cases,we therecontinue isto uncertaintyexpand surroundingour theportfolio of technology solutions, changes andto whatservice-based actualprocurement impacts theypractices may havealso onadversely contractors.affect Theseour changesperformance. As new contracting methods could be costly or administratively difficult for us to satisfy, they could impair our ability to obtain new contracts or win re-competed contracts or adversely affect our future profit margin.margin Any new contracting methods could be costly or administratively difficult for us to satisfy and, as a result,which could cause actual results to differ materially and adversely from those anticipated.

Federal government agencies, including the DCAA and the Defense Contract Management Agency (DCMA),Agency, routinely audit and investigate government contracts and government contractors’ administrative processes and systems. These agencies review our performance on contracts, pricing practices, cost structure, and compliance with applicable laws, regulations and standards. They also evaluate the adequacy of internal controls over our business systems, including our purchasing, accounting, estimating, earned value management, and government property systems. Any costs found to be improperly allocated or assigned to contracts will not be reimbursed, and any such costs already reimbursed must be refunded and certain penalties may be imposed. Moreover, if any of the administrative processes and systems are found not to comply with requirements, we may be subjected to increased government scrutiny and approval that could delay or otherwise adversely affect our ability to compete for or perform contracts or collect our revenues in a timely manner. Therefore, an unfavorable outcome of an audit by the DCAA or another government agency could cause actual results to differ materially and adversely from those anticipated. If a government investigation uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeitures of profits, suspension of payments, fines, and suspension or debarment from doing business with the federal government. In addition, we could suffer serious reputational harm if allegations of impropriety were made against us. Each of these results could cause actual results to differ materially and adversely from those anticipated.

We may not receiverealize the full amountsvalue authorized underof the contracts included in our backlog, which could reducecause our future revenues inand futureoperating periodsresults belowto thediffer levelsmaterially from those anticipated.

Our total backlog consists of funded and unfunded amounts. Funded backlog represents contractthe value of contracts for which funding has been appropriated less revenues previously recognized on these contracts. Unfunded backlog represents the estimated values that have the potential to be recognized into revenue from executed contracts for which funding has not yet been appropriated and unexercised contract options. OurBacklog backlogis not a guarantee of future revenues, and the timing or amount of work ultimately performed may notvary resultsignificantly in actual revenues in any particular period, or at all, which could causefrom our actual results to differ materially and adversely from those anticipated.estimates.

Our continued success depends to a substantial degree on our ability to recruit and retain the technically skilled personnel we need to serve our customers effectively. Our business involves the development of tailored solutions for our customers, a process that relies heavily upon the expertise and services of our employees. Accordingly, our employees are our most valuable resource. Competition for skilled personnel is intense, and technology companies often experience high attrition among their skilled employees. There is a shortage of people capable of filling these positions and they are likely to remain a limited resource for the foreseeable future. Recruiting and training these personnel require substantial resources. Our failure to attract and retain technical personnel could increase our costs of performing our contractual obligations, reduce our ability to efficiently satisfy our customers’ needs, limit our ability to win new business, and cause our actual results to differ materially and adversely from those anticipated. In addition to attracting and retaining qualified technical personnel, we believe that our success will depend on the continued employment of our senior management team and its ability to generate new business and execute projects successfully. Our senior management team is very important to our business because personal reputations and individual business relationships are a critical element of obtaining and maintaining customer engagements in our industry, particularly with agencies performing classified operations. The loss of any of our senior executives could cause us to lose customer relationships or new business opportunities, which could cause actual results to differ materially and adversely from those anticipated.

We may experience an increase in the costs in our supply and labor markets due to global inflationary pressures and other various geopolitical factors. We generate a portion of our revenues through various fixed-price and multi-year government contracts which anticipate moderate increases in costs over the term of the contract. With the current pace of inflation our standard approach to moderate annual price escalations in our bids for multi-year work may be insufficient to counter inflationary cost pressures. This could result in reduced profits, or even losses, as inflation increases, particularly for fixed-priced contracts and our longer-term multi-year contracts. In the competitive environment in which we operate as a government contractor, the lack of pricing leverage and ability to renegotiate long-term, multi-year contracts could reduce our profits, disrupt our business, or otherwise materially adversely affect our results of operations.

