ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 26-2634160 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
8283 Greensboro Drive, McLean, Virginia | 22102 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ý | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Shares Outstanding as of January 25, 2016 | ||
Class A Common Stock | 148,788,170 | |
Class B Non-Voting Common Stock | — | |
Class C Restricted Common Stock | — | |
Class E Special Voting Common Stock | — |
ITEM 1 | ||
ITEM 2 | ||
ITEM 3 | ||
ITEM 4 | ||
ITEM 1 | ||
ITEM 1A | ||
ITEM 2 | ||
ITEM 3 | ||
ITEM 4 | ||
ITEM 5 | ||
ITEM 6 |
Item 1. | Financial Statements |
BOOZ ALLEN HAMILTON HOLDING CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
December 31, 2015 | March 31, 2015 | ||||||
(Unaudited) | |||||||
(Amounts in thousands, except share and per share data) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 167,104 | $ | 207,217 | |||
Accounts receivable, net of allowance | 845,175 | 857,310 | |||||
Prepaid expenses and other current assets | 121,904 | 98,681 | |||||
Total current assets | 1,134,183 | 1,163,208 | |||||
Property and equipment, net of accumulated depreciation | 126,048 | 111,367 | |||||
Intangible assets, net of accumulated amortization | 223,026 | 219,382 | |||||
Goodwill | 1,361,550 | 1,304,231 | |||||
Other long-term assets | 121,701 | 79,305 | |||||
Total assets | $ | 2,966,508 | $ | 2,877,493 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 72,625 | $ | 57,063 | |||
Accounts payable and other accrued expenses | 432,999 | 481,815 | |||||
Accrued compensation and benefits | 242,849 | 279,239 | |||||
Other current liabilities | 45,004 | 30,877 | |||||
Total current liabilities | 793,477 | 848,994 | |||||
Long-term debt, net of current portion | 1,514,576 | 1,569,272 | |||||
Other long-term liabilities | 277,698 | 272,729 | |||||
Total liabilities | 2,585,751 | 2,690,995 | |||||
Commitments and contingencies (Note 18) | |||||||
Stockholders’ equity: | |||||||
Common stock, Class A — $0.01 par value — authorized, 600,000,000 shares; issued, 153,137,421 shares at December 31, 2015 and 150,237,675 shares at March 31, 2015; outstanding, 148,777,465 shares at December 31, 2015 and 147,238,282 shares at March 31, 2015 | 1,531 | 1,502 | |||||
Special voting common stock, Class E — $0.003 par value — authorized, 25,000,000 shares; issued and outstanding, 0 shares at December 31, 2015 and 1,851,589 shares at March 31, 2015 | — | 6 | |||||
Treasury stock, at cost — 4,359,956 shares at December 31, 2015 and 2,999,393 shares at March 31, 2015 | (106,893 | ) | (72,293 | ) | |||
Additional paid-in capital | 231,340 | 174,985 | |||||
Retained earnings | 275,356 | 104,457 | |||||
Accumulated other comprehensive loss | (20,577 | ) | (22,159 | ) | |||
Total stockholders’ equity | 380,757 | 186,498 | |||||
Total liabilities and stockholders’ equity | $ | 2,966,508 | $ | 2,877,493 |
BOOZ ALLEN HAMILTON HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||||
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(Amounts in thousands, except per share data) | (Amounts in thousands, except per share data) | ||||||||||||||
Revenue | $ | 1,307,663 | $ | 1,304,686 | $ | 3,981,421 | $ | 3,931,824 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of revenue | 630,189 | 641,541 | 1,899,376 | 1,928,967 | |||||||||||
Billable expenses | 355,401 | 366,371 | 1,097,741 | 1,064,994 | |||||||||||
General and administrative expenses | 200,809 | 176,327 | 597,611 | 524,368 | |||||||||||
Depreciation and amortization | 16,148 | 15,191 | 46,617 | 47,233 | |||||||||||
Total operating costs and expenses | 1,202,547 | 1,199,430 | 3,641,345 | 3,565,562 | |||||||||||
Operating income | 105,116 | 105,256 | 340,076 | 366,262 | |||||||||||
Interest expense | (17,762 | ) | (17,863 | ) | (52,937 | ) | (54,544 | ) | |||||||
Other, net | 555 | (777 | ) | 309 | (1,080 | ) | |||||||||
Income before income taxes | 87,909 | 86,616 | 287,448 | 310,638 | |||||||||||
Income tax (benefit) expense | (20,146 | ) | 33,809 | 58,871 | 121,432 | ||||||||||
Net income | $ | 108,055 | $ | 52,807 | $ | 228,577 | $ | 189,206 | |||||||
Earnings per common share (Note 3): | |||||||||||||||
Basic | $ | 0.72 | $ | 0.35 | $ | 1.54 | $ | 1.28 | |||||||
Diluted | $ | 0.71 | $ | 0.35 | $ | 1.51 | $ | 1.24 | |||||||
Dividends declared per share | $ | 0.13 | $ | 0.11 | $ | 0.39 | $ | 1.33 |
BOOZ ALLEN HAMILTON HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) | |||||||||||||||
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(Amounts in thousands) | (Amounts in thousands) | ||||||||||||||
Net income | $ | 108,055 | $ | 52,807 | $ | 228,577 | $ | 189,206 | |||||||
Change in postretirement plan costs, net of tax | 534 | 86 | 1,582 | 257 | |||||||||||
Comprehensive income | $ | 108,589 | $ | 52,893 | $ | 230,159 | $ | 189,463 |
BOOZ ALLEN HAMILTON HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||
Nine Months Ended December 31, | |||||||
2015 | 2014 | ||||||
(Amounts in thousands) | |||||||
Cash flows from operating activities | |||||||
Net income | $ | 228,577 | $ | 189,206 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 46,617 | 47,233 | |||||
Stock-based compensation expense | 17,809 | 19,954 | |||||
Excess tax benefits from stock-based compensation | (30,055 | ) | (48,452 | ) | |||
Amortization of debt issuance costs and loss on extinguishment | 6,276 | 9,538 | |||||
Losses on dispositions and impairments | 61 | 1,396 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | 15,885 | 73,088 | |||||
Prepaid expenses and other current assets | 16,083 | 15,008 | |||||
Other long-term assets | (54,925 | ) | 773 | ||||
Accrued compensation and benefits | (6,936 | ) | (31,390 | ) | |||
Accounts payable and other accrued expenses | (50,765 | ) | (56,419 | ) | |||
Accrued interest | 2,148 | 7,467 | |||||
Other current liabilities | 4,505 | 1,582 | |||||
Other long-term liabilities | (14,283 | ) | (926 | ) | |||
Net cash provided by operating activities | 180,997 | 228,058 | |||||
Cash flows from investing activities | |||||||
Purchases of property and equipment | (45,829 | ) | (17,466 | ) | |||
Cash paid for business acquisitions, net of cash acquired | (50,618 | ) | (23,907 | ) | |||
Net cash used in investing activities | (96,447 | ) | (41,373 | ) | |||
Cash flows from financing activities | |||||||
Net proceeds from issuance of common stock | 4,368 | 3,699 | |||||
Stock option exercises | 6,399 | 4,272 | |||||
Excess tax benefits from stock-based compensation | 30,055 | 48,452 | |||||
Repurchases of common stock | (34,600 | ) | (33,369 | ) | |||
Cash dividends paid | (57,678 | ) | (195,924 | ) | |||
Dividend equivalents paid to option holders | (31,707 | ) | (47,006 | ) | |||
Debt issuance costs | — | (8,610 | ) | ||||
Repayment of debt | (189,500 | ) | (219,188 | ) | |||
Proceeds from debt issuance | 148,000 | 198,438 | |||||
Net cash used in financing activities | (124,663 | ) | (249,236 | ) | |||
Net decrease in cash and cash equivalents | (40,113 | ) | (62,551 | ) | |||
Cash and cash equivalents––beginning of period | 207,217 | 259,994 | |||||
Cash and cash equivalents––end of period | $ | 167,104 | $ | 197,443 | |||
Supplemental disclosures of cash flow information | |||||||
Cash paid during the period for: | |||||||
Interest | $ | 40,396 | $ | 36,552 | |||
Income taxes | $ | 113,422 | $ | 114,276 | |||
Supplemental disclosures of non-cash investing and financing activities | |||||||
Assets acquired under capital lease | $ | 6,800 | $ | — |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Earnings for basic computations (1) | $ | 106,548 | $ | 52,010 | $ | 225,430 | $ | 186,275 | |||||||
Weighted-average Class A Common Stock outstanding | 147,428,588 | 146,664,977 | 146,291,184 | 144,482,223 | |||||||||||
Weighted-average Class B Non-Voting Common Stock outstanding | — | — | — | 293,071 | |||||||||||
Weighted-average Class C Restricted Common Stock outstanding | — | — | — | 504,112 | |||||||||||
Total weighted-average common shares outstanding for basic computations | 147,428,588 | 146,664,977 | 146,291,184 | 145,279,406 | |||||||||||
Earnings for diluted computations (1) | $ | 106,568 | $ | 52,025 | $ | 225,481 | $ | 186,275 | |||||||
Dilutive stock options and restricted stock | 2,472,337 | 4,014,108 | 3,210,274 | 4,960,430 | |||||||||||
Average number of common shares outstanding for diluted computations | 149,900,925 | 150,679,085 | 149,501,458 | 150,239,836 | |||||||||||
Earnings per common share | |||||||||||||||
Basic | $ | 0.72 | $ | 0.35 | $ | 1.54 | $ | 1.28 | |||||||
Diluted | $ | 0.71 | $ | 0.35 | $ | 1.51 | $ | 1.24 |
December 31, 2015 | March 31, 2015 | ||||||
Current | |||||||
Accounts receivable–billed | $ | 352,172 | $ | 318,464 | |||
Accounts receivable–unbilled | 493,163 | 539,203 | |||||
Allowance for doubtful accounts | (160 | ) | (357 | ) | |||
Accounts receivable, net | 845,175 | 857,310 | |||||
Long-term | |||||||
Unbilled receivables | 41,484 | 18,496 | |||||
Total accounts receivable, net | $ | 886,659 | $ | 875,806 |
December 31, 2015 | March 31, 2015 | ||||||
Vendor payables | $ | 188,191 | $ | 215,995 | |||
Accrued expenses | 244,808 | 265,820 | |||||
Total accounts payable and other accrued expenses | $ | 432,999 | $ | 481,815 |
December 31, 2015 | March 31, 2015 | ||||||
Bonus | $ | 56,330 | $ | 82,237 | |||
Retirement | 62,136 | 29,285 | |||||
Vacation | 97,826 | 115,657 | |||||
Stock-based compensation liability (Note 15) | 2,278 | 31,732 | |||||
Other | 24,279 | 20,328 | |||||
Total accrued compensation and benefits | $ | 242,849 | $ | 279,239 |
December 31, 2015 | March 31, 2015 | |||||||
Deferred payment obligation | $ | 80,000 | $ | 80,000 | ||||
Indemnified pre-acquisition uncertain tax positions | (21,407 | ) | (20,586 | ) | ||||
Release of indemnified pre-acquisition uncertain tax positions | 21,407 | — | ||||||
Accrued interest | 3,326 | 1,304 | ||||||
Amount recorded in the consolidated balance sheets | $ | 83,326 | $ | 60,718 |
December 31, 2015 | March 31, 2015 | ||||||||||||
Interest Rate | Outstanding Balance | Interest Rate | Outstanding Balance | ||||||||||
Term Loan A | 2.82 | % | $ | 755,145 | 2.68 | % | $ | 796,024 | |||||
Term Loan B | 3.75 | % | 832,056 | 3.75 | % | 830,311 | |||||||
Total | 1,587,201 | 1,626,335 | |||||||||||
Less: Current portion of long-term debt | (72,625 | ) | (57,063 | ) | |||||||||
Long-term debt, net of current portion | $ | 1,514,576 | $ | 1,569,272 |
December 31, 2015 | March 31, 2015 | ||||||
Income tax reserve | $ | 8,011 | $ | 58,444 | |||
Deferred rent | 63,989 | 34,732 | |||||
Deferred payment obligation | 80,000 | 59,414 | |||||
Postretirement benefit obligations | 117,379 | 111,624 | |||||
Other (1) | 8,319 | 8,515 | |||||
Total other long-term liabilities | $ | 277,698 | $ | 272,729 |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Service cost | $ | 1,426 | $ | 1,022 | $ | 4,277 | $ | 3,064 | |||||||
Interest cost | 1,126 | 892 | 3,379 | 2,676 | |||||||||||
Net actuarial loss | 884 | 145 | 2,652 | 436 | |||||||||||
Total postretirement medical expense | $ | 3,436 | $ | 2,059 | $ | 10,308 | $ | 6,176 |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Beginning of period | $ | (21,111 | ) | $ | (6,465 | ) | $ | (22,159 | ) | $ | (6,636 | ) | |||
Amounts reclassified from accumulated other comprehensive loss | 534 | 86 | 1,582 | 257 | |||||||||||
Net current-period other comprehensive loss | 534 | 86 | 1,582 | 257 | |||||||||||
End of period | $ | (20,577 | ) | $ | (6,379 | ) | $ | (20,577 | ) | $ | (6,379 | ) |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Amortization of net actuarial loss included in net periodic benefit cost (See Note 12) | |||||||||||||||
Total before tax | $ | 884 | $ | 144 | $ | 2,652 | $ | 432 | |||||||
Tax benefit | (350 | ) | (58 | ) | (1,070 | ) | (175 | ) | |||||||
Net of tax | $ | 534 | $ | 86 | $ | 1,582 | $ | 257 |
Class A Common Stock | Class B Non-Voting Common Stock | Class C Restricted Common Stock | Class E Special Voting Common Stock | Treasury Stock | ||||||||||
Balance at March 31, 2014 | 143,962,073 | 582,080 | 935,871 | 4,424,814 | 609,625 | |||||||||
Issuance of common stock | 1,365,008 | — | — | — | — | |||||||||
Stock options exercised | 3,392,643 | — | — | (2,573,225) | — | |||||||||
Share exchange (1) | 1,517,951 | (582,080) | (935,871) | — | — | |||||||||
Repurchase of common stock (2) | — | — | — | — | 2,389,768 | |||||||||
Balance at March 31, 2015 | 150,237,675 | — | — | 1,851,589 | 2,999,393 | |||||||||
Issuance of common stock | 365,986 | — | — | — | — | |||||||||
Stock options exercised (3) | 2,533,760 | — | — | (1,851,589 | ) | — | ||||||||
