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 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
☒ | Accelerated Filer | ☐ | ||||
Non-Accelerated Filer | Smaller Reporting Company | |||||
Emerging Growth Company |
Shares Outstanding as of January 28, 2020 | ||
Class A 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, 2019 | March 31, 2019 | ||||||
(Unaudited) | |||||||
(Amounts in thousands, except share and per share data) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable, net of allowance | |||||||
Prepaid expenses and other current assets | |||||||
Total current assets | |||||||
Property and equipment, net of accumulated depreciation | |||||||
Operating lease right-of-use assets | |||||||
Intangible assets, net of accumulated amortization | |||||||
Goodwill | |||||||
Other long-term assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | $ | |||||
Accounts payable and other accrued expenses | |||||||
Accrued compensation and benefits | |||||||
Operating lease liabilities | |||||||
Other current liabilities | |||||||
Total current liabilities | |||||||
Long-term debt, net of current portion | |||||||
Operating lease liabilities, net of current portion | |||||||
Other long-term liabilities | |||||||
Total liabilities | |||||||
Commitments and contingencies (Note 19) | |||||||
Stockholders’ equity: | |||||||
Common stock, Class A — $0.01 par value — authorized, 600,000,000 shares; issued, 160,658,781 shares at December 31, 2019 and 159,924,825 shares at March 31, 2019; outstanding, 140,318,046 shares at December 31, 2019 and 140,027,853 shares at March 31, 2019 | |||||||
Treasury stock, at cost — 20,340,735 shares at December 31, 2019 and 19,896,972 shares at March 31, 2019 | ( | ) | ( | ) | |||
Additional paid-in capital | |||||||
Retained earnings | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Total stockholders’ equity | |||||||
Total liabilities and stockholders’ equity | $ | $ |
BOOZ ALLEN HAMILTON HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||||
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(Amounts in thousands, except per share data) | (Amounts in thousands, except per share data) | ||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||
Operating costs and expenses: | |||||||||||||||
Cost of revenue | |||||||||||||||
Billable expenses | |||||||||||||||
General and administrative expenses | |||||||||||||||
Depreciation and amortization | |||||||||||||||
Total operating costs and expenses | |||||||||||||||
Operating income | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other income (expense), net | ( | ) | |||||||||||||
Income before income taxes | |||||||||||||||
Income tax expense | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Earnings per common share (Note 4): | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted | $ | $ | $ | $ |
BOOZ ALLEN HAMILTON HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) | |||||||||||||||
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(Amounts in thousands) | (Amounts in thousands) | ||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Other comprehensive income, net of tax: | |||||||||||||||
Change in unrealized (loss) gain on derivatives designated as cash flow hedges | ( | ) | ( | ) | ( | ) | |||||||||
Change in postretirement plan costs | |||||||||||||||
Total other comprehensive income (loss), net of tax | ( | ) | ( | ) | ( | ) | |||||||||
Comprehensive income | $ | $ | $ | $ |
BOOZ ALLEN HAMILTON HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||
Nine Months Ended December 31, | |||||||
2019 | 2018 | ||||||
(Amounts in thousands) | |||||||
Cash flows from operating activities | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Noncash lease expense | |||||||
Stock-based compensation expense | |||||||
Amortization of debt issuance costs and loss on extinguishment | |||||||
Losses on dispositions | |||||||
Changes in assets and liabilities: | |||||||
Accounts receivable, net of allowance | ( | ) | ( | ) | |||
Deferred income taxes and income taxes receivable / payable | ( | ) | ( | ) | |||
Prepaid expenses and other current assets | ( | ) | ( | ) | |||
Other long-term assets | ( | ) | ( | ) | |||
Accrued compensation and benefits | |||||||
Accounts payable and other accrued expenses | |||||||
Other current liabilities | |||||||
Operating lease liabilities | ( | ) | |||||
Other long-term liabilities | ( | ) | |||||
Net cash provided by operating activities | |||||||
Cash flows from investing activities | |||||||
Purchases of property, equipment, and software | ( | ) | ( | ) | |||
Payments for business acquisitions, net of cash acquired | ( | ) | |||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities | |||||||
Proceeds from issuance of common stock | |||||||
Stock option exercises | |||||||
Repurchases of common stock | ( | ) | ( | ) | |||
Cash dividends paid | ( | ) | ( | ) | |||
Repayment of debt | ( | ) | ( | ) | |||
Proceeds from debt issuance | |||||||
Payment of deferred payment obligation | ( | ) | |||||
Other financing activities | ( | ) | ( | ) | |||
Net cash provided by (used in) financing activities | ( | ) | |||||
Net increase (decrease) in cash and cash equivalents | ( | ) | |||||
Cash and cash equivalents––beginning of period | |||||||
Cash and cash equivalents––end of period | $ | $ | |||||
Supplemental disclosures of cash flow information | |||||||
Net cash paid during the period for: | |||||||
Interest | $ | $ | |||||
Income taxes | $ | $ | |||||
Supplemental disclosures of non-cash investing and financing activities | |||||||
Noncash financing activities | $ | $ |
BOOZ ALLEN HAMILTON HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) | ||||||||||||||||||||||||||||||
(Amounts in thousands, except share data) | Class A Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||
Balance at September 30, 2019 | $ | ( | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
Issuance of common stock | — | — | — | — | ||||||||||||||||||||||||||
Stock options exercised | — | — | — | — | ||||||||||||||||||||||||||
Repurchase of common stock | — | — | ( | ( | ) | — | — | — | ( | ) | ||||||||||||||||||||
Recognition of liability related to future restricted stock units vesting | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | ||||||||||||||||||||||||
Dividends paid of $0.27 per common share | — | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||
Balance at December 31, 2019 | $ | ( | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
Balance at March 31, 2019 | $ | ( | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
Issuance of common stock | — | — | — | — | ||||||||||||||||||||||||||
Stock options exercised | — | — | — | — | ||||||||||||||||||||||||||
Repurchase of common stock (1) | — | — | ( | ( | ) | — | — | — | ( | ) | ||||||||||||||||||||
Recognition of liability related to future restricted stock units vesting | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||
Dividends paid of $0.73 per common share | — | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||
Balance at December 31, 2019 | $ | ( | $ | ( | ) | $ | $ | $ | ( | ) | $ |
BOOZ ALLEN HAMILTON HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) [CONTINUED] | ||||||||||||||||||||||||||||||
(Amounts in thousands, except share data) | Class A Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||
Balance at September 30, 2018 | $ | ( | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
Issuance of common stock | — | — | — | — | ||||||||||||||||||||||||||
Stock options exercised | — | — | — | — | ||||||||||||||||||||||||||
Repurchase of common stock | — | — | ( | ( | ) | — | — | — | ( | ) | ||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||
Dividends paid of $0.19 per common share | — | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||
Balance at December 31, 2018 | $ | ( | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
Balance at March 31, 2018 | $ | ( | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
Issuance of common stock | — | — | — | — | ||||||||||||||||||||||||||
Stock options exercised | — | — | — | — | ||||||||||||||||||||||||||