We may lose money or generate less than anticipated profits if we do not accurately estimate the cost of an engagement which is conducted on either a fixed-price or a time-and-materials basis.

We generated 26.3% and 27.3% of our total revenues in fiscal 2025 and 2024, respectively, from fixed-price contracts. Fixed-price contracts require us to price our contracts by predicting our expenditures in advance. In addition, some of our engagements obligate us to provide ongoing maintenance and other supporting or ancillary services on a fixed-price basis or with limitations on our ability to increase prices. Many of our engagements are also on a time-and-materials basis. While these types of contracts are generally subject to less uncertainty than fixed-price contracts, to the extent that our actual labor costs are higher than the contract rates,expected, our actual results could differ materially and adversely from those anticipated.

AtWe Junegenerate 30,revenue 2025,from oura backlogmix includedof cost reimbursable, time-and-materialstime-and-materials, and fixed-price contracts.contracts, Costof reimbursable and time-and-materials contracts generally have lowerwhich profit margins than fixed-price contracts.vary. Our earnings and margins may therefore varychange materially and adversely depending on the relative mix of contract types, the costs incurred in their performance, the achievement of other performance objectives, and the stage of performance at which the right to receive fees, particularly under incentive and award fee contracts, is finally determined.

One of our key growth strategies has been to selectively pursue acquisitions. Through acquisitions, we have expanded our base of federal government customers, increased the range of solutions we offer to our customerscustomers, and deepened our penetration of existing markets and customers. We may encounter difficulty identifying and executing suitable acquisitions. To the extent that management is involved in identifying acquisition opportunities or integrating new acquisitions into our business, our management may be diverted from operating our core business. Without acquisitions, we may not grow as rapidly as we historically have grown, which could cause our actual results to differ materially and adversely from those anticipated. We may encounter other risks in executing our acquisition strategy, including:

We have substantial investments in goodwill and intangible assets as a result of prior acquisitions, and changes in future business conditions could cause these investments to become impaired, requiring substantial write-downs that would reduce our operating income.

As of June 30, 2025, goodwill accounts for $5.0 billion of our total assets. We evaluate the recoverability of goodwill amounts annually or when evidence of potential impairment exists. The annual impairment test is based on several factors requiring judgment. Principally, a decrease in expected reporting unit cash flows or changes in market conditions may indicate potential impairment of goodwill. We evaluate impairment for intangible assets with finite lives whenever events or changes in circumstances indicate that the carrying value may not be recoverable at the asset group level. If there is an impairment, we would be required to write down the amount of goodwill,goodwill and intangible assets, which would be reflected as a charge against operating income.

Our seniordebt secured credit facility (the Credit Facility), senior secured term loan (Term Loan B Facility), and senior unsecured notes (2033 Notes)instruments impose certain restrictions on our ability to take certain actions which may have an impact on our business, operating resultsresults, and financial condition.

TheWe have several debt instruments, including a senior secured credit facility (the Credit Facility,Facility), senior secured term loans (Term Loan B Facility,and Term Loan B-2), and senior unsecured notes (2033 Notes and 2033 NotesNotes-2). These debt instruments impose certain operating and financial restrictions on us and requiresrequire us to meet certain financial covenants. These restrictions may significantly limit or prohibit us from engaging in certain transactions, and include the followingincluding:

•transforming or selling certain assets currently held by us, including certain sale and lease-back transactions;

We have been in compliance with all covenants since inception of the Credit Facility, Term Loan BB, Facility,Term Loan B-2, 2033 Notes, and 2033 Notes.Notes-2.

The Credit FacilityFacility, Term Loan B, and Term Loan B FacilityB-2 provide that certain change in control events will constitute a default. The 2033 Notes and 2033 Notes-2 provide that upon the occurrence of certain change in control events accompanied by a ratings decline, the Company may be required to repurchase outstanding notes, in whole or in part, at a redemption price of 101% plus accrued and unpaid interest to the date of redemption.