Repurchase of common stock (4) | — | — | — | — | 1,360,563 | |||||||||
Balance at December 31, 2015 | 153,137,421 | — | — | — | 4,359,956 |
(1) | At the annual meeting of stockholders held on July 31, 2014, the stockholders approved a proposal to amend and restate the certificate of incorporation, which had the effect of converting all issued and outstanding shares of Class B Non-Voting Common Stock and Class C Restricted Common Stock into shares of Class A Common Stock on a one-for-one basis. The conversion was effected on August 13, 2014 when the Company filed its third amended and restated certificate of incorporation with the Secretary of State of the State of Delaware. As a result of the conversion, there were no shares of Class B Non-Voting Common Stock and Class C Restricted Common Stock outstanding at such time. |
(2) | On November 5, 2014, the Company entered into an agreement with an affiliate of The Carlyle Group to repurchase 1.0 million shares of the Company's Class A Common Stock. The shares were repurchased at a price of $25.10 per |
(3) | On September 30, 2015, the Company purchased, at par value, all issued and outstanding shares of Class E special voting common stock in connection with the exercise of the final tranche of rollover options during the second quarter of fiscal 2016. |
(4) | During the first quarter of fiscal 2016, the Company purchased 1.2 million shares of the Company’s Class A Common Stock in a series of open market transactions for $30.5 million. Additionally, the Company repurchased shares on June 30, 2015 to cover the minimum statutory withholding taxes on restricted stock awards and restricted stock units that vested on June 30, 2015, and repurchased shares to cover the minimum statutory withholding taxes on accelerated restricted stock vesting for departing officers. |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Cost of revenue | $ | 954 | $ | 2,303 | $ | 3,237 | $ | 6,601 | |||||||
General and administrative expenses | 5,334 | 4,764 | 14,572 | 13,353 | |||||||||||
Total | $ | 6,288 | $ | 7,067 | $ | 17,809 | $ | 19,954 |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Equity Incentive Plan Options | $ | 792 | $ | 1,241 | $ | 2,035 | $ | 4,022 | |||||||
Class A Restricted Common Stock | 5,496 | 5,826 | 15,774 | 15,932 | |||||||||||
Total | $ | 6,288 | $ | 7,067 | $ | 17,809 | $ | 19,954 |
December 31, 2015 | ||||||
Unrecognized Compensation Cost | Weighted Average Remaining Period to be Recognized (in years) | |||||
Equity Incentive Plan Options | $ | 4,300 | 3.41 | |||
Class A Restricted Common Stock | 20,951 | 2.20 | ||||
Total | $ | 25,251 |
December 31, 2015 | March 31, 2015 | ||||||||||||||||||||||
EIP Options | Rollover Options | Total | EIP Options | Rollover Options | Total | ||||||||||||||||||
Current liability (1) | $ | 2,278 | $ | — | $ | 2,278 | $ | 3,697 | $ | 28,035 | $ | 31,732 |
Recurring Fair Value Measurements as of December 31, 2015 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Cash and cash equivalents: | |||||||||||||||
Cash and cash equivalents | $ | 32,329 | $ | — | $ | — | $ | 32,329 | |||||||
Money market funds (1) | — | 134,775 | — | 134,775 | |||||||||||
Total cash and cash equivalents | $ | 32,329 | $ | 134,775 | $ | — | $ | 167,104 | |||||||
Liabilities: | |||||||||||||||
Contingent earnout liability (2) | — | — | 4,500 | 4,500 | |||||||||||
Total liabilities | $ | — | $ | — | $ | 4,500 | $ | 4,500 |
Recurring Fair Value Measurements as of March 31, 2015 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Cash and cash equivalents: | |||||||||||||||
Cash and cash equivalents | $ | 48,942 | $ | — | $ | — | $ | 48,942 | |||||||
Money market funds (1) | — | 158,275 | — | 158,275 | |||||||||||
Total cash and cash equivalents | $ | 48,942 | $ | 158,275 | $ | — | $ | 207,217 | |||||||
Liabilities: | |||||||||||||||
Contingent earnout liability (2) | — | — | 4,500 | 4,500 | |||||||||||
Total liabilities | $ | — | $ | — | $ | 4,500 | $ | 4,500 |
Contingent Earnout Liability | |||
Balance at March 31, 2015 | $ | 4,500 | |
Issuances | — | ||
Balance at December 31, 2015 | $ | 4,500 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | "Adjusted Operating Income" represents operating income before (i) adjustments related to the amortization of intangible assets, and (ii) transaction costs, fees, losses, and expenses, including fees associated with debt prepayments. We prepare Adjusted Operating Income to eliminate the impact of items we do not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary, or non-recurring nature or because they result from an event of a similar nature. |
• | "Adjusted EBITDA" represents net income before income taxes, net interest and other expense, and depreciation and amortization and before certain other items, including transaction costs, fees, losses, and expenses, including fees associated with debt prepayments. We prepare Adjusted EBITDA to eliminate the impact of items we do not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary, or non-recurring nature or because they result from an event of a similar nature. |
• | "Adjusted Net Income" represents net income before: (i) transaction costs, fees, losses, and expenses, including fees associated with debt prepayments, (ii) adjustments related to the amortization of intangible assets, (iii) amortization or write-off of debt issuance costs and write-off of original issue discount, and (iv) any extraordinary, unusual, or non-recurring items, in each case net of the tax effect calculated using an assumed effective tax rate. We prepare Adjusted Net Income to eliminate the impact of items, net of tax, we do not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary, or non-recurring nature or because they result from an event of a similar nature. |
• | "Adjusted Diluted EPS" represents diluted EPS calculated using Adjusted Net Income as opposed to net income. Additionally, Adjusted Diluted EPS does not contemplate any adjustments to net income as required under the two-class method as disclosed in the footnotes to the financial statements. |
• | "Free Cash Flow" represents the net cash generated from operating activities less the impact of purchases of property and equipment. |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
(Amounts in thousands, except share and per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Adjusted Operating Income | |||||||||||||||
Operating Income | $ | 105,116 | $ | 105,256 | $ | 340,076 | $ | 366,262 | |||||||
Amortization of intangible assets (a) | 1,056 | 1,057 | 3,169 | 3,169 | |||||||||||
Transaction expenses (b) | — | — | — | 2,039 | |||||||||||
Adjusted Operating Income | $ | 106,172 | $ | 106,313 | $ | 343,245 | $ | 371,470 | |||||||
EBITDA & Adjusted EBITDA | |||||||||||||||
Net income | $ | 108,055 | $ | 52,807 | $ | 228,577 | $ | 189,206 | |||||||
Income tax (benefit) expense | (20,146 | ) | 33,809 | 58,871 | 121,432 | ||||||||||
Interest and other, net | 17,207 | 18,640 | 52,628 | 55,624 | |||||||||||
Depreciation and amortization | 16,148 | 15,191 | 46,617 | 47,233 | |||||||||||
EBITDA | 121,264 | 120,447 | 386,693 | 413,495 | |||||||||||
Transaction expenses (b) | — | — | — | 2,039 | |||||||||||
Adjusted EBITDA | $ | 121,264 | $ | 120,447 | $ | 386,693 | $ | 415,534 | |||||||
Adjusted Net Income | |||||||||||||||
Net income | $ | 108,055 | $ | 52,807 | $ | 228,577 | $ | 189,206 | |||||||
Amortization of intangible assets (a) | 1,056 | 1,057 | 3,169 | 3,169 | |||||||||||
Transaction expenses (b) | — | — | — | 2,039 | |||||||||||
Release of income tax reserves (c) | (47,667 | ) | — | (47,667 | ) | — | |||||||||
Amortization or write-off of debt issuance costs and write-off of original issue discount | 1,307 | 1,306 | 3,910 | 5,267 | |||||||||||
Adjustments for tax effect (d) | (945 | ) | (945 | ) | (2,832 | ) | (4,190 | ) | |||||||
Adjusted Net Income | $ | 61,806 | $ | 54,225 | $ | 185,157 | $ | 195,491 | |||||||
Adjusted Diluted Earnings Per Share | |||||||||||||||
Weighted-average number of diluted shares outstanding | 149,900,925 | 150,679,085 | 149,501,458 | 150,239,836 | |||||||||||
Adjusted Net Income Per Diluted Share (e) | $ | 0.41 | $ | 0.36 | $ | 1.24 | $ | 1.30 | |||||||
Free Cash Flow | |||||||||||||||
Net cash provided by operating activities | $ | 92,310 | $ | 27,529 | $ | 180,997 | $ | 228,058 | |||||||
Less: Purchases of property and equipment | (16,267 | ) | (8,535 | ) | (45,829 | ) | (17,466 | ) | |||||||
Free Cash Flow | $ | 76,043 | $ | 18,994 | $ | 135,168 | $ | 210,592 |
(a) | Reflects amortization of intangible assets resulting from the Acquisition of our Company by The Carlyle Group. |
(b) | Reflects debt refinancing costs incurred in connection with the refinancing transaction consummated on May 7, 2014. |
(c) | Release of pre-acquisition income tax reserves assumed by the Company in connection with the Acquisition of our Company by The Carlyle Group. |
(d) | Reflects tax effect of adjustments at an assumed marginal tax rate of 40%. |
(e) | Excludes an adjustment of approximately $1.5 million and $3.0 million of net earnings for the three and nine months ended December 31, 2015, respectively, and excludes an adjustment of approximately $0.8 million and $2.9 million of net earnings for the three and nine months ended December 31, 2014, respectively, associated with the application of the two-class method for computing diluted earnings per share. |
• | uncertainty around the timing, extent, nature and effect of Congressional and other U.S. government actions to address budgetary constraints, caps on the discretionary budget for defense non-defense departments and agencies, as established by the Bipartisan Budget Control Act 2011 and subsequently adjusted by the American Tax Payer Relief Act of 2012, the Bipartisan Budget Act of 2013 and the Bipartisan Budget Act of 2015, and the ability of Congress to determine how to allocate the available budget authority and pass appropriations bills to fund both U.S. government departments and agencies that are, and those that are not, subject to the caps; |
• | budget deficits and the growing U.S. national debt increasing pressure on the U.S. government to reduce federal spending across all federal agencies together with associated uncertainty about the size and timing of those reductions; |
• | cost cutting and efficiency initiatives, current and future budget restrictions, continued implementation of Congressionally mandated automatic spending cuts and other efforts to reduce U.S. government spending, could cause clients to reduce or delay funding for orders for services or invest appropriated funds on a less consistent or rapid basis or not at all, particularly when considering long-term initiatives and in light of uncertainty around Congressional efforts to craft a long-term agreement on the U.S. government's ability to incur indebtedness in excess of its current limits and generally in the current political environment, there is a risk that clients will not issue task orders in sufficient volume to reach current contract ceilings, alter historical patterns of contract awards, including the typical increase in the award of task orders or completion of other contract actions by the U.S. government in the period before the end of the U.S. government's fiscal year on September 30, delay requests for new proposals and contract awards, rely on short-term extensions and funding of current contracts, or reduce staffing levels and hours of operation; |
• | delays in the completion of future U.S. government’s budget processes, which have in the past and could in the future delay procurement of the products, services, and solutions we provide; |
• | changes in the relative mix of overall U.S. government spending and areas of spending growth, with lower spending on homeland security, intelligence and defense-related programs as certain overseas operations end, and continued increased spending on cyber-security, Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR), advanced analytics, technology integration and healthcare; |
• | legislative and regulatory changes to limitations on the amount of allowable executive compensation permitted under flexibly priced contracts following implementation of interim rules adopted by federal agencies pursuant to the Bipartisan Budget Act of 2013 published on June 24, 2014, which substantially further reduce the amount of allowable executive compensation under these contracts and extend these limitations to a larger segment of our executives and our entire contract base; |
• | efforts by the U.S. government to address organizational conflicts of interest and related issues and the impact of those efforts on us and our competitors; |
