ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 27-2525959 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | o | Accelerated filer | o |
Non-accelerated filer | þ (Do not check if a smaller reporting company) | Smaller reporting company | o |
Page | ||
• | our substantial level of indebtedness, our ability to refinance or amend the terms of that indebtedness, and changes in availability of capital and cost of capital; |
• | the ability to refinance with subordinated indebtedness, or pay with proceeds of new equity or capital contributions the 10.375% Senior Notes due 2017 (the "Senior Unsecured Notes") by May 8, 2017; |
• | the future impact of mergers, acquisitions, divestitures, joint ventures or teaming agreements; |
• | the outcome of any material litigation, government investigation, audit or other regulatory matters; |
• | restatement of our financial statements causing credit ratings to be downgraded or covenant violations under our debt agreements; |
• | policy and/or spending changes implemented by the Obama Administration, any subsequent administration or Congress, including any further changes to the sequestration that the United States ("U.S.") Department of Defense ("DoD") is currently operating under; |
• | termination or modification of key U.S. government or commercial contracts, including subcontracts; |
• | changes in the demand for services that we provide or work awarded under our contracts, including without limitation, the Bureau for International Narcotics and Law Enforcement Affairs, Office of Aviation ("INL Air Wing"), Contract Field Teams ("CFT") and Logistics Civil Augmentation Program ("LOGCAP IV") contracts; |
• | the outcome of recompetes on existing programs, including but not limited to any upcoming recompetes on the INL Air Wing or War Reserve Materiel programs; |
• | changes in the demand for services provided by our joint venture partners; |
• | changes due to pursuit of new commercial business in the U.S. and abroad; |
• | activities of competitors and the outcome of bid protests; |
• | changes in significant operating expenses; |
• | impact of lower than expected win rates for new business; |
• | general political, economic, regulatory and business conditions in the U.S. or in other countries in which we operate; |
• | acts of war or terrorist activities, including cyber security threats; |
• | variations in performance of financial markets; |
• | the inherent difficulties of estimating future contract revenue and changes in anticipated revenue from indefinite delivery, indefinite quantity ("IDIQ") contracts and indefinite quantity contracts ("IQC"); |
• | the timing or magnitude of any award, performance or incentive fee granted under our government contracts; |
• | changes in expected percentages of future revenue represented by fixed-price and time-and-materials contracts, including increased competition with respect to task orders subject to such contracts; |
• | decline in the estimated fair value of a reporting unit resulting in a goodwill impairment and a related non-cash impairment charged against earnings; |
• | changes in underlying assumptions, circumstances or estimates that may have a material adverse effect upon the profitability of one or more contracts and our performance; |