We must observe laws and regulations relating to the formation, administration and performance of federal government contracts which affect how we do business with our customers and may impose added costs on our business.operations. ForThese example,laws theand Federalregulations Acquisitioncontinue Regulationto evolve, and the federal government regularly updates or expands compliance obligations in areas such as cybersecurity, supply‑chain integrity, industrial securitysecurity, regulationscost accounting, and ethical conduct. Keeping pace with these changes requires ongoing investment in compliance processes, monitoring systems, training, and internal controls, and increases the complexity and cost of themaintaining DoDcompliance andacross relatedour laws include provisions that:business.

We are a leading provider of ExpertiseTechnology and TechnologyExpertise to customers in support of national security in the intelligence, defense, and federal civilian sectors, both domestically and internationally. The demand for our ExpertiseTechnology and TechnologyExpertise is largely driven by the evolving national security and geopolitical environment, the increasingly complex network, systems, and information environments in which governments and businesses operate, and the ongoing need to stay current with emerging technologies.

We carefullyclosely followmonitor U.S. federal budget, legislativelegislative, and contracting trendsdevelopments, and activitieswe and evolveadjust our business strategies to takeaccount for these intotrends. consideration. WhileAlthough future levels of defense and non-defense spending may vary and are difficult to project,predict, we believe that there continues to be bipartisan support for defense and national security-relatedsecurity spending,programs, particularly given the heightened current global threat environment.

DependingThe on their scope, duration,scope and otherduration factors,of CRs can negatively impactaffect our business dueby to delays indelaying new program starts, delays inprograms, contract awardawards, decisions, andor other factors.customer Whendecisions. If a CR expires,expires unlesswithout the enactment of full-year appropriations billsor havean beenextension passed by Congress and signed by the President, orvia a new CR is passed and signed into law,CR, the federal government must cease operations,non-essential oroperations shutdown,(a “government shutdown”), except inwhere certaincontinuing emergencyactivities situationsare orauthorized whenby the law authorizes continued activity.law. We continuously reviewevaluate our operationsportfolio inon an attemptongoing basis to identify programsareas potentially at risk from CRs soor thatshutdowns weand canto considerdevelop appropriate contingency plans.

On May 2, 2025, the President Trump submitted the GFY26 Presidential Budget Request (PBR) to Congress,, which heldproposed holding defense spending at the GFY25 enacted level (a full-year CR) level of $893 billion. On July 4, 2025, the President Trump signed the One Big Beautiful Bill Act (OBBBA), whicha providesreconciliation bill providing additional mandatory funding above and beyondoutside the PBR.regular annual appropriations process. The OBBBA ismade aimmediately reconciliation bill, which is separate from the usual government funding legislation that Congress will still need to pass before October 1, 2025 or pass a CR. The OBBBA provides immediate funding for specified parts of the government, includingavailable approximately $156 billion in defense funding (including $25 billion for the Golden Dome initiative). When combined with the President’s GFY26 PBR, this represents growth of approximately 13% over GFY25 enacted levels for defense. In addition, the OBBBA providesand approximately $170 billion for border security and immigration. Since this is direct funding authorized by reconciliation outside the normal budget process,Because these funds willwere beauthorized through the reconciliation process, they remain available in GFY26 and beyond regardless of whether normalCongress appropriationsenacts full-year appropriations, passes a CR, or enters a CRgovernment is passed.shutdown.

We provide ExpertiseTechnology and TechnologyExpertise to government customers. We believe that the total addressable market for our offerings is sufficient to support the Company'sCompany’s plans and is expected to continue to grow over the next several years. Approximately 75%78% of our revenue comes from defense-relatedDoW and IC customers, including those in the IC, with additional revenue coming from non-defensefederal IC,civilian homelandagencies security,and commercial and other federal civilian customers.