• | increased audit, review, investigation and general scrutiny by U.S. government agencies of government contractors' performance under U.S. government contracts and compliance with the terms of those contracts and applicable laws; |
• | the federal focus on refining the definition of “inherently governmental” work, including proposals to limit contractor access to sensitive or classified information and work assignments, which will continue to drive pockets of insourcing in various agencies, particularly in the intelligence market; |
• | negative publicity and increased scrutiny of government contractors in general, including us, relating to U.S. government expenditures for contractor services and incidents involving the mishandling of sensitive or classified information; |
• | U.S. government agencies awarding contracts on a technically acceptable/lowest cost basis, which could have a negative impact on our ability to win certain contracts; |
• | increased competition from other government contractors and market entrants seeking to take advantage of certain of the trends identified above, and industry trend towards consolidation, which may result in the emergence of companies that are better able to compete against us; |
• | cost cutting and efficiency and effectiveness efforts by U.S. civilian agencies with a focus on increased use of performance measurement, “program integrity” efforts to reduce waste, fraud and abuse in entitlement programs, and renewed focus on improving procurement practices for and interagency use of IT services, including through the use of cloud based options and data center consolidation; |
• | restrictions by the U.S. government on the ability of federal agencies to use lead system integrators, in response to cost, schedule and performance problems with large defense acquisition programs where contractors were performing the lead system integrator role; and |
• | increasingly complex requirements of the Department of Defense and the U.S. Intelligence Community, including cyber-security, managing federal health care cost growth and focus on reforming existing government regulation of various sectors of the economy, such as financial regulation and healthcare. |
• | Cost-Reimbursable Contracts. Cost-reimbursable contracts provide for the payment of allowable costs incurred during performance of the contract, up to a ceiling based on the amount that has been funded, plus a fee. As we increase or decrease our spending on allowable costs, our revenue generated on cost-reimbursable contracts will increase, up to the ceiling and funded amounts, or decrease, respectively. We generate revenue under two general types of cost-reimbursable contracts: cost-plus-fixed-fee and cost-plus-award-fee, both of which reimburse allowable costs and provide for a fee. The fee under each type of cost-reimbursable contract is generally payable upon completion of services in accordance with the terms of the contract. Cost-plus-fixed-fee contracts offer no opportunity for payment beyond the fixed fee. Cost-plus-award-fee contracts also provide for an award fee that varies within specified limits based upon the client’s assessment of our performance against a predetermined set of criteria, such as targets for factors like cost, quality, schedule, and performance. |
• | Time-and-Materials Contracts. Under a time-and-materials contract, we are paid a fixed hourly rate for each direct labor hour expended, and we are reimbursed for billable material costs and billable out-of-pocket expenses inclusive of allocable indirect costs. To the extent our actual direct labor including allocated indirect costs, and associated billable expenses decrease or increase in relation to the fixed hourly billing rates provided in the contract, we will generate more or less profit, respectively, or could incur a loss. |
• | Fixed-Price Contracts. Under a fixed-price contract, we agree to perform the specified work for a pre-determined price. To the extent our actual direct and allocated indirect costs decrease or increase |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||
2015 | 2014 | 2015 | 2014 | ||||
Cost-reimbursable (1) | 49% | 53% | 51% | 55% | |||
Time-and-materials | 27% | 25% | 26% | 26% | |||
Fixed-price (2) | 24% | 22% | 23% | 19% |
(1) | Includes both cost-plus-fixed-fee and cost-plus-award-fee contracts. |
(2) | Includes fixed-price level of effort contracts. |
• | Funded Backlog. Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts. |
• | Unfunded Backlog. Unfunded backlog represents the revenue value of orders for services under existing contracts for which funding has not been appropriated or otherwise authorized. |
• | Priced Options. Priced contract options represent 100% of the undiscounted revenue value of all future contract option periods under existing contracts that may be exercised at our clients’ option and for which funding has not been appropriated or otherwise authorized. |
As of December 31, | |||||||
2015 | 2014 | ||||||
(In millions) | |||||||
Backlog: | |||||||
Funded | $ | 2,693 | $ | 2,672 | |||
Unfunded (1) | 2,825 | 2,673 | |||||
Priced options | 6,556 | 4,714 | |||||
Total backlog | $ | 12,074 | $ | 10,059 |
(1) | Amount as of December 31, 2014 reflects a reduction by management to the revenue value of orders for services under one then existing single award ID/IQ contract the Company has had for several years, based on an established pattern of funding under this contract by the U.S. government. |
• | Cost of Revenue. Cost of revenue includes direct labor, related employee benefits, and overhead. Overhead consists of indirect costs, including indirect labor relating to infrastructure, management and administration, and other expenses. |
• | Billable Expenses. Billable expenses include direct subcontractor expenses, travel expenses, and other expenses incurred to perform on contracts. |
• | General and Administrative Expenses. General and administrative expenses include indirect labor of executive management and corporate administrative functions, marketing and bid and proposal costs, and other discretionary spending. |
• | Depreciation and Amortization. Depreciation and amortization includes the depreciation of computers, leasehold improvements, furniture and other equipment, and the amortization of internally developed software, as well as third-party software that we use internally, and of identifiable long-lived intangible assets over their estimated useful lives. |
Three Months Ended December 31, | Percent | Nine Months Ended December 31, | Percent | ||||||||||||||||||
2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||||||
Revenue | $ | 1,307,663 | $ | 1,304,686 | 0.2 | % | $ | 3,981,421 | $ | 3,931,824 | 1.3 | % | |||||||||
Operating costs and expenses: | |||||||||||||||||||||
Cost of revenue | 630,189 | 641,541 | (1.8 | )% | 1,899,376 | 1,928,967 | (1.5 | )% | |||||||||||||
Billable expenses | 355,401 | 366,371 | (3.0 | )% | 1,097,741 | 1,064,994 | 3.1 | % | |||||||||||||
General and administrative expenses | 200,809 | 176,327 | 13.9 | % | 597,611 | 524,368 | 14.0 | % | |||||||||||||
Depreciation and amortization | 16,148 | 15,191 | 6.3 | % | 46,617 | 47,233 | (1.3 | )% | |||||||||||||
Total operating costs and expenses | 1,202,547 | 1,199,430 | 0.3 | % | 3,641,345 | 3,565,562 | 2.1 | % | |||||||||||||
Operating income | 105,116 | 105,256 | (0.1 | )% | 340,076 | 366,262 | (7.1 | )% | |||||||||||||
Interest expense | (17,762 | ) | (17,863 | ) | (0.6 | )% | (52,937 | ) | (54,544 | ) | (2.9 | )% | |||||||||
Other, net | 555 | (777 | ) | (171.4 | )% | 309 | (1,080 | ) | (128.6 | )% | |||||||||||
Income before income taxes | 87,909 | 86,616 | 1.5 | % | 287,448 | 310,638 | (7.5 | )% | |||||||||||||
Income tax expense | (20,146 | ) | 33,809 | (159.6 | )% | 58,871 | 121,432 | (51.5 | )% | ||||||||||||
Net income | $ | 108,055 | $ | 52,807 | 104.6 | % | $ | 228,577 | $ | 189,206 | 20.8 | % |
• | operating expenses, including salaries; |
• | working capital requirements to fund the growth of our business; |
• | capital expenditures which primarily relate to the purchase of computers, business systems, furniture and leasehold improvements to support our operations; |
• | debt service requirements for borrowings under our senior secured loan facilities; and |
• | cash taxes to be paid. |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Recurring dividends (1) | $ | 19,408 | $ | 16,432 | $ | 57,678 | $ | 48,676 | |||||||
Special dividends (2) | — | — | — | 147,248 | |||||||||||
Dividend equivalents (3) | 28,113 | 209 | 31,707 | 47,006 | |||||||||||
Total distributions | $ | 47,521 | $ | 16,641 | $ | 89,385 | $ | 242,930 |
Nine Months Ended December 31, | |||||||
2015 | 2014 | ||||||
(Unaudited) | (Unaudited) | ||||||
(In thousands) | |||||||
Net cash provided by operating activities | $ | 180,997 | $ | 228,058 | |||
Net cash used in investing activities | (96,447 | ) | (41,373 | ) | |||
Net cash used in financing activities | (124,663 | ) | (249,236 | ) | |||
Total decrease in cash and cash equivalents | $ | (40,113 | ) | $ | (62,551 | ) |
DIC Amortization Expense | |||||||||||||||||||||
Total | 2016 | 2017 | 2018 | 2019 | 2020 | Thereafter | |||||||||||||||
(in thousands) | |||||||||||||||||||||
Term Loan A | $ | 4,702 | $ | 422 | $ | 1,621 | $ | 1,463 | $ | 1,109 | $ | 87 | $ | — | |||||||
Term Loan B | 6,296 | 407 | 1,677 | 1,752 | 1,830 | 630 | — | ||||||||||||||
Revolver | 6,331 | 462 | 1,853 | 1,853 | 1,853 | 310 | — | ||||||||||||||
Total | $ | 17,329 | $ | 1,291 | $ | 5,151 | $ | 5,068 | $ | 4,792 | $ | 1,027 | $ | — |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit Number | Description | |
2.1 | Agreement and Plan of Merger, dated as of May 15, 2008, by and among Booz Allen Hamilton Inc., Booz Allen Hamilton Holding Corporation (formerly known as Explorer Holding Corporation), Booz Allen Hamilton Investor Corporation (formerly known as Explorer Investor Corporation), Explorer Merger Sub Corporation and Booz & Company Inc. (Incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-1 (File No. 333- 167645)) | |
2.2 | Spin Off Agreement, dated as of May 15, 2008, by and among Booz Allen Hamilton Inc., Booz & Company Holdings, LLC, Booz & Company Inc., Booz & Company Intermediate I Inc. and Booz & Company Intermediate II Inc. (Incorporated by reference to Exhibit 2.2 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
2.3 | Amendment to the Agreement and Plan of Merger and the Spin Off Agreement, dated as of July 30, 2008, by and among Booz Allen Hamilton Inc., Booz Allen Hamilton Investor Corporation (formerly known as Explorer Investor Corporation), Explorer Merger Sub Corporation, Booz & Company Holdings, LLC, Booz & Company Inc., Booz & Company Intermediate I Inc. and Booz & Company Intermediate II Inc. (Incorporated by reference to Exhibit 2.3 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
3.1 | Third Amended and Restated Certificate of Incorporation of Booz Allen Hamilton Holding Corporation (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report for the period ended September 30, 2014 on Form 10-Q (File No. 001-34972)) | |
3.2 | Second Amended and Restated Bylaws of Booz Allen Hamilton Holding Corporation (Incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report for the period ended December 31, 2010 on Form 10-Q (File No. 001-34972)) | |
4.1 | Amended and Restated Stockholders Agreement (Incorporated by reference to Exhibit 10.1 to the Company’s Periodic Report on Form 8-K filed on January 30, 2015) (File No. 001-34972)) | |
4.2 | Form of Stock Certificate (Incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.1 | Management Agreement, by and among Booz Allen Hamilton Holding Corporation (formerly known as Explorer Holding Corporation), Booz Allen Hamilton Inc., and TC Group V US, LLC, dated as of July 31, 2008 (Incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.2† | Second Amended and Restated Equity Incentive Plan of Booz Allen Hamilton Holding Corporation (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report for the period ended September 30, 2014 on Form 10-Q (File No. 001-34972)) | |