• | changes in our tax provisions or exposure to additional income tax liabilities that could affect our profitability and cash flows; |
• | uncertainty created by management turnover; |
• | termination or modification of key subcontractor performance or delivery; |
• | the ability to receive timely payments from prime contractors where we act as a subcontractor; and |
• | statements covering our business strategy, those described in "Item 1A. Risk Factors" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission ("SEC") on March 30, 2016 and in this Quarterly Report on Form 10-Q and other risks detailed from time to time in our reports filed with SEC. |
Three Months Ended | Six Months Ended | ||||||||||||||
(Amounts in thousands) | June 24, 2016 | June 26, 2015 | June 24, 2016 | June 26, 2015 | |||||||||||
Revenue | $ | 450,967 | $ | 490,170 | $ | 870,957 | $ | 957,192 | |||||||
Cost of services | (410,361 | ) | (439,193 | ) | (782,859 | ) | (863,351 | ) | |||||||
Selling, general and administrative expenses | (36,959 | ) | (41,461 | ) | (71,048 | ) | (72,683 | ) | |||||||
Depreciation and amortization expense | (8,911 | ) | (9,288 | ) | (17,203 | ) | (16,548 | ) | |||||||
Earnings from equity method investees | 335 | 56 | 702 | 125 | |||||||||||
Impairment of goodwill, intangibles and long lived assets | — | (86,795 | ) | — | (86,795 | ) | |||||||||
Operating (loss) income | (4,929 | ) | (86,511 | ) | 549 | (82,060 | ) | ||||||||
Interest expense | (17,460 | ) | (17,172 | ) | (33,427 | ) | (33,228 | ) | |||||||
Loss on early extinguishment of debt | (328 | ) | — | (328 | ) | — | |||||||||
Interest income | 22 | 25 | 82 | 42 | |||||||||||
Other income, net | 4,611 | 608 | 4,963 | 1,602 | |||||||||||
Loss before income taxes | (18,084 | ) | (103,050 | ) | (28,161 | ) | (113,644 | ) | |||||||
(Provision) benefit for income taxes | (6,729 | ) | 13,293 | (11,224 | ) | 9,485 | |||||||||
Net loss | (24,813 | ) | (89,757 | ) | (39,385 | ) | (104,159 | ) | |||||||
Noncontrolling interests | (308 | ) | (298 | ) | (496 | ) | (729 | ) | |||||||
Net loss attributable to Delta Tucker Holdings, Inc. | $ | (25,121 | ) | $ | (90,055 | ) | $ | (39,881 | ) | $ | (104,888 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
(Amounts in thousands) | June 24, 2016 | June 26, 2015 | June 24, 2016 | June 26, 2015 | |||||||||||
Net loss | $ | (24,813 | ) | $ | (89,757 | ) | $ | (39,385 | ) | $ | (104,159 | ) | |||
Other comprehensive loss, net of tax: | |||||||||||||||
Foreign currency translation adjustment | (1 | ) | 11 | 2 | (101 | ) | |||||||||
Other comprehensive income (loss), before tax | (1 | ) | 11 | 2 | (101 | ) | |||||||||
Income tax (expense) benefit related to items of other comprehensive loss | — | (4 | ) | (1 | ) | 36 | |||||||||
Other comprehensive income (loss) | (1 | ) | 7 | 1 | (65 | ) | |||||||||
Comprehensive loss | (24,814 | ) | (89,750 | ) | (39,384 | ) | (104,224 | ) | |||||||
Comprehensive loss attributable to noncontrolling interests | (308 | ) | (298 | ) | (496 | ) | (729 | ) | |||||||
Comprehensive loss attributable to Delta Tucker Holdings, Inc. | $ | (25,122 | ) | $ | (90,048 | ) | $ | (39,880 | ) | $ | (104,953 | ) |
As Of | |||||||
(Amounts in thousands, except share data) | June 24, 2016 | December 31, 2015 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 96,264 | $ | 108,782 | |||
Restricted cash | 20,963 | 721 | |||||