We believe that our customers’ use of lowest price/technically acceptable (LPTA) procurements, which contributed to pricing pressures in past years, has moderated, though price still remains an important factor in procurements. We also continue to see protests of major contract awards and delays in U.S. government procurement activities. In addition, many of our federal government contracts require us to employ personnel with security clearances, specific levels of education, and specific past work experience. Depending on the level of clearance, security clearances can be difficult and time-consuming to obtainobtain, and competition for skilled personnel in the industry is intense. Additional factors that could affect U.S. government spending in our addressable market include changes in set-asides for small businesses and budgetary priorities, including efficiency initiatives like the Department of Government Efficiency, limiting, delaying, or reducing federal government spending in general.priorities.

•DoDDoW revenues include ExpertiseTechnology and TechnologyExpertise provided to various DoDDoW customers.customers, excluding those defined as part of the IC.

•Federal civilian agencies’agencies revenues primarily include ExpertiseTechnology and TechnologyExpertise provided to non-DoDnon-DoW and non-IC agencies and departments of the U.S. federal government, including intelligence agencies andthe Departments of Homeland Security, Justice, Agriculture, Health and Human Services, and State.

•Commercial and other revenues primarily include ExpertiseTechnology and TechnologyExpertise provided to U.S. state and local governments, commercial customers, and certain foreign governments and agencies through our international reportable segment.

Direct Costs. Direct costs include direct labor, subcontractor costs, materials, and other direct costs. The increase in direct costs was primarily attributable to directthe laborincrease andin subcontractor costs from organic growth on existing programs and higher materials costs.revenues. As a percentage of revenues, total direct costs were 67.6%66.8% and 67.2%67.6% for fiscal 20252026 and 2024,2025, respectively.

Indirect Costs and Selling Expenses. The increase in indirect costs and selling expenses was primarily attributable to an increase in fringe benefit expenses onand overhead costs associated with a higherlarger labor base.base and an increase in acquisition related expenses. As a percentage of revenues, indirect costs and selling expenses decreasedwere to21.0% and 21.2% for fiscal 20252026 fromand 22.5%2025, for fiscal 2024, which was primarily attributable to the synergies from the acquisitions.respectively.

Depreciation and Amortization. DepreciationThe increase in depreciation and amortization for fiscal 2025 increased compared to prior yearwas due to the amortization of intangible assets obtainedacquired throughin acquisitionsfiscal made2026 and the timing of intangible assets acquired in fiscal 2025.

Interest Expense and Other, Net. The increase in interest expense and other, net was primarily attributabledue to higher outstanding debt balances andin coststhe incurredcurrent withyear debtresulting issuances.from borrowings used to finance acquisitions.

Income Taxes. The Company’s effective income tax rate was 17.4%23.9% and 22.9%17.4% for fiscal 2026 and 2025, respectively. The effective tax rates for fiscal 2026 and 2025 were primarily driven by state income taxes offset by R&D tax credits. Additionally, the effective tax rate for fiscal 2025 and 2024, respectively. Fiscal 2025 effective tax rate benefited from a reduction in unrecognized tax benefits following our resolution of a federal income tax audit. The effective tax rate for fiscal 2024 benefited from research and development tax credits partially offset by state income taxes. See “Note 1615 – Income Taxes” in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

As of June 30, 2025,2026, the Company had total backlog of $31.4$32.0 billion, compared with $31.6$31.4 billion a year ago, aan decreaseincrease of 0.6%.1.9%. Funded backlog as of June 30, 20252026 was $4.2$5.4 billion. The total backlog consists of remaining performance obligations plus unexercised options. See “Note 56 – Revenues” in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to remaining performance obligations.

•Fixed-price contracts: This contract type provides for a fixed-price for specified ExpertiseTechnology and TechnologyExpertise and is often used when there is more certainty regarding the estimated costs to complete the contractual statement of work. Since the contractor bears the risk of cost overruns, there is higher risk and generally potential profit associated with this contract type.