10.3† | Booz Allen Hamilton Holding Corporation Officers’ Rollover Stock Plan (Incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.4† | Form of Booz Allen Hamilton Holding Corporation Rollover Stock Option Agreement (Incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.5† | Form of Stock Option Agreement under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation (Incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.6† | Form of Stock Option Agreement under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation (Incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.7† | Form of Subscription Agreement (Incorporated by reference to Exhibit 10.12 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.8† | Form of Restricted Stock Agreement for Directors under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation (Incorporated by reference to Exhibit 10.13 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.9† | Form of Restricted Stock Agreement for Employees under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation (Incorporated by reference to Exhibit 10.14 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.10† | Amended and Restated Booz Allen Hamilton Holding Corporation Annual Incentive Plan (Incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report for the period ended September 30, 2014 on Form 10-Q (File No. 001-34972)) | |
10.11† | Booz Allen Hamilton Holding Corporation Officers’ Retirement Plan (Incorporated by reference to Exhibit 10.16 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.12† | Officer’s Comprehensive Medical and Dental Choice Plans (Incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.13† | Retired Officer’s Comprehensive Medical and Dental Choice Plans (Incorporated by reference to Exhibit 10.18 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.14† | Group Variable Universal Life Insurance (Incorporated by reference to Exhibit 10.14 to the Company’s Annual Report for the year ended March 31, 2015 on Form 10-K (File No. 001-34972)) | |
10.15† | Group Personal Excess Liability Insurance (Incorporated by reference to Exhibit 10.21 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.16† | Annual Performance Bonus Program (Incorporated by reference to Exhibit 10.22 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.17† | Form of Booz Allen Hamilton Holding Corporation Director and Officer Indemnification Agreement (Incorporated by reference to Exhibit 10.23 to the Company’s Registration Statement on Form S-1 (File No. 333-167645)) | |
10.18† | Form of Stock Option Agreement under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation (Incorporated by reference to Exhibit 10.23 to the Company’s Annual Report for the year ended March 31, 2011 on Form 10-K (File No. 001-34972)) | |
10.19† | Officer Transition Policy (Incorporated by reference to Exhibit 10.24 to the Company’s Annual Report for the year ended March 31, 2011 on Form 10-K (File No. 001-34972)) | |
10.20† | Form of Stock Option Agreement under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation (Incorporated by reference to Exhibit 10.25 to the Company’s Quarterly Report for the period ended December 31, 2011 on Form 10-Q (File No. 001-34972)) | |
10.21 | Amendment No. 1 to the Amended and Restated Stockholders Agreement (Incorporated by reference to Exhibit 10.1 to the Company's Periodic Report on Form 8-K filed on June 14, 2012 (File No. 001-34972)) | |
10.22 | Credit Agreement, by and among Booz Allen Hamilton Inc., as the Borrower, the several lenders from time to time parties thereto, Bank of America, N.A., as Administrative Agent, Collateral Agent and Issuing Lender, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse Securities (USA) LLC, as Joint Lead Arrangers, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit Suisse Securities (USA) LLC, Barclays Bank PLC, Citigroup Global Markets Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc. and Sumimoto Mitsui Banking Corporation, as Joint Bookrunners, Credit Suisse Securities (USA) LLC, as Syndication Agent, Barclays Bank PLC, Citigroup Global Markets Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumimoto Mitsui Banking Corporation and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Co-Documentation Agents, dated as of July 31, 2012 (Incorporated by reference to Exhibit 10.1 to the Company’s Periodic Report on Form 8-K filed on August 1, 2012 (File No. 001-34972)) | |
10.23 | Guarantee and Collateral Agreement, among Booz Allen Hamilton Investor Corporation, Booz Allen Hamilton Inc., and the Subsidiary Guarantors party thereto, in favor of Bank of America, N.A., as Collateral Agent, dated as of July 31, 2012 (Incorporated by reference to Exhibit 10.2 to the Company’s Periodic Report on Form 8-K filed on August 1, 2012 (File No. 001-34972)) | |
10.24 | First Amendment to Credit Agreement, dated as of August 16, 2013, by and among Booz Allen Hamilton Inc., as Borrower, Booz Allen Hamilton Investor Corporation, Booz Allen Hamilton Engineering Holding Co., LLC, Booz Allen Hamilton Engineering Services, LLC, SDI Technology Corporation, ASE, Inc. and , Booz Allen Hamilton International, Inc., as Guarantors, Bank of America, N.A., as Administrative Agent, Collateral Agent and New Refinancing Tranche B Term Lender, and the other Lenders and financial institutions from time to time party thereto (Incorporated by reference to Exhibit 10.1 to the Company’s Periodic Report on Form 8-K filed on August 20, 2013 (File No. 001-34972)) | |
10.25† | Form of Employment Agreement (Incorporated by reference to Exhibit 10.27 to the Company’s Annual Report for the year ended March 31, 2014 on Form 10-K (File No. 001-34972)) | |
10.26† | Form of Restricted Stock Agreement under the Amended and Restated Equity Incentive Plan of Booz Allen Hamilton Holding Corporation (Incorporated by reference to Exhibit 10.28 to the Company’s Annual Report for the year ended March 31, 2014 on Form 10-K (File No. 001-34972)) |
10.27† | Form of Restricted Stock Unit Agreement under the Amended and Restated Equity Incentive Plan of Booz Allen Hamilton Holding Corporation (Incorporated by reference to Exhibit 10.29 to the Company’s Annual Report for the year ended March 31, 2014 on Form 10-K (File No. 001-34972)) | |
10.28 | Second Amendment to Credit Agreement, dated as of May 7, 2014, among Booz Allen Hamilton Inc., as Borrower, Booz Allen Hamilton Investor Corporation, Booz Allen Hamilton Engineering Holding Co., LLC, Booz Allen Hamilton Engineering Services, LLC, SDI Technology Corporation, ASE, Inc. and Booz Allen Hamilton International, Inc., as Guarantors, Bank of America, N.A., as Administrative Agent, Collateral Agent and Issuing Lender, and the other Lenders and financial institutions from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to the Company’s Periodic Report on Form 8-K filed on May 13, 2014 (File No. 001-34972)) | |
10.29† | Form of Restricted Stock Unit Agreement under the Second Amended and Restated Equity Incentive Plan of Booz Allen Hamilton Holding Corporation (Incorporated by reference to Exhibit 10.29 to the Company’s Quarterly Report for the period ended June 30, 2015 on Form 10-Q (File No. 001-34972)) | |
31.1 | Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer* | |
31.2 | Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer* | |
32.1 | Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350)* | |
32.2 | Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350)* | |
101 | The following materials from Booz Allen Hamilton Holding Corporation’s Quarterly Report on Form 10-Q for the three and nine months ended December 31, 2015 formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at December 31, 2015 and March 31, 2015; (ii) Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2015 and 2014; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended December 31, 2015 and 2014; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2015 and 2014; and (v) Notes to Condensed Consolidated Financial Statements. |
* | Filed electronically herewith. |
Booz Allen Hamilton Holding Corporation | ||
Registrant | ||
Date: January 27, 2016 | By: | /s/ Kevin L. Cook |
Kevin L. Cook Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |
Date: January 27, 2016 | By: | /s/ Horacio Rozanski |
Horacio Rozanski President and Chief Executive Officer (Principal Executive Officer) |
Date: January 27, 2016 | By: | /s/ Kevin L. Cook |
Kevin L. Cook Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |
Date: January 27, 2016 | By: | /s/ Horacio Rozanski |
Horacio Rozanski President and Chief Executive Officer (Principal Executive Officer) |
Date: January 27, 2016 | By: | /s/ Kevin L. Cook |
Kevin L. Cook Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Jan. 25, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Booz Allen Hamilton Holding Corp | |
Entity Central Index Key | 0001443646 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2015 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --03-31 | |
Entity Filer Category | Large Accelerated Filer | |
Common stock, Class A | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 148,788,170 | |
Non-voting common stock, Class B | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 0 | |
Restricted common stock, Class C | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 0 | |
Special voting common stock, Class E | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 0 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2015 |
Mar. 31, 2015 |
---|---|---|
Treasury stock, shares | 4,359,956 | 2,999,393 |
Common stock, Class A | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 600,000,000 | 600,000,000 |
Common stock, shares issued | 153,137,421 | 150,237,675 |
Common stock, shares outstanding | 148,777,465 | 147,238,282 |
Special voting common stock, Class E | ||
Common stock, par value | $ 0.003 | $ 0.003 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 0 | 1,851,589 |
Common stock, shares outstanding | 0 | 1,851,589 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Statement [Abstract] | ||||
Revenue | $ 1,307,663 | $ 1,304,686 | $ 3,981,421 | $ 3,931,824 |
Operating costs and expenses: | ||||
Cost of revenue | 630,189 | 641,541 | 1,899,376 | 1,928,967 |
Billable expenses | 355,401 | 366,371 | 1,097,741 | 1,064,994 |
General and administrative expenses | 200,809 | 176,327 | 597,611 | 524,368 |
Depreciation and amortization | 16,148 | 15,191 | 46,617 | 47,233 |
Total operating costs and expenses | 1,202,547 | 1,199,430 | 3,641,345 | 3,565,562 |
Operating income | 105,116 | 105,256 | 340,076 | 366,262 |
Interest expense | (17,762) | (17,863) | (52,937) | (54,544) |
Other, net | 555 | (777) | 309 | (1,080) |
Income before income taxes | 87,909 | 86,616 | 287,448 | 310,638 |
Income tax expense | (20,146) | 33,809 | 58,871 | 121,432 |
Net income | $ 108,055 | $ 52,807 | $ 228,577 | $ 189,206 |
Earnings per common share (Note 3): | ||||
Basic (in dollars per share) | $ 0.72 | $ 0.35 | $ 1.54 | $ 1.28 |
Diluted (in dollars per share) | 0.71 | 0.35 | 1.51 | 1.24 |
Dividends declared per share | $ 0.13 | $ 0.11 | $ 0.39 | $ 1.33 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
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Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 108,055 | $ 52,807 | $ 228,577 | $ 189,206 |
Change in postretirement plan costs, net of tax | 534 | 86 | 1,582 | 257 |
Comprehensive income | $ 108,589 | $ 52,893 | $ 230,159 | $ 189,463 |
Business Overview |
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Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS OVERVIEW | BUSINESS OVERVIEW Organization Booz Allen Hamilton Holding Corporation, including its wholly owned subsidiaries, or Holding or the Company, is an affiliate of The Carlyle Group, or Carlyle, and was incorporated in Delaware in May 2008. The Company provides management consulting, technology, and engineering services to the U.S. government in the defense, intelligence, and civil markets. Additionally, the Company provides its management and technology consulting services to major corporations, institutions, not-for-profit organizations, and international clients. The Company reports operating results and financial data in one operating segment. The Company is headquartered in McLean, Virginia, with approximately 22,600 employees as of December 31, 2015. |
Basis of Presentation |