Repurchase of common stock (2) | — | — | ( | ( | ) | — | — | — | ( | ) | ||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||
Dividends paid of $0.57 per common share | — | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||
Balance at December 31, 2018 | $ | ( | $ | ( | ) | $ | $ | $ | ( | ) | $ |
Balance at March 31, 2019 | Adoption adjustments for Topic 842 | Balance at April 1, 2019 | |||||||||
Current assets: | |||||||||||
Prepaid expenses and other current assets | $ | $ | ( | ) | $ | ||||||
Non-current assets: | |||||||||||
Operating lease right-of-use assets | $ | — | $ | $ | |||||||
Other long-term assets | ( | ) | |||||||||
Current liabilities: | |||||||||||
Accounts payable and other accrued expenses | $ | $ | ( | ) | $ | ||||||
Operating lease liabilities | — | ||||||||||
Non-current liabilities: | |||||||||||
Operating lease liabilities, net of current portion | $ | — | $ | $ | |||||||
Other long-term liabilities | ( | ) |
• | 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 fixed fee or award fee. |
• | Time-and-Materials Contracts: Under contracts in this category, 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. We assume the financial risk on time-and-materials contracts because our costs of performance may exceed negotiated hourly rates. |
• | Fixed-Price Contracts: Under a fixed-price contract, we agree to perform the specified work for a predetermined price. To the extent our actual direct and allocated indirect costs decrease or increase from the estimates upon which the price was negotiated, we will generate more or less profit, respectively, or could incur a loss. |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
Cost-reimbursable | $ | % | $ | % | $ | % | $ | % | |||||||||||||||
Time-and-materials | % | % | % | % | |||||||||||||||||||
Fixed-price | % | % | % | % | |||||||||||||||||||
Total Revenue | $ | % | $ | % | $ | % | $ | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
U.S. government: | |||||||||||||||||||||||
Defense Clients | $ | % | $ | % | $ | % | $ | % | |||||||||||||||
Intelligence Clients | % | % | % | % | |||||||||||||||||||
Civil Clients | % | % | % | % | |||||||||||||||||||
Total U.S. government | % | % | % | % | |||||||||||||||||||
Global Commercial Clients | % | % | % | % | |||||||||||||||||||
Total Revenue | $ | % | $ | % | $ | % | $ | % |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
Prime Contractor | $ | % | $ | % | $ | % | $ | % | |||||||||||||||
Sub-contractor | % | % | % | % | |||||||||||||||||||
Total Revenue | $ | % | $ | % | $ | % | $ | % |
Balance Sheet line item | December 31, 2019 | March 31, 2019 | ||||||
Contract assets: | ||||||||
Current | Accounts receivable, net of allowance | $ | $ | |||||
Long-term | Other long-term assets | |||||||
Total | $ | $ | ||||||
Contract liabilities: | ||||||||
Advance payments, billings in excess of costs incurred and deferred revenue | Other current liabilities | $ | $ |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Earnings for basic computations (1) | $ | $ | $ | $ | |||||||||||
Weighted-average common shares outstanding for basic computations | |||||||||||||||
Earnings for diluted computations (1) | $ | $ | $ | $ | |||||||||||
Dilutive stock options and restricted stock | |||||||||||||||
Weighted-average common shares outstanding for diluted computations | |||||||||||||||
Earnings per common share | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted | $ | $ | $ | $ |
December 31, 2019 | March 31, 2019 | ||||||
Current assets | |||||||
Accounts receivable–billed | $ | $ | |||||
Accounts receivable–unbilled | |||||||
Allowance for doubtful accounts | ( | ) | ( | ) | |||
Accounts receivable, net of allowance | |||||||
Other long-term assets | |||||||
Accounts receivable–unbilled | |||||||
Total accounts receivable, net | $ | $ |
December 31, 2019 | March 31, 2019 | ||||||
Vendor payables | $ | $ | |||||
Accrued expenses | |||||||
Total accounts payable and other accrued expenses | $ | $ |
December 31, 2019 | March 31, 2019 | ||||||
Bonus | $ | $ | |||||
Retirement | |||||||
Vacation | |||||||
Other | |||||||
Total accrued compensation and benefits | $ | $ |
December 31, 2019 | March 31, 2019 | ||||||||||||
Interest Rate | Outstanding Balance | Interest Rate | Outstanding Balance | ||||||||||
Term Loan A | % | $ | % | $ | |||||||||
Term Loan B | % | % | |||||||||||
Senior Notes | % | % | |||||||||||
Less: Unamortized debt issuance costs and discount on debt | ( | ) | ( | ) | |||||||||
Total | |||||||||||||
Less: Current portion of long-term debt | ( | ) | ( | ) | |||||||||
Long-term debt, net of current portion | $ | $ |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(In thousands) | (In thousands) | ||||||||||||||
Term Loan A Interest Expense | $ | $ | $ | $ | |||||||||||
Term Loan B Interest Expense | |||||||||||||||
Interest on Revolving Credit Facility | |||||||||||||||
Senior Notes Interest Expense | |||||||||||||||
Deferred Payment Obligation Interest (1) | |||||||||||||||
Amortization of Debt Issuance Cost (DIC) and Original Issue Discount (OID) (2) | |||||||||||||||
Other | ( | ) | |||||||||||||
Total Interest Expense | $ | $ | $ | $ |
Three Months Ended December 31, | |||||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | Location of Gain or Loss Recognized in Income on Derivatives | Amount of Gain or (Loss) Recognized in AOCL on Derivatives | Amount of Gain or (Loss) Reclassified from AOCL into Income | Interest Expense on Condensed Consolidated Statements of Operations | |||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
Interest rate swaps | Interest expense | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Nine Months Ended December 31, | |||||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | Location of Gain or Loss Recognized in Income on Derivatives | Amount of Gain or (Loss) Recognized in AOCL on Derivatives | Amount of Gain or (Loss) Reclassified from AOCL into Income | Interest Expense on Condensed Consolidated Statements of Operations | |||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
Interest rate swaps | Interest expense | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Three Months Ended December 31, 2019 | Nine Months Ended December 31, 2019 | ||||||
Operating lease cost | $ | $ | |||||
Short-term lease cost | |||||||
Variable lease cost | |||||||
Total operating lease costs | $ | $ |
For the Fiscal Year Ending March 31, | Operating Lease Payments | ||
Remainder of 2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total future lease payments | |||
Less: imputed interest | ( | ) | |
Total lease liabilities | $ |
Nine Months Ended December 31, 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities | $ | ||
Operating lease liabilities arising from obtaining ROU assets (1) |
As of December 31, 2019 | ||
Weighted average remaining lease term (in years) | ||
Weighted average discount rate | % |
December 31, 2019 | March 31, 2019 | ||||||
Deferred rent (1) | $ | — | $ | ||||
Postretirement benefit obligations | |||||||
Other (2) | |||||||
Total other long-term liabilities | $ | $ |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||
Interest cost | |||||||||||||||
Net actuarial loss | |||||||||||||||
Total postretirement medical expense | $ | $ | $ | $ |
Three Months Ended December 31, 2019 | Nine Months Ended December 31, 2019 | |||||||||||||||||
Post-retirement plans | Derivatives designated as cash flow hedges | Totals | Post-retirement plans | Derivatives designated as cash flow hedges | Totals | |||||||||||||
Beginning of period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Other comprehensive income (loss) before reclassifications (1) | ( | ) | ( | ) | ||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ||||||||||||||||||
Net current-period other comprehensive income (loss) | ( | ) | ( | ) | ||||||||||||||
End of period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Three Months Ended December 31, 2018 | Nine Months Ended December 31, 2018 | |||||||||||||||||
Post-retirement plans | Derivatives designated as cash flow hedges | Totals | Post-retirement plans | Derivatives designated as cash flow hedges | Totals | |||||||||||||
Beginning of period | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||