Accounts receivable, net of allowances of $17,535 and $16,283 respectively | 329,785 | 386,097 | |||||
Prepaid expenses and other current assets | 55,325 | 55,683 | |||||
Assets held for sale | — | 7,913 | |||||
Total current assets | 502,337 | 559,196 | |||||
Property and equipment, net | 15,787 | 15,694 | |||||
Goodwill | 42,093 | 42,093 | |||||
Tradenames, net | 28,536 | 28,536 | |||||
Other intangibles, net | 99,706 | 113,479 | |||||
Long-term deferred taxes | — | 13,364 | |||||
Other assets, net | 16,319 | 12,327 | |||||
Total assets | $ | 704,778 | $ | 784,689 | |||
LIABILITIES | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 60,001 | $ | 184,866 | |||
Accounts payable | 83,216 | 90,610 | |||||
Accrued payroll and employee costs | 92,416 | 100,681 | |||||
Deferred income taxes | — | 27,334 | |||||
Accrued liabilities | 107,529 | 114,718 | |||||
Liabilities held for sale | — | 784 | |||||
Income taxes payable | 14,002 | 8,130 | |||||
Total current liabilities | 357,164 | 527,123 | |||||
Long-term debt | 566,137 | 452,165 | |||||
Long-term deferred taxes | 16,964 | — | |||||
Other long-term liabilities | 12,488 | 13,571 | |||||
Total liabilities | 952,753 | 992,859 | |||||
DEFICIT | |||||||
Common stock, $0.01 par value – 1,000 shares authorized and 100 shares issued and outstanding at June 24, 2016 and December 31, 2015, respectively | — | — | |||||
Additional paid-in capital | 554,751 | 554,379 | |||||
Accumulated deficit | (807,862 | ) | (767,981 | ) | |||
Accumulated other comprehensive loss | (359 | ) | (360 | ) | |||
Total deficit attributable to Delta Tucker Holdings, Inc. | (253,470 | ) | (213,962 | ) | |||
Noncontrolling interests | 5,495 | 5,792 | |||||
Total deficit | (247,975 | ) | (208,170 | ) | |||
Total liabilities and deficit | $ | 704,778 | $ | 784,689 |
Six Months Ended | |||||||
(Amounts in thousands) | June 24, 2016 | June 26, 2015 | |||||
Cash flows from operating activities | |||||||
Net loss | $ | (39,385 | ) | $ | (104,159 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 17,677 | 18,148 | |||||
Loss on early extinguishment of debt | 328 | — | |||||
Amortization of deferred loan costs and original issue discount | 3,123 | 3,169 | |||||
Impairment of goodwill, intangibles and long-lived assets | — | 86,795 | |||||
Earnings from equity method investees | (684 | ) | (870 | ) | |||
Deferred income taxes | 2,993 | (8,428 | ) | ||||
Other | 1,725 | (436 | ) | ||||
Changes in assets and liabilities: | |||||||
Accounts receivable | 56,522 | 9,938 | |||||
Prepaid expenses and other current assets | 4,204 | 8,629 | |||||
Accounts payable and accrued liabilities | (24,852 | ) | (24,974 | ) | |||
Income taxes payable | 5,972 | (767 | ) | ||||
Net cash provided by (used in) operating activities | 27,623 | (12,955 | ) | ||||
Cash flows from investing activities | |||||||
Purchase of property and equipment | (1,882 | ) | (2,123 | ) | |||
Proceeds from sale of property, plant and equipment | 799 | — | |||||
Purchase of software | (1,417 | ) | (847 | ) | |||
Restriction on cash related to Cerberus 3L Notes | (20,242 | ) | — | ||||
Return of capital from equity method investees | 1,104 | 3,683 | |||||
Contributions to equity method investees | (4,056 | ) | (500 | ) | |||
Net cash (used in) provided by investing activities | (25,694 | ) | 213 | ||||
Cash flows from financing activities | |||||||