As discussed further withinin “Risk Factors” in Part I, Item 1A,1A Risk Factors inof this Annual Report on Form 10-K, our earnings and margins may vary based on the mix of our contract types. We generated the following revenues by contract type for the periods presented (dollars in thousands):

Existing cash and cash equivalents and cash generated by operations are our primary sources of liquidity, as well as sales of receivables under our Master Accounts Receivable Purchase Agreement (MARPA) and available borrowings under our Creditrevolving Facility.credit Asfacility (the Revolving Facility), which permits renewable borrowings of Juneup 30,to 2025,$2,000.0 wemillion. hadThe $106.2Revolving Facility also has sub-facilities of $150.0 million infor cashsame-day swing line loan borrowings and cash$25.0 equivalents.million for stand-by letters of credit.

The Company has a $3,200.0$3,250.0 million senior secured credit facility (the Credit Facility,Facility), which consists of a $1,975.0 millionthe Revolving Facility and a $1,225.0$1,250.0 million term loan (the Term Loan. The Revolving Facility is a secured facility that permits continuously renewable borrowings and has subfacilities of $100.0 million for same-day swing line borrowings and $25.0 million for stand-by letters of credit.Loan). As of June 30, 2025,2026, $124.5the Company had $1,340.0 million wasof outstandingundrawn capacity under the Revolving Facility and no borrowings on the swing line. The Company also has Term Loan B Facilityline and 2033stand-by Notes, with a principal amountletters of $750.0 million and $1,000.0 million, respectively.credit.

See “Note 67 – Sales of Receivables” and “Note 1211 – Long-term Debt” in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

AThe summaryfollowing oftable summarizes cash flow information isfor the periods presented below (dollars in thousands):

Net cash provided by operating activities increased $49.7$339.7 million primarily due to $162.7 million in higher net income, adjustedthe fordeduction non-cashof items,domestic andR&D $48.0costs millionpursuant into lowertax incomeprovisions taxes payments, partially offsetenacted by the OBBBA, timing of milestone billings and customer payments of $141.3 million, a decrease of $11.1 million in cash provided by the Company's MARPA,collections, and other net unfavorablefavorable changes in other operating assets and liabilities.

Net cash used in investing activities increased $1,607.0$975.3 million primarily due to higher cash used infor acquisitions.

Net cash provided by (used in) financing activities increased $1,504.8$756.9 million primarily asdue ato resultan ofincrease a $1,528.3 million ofin net proceedsborrowings under our debt instruments, including the impactCredit of debt issuance costs forFacility, the Term Loan B FacilityB-2, and the 2033 Notes.Notes-2 and a decrease in stock repurchase activity.

We believe that the combination of cash and cash equivalents, internally generated funds, and available bank borrowings, and cash and cash equivalents on handborrowings will provide the required liquidity and capital resources necessary to fund on-going operations, customary capital expenditures, debt service obligations, and other working capital requirements over the next twelve months. We may in the future seek to borrow additional amounts under existing debt instruments or new debt instruments. Over the longer term, our ability to generate sufficient cash flows from operations necessary to fulfill theour obligationslong-term undercash the Credit Facility, Term Loan B Facility, 2033 Notes, and any other indebtedness we may incurrequirements will depend on our future financial performance. Our future financial performance which will be affected by many factors outside of our control, including current worldwide economic conditions andconditions, financial market conditions.conditions, and regulatory factors.

For a description of the Company’s contractual obligations related to debt, leases, and retirement plans refer to “Note 10 – Leases”, “Note 1211 – Long-term Debt”, and “Note 17 – Retirement Plans” in Part II, Item 8 of this Annual Report on Form 10-K.

We are subject to a number of reviews, investigations, claims, lawsuits, other uncertainties, and future obligations related to our business. For a discussion of these items, see “Note 19 – Legal Proceedings and Other Commitments and Contingencies” in Part II, Item 8 of this Annual Report on Form 10-K.

We believe the following accounting policies require significant judgment due to the complex nature of the underlying transactions:transactions.