Other comprehensive loss before reclassifications (2) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive loss | ( | ) | ( | ) | ||||||||||||||
Net current-period other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
End of period | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss: | |||||||||||||||
Post-retirement plans (Note 14): | |||||||||||||||
Amortization of net actuarial loss included in net periodic benefit cost | $ | $ | $ | $ | |||||||||||
Tax benefit (expense) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net of tax | $ | $ | $ | $ | |||||||||||
Derivatives designated as cash flow hedges (Note 10): | |||||||||||||||
Reclassification of hedge (loss) gain | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Tax benefit (expense) | ( | ) | ( | ) | |||||||||||
Net of tax | $ | $ | ( | ) | $ | $ | ( | ) |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Cost of revenue | $ | $ | $ | $ | |||||||||||
General and administrative expenses | |||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Equity Incentive Plan Options | $ | $ | $ | $ | |||||||||||
Class A Restricted Common Stock | |||||||||||||||
Total | $ | $ | $ | $ |
December 31, 2019 | ||||||
Unrecognized Compensation Cost | Weighted Average Remaining Period to be Recognized (in years) | |||||
Equity Incentive Plan Options | $ | |||||
Class A Restricted Common Stock | ||||||
Total | $ |
Recurring Fair Value Measurements as of December 31, 2019 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Long term deferred compensation costs (2) | |||||||||||||||
Total Assets | $ | $ | $ | $ | |||||||||||
Liabilities: | |||||||||||||||
Contingent consideration liability (3) | $ | $ | $ | ||||||||||||
Current derivative instruments (1) | |||||||||||||||
Long term derivative instruments (1) | |||||||||||||||
Long term deferred compensation costs (2) | |||||||||||||||
Total Liabilities | $ | $ | $ | $ |
Recurring Fair Value Measurements as of March 31, 2019 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Current derivative instruments (1) | $ | $ | $ | $ | |||||||||||
Long term derivative instruments (1) | |||||||||||||||
Long term deferred compensation costs (2) | |||||||||||||||
Total Assets | $ | $ | $ | $ | |||||||||||
Liabilities: | |||||||||||||||
Contingent consideration liability (3) | $ | $ | $ | $ | |||||||||||
Current derivative instruments (1) | |||||||||||||||
Long term derivative instruments (1) | |||||||||||||||
Long term deferred compensation costs (2) | |||||||||||||||
Total Liabilities | $ | $ | $ | $ |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | "Revenue, Excluding Billable Expenses" represents revenue less billable expenses. We use Revenue, Excluding Billable Expenses because it provides management useful information about the Company's operating performance by excluding the impact of costs that are not indicative of the level of productivity of our consulting staff headcount and our overall direct labor, which management believes provides useful information to our investors about our core operations. |
• | "Adjusted Operating Income" represents operating income before 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 before certain other items, including transaction costs, fees, losses, and expenses, including fees associated with debt prepayments. "Adjusted EBITDA Margin on Revenue" is calculated as Adjusted EBITDA divided by revenue. "Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses" is calculated as Adjusted EBITDA divided by Revenue, Excluding Billable Expenses. The Company prepares Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, and Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses to eliminate the impact of items it does 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) amortization or write-off of debt issuance costs and write-off of original issue discount, (iii) release of income tax reserves, and (iv) re-measurement of deferred tax assets and liabilities as a result of the Tax Cuts and Jobs Act (the "2017 Tax Act") in each case net of the tax effect where appropriate calculated using an assumed effective tax rate. We prepare Adjusted Net Income |
• | "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 condensed consolidated financial statements. |
• | "Free Cash Flow" represents the net cash generated from operating activities less the impact of purchases of property, equipment and software. |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
(In thousands, except share and per share data) | 2019 | 2018 | 2019 | 2018 | |||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Revenue, Excluding Billable Expenses | |||||||||||||||
Revenue | $ | 1,849,441 | $ | 1,663,112 | $ | 5,494,194 | $ | 4,923,957 | |||||||
Billable expenses | 600,522 | 510,047 | 1,691,543 | 1,465,831 | |||||||||||
Revenue, Excluding Billable Expenses | $ | 1,248,919 | $ | 1,153,065 | $ | 3,802,651 | $ | 3,458,126 | |||||||
Adjusted Operating Income | |||||||||||||||
Operating Income | $ | 169,045 | $ | 161,932 | $ | 520,126 | $ | 467,295 | |||||||
Transaction expenses (a) | 1,069 | — | 1,069 | 3,660 | |||||||||||
Adjusted Operating Income | $ | 170,114 | $ | 161,932 | $ | 521,195 | $ | 470,955 | |||||||
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue & Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses | |||||||||||||||
Net income | $ | 112,026 | $ | 132,037 | $ | 343,737 | $ | 328,954 | |||||||
Income tax expense | 34,697 | 8,232 | 106,993 | 68,569 | |||||||||||
Interest and other, net (b) | 22,322 | 21,663 | 69,396 | 69,772 | |||||||||||
Depreciation and amortization | 20,655 | 17,780 | 60,308 | 50,359 | |||||||||||
EBITDA | 189,700 | 179,712 | 580,434 | 517,654 | |||||||||||
Transaction expenses (a) | 1,069 | — | 1,069 | 3,660 | |||||||||||
Adjusted EBITDA | $ | 190,769 | $ | 179,712 | $ | 581,503 | $ | 521,314 | |||||||
Adjusted EBITDA Margin on Revenue | 10.3 | % | 10.8 | % | 10.6 | % | 10.6 | % | |||||||
Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses | 15.3 | % | 15.6 | % | 15.3 | % | 15.1 | % | |||||||
Adjusted Net Income | |||||||||||||||
Net income | $ | 112,026 | $ | 132,037 | $ | 343,737 | $ | 328,954 | |||||||
Transaction expenses (a) | 1,069 | — | 1,069 | 3,660 | |||||||||||
Release of income tax reserves (c) | — | (462 | ) | — | (462 | ) | |||||||||
Re-measurement of deferred tax assets/liabilities (d) | — | (28,972 | ) | — | (27,908 | ) | |||||||||
Amortization or write-off of debt issuance costs and write-off of original issue discount | 886 | 533 | 1,945 | 2,401 | |||||||||||
Adjustments for tax effect (e) | (509 | ) | (139 | ) | (784 | ) | (1,576 | ) | |||||||
Adjusted Net Income | $ | 113,472 | $ | 102,997 | $ | 345,967 | $ | 305,069 | |||||||
Adjusted Diluted Earnings Per Share | |||||||||||||||
Weighted-average number of diluted shares outstanding | 141,558,427 | 143,056,900 | 141,348,635 | 143,832,886 | |||||||||||
Adjusted Net Income Per Diluted Share (f) | $ | 0.80 | $ | 0.72 | $ | 2.45 | $ | 2.12 | |||||||
Free Cash Flow | |||||||||||||||
Net cash provided by operating activities | $ | 99,780 | $ | 8,636 | $ | 366,459 | $ | 283,203 | |||||||
Less: Purchases of property, equipment and software | (30,734 | ) | (18,404 | ) | (90,712 | ) | (58,076 | ) | |||||||
Free Cash Flow | $ | 69,046 | $ | (9,768 | ) | $ | 275,747 | $ | 225,127 |
(a) | Fiscal 2020 and fiscal 2019 reflect debt refinancing costs incurred in connection with the refinancing transactions consummated on November 26, 2019 and July 23, 2018, respectively. |
(b) | Reflects the combination of Interest expense and Other income (expense), net from the condensed consolidated statement of operations. |
(c) | Release of pre-acquisition income tax reserves assumed by the Company in connection with the Carlyle Acquisition. |
(d) | Reflects the adjustments made to the provisional income tax benefit associated with the re-measurement of the Company’s deferred tax assets and liabilities as a result of the 2017 Tax Act. |
(e) | Reflects the tax effect of adjustments at an assumed effective tax rate of 26%, which approximates the blended federal and state tax rates and consistently excludes the impact of other tax credits and incentive benefits realized. |