Borrowings on revolving credit facilities | 18,000 | 100,000 | |||||
Payments on revolving credit facilities | (18,000 | ) | (100,000 | ) | |||
Payments on senior secured credit facility | (187,272 | ) | — | ||||
Borrowing under new senior credit facility | 192,882 | — | |||||
Borrowing under Cerberus 3L notes | 30,000 | — | |||||
Payment to bondholders for Exchange Offer | (45,000 | ) | — | ||||
Payment of deferred financing costs | (4,878 | ) | — | ||||
Payments under other financing arrangements | — | (2,055 | ) | ||||
Equity contribution from affiliates of Cerberus | 350 | — | |||||
Payment of dividends to noncontrolling interests | (529 | ) | (514 | ) | |||
Net cash used in financing activities | (14,447 | ) | (2,569 | ) | |||
Net decrease in cash and cash equivalents | (12,518 | ) | (15,311 | ) | |||
Cash and cash equivalents, beginning of period | 108,782 | 94,004 | |||||
Cash and cash equivalents, end of period | $ | 96,264 | $ | 78,693 | |||
Income taxes paid, net | $ | 2,323 | $ | 4,761 | |||
Interest paid | $ | 30,726 | $ | 30,536 |
(Amounts in thousands) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Deficit Attributable to Delta Tucker Holdings, Inc. | Noncontrolling Interest | Total Deficit | |||||||||||||||||||||||
Balance at December 31, 2014 | — | $ | — | $ | 552,894 | $ | (635,379 | ) | $ | (281 | ) | $ | (82,766 | ) | $ | 5,489 | $ | (77,277 | ) | |||||||||||
Share based compensation, net | — | — | 295 | — | — | 295 | — | 295 | ||||||||||||||||||||||
Comprehensive loss attributable to Delta Tucker Holdings, Inc. | — | — | — | (104,888 | ) | (65 | ) | (104,953 | ) | 729 | (104,224 | ) | ||||||||||||||||||
DIFZ financing, net of tax | — | — | 1 | — | — | 1 | — | 1 | ||||||||||||||||||||||
Dividends declared to noncontrolling interests | — | — | — | — | — | — | (771 | ) | (771 | ) | ||||||||||||||||||||
Balance at June 26, 2015 | — | $ | — | $ | 553,190 | $ | (740,267 | ) | $ | (346 | ) | $ | (187,423 | ) | $ | 5,447 | $ | (181,976 | ) | |||||||||||
(Amounts in thousands) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Deficit Attributable to Delta Tucker Holdings, Inc. | Noncontrolling Interest | Total Deficit | |||||||||||||||||||||||
Balance at December 31, 2015 | — | $ | — | $ | 554,379 | $ | (767,981 | ) | $ | (360 | ) | $ | (213,962 | ) | $ | 5,792 | $ | (208,170 | ) | |||||||||||
Share based compensation, net | — | — | 22 | — | — | 22 | — | 22 | ||||||||||||||||||||||
Comprehensive loss attributable to Delta Tucker Holdings, Inc. | — | — | — | (39,881 | ) | 1 | (39,880 | ) | 496 | (39,384 | ) | |||||||||||||||||||
Capital contribution | — | — | 350 | — | — | 350 | — | 350 | ||||||||||||||||||||||
Dividends declared to noncontrolling interests | — | — | — | — | — | — | (793 | ) | (793 | ) | ||||||||||||||||||||
Balance at June 24, 2016 | — | $ | — | $ | 554,751 | $ | (807,862 | ) | $ | (359 | ) | $ | (253,470 | ) | $ | 5,495 | $ | (247,975 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
(Amounts in millions) | June 24, 2016 | June 26, 2015 | June 24, 2016 | June 26, 2015 | |||||||||||
Gross favorable adjustments | $ | 8.1 | $ | 7.9 | $ | 7.8 | $ | 12.2 | |||||||
Gross unfavorable adjustments | (13.2 | ) | (1.7 | ) | (13.5 | ) | (5.8 | ) | |||||||
Net adjustments | $ | (5.1 | ) | $ | 6.2 | $ | (5.7 | ) | $ | 6.4 |
As Of | |||||||