We record all tangible and intangible assets acquired and liabilities assumed in a business combination at fair value as of the acquisition date, with any excess purchase consideration recorded as goodwill. For contingent purchase consideration, a liability is recognized at fair value as of the acquisition date with subsequent fair value adjustments recorded in operations. The Company uses various valuation methods,methods of income approach, including the relief-from-royalty method ofand the incomemulti-period approach,excess earnings method, to determine the fair value of acquired assets and liabilities assumed. The use of these methods requires management to make significant judgments which may include, among others, projections about expectedfuture futurerevenues, expenses, and cash flows, weighted averageweighted-average cost of capital, discount rates, royalty rates, and expected long-term growth rates. During the measurement period, not to exceed one year from the acquisition date, we may adjust provisional amounts recorded to reflect new information subsequently obtained regarding facts and circumstances that existed as of the acquisition date.

We evaluate goodwill for both of our reporting units for impairment at least annually on the first day of the fiscal fourth quarter, or whenever events or circumstances indicate that the carrying value may not be recoverable. The evaluation includes comparing the fair value of the relevant reporting unit to its respective carrying value, including goodwill, and utilizes both income and market approaches. The analysis relies on significant judgementsjudgments and assumptions about expected future cash flows, weighted averageweighted-average cost of capital, discount rates, expected long-term growth rates, and financial measures derived from observable market data of comparable public companies. During the fourth quarter of fiscal 2025,2026, we completed our annual goodwill assessment and determined that each reporting unit’s fair value significantly exceeded its carrying value.

Intangible assets with finite lives are amortized using the method that best reflects how their economic benefits are utilized or, if a pattern of economic benefits cannot be reliably determined, on a straight-line basis over their estimated useful lives, which is generally over periods ranging from one to twentytwenty-six years. Intangible assets with finite lives are assessed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable at the asset group level.

•Technology – CACI provides technology that addresses our customers’ most challenging needs. This includes agile software development using open modern architectures and DevSecOps; advanced data platformsplatforms, applications, and applicationsanalytics augmented by Artificial Intelligence (AI), Enterprise Resource Planning systems, electromagnetic spectrum capabilities, space-based sensors and ground site processors, photonics, and network modernization. CACI invests ahead of customer need with research and development to create unique and differentiated technology addressing critical national security needs.

We provide Expertise and Technology to government customers. We believe that the total addressable market for our offerings is sufficient to support the Company’s plans and is expected to continue to grow over the next several years. Approximately 77%78% of our revenue comes from defense-relatedDoD customers, including those in theand Intelligence Community (IC), customers, with additional revenue coming from non-defensefederal IC,civilian homelandagencies security,and commercial and other federal civilian agencies.customers.

Results of Operations for the Three and SixNine Months Ended DecemberMarch 31, 20252026 and 20242025

Revenues. The increase in revenues for the three and sixnine months ended DecemberMarch 31, 2025,2026, was partially attributable to organic growth of 4.5%6.8% and 5.0%,5.6%, respectively, which included new contract awards and growth on existing programs.

The following table summarizes revenues by customer type with related percentages of revenues for the three and sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively (dollars in thousands):

Direct Costs. Direct costs include direct labor, subcontractor costs, materials, and other direct costs. The increase in direct costs for the three and sixnine months ended DecemberMarch 31, 2025,2026, compared to the prior year period,periods, was primarily attributable to the increase in revenues. As a percentage of revenue, direct costs were 67.3%66.1% and 67.5%67.0% for the three and sixnine months ended DecemberMarch 31, 2025,2026, respectively, and 66.8%66.2% and 67.8%67.2% for the three and sixnine months ended DecemberMarch 31, 2024,2025, respectively.