(f) | Excludes adjustments of approximately $0.6 million and $1.8 million of net earnings for the three and nine months ended December 31, 2019, respectively, and excludes adjustments of approximately $0.8 million and $2.1 million of net earnings for the three and nine months ended December 31, 2018 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 approve funding of the U.S. government, address budgetary constraints, including caps on the discretionary budget for defense and non-defense departments and agencies, as established by the Bipartisan Budget Control Act of 2011 ("BCA") and subsequently adjusted by the American Tax Payer Relief Act of 2012, the Bipartisan Budget Act of 2013, the Bipartisan Budget Act of 2015, the Bipartisan Budget Act of 2018, and the Bipartisan Budget Act of 2019 and address 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 current uncertainty around Congressional efforts to approve funding of the U.S. government and 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, defense-related programs as certain overseas operations end and continued increased spending on cybersecurity, 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, 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 an 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; |
• | increasingly complex requirements of the Department of Defense and the U.S. intelligence community, including cybersecurity, 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; and |
• | increasing small business regulations across the Department of Defense and civilian agency clients continue to gain traction, whereby agencies are required to meet high small business set aside targets, and large business prime contractors are required to subcontract in accordance with considerable small business participation goals necessary for contract award. |
• | 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 fixed fee or award 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 |
• | Time-and-Materials Contracts. Under contracts in this category, 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. We assume the financial risk on time-and-materials contracts because our costs of performance may exceed negotiated hourly rates. 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 predetermined price. To the extent our actual direct and allocated indirect costs decrease or increase from the estimates upon which the price was negotiated, we will generate more or less profit, respectively, or could incur a loss. Some fixed-price contracts have a performance-based component, pursuant to which we can earn incentive payments or incur financial penalties based on our performance. Fixed-price level of effort contracts require us to provide a specified level of effort (i.e., labor hours), over a stated period of time, for a fixed price. |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||
2019 | 2018 | 2019 | 2018 | ||||
Cost-reimbursable | 57% | 54% | 57% | 53% | |||
Time-and-materials | 23% | 23% | 23% | 24% | |||
Fixed-price | 20% | 23% | 20% | 23% |
• | 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 (including optional 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 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, | |||||||
2019 | 2018 | ||||||
(In millions) | |||||||
Backlog: | |||||||
Funded | $ | 3,521 | $ | 3,545 | |||
Unfunded | 5,308 | 4,501 | |||||
Priced options | 13,128 | 12,408 | |||||
Total backlog | $ | 21,957 | $ | 20,454 |
• | 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 | ||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||||||
Revenue | $ | 1,849,441 | $ | 1,663,112 | 11.2 | % | $ | 5,494,194 | $ | 4,923,957 | 11.6 | % | |||||||||
Operating costs and expenses: | |||||||||||||||||||||
Cost of revenue | 813,500 | 750,680 | 8.4 | % | 2,498,096 | 2,285,062 | 9.3 | % | |||||||||||||
Billable expenses | 600,522 | 510,047 | 17.7 | % | 1,691,543 | 1,465,831 | 15.4 | % | |||||||||||||
General and administrative expenses | 245,719 | 222,673 | 10.3 | % | 724,121 | 655,410 | 10.5 | % | |||||||||||||
Depreciation and amortization | 20,655 | 17,780 | 16.2 | % | 60,308 | 50,359 | 19.8 | % | |||||||||||||
Total operating costs and expenses | 1,680,396 | 1,501,180 | 11.9 | % | 4,974,068 | 4,456,662 | 11.6 | % | |||||||||||||
Operating income | 169,045 | 161,932 | 4.4 | % | 520,126 | 467,295 | 11.3 | % | |||||||||||||
Interest expense | (24,231 | ) | (22,036 | ) | 10.0 | % | (75,281 | ) | (67,357 | ) | 11.8 | % | |||||||||
Other income (expense), net | 1,909 | 373 | NM | 5,885 | (2,415 | ) | NM | ||||||||||||||
Income before income taxes | 146,723 | 140,269 | 4.6 | % | 450,730 | 397,523 | 13.4 | % | |||||||||||||
Income tax expense | 34,697 | 8,232 | NM | 106,993 | 68,569 | 56.0 | % | ||||||||||||||
Net income | $ | 112,026 | $ | 132,037 | (15.2 | )% | $ | 343,737 | $ | 328,954 | 4.5 | % |
December 31, 2019 | March 31, 2019 | ||||||
(Unaudited) | |||||||
(In thousands) | |||||||
Cash and cash equivalents | $ | 696,821 | $ | 283,990 | |||
Total debt | 2,104,510 | 1,759,761 | |||||
Nine Months Ended December 31, | |||||||
2019 | 2018 | ||||||
(Unaudited) | (Unaudited) | ||||||
(In thousands) | |||||||
Net cash provided by operating activities | $ | 366,459 | $ | 283,203 | |||
Net cash used in investing activities | (90,712 | ) | (58,096 | ) | |||
Net cash provided by (used in) financing activities | 137,084 | (300,206 | ) | ||||
Total increase (decrease) in cash and cash equivalents | $ | 412,831 | $ | (75,099 | ) |
• | 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; |
• | the design, build-out, testing, and potential implementation and operation of new financial management systems; |
• | commitments and other discretionary investments; |
• | debt service requirements for borrowings under our Secured Credit Facility and interest payments for the Senior Notes; and |
• | cash taxes to be paid. |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Quarterly dividends (1) | $ | 38,095 | $ | 27,148 | $ | 102,943 | $ | 81,807 | |||||||
Dividend equivalents (2) | — | — | — | 268 | |||||||||||
Total distributions | $ | 38,095 | $ | 27,148 | $ | 102,943 | $ | 82,075 |
• | efforts by Congress and other U.S. government bodies to reduce U.S. government spending and address budgetary constraints, including automatic sequestration required by the Budget Control Act of 2011 (as subsequently amended) and the U.S. deficit, as well as associated uncertainty around the timing, extent, nature and effect of such efforts; |
• | delayed funding of our contracts due to uncertainty relating to funding of the U.S. government and a possible failure of Congressional efforts to approve such funding and to craft a long-term agreement on the U.S. government’s ability to incur indebtedness in excess of its current limits, or changes in the pattern or timing of government funding and spending (including those resulting from or related to cuts associated with sequestration); |
• | any issue that compromises our relationships with the U.S. government or damages our professional reputation, including negative publicity concerning government contractors in general or us in particular; |
• | changes in U.S. government spending, including a continuation of efforts by the U.S. government to decrease spending for management support service contracts, and mission priorities that shift expenditures away from agencies or programs that we support; |
• | U.S. government shutdowns, as a result of the failure by elected officials to fund the government; |
• | the size of our addressable markets and the amount of U.S. government spending on private contractors; |
• | failure to comply with numerous laws and regulations, including but not limited to, the Federal Acquisition Regulation ("FAR"), the False Claims Act, the Defense Federal Acquisition Regulation Supplement and FAR Cost Accounting Standards and Cost Principles; |
• | our ability to compete effectively in the competitive bidding process and delays or losses of contract awards caused by competitors' protests of major contract awards received by us; |