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Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The Company prepared the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q, or Quarterly Report, in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. As a result, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The Company followed the accounting policies used and disclosed in the consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2015 filed with the Securities and Exchange Commission on May 21, 2015, or Annual Report, and policies stated within this Quarterly Report. The Company’s fiscal year ends on March 31 and unless otherwise noted, references to fiscal year or fiscal are for fiscal years ended March 31. The interim financial information in this Quarterly Report reflects all adjustments, consisting of normal recurring adjustments except as otherwise disclosed, necessary for a fair presentation of the Company’s results of operations for the interim periods. The results of operations for the nine months ended December 31, 2015 are not necessarily indicative of results to be expected for the full fiscal year. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Areas of the financial statements where estimates may have the most significant effect include contractual and regulatory reserves, valuation and lives of tangible and intangible assets, contingent consideration related to business acquisitions, impairment of long-lived assets, accrued liabilities, revenue recognition, bonus and other incentive compensation, stock-based compensation, realization of deferred tax assets, provisions for income taxes, and postretirement obligations. Actual results experienced by the Company may differ materially from management's estimates. Recent Accounting Pronouncements In May 2014, the FASB issued a new standard that will replace existing revenue recognition standards and significantly expand the disclosure requirements for revenue arrangements. In July 2015, the FASB approved a one-year delay in the effective date of the standard to January 1, 2018, with an option that would permit companies to adopt the standard as early as the original effective date. Early adoption prior to the effective date is not permitted. With the one-year delay enacted, the new standard will be effective for the Company beginning on April 1, 2018 (i.e., beginning with the first quarter fiscal 2019 interim financial statements). The new standard may be adopted retrospectively for all periods presented, or adopted using a modified retrospective approach. Under the retrospective approach, the fiscal 2018 and 2017 financial statements would be adjusted to reflect the effects of adopting the new standard in those periods. Under the modified retrospective approach, the new standard would only be adopted for the period beginning April 1, 2018 to new contracts and those contracts that are not yet complete at April 1, 2018, with a cumulative catch-up adjustment recorded to beginning retained earnings for existing contracts that still require performance. Management is still in the process of determining which transition method to utilize in order to adopt the new standard and still assessing what effect the adoption of this standard may have on the timing of our revenue recognition and our consolidated financial statements. Other recent accounting pronouncements issued by the FASB during the nine months ended December 31, 2015 and through the filing date did not or are not believed by management to have a material impact on the Company's present or historical condensed consolidated financial statements. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | EARNINGS PER SHARE The Company computes basic and diluted earnings per share amounts based on net income for the periods presented. The Company uses the weighted average number of common shares outstanding during the period to calculate basic earnings per share, or EPS. Diluted EPS adjusts the weighted average number of shares outstanding to include the dilutive effect of outstanding common stock options and other stock-based awards. The Company currently has outstanding shares of Class A Common Stock. On September 30, 2015, the Company purchased, at par value, all issued and outstanding shares of Class E special voting common stock in connection with the exercise of the final tranche of rollover options during the second quarter of fiscal 2016. Class E Special Voting Common Stock shares are not included in the calculation of EPS as these shares represent voting rights only and are not entitled to participate in dividends or other distributions. During fiscal 2015, the Company converted all issued and outstanding shares of Class B Non-Voting Common Stock and Class C Restricted Common Stock into shares of Class A Common Stock on a one-for-one basis. Unvested Class A Restricted Common Stock holders are entitled to participate in non-forfeitable dividends or other distributions. These unvested shares participated in the Company's dividends declared and were paid in the first, second, and third quarters of fiscal 2016 and 2015. As such, EPS is calculated using the two-class method whereby earnings are reduced by distributed earnings as well as any available undistributed earnings allocable to holders of unvested restricted shares. A reconciliation of the income used to compute basic and diluted EPS for the periods presented are as follows:
(1) During the three months ended December 31, 2015 and 2014, approximately 2.1 million and 2.2 million participating securities were paid dividends totaling $0.3 million and $0.3 million, respectively. During the nine months ended December 31, 2015 and 2014, approximately 2.1 million and 2.2 million participating securities were paid dividends totaling $0.7 million and $2.9 million, respectively. For the three and nine months ended December 31, 2015 there were undistributed earnings of $1.3 million and $2.4 million respectively, allocated to the participating class of securities in basic earnings per share, and $1.2 million and $2.3 million, respectively, to diluted earnings per share. For the three months ended December 31, 2014 there were undistributed earnings of $0.6 million allocated to the participating class of securities in basic earnings per share, and $0.5 million to diluted earnings per share. The allocated undistributed earnings and the dividends paid comprise the difference between net income presented on the condensed consolidated statements of operations and earnings for basic and diluted computations for the three and nine months ended December 31, 2015, and the three months ended December 31, 2014, while only the dividends paid comprise the difference in net income for the nine months ended December 31, 2014, as there were no undistributed earnings. The EPS calculation for the three and nine months ended December 31, 2015 excludes 0.5 million and 0.6 million options, respectively, as their impact was anti-dilutive. The EPS calculation for the three and nine months ended December 31, 2014 excludes 0.1 million and 0.3 million options, respectively, as their impact was anti-dilutive. |
Goodwill |
9 Months Ended |
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Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL On October 31, 2015, the Company acquired the software services unit of SPARC, LLC, a Charleston, SC software development firm for a preliminary purchase price per the agreement of $53 million, subject to finalizing the working capital adjustments. Pursuant to the terms of the agreement, the acquisition was accounted for using the purchase method of accounting which requires the total purchase price consideration to be allocated to the assets acquired and liabilities assumed based on estimates of their estimated fair values. The excess of purchase consideration over the amounts assigned to tangible and intangible assets acquired and liabilities assumed, based on the preliminary purchase price allocation of $35.1 million, was recognized as goodwill. As part of the acquisition the Company also acquired a capital lease. The lease is valued at $6.8 million and is included within other current liabilities on the condensed consolidated balance sheet. As of December 31, 2015 and March 31, 2015, goodwill was $1,361.6 million and $1,304.2 million, respectively. The increase in the carrying amount of goodwill is primarily attributable to the preliminary purchase price allocation associated with the acquisition of the software services unit of SPARC, LLC. In addition, during the third quarter, the Company released $50.9 million of uncertain tax positions associated with the acquisition of the Company by the Carlyle Group in July 2008, or the Acquisition. Of the $50.9 million, $21.4 million were tax related indemnification assets that offset the deferred payment obligation, with a corresponding adjustment to goodwill. See Note 8 and Note 10 for further information. |
Accounts Receivable, Net |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS RECEIVABLE, NET | ACCOUNTS RECEIVABLE, NET Accounts receivable, net consisted of the following:
Unbilled amounts represent sales for which billings have not been presented to customers at quarter-end or year-end. These amounts are usually billed and collected within one year. Long-term unbilled receivables not anticipated to be billed and collected within one year, and are primarily related to retainage, holdbacks, and long-term rate settlements to be billed at contract closeout, are included in other long-term assets as accounts receivable in the accompanying condensed consolidated balance sheets. The Company recognized a provision (benefit) for doubtful accounts (including certain unbilled reserves) of $1.1 million and $(0.01) million for the three months ended December 31, 2015 and 2014, respectively, and $0.3 million and $(1.0) million for the nine months ended December 31, 2015 and 2014, respectively. The Company does not have material exposure to accounts receivable credit risk, because the Company's accounts receivable are primarily with the U.S. Government and its agencies. |
Accounts Payable and Other Accrued Expenses |
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ACCOUNTS PAYABLE AND OTHER ACCRUED EXPENSES | ACCOUNTS PAYABLE AND OTHER ACCRUED EXPENSES Accounts payable and other accrued expenses consisted of the following:
Accrued expenses consisted primarily of the Company’s reserve related to potential cost disallowance in conjunction with government audits. Refer to Note 18 for further discussion of this reserve. |
Accrued Compensation and Benefits |
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Compensation Related Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED COMPENSATION AND BENEFITS | ACCRUED COMPENSATION AND BENEFITS Accrued compensation and benefits consisted of the following:
As of December 31, 2015 and March 31, 2015, the Company recorded a stock-based compensation liability of $2.3 million and $31.7 million, respectively, expected to be paid within one year, related to special dividends paid in July and December 2009, June and August 2012, November 2013, and February and August 2014. Rollover options vested and not yet exercised that would have had an exercise price below zero as a result of the dividends were reduced to one cent, with the remaining reduction to be paid in cash upon exercise of the options. Payments of the special dividends to the Company's Second Amended and Restated Equity Incentive Plan, or EIP, option holders are linked to vesting. Refer to Note 15 for further discussion of the special dividends. |
Deferred Payment Obligation |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEFERRED PAYMENT OBLIGATION | 8. DEFERRED PAYMENT OBLIGATION Pursuant to an Agreement and Plan of Merger, or the Merger Agreement, dated as of May 15, 2008, and subsequently amended, The Carlyle Group indirectly acquired all of the issued and outstanding stock of the Company. In connection with this transaction, on July 31, 2008 the Company established a Deferred Payment Obligation, or DPO, of $158.0 million, payable 8.5 years after the closing date, less any settled claims. Pursuant to the Merger Agreement, $78.0 million of the $158.0 million DPO was required to be paid in full to the selling shareholders. On December 11, 2009, in connection with a recapitalization transaction, $100.4 million was paid to the selling shareholders, of which $78.0 million was the repayment of that portion of the DPO, with approximately $22.4 million representing accrued interest. The remaining $80.0 million is available to indemnify the Company for certain pre-acquisition tax contingencies, related interest and penalties, and other matters pursuant to the Merger Agreement. Any amounts remaining after the settlement of claims will be paid out to the selling shareholders. During the quarter ended December 31, 2015, the Company effectively settled approximately $50.9 million of its pre-acquisition uncertain tax positions, thereby relieving an amount of approximately $21.4 million that was previously indemnified under the DPO. As of December 31, 2015, there were no estimated indemnified amounts recorded against the DPO. A reconciliation of the principal balance of the DPO to the amount recorded in the condensed consolidated balance sheets for the periods presented are as follows:
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT Debt consisted of the following:
On May 7, 2014, the Company entered into the Second Amendment to the Credit Agreement, dated as of July 31, 2012 (as previously amended by the First Amendment to the Credit Agreement, dated as of August 16, 2013). The Credit Agreement, as amended, provides the Company with an $830.0 million Term Loan A and an $841.2 million Term Loan B, and a $500.0 million revolving credit facility, with a sublimit for letters of credit of $100.0 million. The outstanding obligations under the Credit Agreement, as amended, are secured by a security interest in substantially all of the assets of the Company, subject to certain exceptions set forth in the Credit Agreement, as amended, and related documentation. The rates for Term Loan A and Term Loan B, as amended, remain unchanged. The Second Amendment also extended the maturity date of Term Loan A and the revolving credit facility to May 31, 2019. The maturity date for Term Loan B remained unchanged at July 31, 2019. The Company also amended its existing debt covenants to provide for greater operational and financial flexibility. The Company occasionally borrows under the revolving credit facility in anticipation of cash demands. On October 29, 2015 the Company's wholly-owned subsidiary Booz Allen Hamilton Inc. accessed $93.0 million of its $500.0 million revolving credit facility to support month-end transactions and the acquisition of the software services unit of SPARC, LLC. On November 4, 2015, the Company repaid the $40.0 million borrowed from the revolving credit facility. On November 25, 2015 Booz Allen Hamilton Inc. accessed an additional $30 million from the revolving credit facility to support month-end transactions. The Company repaid $53 million on November 30, 2015 and the remaining $30 million balance on December 4, 2015. The Credit Agreement, as amended, requires quarterly principal payments of 1.25% of the stated principal amount of Term Loan A, with annual incremental increases to 1.875%, 2.50%, 3.125%, and 13.0%, prior to Term Loan A's maturity date of May 31, 2019. As a result of paying approximately $168.4 million of Term Loan B principal in connection with the Second Amendment, no additional principal payments are required until the remaining balance is due on Term Loan B's maturity date of July 31, 2019. The revolving credit facility matures on May 31, 2019, at which time any outstanding principal balance is due in full. As of December 31, 2015 and March 31, 2015, there were no amounts outstanding on the revolving credit facility. The interest rate on borrowings under Term Loan A is LIBOR plus a 2.50% spread. The spread ranges from 2.00% to 2.75% based on the Company's total leverage ratio. The interest rate on borrowings under Term Loan B is LIBOR plus a 3.0% spread with a 0.75% floor. The spread ranges from 2.00% to 3.00% based upon either an ABR or LIBOR borrowing. The revolving credit facility margin and commitment fee are subject to the leveraged based pricing grid, as set forth in the Credit Agreement, as amended. The total outstanding debt balance is recorded in the accompanying condensed consolidated balance sheets, net of unamortized discount of $11.4 million and $13.7 million as of December 31, 2015 and March 31, 2015, respectively. As of December 31, 2015 and March 31, 2015, the Company was in compliance with all of the Credit Agreement's debt covenants. |
Income Taxes |
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Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s effective income tax rate was (22.9)% and 39.0% for the three months ended December 31, 2015 and 2014, respectively, and 20.5% and 39.1% for the nine months ended December 31, 2015 and 2014, respectively. The decrease in the effective tax rate for the three and nine months ended December 31, 2015 as compared to the same period last year is primarily due to the reduction in income tax reserves for uncertain tax positions as a result of expiring statute of limitations. Based on management's conclusion that the uncertain tax positions related to the statute lapse were effectively settled, $50.9 million of tax reserves associated with pre-acquisition uncertain tax positions, which includes $3.2 million of interest and penalties that were incurred by the Company subsequent to the Acquisition, were released, which reduced the income tax provision for the three and nine months ended December 31, 2015. The three and nine months effective tax rates of (22.9)% and 20.5% differ from the statutory rate of 35.0% primarily due to the release of tax reserves, offset by the state income taxes and the effect of permanent rate differences, which primarily relate to meals and entertainment. The Company is also subject to taxes imposed by various taxing authorities including state and foreign jurisdictions. Tax years related to state and foreign jurisdictions that remain open and subject to examination are not considered to be material. Additionally, due to statute of limitations expirations and potential audit settlements, it is reasonably possible that a portion of the remaining reserves recorded on previously recognized tax benefits may be effectively settled by March 31, 2016. |
Other Long-Term Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER LONG-TERM LIABILITIES | OTHER LONG-TERM LIABILITIES Other long-term liabilities consisted of the following:
(1) Balance at December 31, 2015 and March 31, 2015 includes a contingent earnout liability of $4.5 million related to business acquisitions. Refer to Note 16 for further discussion. |
Employee Benefit Plans |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS Defined Contribution Plan The Company sponsors the Employees’ Capital Accumulation Plan, or ECAP, which is a qualified defined contribution plan that covers eligible U.S. and international employees. ECAP provides for distributions, subject to certain vesting provisions, to participants by reason of retirement, death, disability, or termination of employment. Effective April 1, 2014 the Company transitioned from a discretionary employer contribution to an annual matching contribution of up to 6% of eligible annual income as determined by the Internal Revenue Code for the ECAP. Total expense recognized under ECAP was $27.0 million and $26.2 million for the three months ended December 31, 2015 and 2014, respectively, and $81.4 million and $81.4 million for the nine months ended December 31, 2015 and 2014, respectively. The Company-paid contributions were $14.6 million and $14.9 million for the three months ended December 31, 2015 and 2014, respectively, and $46.6 million and $53.1 million for the nine months ended December 31, 2015 and 2014, respectively. Defined Benefit Plan and Other Postretirement Benefit Plans The Company maintains and administers a postretirement medical plan and a defined benefit retirement plan for current, retired, and resigned officers. The components of net postretirement medical expense for the Officer Medical Plan were as follows:
As of December 31, 2015 and March 31, 2015, the unfunded status of the post-retirement medical plan was $112.7 million and $107.3 million, respectively, which is included in other long-term liabilities in the accompanying condensed consolidated balance sheets. |
Accumulated Other Comprehensive Loss |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS All amounts recorded in other comprehensive loss are related to the Company's post-retirement plan. The following table represents a rollforward of amounts recognized in accumulated other comprehensive loss, net of tax:
The following table presents the reclassifications out of accumulated other comprehensive loss to net income:
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Stockholders' Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Common Stock The common stock shares activity consisted of the following:
For the quarterly offering period that closed on December 31, 2015, 51,157 Class A Common Stock shares were purchased by employees under the Company's Employee Stock Purchase Plan, or ESPP. Since the program's inception, 1,677,359 shares have been purchased by employees. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The following table summarizes stock-based compensation expense recognized in the condensed consolidated statements of operations:
The following table summarizes the total stock-based compensation expense recognized in the condensed consolidated statements of operations by the following types of equity awards:
As of December 31, 2015, there was $25.3 million of total unrecognized compensation cost related to unvested stock-based compensation agreements. The unrecognized compensation cost as of December 31, 2015 is expected to be fully amortized over the next 4.25 years. Absent the effect of accelerating stock compensation cost for any departures of employees who may continue to vest in their equity awards, the following table summarizes the unrecognized compensation cost and the weighted average period the cost is expected to be amortized.
Equity Incentive Plan As of December 31, 2015, there were 5,953,555 EIP options outstanding, of which 1,733,945 were unvested. Grants of Restricted Stock Units and Class A Restricted Common Stock On October 28, 2015, the Board of Directors granted 2,808 shares of Class A Restricted Common Stock to a new member of the Board of Directors. The aggregate value was estimated at $0.1 million based on the stock price of $30.30 on the grant date. On October 28, 2015, the Board of Directors granted 5,775 Restricted Stock Units to certain newly hired employees. The aggregate value was estimated at $0.2 million based on the stock price of $30.30 on the grant date. On December 15, 2015, the Board of Directors granted 35,590 Restricted Stock Units to certain newly hired and current officers. The aggregate value was estimated at $1.0 million based on the stock price of $29.50 on the grant date. Special Dividends The Compensation Committee, acting as the Administrator of the Officers' Rollover Stock Plan and the EIP have discretion in how to effect the required adjustment to keep option holders whole in the event of a distribution of dividends that trigger certain anti-dilution clauses within the respective plans. In the event the Board of Directors elects to grant option holders a cash payment equal to the amount of the special dividend, the Company accrues a stock-based compensation liability as the EIP options are scheduled to be vested. Rollover Options are fully vested; therefore the liability associated with these options was fully recorded on the condensed consolidated balance sheet. As of December 31, 2015, the rollover options were fully exercised and the liability was fully settled. Total compensation expense recorded in conjunction with the payment of the dividend equivalents to EIP option holders for the three and nine months ended December 31, 2015 was $0.1 million and $0.2 million, respectively, as compared to $0.1 million and $0.9 million recorded for the three and nine months ended December 31, 2014, respectively. Future compensation expense related to the payment of the dividend equivalents to EIP option holders not yet recognized in the statement of operations is $0.2 million and is expected to be recognized over 1.5 years. As of December 31, 2015 and March 31, 2015, the Company calculated a total recorded and unrecorded stock-based compensation liability of $3.9 million and $35.8 million, respectively, related to the special dividends paid in July and December 2009, June and August 2012, November 2013 and February and August 2014, as follows:
(1) Included in accrued compensation and benefits (Note 6). As of December 31, 2015, $1.6 million related to EIP options will be recorded as liabilities as the options vest over the next 3.25 years. As of March 31, 2015, there was an unrecorded liability of $4.1 million related to EIP options. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The accounting standard for fair value measurements establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: observable inputs such as quoted prices in active markets (Level 1); inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2); and unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions (Level 3). A financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The financial instruments measured at fair value in the accompanying consolidated balance sheets consist of the following:
The following table set forth by levels represents the Company's fair value measurements as of March 31, 2015.