(Amounts in thousands) | June 24, 2016 | December 31, 2015 | |||||
Prepaid expenses | $ | 29,708 | $ | 30,985 | |||
Income tax refunds receivable | 87 | 204 | |||||
Inventories | 15,743 | 14,776 | |||||
Work-in-process inventory | 1,923 | 1,733 | |||||
Joint venture receivables | 789 | 460 | |||||
Other current assets | 7,075 | 7,525 | |||||
Total prepaid expenses and other current assets | $ | 55,325 | $ | 55,683 |
As Of | |||||||
(Amounts in thousands) | June 24, 2016 | December 31, 2015 | |||||
Helicopters | $ | 983 | $ | 983 | |||
Computers and other equipment | 11,568 | 10,392 | |||||
Leasehold improvements | 21,429 | 19,639 | |||||
Office furniture and fixtures | 4,930 | 4,541 | |||||
Gross property and equipment | 38,910 | 35,555 | |||||
Less accumulated depreciation | (23,123 | ) | (19,861 | ) | |||
Total property and equipment, net | $ | 15,787 | $ | 15,694 |
As Of | |||||||
(Amounts in thousands) | June 24, 2016 | December 31, 2015 | |||||
Investment in affiliates | $ | 10,484 | $ | 6,712 | |||
Palm promissory note, long-term portion | 2,268 | 2,079 | |||||
Other | 3,567 | 3,536 | |||||
Total other assets, net | $ | 16,319 | $ | 12,327 |
As Of | |||||||
(Amounts in thousands) | June 24, 2016 | December 31, 2015 | |||||
Wages, compensation and other benefits | $ | 73,364 | $ | 85,216 | |||
Accrued vacation | 17,839 | 14,433 | |||||
Accrued contributions to employee benefit plans | 1,213 | 1,032 | |||||
Total accrued payroll and employee costs | $ | 92,416 | $ | 100,681 |
As Of | |||||||
(Amounts in thousands) | June 24, 2016 | December 31, 2015 | |||||
Customer liabilities | $ | 24,991 | $ | 21,183 | |||
Accrued insurance | 24,536 | 35,530 | |||||
Accrued interest | 23,875 | 24,370 | |||||
Contract losses | 14,868 | 15,718 | |||||
Legal reserves | 4,574 | 5,063 | |||||
Subcontractor retention | 1,125 | 1,646 | |||||
Other | 13,560 | 11,208 | |||||
Total accrued liabilities | $ | 107,529 | $ | 114,718 |
(Amounts in thousands) | DynAviation | DynLogistics | Total | ||||||||
Goodwill balance as of December 31, 2015 | $ | — | $ | 42,093 | $ | 42,093 | |||||
Changes between January 1, 2016 and June 24, 2016 | — | — | — | ||||||||
Goodwill balance as of June 24, 2016 | $ | — | $ | 42,093 | $ | 42,093 |
As of June 24, 2016 | |||||||||||||
(Amounts in thousands, except years) | Weighted Average Remaining Useful Life (Years) | Gross Carrying Value | Accumulated Amortization | Net | |||||||||
Other intangible assets: | |||||||||||||
Customer-related intangible assets | 3.5 | $ | 252,615 | $ | (156,719 | ) | $ | 95,896 | |||||
Other | |||||||||||||
Finite-lived | 1.0 | 14,969 | (11,159 | ) | 3,810 | ||||||||
Total other intangibles | $ | 267,584 | $ | (167,878 | ) | $ | 99,706 | ||||||
Tradenames: | |||||||||||||
Finite-lived | 0.0 | $ | 869 | $ | (869 | ) | $ | — | |||||
Indefinite-lived | 28,536 | — | 28,536 | ||||||||||
Total tradenames | $ | 29,405 | $ | (869 | ) | $ | 28,536 |
As of December 31, 2015 | |||||||||||||||||||||
(Amounts in thousands, except years) | Weighted Average Remaining Useful Life (Years) | Gross Carrying Value | Accumulated Amortization | Impairment | Transfer to Assets Held for Sale | Net | |||||||||||||||
Other intangible assets: | |||||||||||||||||||||
Customer-related intangible assets | 4.0 | $ | 252,615 | $ | (142,020 | ) | $ | — | $ | — | $ | 110,595 | |||||||||
Other | |||||||||||||||||||||