• | the loss of General Services Administration Multiple Award schedule contracts, or GSA schedules, or our position as prime contractor on government-wide acquisition contract vehicles, or GWACs; |
• | changes in the mix of our contracts and our ability to accurately estimate or otherwise recover expenses, time, and resources for our contracts; |
• | continued efforts to change how the U.S. government reimburses compensation related costs and other expenses or otherwise limit such reimbursements, and an increased risk of compensation being deemed unallowable or payments being withheld as a result of U.S. government audit, review, or investigation; |
• | our ability to realize the full value of and replenish our backlog, generate revenue under certain of our contracts, and the timing of our receipt of revenue under contracts included in backlog; |
• | changes in estimates used in recognizing revenue; |
• | an inability to attract, train, or retain employees with the requisite skills and experience; |
• | an inability to timely hire, assimilate and effectively utilize our employees, ensure that employees obtain and maintain necessary security clearances and/or effectively manage our cost structure; |
• | the loss of members of senior management or failure to develop new leaders; |
• | misconduct or other improper activities from our employees or subcontractors, including the improper use or release of our clients' sensitive or classified information; |
• | increased insourcing by various U.S. government agencies due to changes in the definition of “inherently governmental” work, including proposals to limit contractor access to sensitive or classified information and work assignments; |
• | increased competition from other companies in our industry; |
• | failure to maintain strong relationships with other contractors, or the failure of contractors with which we have entered into a sub- or prime- contractor relationship to meet their obligations to us or our clients; |
• | inherent uncertainties and potential adverse developments in legal or regulatory proceedings, including litigation, audits, reviews, and investigations, which may result in materially adverse judgments, settlements, withheld payments, penalties, or other unfavorable outcomes including debarment, as well as disputes over the availability of insurance or indemnification; |
• | internal system or service failures and security breaches, including, but not limited to, those resulting from external or internal cyber attacks on our network and internal systems; |
• | risks related to the potential implementation and operation of new financial management systems; |
• | risks inherent in the government contracting environment; |
• | risks related to changes to our operating structure, capabilities, or strategy intended to address client needs, grow our business or respond to market developments; |
• | risks associated with increased competition, new relationships, clients, capabilities, and service offerings in our U.S. and international businesses; |
• | failure to comply with special U.S. government laws and regulations relating to our international operations; |
• | risks related to our indebtedness and credit facilities which contain financial and operating covenants; |
• | the adoption by the U.S. government of new laws, rules, and regulations, such as those relating to organizational conflicts of interest issues or limits; |
• | risks related to completed and future acquisitions, including our ability to realize the expected benefits from such acquisitions; |
• | an inability to utilize existing or future tax benefits for any reason, including as a result of a change in laws or regulations; |
• | variable purchasing patterns under U.S. government GSA schedules, blanket purchase agreements and indefinite delivery, indefinite quantity, or IDIQ, contracts; |
• | the impact of changes in accounting rules and regulations, or interpretations thereof, that may affect the way we recognize and report our financial results, including changes in accounting rules governing recognition of revenue; and |
• | other risks and factors listed under “Item 1A. Risk Factors” and elsewhere in this Quarterly Report. |
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 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) | ||||||
October 2019 | — | $— | — | $ | 652,314,007 | |||||
November 2019 | 139,135 | $71.87 | 139,135 | $ | 642,314,058 | |||||
December 2019 | 174,450 | $71.76 | 174,450 | $ | 629,795,751 | |||||
Total | 313,585 | 313,585 |
(1) | On December 12, 2011, the Board of Directors approved a $30.0 million share repurchase program, which was further increased by the Board of Directors on (i) January 27, 2015 to $180.0 million, (ii) January 25, 2017 to $410.0 million, (iii) November 2, 2017 to $610.0 million, (iv) May 24, 2018 to $910.0 million, and (v) May 23, 2019 to $1,310.0 million. A special committee of the Board of Directors was appointed to evaluate market conditions and other relevant factors and initiate repurchases under the program from time to time. The share repurchase program may be suspended, modified or discontinued at any time at the Company’s discretion without prior notice. |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit Number | Description | |
10.1 | ||
10.2 † | ||
10.3 † | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
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, 2019 formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at December 31, 2019 and March 31, 2019; (ii) Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2019 and 2018; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended December 31, 2019 and 2018; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2019 and 2018; and (v) Notes to Condensed Consolidated Financial Statements. |
* | Filed electronically herewith. |
† | Management contract or compensatory arrangement. |
Booz Allen Hamilton Holding Corporation | ||
Registrant | ||
Date: January 31, 2020 | By: | /s/ Lloyd W. Howell, Jr. |
Lloyd W. Howell, Jr. Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) |
Date: January 31, 2020 | By: | /s/ Horacio Rozanski |
Horacio Rozanski President and Chief Executive Officer (Principal Executive Officer) |
Date: January 31, 2020 | By: | /s/ Lloyd W. Howell, Jr. |
Lloyd W. Howell, Jr. Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) |
Date: January 31, 2020 | By: | /s/ Horacio Rozanski |
Horacio Rozanski President and Chief Executive Officer (Principal Executive Officer) |
Date: January 31, 2020 | By: | /s/ Lloyd W. Howell, Jr. |
Lloyd W. Howell, Jr. Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) |
Accounts Receivable, Net of Allowance |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net of Allowance | ACCOUNTS RECEIVABLE, NET OF ALLOWANCE Accounts receivable, net of allowance consisted of the following:
Unbilled amounts represent revenues for which billings have not been presented to customers at quarter-end or year-end. These amounts are generally billed and collected within one year subject to various conditions including, without limitation, appropriated and available funding. Long-term unbilled receivables not anticipated to be billed and collected within one year, which are primarily related to retainage, holdbacks, and long-term rate settlements to be billed at contract closeout, are included in other long-term assets in the accompanying condensed consolidated balance sheets. The Company recognized a (benefit) provision for doubtful accounts (including certain unbilled reserves) of $(9.2) million and $0.5 million for the three months ended December 31, 2019 and 2018, respectively, and $(7.9) million and $11.2 million for the nine months ended December 31, 2019 and 2018, respectively. The primary financial instruments, other than derivatives, that potentially subject the Company to concentrations of credit risk are accounts receivable. The Company's primary customers are U.S. federal government agencies and prime contractors under contracts with the U.S. government. The Company continuously reviews its accounts receivable and records provisions for doubtful accounts as needed.