Indirect Costs and Selling Expenses. The decreaseincrease in indirect costs and selling expenses for the three months ended DecemberMarch 31, 2025, compared to the prior year period, was primarily attributable to acquisition costs incurred in fiscal 2025 offset by increases in other indirect costs. The increase in indirect costs and selling expenses for the six months ended December 31, 2025,2026, compared to the prior year period, was primarily attributable to an increase in acquisition related expenses. The increase in indirect costs and selling expenses for the nine months ended March 31, 2026, compared to the prior year period, was primarily attributable to increases in fringe benefit expenses onand overhead costs associated with a higherlarger labor basebase, offsetacquisition-related byexpenses, aand decreaseother inindirect acquisition related expenses.costs. As a percentage of revenue, indirect costs and selling expenses were 20.9%21.7% and 20.8%21.1% for the three and sixnine months ended DecemberMarch 31, 2025,2026, respectively, and 22.2% and 21.5%21.8% for the three and sixnine months ended DecemberMarch 31, 2024,2025, respectively, driven by cost efficiencies across the Company.respectively.

Depreciation and Amortization. The increase in depreciation and amortization for the three and six months ended DecemberMarch 31, 2025,2026, compared to the prior year period, was due to the amortization of intangible assets acquired in the third quarter of fiscal 2026. The increase in depreciation and amortization for the nine months ended March 31, 2026, compared to the prior year period, was due to the timing of intangible assets acquired in fiscal 2025.

Interest Expense and Other, Net. The increase in interest expense and other, net for the three and sixnine months ended DecemberMarch 31, 2025,2026, compared to the prior year period,periods, was primarily attributabledue to higher outstanding debt balances duringin the current year offsetresulting byfrom lowerborrowings interestused rates.to finance acquisitions completed in both periods.

Income Tax Expense. The Company’s effective income tax raterates waswere 23.3%26.2% and 24.1%24.8% for the three and sixnine months ended DecemberMarch 31, 2025,2026, respectively, and 19.9%26.0% and 21.5%23.0% for the three and sixnine months ended DecemberMarch 31, 2024,2025, respectively. The effective tax rates for the three and sixnine months ended DecemberMarch 31, 20252026 and 20242025 differ from the statutory rate of 21.0% primarily due to state income taxes offset by research and development tax credits and stock-based compensation.credits.

As of DecemberMarch 31, 2025,2026, the Company had total backlog of $32.8$33.4 billion, compared to $31.8$31.4 billion a year ago, an increase of 3.1%.6.4%. Funded backlog as of DecemberMarch 31, 20252026 was $4.4$5.0 billion. The total backlog consists of remaining performance obligations (see Note 5) plus unexercised options.

The Company has a $3,250.0 million senior secured credit facility (the Credit Facility), which consists of the Revolving Facility and a $1,250.0 million term loan facility (the Term Loan). As of DecemberMarch 31, 2025,2026, therethe wereCompany nohad outstanding$1,072.0 borrowingsmillion of undrawn capacity under the Revolving Facility,Facility and no borrowings on the swing line,line and stand-by letters of credit.

Net cash usedprovided inby investingoperating activities decreasedincreased by $1,571.3$117.4 million for the sixnine months ended DecemberMarch 31, 2025,2026, compared to the sixnine months ended DecemberMarch 31, 2024,2025, primarily due to higher cashnet usedincome in acquisitions inand the priordeduction year.of domestic research and development costs pursuant to tax provisions enacted by the OBBBA.

Net cash providedused in investing activities increased by financing activities decreased by $1,464.0$1,007.8 million for the sixnine months ended DecemberMarch 31, 2025,2026, compared to the sixnine months ended DecemberMarch 31, 2024,2025, primarily due to higher proceedscash fromused borrowingsfor acquisitions in the priorcurrent year.

We believe that the combination of internally generated funds, available bank borrowings, and cash and cash equivalents on handhand, internally generated funds, and available bank borrowings will provide the required liquidity and capital resources necessary to fund on-going operations, customary capital expenditures, debt service obligations, and other working capital requirements over the next twelve months. We may in the future seek to borrow additional amounts under existing debt instruments or new debt instruments. Over the longer term, our ability to generate sufficient cash flows from operations necessary to fulfill theour long-term debt obligations under the Credit Facility, Term Loan B Facility, 2033 Notes, and any other indebtedness we may incur will depend on our future financial performance which will be affected by many factors outside of our control, including current worldwide economic conditions and financial market conditions.