(1) Level two cash and cash equivalents are invested in money market funds that are intended to maintain a stable net asset value of $1.00 per share by investing in liquid, high quality U.S. dollar-denominated money market instruments. Depending on our short-term liquidity needs, we make regular transfers between money market funds and other cash equivalents. (2) On October 9, 2014, the Company entered into a contingent consideration arrangement in connection with a business acquisition. Under the arrangement, the Company agreed to pay up to a maximum of $9 million in cash to the seller if certain financial performance thresholds are achieved in calendar years 2016 and 2017. The fair value of the contingent consideration liability as of March 31, 2015 and December 31, 2015 was $4.5 million and is a Level 3 fair value measurement recorded within other long-term liabilities. It was valued using a Monte Carlo simulation and the key input besides projected cash flows was volatility, estimated as 30% based on the asset volatility of comparable publicly-traded companies. An increase (decrease) in volatility in isolation would result in a lower (higher) fair value measurement. Since the initial recording of this liability as a part of the purchase accounting, there have been no subsequent changes in fair value recorded to-date. Any future changes in the fair value of this contingent consideration liability will be recognized in earnings during the applicable period. The fair value of the Company's debt instruments approximates its carrying value at December 31, 2015 and March 31, 2015. The fair value of debt is determined based on interest rates available for debt with terms and maturities similar to the Company's existing debt arrangements (Level 2 inputs). The following table presents a summary of changes in the fair value of the Company's contingent earnout liability categorized as Level 3 for the fiscal year ended December 31, 2015:
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Related-Party Transactions |
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Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS | RELATED-PARTY TRANSACTIONS The Carlyle Group is the largest shareholder of the Company. From time to time, and in the ordinary course of business: (1) other Carlyle portfolio companies engage the Company as a subcontractor or service provider, and (2) the Company engages other Carlyle portfolio companies as subcontractors or service providers. Revenue and cost associated with these related parties for the three months ended December 31, 2015 were $36,000 and $29,000, respectively, and $140,000 and $110,000 for the nine months ended December 31, 2015, respectively. Revenue and cost associated with these related parties for the three months ended December 31, 2014 were $312,000 and $233,000, respectively, and $961,000 and $719,000 for the nine months ended December 31, 2014, respectively. In addition, investment vehicles affiliated with The Carlyle Group participated in a lender syndicate in the Company’s outstanding debt in the amount of $41.4 million and $47.0 million at December 31, 2015 and March 31, 2015, respectively. The participation by such investment vehicles in the syndication of the Company's debt was done on an arm’s length basis. On July 31, 2008, the Company entered into a management agreement, or Management Agreement, with TC Group V US, L.L.C., or TC Group, a company affiliated with Carlyle. On June 7, 2012, TC Group assigned all of its right, title and interest in, and obligations under, the management agreement to Carlyle Investment Management L.L.C., or Carlyle Investment Management. In accordance with the Management Agreement, Carlyle Investment Management provides the Company with advisory, consulting, and other services and the Company pays Carlyle Investment Management an aggregate annual fee of $1.0 million, plus expenses. For the three months ended December 31, 2015 and 2014, the Company incurred $250,000 in advisory fees in each period. For the nine months ended December 31, 2015 and 2014, the Company incurred $750,000 in advisory fees in each period. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Leases As a result of the Acquisition, the Company assigned a total of nine leases to Booz & Co, which has subsequently changed its name to Strategy&. The Company remains liable for one lease, which expires in March 2017, for a facility located in London under the terms of the original lease should Strategy& default on its obligations. All other leases assigned to Strategy& have expired. There were no events of default under these leases as of December 31, 2015 or March 31, 2015. The maximum potential amount of undiscounted future payments is $5.5 million. Based on the Company’s assessment of the likelihood of future payment, no amounts have been recorded related to the Company’s contingent liability on such leases. Letters of Credit and Third-Party Guarantees As of December 31, 2015 and March 31, 2015, the Company was contingently liable under open standby letters of credit and bank guarantees issued by our banks in favor of third parties that totaled $5.5 million and $5.3 million, respectively. These letters of credit and bank guarantees primarily support insurance and bid and performance obligations. At December 31, 2015 and March 31, 2015, approximately $1.8 million and $5.2 million of these instruments reduce the available borrowings under the revolving credit facility. The remainder are guaranteed under a separate $5.0 million facility established in fiscal 2015 of which $1.3 million and $4.9 million, respectively, was available to the Company at December 31, 2015 and March 31, 2015. Government Contracting Matters For the three and nine months ended December 31, 2015 approximately 97%, and for the three and nine months ended December 31, 2014 approximately 97% and 98% respectively, of the Company’s revenue was generated from contracts where the end client was an agency or department of the U.S. government, including contracts where Booz Allen performed in either a prime or subcontract position, and regardless of the geographic location in which the work was performed. Contracts with the U.S. government are subject to extensive legal and regulatory requirements and, from time to time and in the ordinary course of business, agencies of the U.S. government investigate whether the Company’s operations are conducted in accordance with these requirements and the terms of the relevant contracts by using investigative techniques such as subpoenas or civil investigative demands. U.S. government investigations of the Company, whether related to the Company’s U.S. government contracts or conducted for other reasons, could result in administrative, civil, or criminal liabilities, including repayments, fines, or penalties being imposed upon the Company, or could lead to suspension or debarment from future U.S. government contracting. Management believes it has recorded the appropriate provision for any losses that may be experienced from any investigation of which it is aware. The Defense Contract Management Agency Administrative Contracting Officer has negotiated annual final indirect cost rates through fiscal year 2008. Audits of subsequent years may result in cost reductions and/or penalties. Management believes it has recorded the appropriate provision for the estimated losses that may be experienced from any such reductions and/or penalties. As of December 31, 2015 and March 31, 2015, the Company has recorded a liability of approximately $208.0 million and $205.3 million, respectively, for its current best estimate of amounts to be refunded to customers for potential adjustments from such audits or reviews of contract costs incurred subsequent to fiscal year 2008. Litigation The Company is involved in legal proceedings and investigations arising in the ordinary course of business, including those relating to employment matters, relationships with clients and contractors, intellectual property disputes, and other business matters. These legal proceedings seek various remedies, including claims for monetary damages in varying amounts, none of which are considered material, or are unspecified as to amount. Although the outcome of any such matter is inherently uncertain and may be materially adverse, based on current information, management does not expect any of the currently ongoing audits, reviews, investigations, or litigation to have a material adverse effect on the Company’s financial condition and results of operations. As of December 31, 2015, there are no material amounts accrued in the condensed consolidated financial statements related to these proceedings. Six former officers and stockholders who had departed the company prior to July 31, 2008, the date on which we became majority owned by Carlyle and certain of its affiliated investment funds, as described in the Company’s Annual Report, or the Acquisition, have filed a total of nine suits in various jurisdictions, with original filing dates ranging from July 3, 2008 through December 15, 2009, against the Company and certain of the Company’s current and former directors and officers. Three of these suits were amended on July 2, 2010 and then further amended into one consolidated complaint on September 7, 2010. Another two of the original nine suits were consolidated into one complaint on September 24, 2014. Each of the suits arises out of the Acquisition and alleges that the former stockholders are entitled to certain payments that they would have received if they had held their stock at the time of the Acquisition. Some of the suits also allege that the Acquisition price paid to stockholders was insufficient. The various suits assert claims for breach of contract, tortious interference with contract, breach of fiduciary duty, civil Racketeer Influenced and Corrupt Organizations Act, or RICO, violations, violations of the Employee Retirement Income Security Act, and/or securities and common law fraud. Three of these suits have been dismissed with all appeals exhausted. The two suits that were consolidated into one action on September 24, 2014 were settled on April 16, 2015. One of the remaining suits has been dismissed by the United States District Court for the Southern District of California and is on appeal before the United States Court of Appeals for the Ninth Circuit. The other three remaining suits that were previously consolidated on September 7, 2010 have been dismissed by the United States District Court for the Southern District of New York and have been appealed by the plaintiffs. As of December 31, 2015 and March 31, 2015, the aggregate alleged damages sought in these four remaining suits was approximately $291.7 million (which is sought to be trebled pursuant to RICO) plus punitive damages, costs, and fees. Although the outcome of any of these cases is inherently uncertain and may be materially adverse, based on current information, management does not expect them to have a material adverse effect on our financial condition and results of operations. |
Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of the income used to compute basic and diluted EPS | A reconciliation of the income used to compute basic and diluted EPS for the periods presented are as follows:
(1) During the three months ended December 31, 2015 and 2014, approximately 2.1 million and 2.2 million participating securities were paid dividends totaling $0.3 million and $0.3 million, respectively. During the nine months ended December 31, 2015 and 2014, approximately 2.1 million and 2.2 million participating securities were paid dividends totaling $0.7 million and $2.9 million, respectively. For the three and nine months ended December 31, 2015 there were undistributed earnings of $1.3 million and $2.4 million respectively, allocated to the participating class of securities in basic earnings per share, and $1.2 million and $2.3 million, respectively, to diluted earnings per share. For the three months ended December 31, 2014 there were undistributed earnings of $0.6 million allocated to the participating class of securities in basic earnings per share, and $0.5 million to diluted earnings per share. The allocated undistributed earnings and the dividends paid comprise the difference between net income presented on the condensed consolidated statements of operations and earnings for basic and diluted computations for the three and nine months ended December 31, 2015, and the three months ended December 31, 2014, while only the dividends paid comprise the difference in net income for the nine months ended December 31, 2014, as there were no undistributed earnings. |
Accounts Receivable, Net (Tables) |
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Accounts receivable, net | Accounts receivable, net consisted of the following:
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Accounts Payable and Other Accrued Expenses (Tables) |
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Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] | Accounts payable and other accrued expenses consisted of the following:
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Accrued Compensation and Benefits (Tables) |
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Accrued compensation and benefits | Accrued compensation and benefits consisted of the following:
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Deferred Payment Obligation (Tables) |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Payment Obligation [Table Text Block] | A reconciliation of the principal balance of the DPO to the amount recorded in the condensed consolidated balance sheets for the periods presented are as follows:
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt consisted of the following:
|
Other Long-Term Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Long-Term Liabilities | Other long-term liabilities consisted of the following:
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Employee Benefit Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net postretirement medical expense | The components of net postretirement medical expense for the Officer Medical Plan were as follows:
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Accumulated Other Comprehensive Loss (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accumulated other comprehensive loss | The following table represents a rollforward of amounts recognized in accumulated other comprehensive loss, net of tax:
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Reclassification out of accumulated other comprehensive loss to net income | The following table presents the reclassifications out of accumulated other comprehensive loss to net income:
|
Stockholders' Equity (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock shares activity | The common stock shares activity consisted of the following:
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Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense recognized in the condensed consolidated statements of operations | The following table summarizes stock-based compensation expense recognized in the condensed consolidated statements of operations:
The following table summarizes the total stock-based compensation expense recognized in the condensed consolidated statements of operations by the following types of equity awards:
|
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Schedule of unrecognized compensation cost | Absent the effect of accelerating stock compensation cost for any departures of employees who may continue to vest in their equity awards, the following table summarizes the unrecognized compensation cost and the weighted average period the cost is expected to be amortized.