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | DEBT Debt consisted of the following:
Term Loans and Revolving Credit Facility On November 26, 2019 (the "Amendment Effective Date"), Booz Allen Hamilton Inc. ("Booz Allen Hamilton") and Booz Allen Hamilton Investor Corporation ("Investor"), and certain wholly-owned subsidiaries of Booz Allen Hamilton, entered into the Seventh Amendment (the "Seventh Amendment") to the Credit Agreement (as amended, the "Credit Agreement"), dated as of July 31, 2012 among Booz Allen Hamilton, Investor, certain wholly-owned subsidiaries of Booz Allen Hamilton and Bank of America, N.A., as Administrative Agent and Collateral Agent and the other lenders and financial institutions from time to time party thereto (as previously amended by the First Amendment to the Credit Agreement, dated as of August 16, 2013, the Second Amendment to the Credit Agreement, dated as of May 7, 2014, the Third Amendment to the Credit Agreement, dated as of July 13, 2016, the Fourth Amendment to the Credit Agreement, dated as of February 6, 2017, the Fifth Amendment to the Credit Agreement, dated as of March 7, 2018, and the Sixth Amendment to the Credit agreement, dated July 23, 2018). Pursuant to the Seventh Amendment, the Company reduced the applicable margin applicable to the Term Loan B ("Term Loan B" and, together with the Term Loan A, the "Term Loans") from 2.00% to 1.75% for LIBOR loans and from 1.00% to 0.75% for base rate loans and extended the maturity of the Term Loan B to November 26, 2026. The applicable margin and maturity date applicable to the Term Loan A ( the "Term Loan A") remained unchanged. Prior to the Seventh Amendment, approximately $389.0 million was outstanding under Term Loan B. Pursuant to the Seventh Amendment, certain lenders converted their existing Term Loan B loans into a new tranche of Term Loan B loans in an aggregate amount, along with Term Loan B loans advanced by certain new lenders, of approximately $389.0 million (the “New Refinancing Tranche B Term Loans”). The proceeds from the new lenders were used to prepay in full all of the existing Term Loan B loans that were not converted into the new Term Loan B tranche. Voluntary prepayments of the New Refinancing Tranche B Term Loans are permitted at any time, in minimum principal amounts, without premium or penalty, subject to a 1.00% premium payable in connection with certain repricing transactions within the first six months after the Seventh Amendment. The other terms of the New Refinancing Tranche B Term Loans are generally the same as the existing Term Loan B prior to the Seventh Amendment. As of December 31, 2019, the Credit Agreement provided Booz Allen Hamilton with a $1,382.2 million Term Loan A, a $389.1 million Term Loan B, and $500.0 million in New Revolving Commitments with a sub-limit for letters of credit of $100.0 million. As of December 31, 2019, the maturity date of Term Loan A and the termination date for the Revolving Credit Facility was July 23, 2023 and the maturity date of Term Loan B was November 26, 2026. Booz Allen Hamilton’s obligations and the guarantors’ guarantees under the Credit Agreement are secured by a first priority lien on substantially all of the assets (including capital stock of subsidiaries) of Booz Allen Hamilton, Investor, and the subsidiary guarantors, subject to certain exceptions set forth in the Credit Agreement and related documentation. Subject to specified conditions, without the consent of the then-existing lenders (but subject to the receipt of commitments), the Term Loans or the Revolving Credit Facility may be expanded (or a new term loan facility or revolving credit facility added to the existing facilities) by up to (i) the greater of (x) $627 million and (y) 100% of consolidated EBITDA of Booz Allen Hamilton, as of the end of the most recently ended four quarter period for which financial statements have been delivered pursuant to the Credit Agreement plus (ii) the aggregate principal amount under which pro forma consolidated net secured leverage remains less than or equal to 3.50:1.00. At Booz Allen Hamilton’s option, borrowings under the Secured Credit Facility bear interest based either on LIBOR (adjusted for maximum reserves, and subject to a floor of zero) for the applicable interest period or a base rate (equal to the highest of (x) the administrative agent’s prime corporate rate, (y) the overnight federal funds rate plus 0.50%, and (z) three-month LIBOR (adjusted for maximum reserves, and subject to a floor of zero) plus 1.00%), in each case plus an applicable margin, payable at the end of the applicable interest period and in any event at least quarterly. The applicable margin for Term Loan A and borrowings under the Revolving Credit Facility ranges from 1.25% to 2.00% for LIBOR loans and 0.25% to 1.00% for base rate loans, in each case based on Booz Allen Hamilton’s consolidated total net leverage ratio. The applicable margin for Term Loan B is 1.75% for LIBOR loans and 0.75% for base rate loans. Unused commitments under the Revolving Credit Facility are subject to a quarterly fee ranging from 0.20% to 0.35% based on Booz Allen Hamilton’s consolidated total net leverage ratio. Booz Allen Hamilton occasionally borrows under the Revolving Credit Facility in anticipation of cash demands. During the first, second and third quarters of fiscal 2020, Booz Allen Hamilton accessed no amounts of its $500.0 million Revolving Credit Facility. During the first, second and third quarters of fiscal 2019, Booz Allen Hamilton accessed a total of $70.0 million of its $500.0 million Revolving Credit Facility. As of December 31, 2019 and March 31, 2019, there were no amounts outstanding under the Revolving Credit Facility. The Credit Agreement requires quarterly principal payments of 1.25% of the stated principal amount of Term Loan A until maturity, and quarterly principal payments of 0.25% of the stated principal amount of Term Loan B until maturity. The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants include limitations on the following, in each case subject to certain exceptions: (i) indebtedness and liens; (ii) mergers, consolidations or amalgamations, liquidations, wind-ups or dissolutions, and disposition of all or substantially all assets; (iii) dispositions of property; (iv) restricted payments; (v) investments; (vi) transactions with affiliates; (vii) change in fiscal periods; (viii) negative pledges; (ix) restrictive agreements; (x) line of business; and (xi) speculative hedging. The events of default include the following, in each case subject to certain exceptions: (a) failure to make required payments under the Secured Credit Facility; (b) material breaches of representations or warranties under the Secured Credit Facility; (c) failure to observe covenants or agreements under the Secured Credit Facility; (d) failure to pay or default under certain other material indebtedness; (e) bankruptcy or insolvency; (f) certain Employee Retirement Income Security Act, or ERISA events; (g) certain material judgments; (h) actual or asserted invalidity of the Guarantee and Collateral Agreements or the other security documents or failure of the guarantees or perfected liens thereunder; and (i) a change of control. In addition, Booz Allen Hamilton is required to meet certain financial covenants at each quarter end, namely Consolidated Net Total Leverage and Consolidated Net Interest Coverage Ratios. As of December 31, 2019 and March 31, 2019, Booz Allen Hamilton was in compliance with all financial covenants associated with its debt and debt-like instruments. For the three months ended December 31, 2019 and 2018, interest payments of $12.0 million and $10.5 million were made for Term Loan A and $3.7 million and $4.4 million were made for Term Loan B, respectively. For the nine months ended December 31, 2019 and 2018, interest payments of $39.2 million and $31.6 million were made for Term Loan A and $12.5 million and $12.4 million were made for Term Loan B, respectively. Senior Notes On April 25, 2017, Booz Allen Hamilton issued $350 million aggregate principal amount of its 5.125% Senior Notes (the "Senior Notes") due 2025, under an Indenture, dated as of April 25, 2017, among Booz Allen Hamilton, certain subsidiaries of Booz Allen Hamilton, as guarantors (the "Subsidiary Guarantors"), and Wilmington Trust, National Association, as trustee (the "Trustee"), as supplemented by the First Supplemental Indenture, dated as of April 25, 2017, among Booz Allen Hamilton, the Subsidiary Guarantors and the Trustee. Each of Booz Allen Hamilton's existing and future domestic restricted subsidiaries that guarantee its obligations under the Secured Credit Facility and certain other indebtedness guarantee the Senior Notes on a senior unsecured basis. Interest is payable semi-annually on May 1 and November 1 of each year, beginning on November 1, 2017, and principal is due at maturity on May 1, 2025. In connection with the Senior Notes, the Company recognized $6.7 million of issuance costs, which were recorded as an offset against the carrying value of debt and will be amortized to interest expense over the term of the Senior Notes. For both the three months ended December 31, 2019 and 2018, Booz Allen Hamilton made interest payments of $8.9 million for the Senior Notes. For both the nine months ended December 31, 2019 and 2018, Booz Allen Hamilton made interest payments of $17.9 million for the Senior Notes. Borrowings under the Term Loans and, if used, the Revolving Credit Facility, incur interest at a variable rate. In accordance with Booz Allen Hamilton’s risk management strategy, between April 6, 2017 and April 4, 2019, Booz Allen Hamilton executed a series of interest rate swaps. As of December 31, 2019, Booz Allen Hamilton had interest rate swaps with an aggregate notional amount of $1 billion. These instruments hedge the variability of cash outflows for interest payments on the floating portion of the Company's debt. The Company's objectives in using cash flow hedges are to reduce volatility due to interest rate movements and to add stability to interest expense (See Note 10 to our condensed consolidated financial statements). Interest on debt and debt-like instruments consisted of the following:
(1) Interest payments on the deferred payment obligation are made twice a year in January and July. The final payment was made on December 18, 2019. See Note 8 to the condensed consolidated financial statements. (2) DIC and OID on the Term Loans and Senior Notes are recorded as a reduction of long-term debt in the condensed consolidated balance sheet and are amortized ratably over the life of the related debt using the effective rate method. DIC on the Revolving Credit Facility is recorded as a long-term asset on the condensed consolidated balance sheet and amortized ratably over the term of the Revolving Credit Facility.
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Other Long-Term Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Other Long-Term Liabilities | Other long-term liabilities consisted of the following:
(1) Deferred rent balance was reclassified to operating lease right-of-use assets on the condensed consolidated balance sheet as a result of the adoption of Topic 842. See Notes 2 and 11, respectively, to the condensed consolidated financial statements. (2) Because of condensed financial statement presentation, components of other long-term liabilities at December 31, 2019 and March 31, 2019 primarily include the Company's long-term disability obligation, the long-term liability portion of the Company's derivative instruments, income tax reserves and deferred tax liabilities.
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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2019 |
Mar. 31, 2019 |
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Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 600,000,000 | 600,000,000 |
Common stock, issued (in shares) | 160,658,781 | 159,924,825 |
Common stock, outstanding (in shares) | 140,318,046 | 140,027,853 |
Treasury stock (in shares) | 20,340,735 | 19,896,972 |
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands |
Total |
Class A Common Stock |
Treasury Stock |
Additional Paid-In Capital |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
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Beginning balance (shares) at Mar. 31, 2018 | 158,028,673 | (14,582,134) | ||||||||||
Beginning of period at Mar. 31, 2018 | $ 562,491 | $ 1,580 | $ (461,457) | $ 346,958 | $ 690,516 | $ (15,106) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Issuance of common stock (shares) | 489,385 | |||||||||||
Issuance of common stock | 8,104 | $ 6 | 8,098 | |||||||||
Stock options exercised (shares) | 755,294 | |||||||||||
Stock options exercised | 9,371 | $ 7 | 9,364 | |||||||||
Repurchase of common stock (shares) | (3,600,000) | (3,719,344) | [1] | |||||||||
Repurchase of common stock | (172,267) | [1] | $ (168,400) | $ (172,267) | [1] | |||||||
Net income | 328,954 | 328,954 | ||||||||||
Other comprehensive income (loss), net of tax | (2,822) | (2,822) | ||||||||||
Dividends paid per common share | (81,807) | (81,807) | ||||||||||
Stock-based compensation expense | 23,231 | 23,231 | ||||||||||
Ending balance (shares) at Dec. 31, 2018 | 159,273,352 | (18,301,478) | ||||||||||
End of period at Dec. 31, 2018 | 675,255 | $ 1,593 | $ (633,724) | 387,651 | 937,663 | (17,928) | ||||||
Beginning balance (shares) at Sep. 30, 2018 | 159,124,212 | (16,573,433) | ||||||||||
Beginning of period at Sep. 30, 2018 | 646,340 | $ 1,591 | $ (550,688) | 373,980 | 832,774 | (11,317) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Issuance of common stock (shares) | 72,019 | |||||||||||
Issuance of common stock | 2,877 | $ 1 | 2,876 | |||||||||
Stock options exercised (shares) | 77,121 | |||||||||||
Stock options exercised | 830 | $ 1 | 829 | |||||||||
Repurchase of common stock (shares) | (1,728,045) | |||||||||||
Repurchase of common stock | (83,036) | $ (83,036) | ||||||||||
Net income | 132,037 | 132,037 | ||||||||||
Other comprehensive income (loss), net of tax | (6,611) | (6,611) | ||||||||||
Dividends paid per common share | (27,148) | (27,148) | ||||||||||
Stock-based compensation expense | 9,966 | 9,966 | ||||||||||
Ending balance (shares) at Dec. 31, 2018 | 159,273,352 | (18,301,478) | ||||||||||
End of period at Dec. 31, 2018 | 675,255 | $ 1,593 | $ (633,724) | 387,651 | 937,663 | (17,928) | ||||||
Beginning balance (shares) at Mar. 31, 2019 | 159,924,825 | (19,896,972) | ||||||||||
Beginning of period at Mar. 31, 2019 | 675,366 | $ 1,599 | $ (711,450) | 401,596 | 994,811 | (11,190) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Issuance of common stock (shares) | 305,782 | |||||||||||
Issuance of common stock | 10,843 | $ 3 | 10,840 | |||||||||
Stock options exercised (shares) | 428,174 | |||||||||||
Stock options exercised | 7,440 | $ 4 | 7,436 | |||||||||
Repurchase of common stock (shares) | (400,000) | (443,763) | [2] | |||||||||
Repurchase of common stock | (30,885) | [2] | $ (28,400) | $ (30,885) | [2] | |||||||
Recognition of liability related to future restricted stock units vesting | (350) | (350) | ||||||||||
Net income | 343,737 | 343,737 | ||||||||||
Other comprehensive income (loss), net of tax | (14,967) | (14,967) | ||||||||||
Dividends paid per common share | (102,943) | (102,943) | ||||||||||
Stock-based compensation expense | 26,796 | 26,796 | ||||||||||
Ending balance (shares) at Dec. 31, 2019 | 160,658,781 | (20,340,735) | ||||||||||
End of period at Dec. 31, 2019 | 915,037 | $ 1,606 | $ (742,335) | 446,318 | 1,235,605 | (26,157) | ||||||
Beginning balance (shares) at Sep. 30, 2019 | 160,400,357 | (20,026,907) | ||||||||||
Beginning of period at Sep. 30, 2019 | 840,183 | $ 1,604 | $ (719,793) | 427,817 | 1,161,674 | (31,119) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Issuance of common stock (shares) | 59,549 | |||||||||||
Issuance of common stock | 3,794 | $ 0 | 3,794 | |||||||||
Stock options exercised (shares) | 198,875 | |||||||||||
Stock options exercised | 3,753 | $ 2 | 3,751 | |||||||||
Repurchase of common stock (shares) | [1] | (313,828) | ||||||||||
Repurchase of common stock | [1] | (22,542) | $ (22,542) | |||||||||
Recognition of liability related to future restricted stock units vesting | (32) | (32) | ||||||||||
Net income | 112,026 | 112,026 | ||||||||||
Other comprehensive income (loss), net of tax | 4,962 | 4,962 | ||||||||||
Dividends paid per common share | (38,095) | (38,095) | ||||||||||
Stock-based compensation expense | 10,988 | 10,988 | ||||||||||
Ending balance (shares) at Dec. 31, 2019 | 160,658,781 | (20,340,735) | ||||||||||
End of period at Dec. 31, 2019 | $ 915,037 | $ 1,606 | $ (742,335) | $ 446,318 | $ 1,235,605 | $ (26,157) | ||||||
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Accrued Compensation and Benefits (Tables) |
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation Related Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accrued compensation and benefits | Accrued compensation and benefits consisted of the following:
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Revenue (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue | The table below presents the total revenue for each type of contract:
Revenue by Customer Type:
Revenue by Whether the Company Acts as a Prime Contractor or a Sub-Contractor:
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Summary of Contract Balances | The following table summarizes the contract balances recognized on the Company’s condensed consolidated balance sheets:
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Accounts Payable and Other Accrued Expenses (Details) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Apr. 01, 2019 |
Mar. 31, 2019 |
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Payables and Accruals [Abstract] | |||
Vendor payables | $ 398,525 | $ 417,648 | |
Accrued expenses | 273,075 | 247,300 | |
Total accounts payable and other accrued expenses | 671,600 | $ 649,751 | 664,948 |
Unfavorable Regulatory Action | |||
Loss Contingencies [Line Items] | |||
Provision for claimed indirect costs | $ 217,600 | $ 195,300 |
Leases - Schedule of Lease Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Dec. 31, 2019 |
Dec. 31, 2019 |
|
Leases [Abstract] | ||