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Recorded stock-based compensation liabilities | As of December 31, 2015 and March 31, 2015, the Company calculated a total recorded and unrecorded stock-based compensation liability of $3.9 million and $35.8 million, respectively, related to the special dividends paid in July and December 2009, June and August 2012, November 2013 and February and August 2014, as follows:
(1) Included in accrued compensation and benefits (Note 6). |
Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recurring Fair Value Measurements |
The following table set forth by levels represents the Company's fair value measurements as of March 31, 2015.
(1) Level two cash and cash equivalents are invested in money market funds that are intended to maintain a stable net asset value of $1.00 per share by investing in liquid, high quality U.S. dollar-denominated money market instruments. Depending on our short-term liquidity needs, we make regular transfers between money market funds and other cash equivalents. (2) On October 9, 2014, the Company entered into a contingent consideration arrangement in connection with a business acquisition. Under the arrangement, the Company agreed to pay up to a maximum of $9 million in cash to the seller if certain financial performance thresholds are achieved in calendar years 2016 and 2017. The fair value of the contingent consideration liability as of March 31, 2015 and December 31, 2015 was $4.5 million and is a Level 3 fair value measurement recorded within other long-term liabilities. It was valued using a Monte Carlo simulation and the key input besides projected cash flows was volatility, estimated as 30% based on the asset volatility of comparable publicly-traded companies. An increase (decrease) in volatility in isolation would result in a lower (higher) fair value measurement. Since the initial recording of this liability as a part of the purchase accounting, there have been no subsequent changes in fair value recorded to-date. Any future changes in the fair value of this contingent consideration liability will be recognized in earnings during the applicable period. |
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Summary of Changes in Fair Value of Contingent Earnout Liability, Categorized as Level 3 | The following table presents a summary of changes in the fair value of the Company's contingent earnout liability categorized as Level 3 for the fiscal year ended December 31, 2015:
|
Business Overview (Details) |
9 Months Ended |
---|---|
Dec. 31, 2015
employees
segments
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments | segments | 1 |
Number of employees | employees | 22,600 |
Goodwill (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Oct. 31, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Mar. 31, 2015 |
|
Business Acquisition [Line Items] | ||||
Goodwill | $ 1,361,550 | $ 1,304,231 | ||
Pre-acquisition uncertain tax positions | 50,900 | |||
Release of indemnified pre-acquisition uncertain tax positions | $ 21,407 | $ 0 | ||
The software services unit of SPARC, LLC | ||||
Business Acquisition [Line Items] | ||||
Preliminary purchase price per agreement | $ 53,000 | |||
Goodwill | 35,100 | |||
Capital lease obligations assumed | $ 6,800 |
Accounts Receivable, Net (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Mar. 31, 2015 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Accounts receivable-billed | $ 352,172 | $ 352,172 | $ 318,464 | ||
Allowance for doubtful accounts | (160) | (160) | (357) | ||
Accounts receivable, net, current | 845,175 | 845,175 | 857,310 | ||
Total accounts receivable, net | 886,659 | 886,659 | 875,806 | ||
Provision for doubtful accounts | 1,100 | $ (10) | 300 | $ (1,000) | |
Accounts Receivable | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Accounts receivable-unbilled | 493,163 | 493,163 | 539,203 | ||
Other Noncurrent Assets | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Accounts receivable-unbilled | $ 41,484 | $ 41,484 | $ 18,496 |
Accounts Payable and Other Accrued Expenses (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Mar. 31, 2015 |
---|---|---|
Payables and Accruals [Abstract] | ||
Vendor payables | $ 188,191 | $ 215,995 |
Accrued expenses | 244,808 | 265,820 |
Total accounts payable and other accrued expenses | $ 432,999 | $ 481,815 |
Accrued Compensation and Benefits (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Mar. 31, 2015 |
---|---|---|
Compensation Related Costs [Abstract] | ||
Bonus | $ 56,330 | $ 82,237 |
Retirement | 62,136 | 29,285 |
Vacation | 97,826 | 115,657 |
Stock-based compensation liability | 2,278 | 31,732 |
Other | 24,279 | 20,328 |
Total accrued compensation and benefits | $ 242,849 | $ 279,239 |
Deferred Payment Obligation (Details) - USD ($) $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 11, 2009 |
Jul. 31, 2008 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2015 |
Mar. 31, 2015 |
|
Other Liabilities Disclosure [Abstract] | ||||||
Deferred Payment Obligation, original amount | $ 158,000 | |||||
Deferred Payment Obligation Term | 8 years 6 months | |||||
Deferred Payment Obligation, Payment, Persuant of the Merger Agreement | $ 78,000 | |||||
Deferred Payment Obligation, Payment | 100,400 | |||||
Deferred Payment Obligation, Interest Payment | $ 22,400 | |||||
Deferred Payment Obligation | $ 80,000 | $ 80,000 | ||||
Pre-acquisition uncertain tax positions | 50,900 | |||||
Pre-acquisition Uncertain Tax Positions that May Be Indemnified Under the Remaining Available Deferred Payment Obligation | 0 | $ (21,407) | (20,586) | |||
Release of indemnified pre-acquisition uncertain tax positions | 21,407 | $ 0 | ||||
Accrued Interest on Deferred Payment Obligation | 3,326 | 1,304 | ||||
Liabilities of Business Transferred under Contractual Arrangement, Current and Noncurrent | $ 83,326 | $ 60,718 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | (22.90%) | 39.00% | 20.50% | 39.10% |
Pre-acquisition uncertain tax positions | $ 50.9 | $ 50.9 | ||
Income tax reserve, accrued penalties and interest | $ 3.2 | $ 3.2 | ||
Statutory rate | 35.00% | 35.00% |
Other Long-Term Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Mar. 31, 2015 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Income tax reserve | $ 8,011 | $ 58,444 |
Deferred rent | 63,989 | 34,732 |
Deferred payment obligation | 80,000 | 59,414 |
Postretirement benefit obligations | 117,379 | 111,624 |
Other | 8,319 | 8,515 |
Total other long-term liabilities | 277,698 | $ 272,729 |
Contingent earnout liability | $ 4,500 |
Employee Benefit Plans (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Mar. 31, 2015 |
|
Compensation and Retirement Disclosure [Abstract] | |||||
Employer Matching Contribution, Percent of Match | 6.00% | ||||
Employees’ Capital Accumulation Plan, Total expense recognized | $ 27,000 | $ 26,200 | $ 81,400 | $ 81,400 | |
Employees’ Capital Accumulation Plan, Company-paid contributions | 14,600 | 14,900 | 46,600 | 53,100 | |
Officer Medical Plan | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Service cost | 1,426 | 1,022 | 4,277 | 3,064 | |
Interest cost | 1,126 | 892 | 3,379 | 2,676 | |
Net actuarial loss | 884 | 145 | 2,652 | 436 | |
Total benefit cost | 3,436 | $ 2,059 | 10,308 | $ 6,176 | |
Defined benefit plan, unfunded status of plan | $ 112,700 | $ 112,700 | $ 107,300 |
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Equity [Abstract] | ||||
Beginning of period | $ (21,111) | $ (6,465) | $ (22,159) | $ (6,636) |
Amounts reclassified from accumulated other comprehensive loss | 534 | 86 | 1,582 | 257 |
Net current-period other comprehensive loss | 534 | 86 | 1,582 | 257 |
End of period | $ (20,577) | $ (6,379) | $ (20,577) | $ (6,379) |
Accumulated Other Comprehensive Loss (Reclassifications out of Accumulated Other Comprehensive Loss to Net Income) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | ||||
Tax benefit | $ (20,146) | $ 33,809 | $ 58,871 | $ 121,432 |
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment | ||||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total before tax | 884 | 144 | 2,652 | 432 |
Tax benefit | (350) | (58) | (1,070) | (175) |
Net of tax | $ 534 | $ 86 | $ 1,582 | $ 257 |
Stockholders' Equity (Employee Stock Purchase Plan) (Details) - shares |
3 Months Ended | 62 Months Ended |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2015 |
|
Employee Stock Purchase Plan | Common stock, Class A | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares purchased by employees under the employee stock purchase plan | 51,157 | 1,677,359 |
Stock-Based Compensation (Unrecognized Compensation) (Details) $ in Thousands |
9 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation cost related to unvested stock-based compensation agreements | $ 25,251 |
Unrecognized compensation cost, amortization period | 4 years 3 months |
EIP | Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation cost related to unvested stock-based compensation agreements | $ 4,300 |
Unrecognized compensation cost, amortization period | 3 years 4 months 27 days |
Annual Incentive Plan | Restricted stock | Common stock, Class A | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation cost related to unvested stock-based compensation agreements | $ 20,951 |
Unrecognized compensation cost, amortization period | 2 years 2 months 12 days |
Fair Value Measurements (Level 3 Rollforward) (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Mar. 31, 2015 |
|
Fair Value Disclosures [Abstract] | ||
Balance at March 31, 2015 | $ 4,500 | $ 4,500 |
Issuances | 0 | |
Balance at December 31, 2015 | $ 4,500 | $ 4,500 |
Related-Party Transactions (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Jul. 31, 2008 |
|
Related Party Transactions [Abstract] | |||||
Revenue associated with related parties | $ 36,000 | $ 312,000 | $ 140,000 | $ 961,000 | |
Cost associated with related parties | 29,000 | 233,000 | 110,000 | 719,000 | |
Lender syndicate, outstanding debt amount | 41,400,000 | 41,400,000 | |||
Management agreement, annual fee | $ 1,000,000 | ||||
Management agreement, advisory fees | $ 250,000 | $ 250,000 | $ 750,000 | $ 750,000 |
Commitments and Contingencies (Details) $ in Millions |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Dec. 31, 2015
USD ($)
leases
|
Mar. 31, 2015
USD ($)
|
Jul. 31, 2008
leases
|
|
Commitments and Contingencies Disclosure [Abstract] | |||
Number of facility leases assigned to Booz & Co | leases | 9 | ||
Number of facility leases assigned to Booz & Co., outstanding | leases | 1 | ||
Maximum potential amount of undiscounted future lease payments | $ 5.5 | ||
Contracts with U.S. government agencies or other U.S. government contractors | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 97.00% | ||
Unfavorable Regulatory Action | |||
Loss Contingencies [Line Items] | |||
Liability for reductions and/or penalties from U.S Governement audits | $ 208.0 | $ 205.3 | |
Financial Standby Letter of Credit [Member] | |||
Concentration Risk [Line Items] | |||
Guarantor Obligations, Current Carrying Value | 5.5 | 5.3 | |
Guarantor Obligations, Liquidation Proceeds, Monetary Amount | 1.8 | 5.2 | |
Guarantor Obligations, Facility | 5.0 | ||
Guarantor Obligations, Available Amount | $ 1.3 | $ 4.9 |
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