Operating lease cost | $ 18,187 | $ 53,907 |
Short-term lease cost | 2,504 | 7,254 |
Variable lease cost | 3,103 | 8,681 |
Total operating lease costs | $ 23,794 | $ 69,842 |
Commitments and Contingencies - Guarantees and Contracts (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2019 |
Mar. 31, 2015 |
|
Contracts with U.S. government agencies or other U.S. government contractors | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 96.00% | 96.00% | 97.00% | 96.00% | ||
Unfavorable Regulatory Action | ||||||
Loss Contingencies [Line Items] | ||||||
Liability for reductions and/or penalties from U.S Government audits | $ 217.6 | $ 217.6 | $ 195.3 | |||
Financial Standby Letter of Credit | ||||||
Concentration Risk [Line Items] | ||||||
Guarantor obligations, carrying value | 10.6 | 10.6 | 9.5 | |||
Guarantor obligations, reduction to available borrowings | 0.9 | 1.0 | ||||
Guarantor obligations, facility | $ 15.0 | |||||
Guarantor obligations, available amount | $ 5.3 | $ 5.3 | $ 6.5 |
Revenue - Schedule of Contract Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Mar. 31, 2019 |
---|---|---|
Contract assets: | ||
Current | $ 928,056 | $ 846,372 |
Long-term | 61,892 | 61,391 |
Total | 989,948 | 907,763 |
Contract liabilities: | ||
Advance payments, billings in excess of costs incurred and deferred revenue | $ 30,585 | $ 21,316 |
Basis of Presentation - Narrative (Details) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Apr. 01, 2019 |
Mar. 31, 2019 |
---|---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Operating lease right-of-use assets | $ 243,342 | $ 268,840 | $ 0 |
Total lease liabilities | $ 311,488 | 330,600 | |
Deferred tax liability corresponding to operating lease right-of-use assets | 69,000 | ||
Deferred tax asset corresponding to operating lease liabilities | $ 93,000 | ||
Operating lease, deferred rent and tenant allowances | $ 24,000 |
Accumulated Other Comprehensive Loss (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accumulated other comprehensive loss | The following table shows the changes in accumulated other comprehensive income (loss), net of tax:
(1) Changes in other comprehensive income (loss) before reclassification for derivatives designated as cash flow hedges are recorded net of tax expense of $1.5 million and income tax benefit of $5.5 million for the three and nine months ended December 31, 2019, respectively.
(2) Changes in other comprehensive loss before reclassification for derivatives designated as cash flow hedges are recorded net of tax benefits of $2.4 million and $1.3 million for the three and nine months ended December 31, 2018, respectively.
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Reclassification out of accumulated other comprehensive loss to net income | The following table presents the reclassifications out of accumulated other comprehensive loss to net income:
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Other Long-Term Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Apr. 01, 2019 |
Mar. 31, 2019 |
---|---|---|---|
Other Liabilities Disclosure [Abstract] | |||
Deferred rent | $ 78,658 | ||
Postretirement benefit obligations | $ 129,567 | 124,925 | |
Other | 132,111 | 71,816 | |
Total other long-term liabilities | $ 261,678 | $ 196,742 | $ 275,399 |
Other Long-Term Liabilities |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Long-Term Liabilities | OTHER LONG-TERM LIABILITIES Other long-term liabilities consisted of the following:
(1) Deferred rent balance was reclassified to operating lease right-of-use assets on the condensed consolidated balance sheet as a result of the adoption of Topic 842. See Notes 2 and 11, respectively, to the condensed consolidated financial statements. (2) Because of condensed financial statement presentation, components of other long-term liabilities at December 31, 2019 and March 31, 2019 primarily include the Company's long-term disability obligation, the long-term liability portion of the Company's derivative instruments, income tax reserves and deferred tax liabilities.
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Fair Value Measurements |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 condensed consolidated balance sheets consist of the following:
(1) The Company’s interest rate swaps are considered over-the-counter derivatives and fair value is estimated based on the present value of future cash flows using a model-derived valuation that uses Level 2 observable inputs such as interest rate yield curves. See Note 10 to the condensed consolidated financial statements for further discussion on the Company’s derivative instruments designated as cash flow hedges. (2) Investments in this category consist primarily of mutual funds whose fair values are determined by reference to the quoted market price per unit in active markets multiplied by the number of units held without consideration of transaction costs. These assets represent investments held in a consolidated trust to fund the Company's non-qualified deferred compensation plan and are recorded in other long-term assets and other long-term liabilities on our condensed consolidated balance sheets. (3) The Company recognized a contingent consideration liability of $3.6 million in connection with its acquisition of Aquilent in fiscal 2017. As of both December 31, 2019 and March 31, 2019, the estimated fair value of the contingent consideration liability was $1.2 million, and was valued using probability-weighted cash flows, which is based on the use of Level 3 fair value measurement inputs. The fair value of the Company's cash and cash equivalents, which are Level 1 inputs, approximated its carrying values at December 31, 2019 and March 31, 2019. The fair value of the Company's debt instruments approximated its carrying value at December 31, 2019 and March 31, 2019. The fair value of debt is determined using quoted prices or other market information obtained from recent trading activity of each debt tranche in markets that are not active (Level 2 inputs). The fair value is corroborated by prices derived from the interest rate spreads of recently completed leveraged loan transactions of a similar credit profile, industry, and terms to that of the Company. The fair value of the Senior Notes is determined using quoted prices or other market information obtained from recent trading activity in the high-yield bond market (Level 2 inputs).
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Basis of Presentation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The impact to the condensed consolidated balance sheet at April 1 for the adoption of Topic 842 is as follows:
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Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of 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.
|
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Operating Loss Carryforwards [Line Items] | ||||
Effective income tax rate | 23.60% | 5.90% | 23.70% | 17.20% |
Tax Act, net tax benefit from re-measurement of deferred tax balance | $ 29.0 | |||
Federal statutory rate (as a percent) | 21.00% | |||
Income tax uncertainty | $ 10.2 | $ 10.2 | ||
Tax Years 2013-2015 | ||||
Operating Loss Carryforwards [Line Items] | ||||
Income tax assessments | 11.4 | |||
Tax Years 2016-2019 | ||||
Operating Loss Carryforwards [Line Items] | ||||
Income tax assessments | $ 33.5 |
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