Finite-lived | 0.7 | 13,325 | (10,430 | ) | — | (11 | ) | 2,884 | |||||||||||||
Indefinite-lived | 5,059 | — | (5,059 | ) | — | — | |||||||||||||||
Total other intangibles | $ | 270,999 | $ | (152,450 | ) | $ | (5,059 | ) | $ | (11 | ) | $ | 113,479 | ||||||||
Tradenames: | |||||||||||||||||||||
Finite-lived | 0.0 | $ | 869 | $ | (869 | ) | $ | — | $ | — | $ | — | |||||||||
Indefinite-lived | 28,700 | — | (164 | ) | — | 28,536 | |||||||||||||||
Total tradenames | $ | 29,569 | $ | (869 | ) | $ | (164 | ) | $ | — | $ | 28,536 |
Three Months Ended | Six Months Ended | ||||||||||||||
(Amounts in thousands) | June 24, 2016 | June 26, 2015 | June 24, 2016 | June 26, 2015 | |||||||||||
Domestic | $ | (19,469 | ) | $ | (100,930 | ) | $ | (30,061 | ) | $ | (112,256 | ) | |||
Foreign | 1,385 | (2,120 | ) | 1,900 | (1,388 | ) | |||||||||
Loss before income taxes | $ | (18,084 | ) | $ | (103,050 | ) | $ | (28,161 | ) | $ | (113,644 | ) |
As Of | |||||||
(Amounts in thousands) | June 24, 2016 | December 31, 2015 | |||||
Current deferred tax liabilities, net | $ | — | $ | (27,334 | ) | ||
Non-current deferred tax (liabilities) assets, net | (16,964 | ) | 13,364 | ||||
Deferred tax liabilities, net | $ | (16,964 | ) | $ | (13,970 | ) |
As Of | |||||||
(Amounts in thousands) | June 24, 2016 | December 31, 2015 | |||||
Billed | $ | 125,223 | $ | 136,127 | |||
Unbilled | 204,562 | 249,970 | |||||
Total accounts receivable, net | $ | 329,785 | $ | 386,097 |
• | Level 1, defined as observable inputs such as quoted prices in active markets; |
• | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and |
• | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
As Of | |||||||||||||||
June 24, 2016 | December 31, 2015 | ||||||||||||||
(Amounts in thousands) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||
10.375% senior unsecured notes | $ | 39,319 | $ | 31,259 | $ | 455,000 | $ | 337,838 | |||||||
11.875% senior secured second lien notes | 370,605 | 294,631 | — | — | |||||||||||
Term loan | 207,400 | 195,993 | 187,272 | 179,781 | |||||||||||
Cerberus 3L notes | 30,000 | 8,613 | — | — | |||||||||||
Total indebtedness | 647,324 | 530,496 | 642,272 | 517,619 | |||||||||||
Less current portion of long-term debt | (61,819 | ) | (21,263 | ) | (187,272 | ) | (179,781 | ) | |||||||
Total long-term debt | $ | 585,505 | $ | 509,233 | $ | 455,000 | $ | 337,838 |
As of June 24, 2016 | |||||||||||||||
(Amounts in thousands) | Carrying Amount | Original Issue Discount on Term Loan | Deferred Financing Costs, Net | Carrying Amount less Original Issue Discount on Term Loan and Deferred Financing Costs, Net | |||||||||||
10.375% senior unsecured notes | $ | 39,319 | $ | — | $ | — | $ | 39,319 | |||||||
11.875% senior secured second lien notes | 370,605 | — | (1,800 | ) | 368,805 | ||||||||||
Term loan | 207,400 | (14,430 | ) | (4,882 | ) | 188,088 | |||||||||
Cerberus 3L notes | 30,000 | — | (74 | ) | 29,926 | ||||||||||
Total indebtedness | 647,324 | (14,430 | ) | (6,756 | ) | 626,138 | |||||||||
Less current portion of long-term debt | (61,819 | ) | 1,566 | 252 | (60,001 | ) | |||||||||
Total long-term debt | $ | 585,505 | $ | (12,864 | ) | $ | (6,504 | ) | $ | 566,137 |
As of December 31, 2015 | |||||||||||
(Amounts in thousands) | Carrying Amount | Deferred Financing Costs, Net | Carrying Amount less Deferred Financing Costs, Net | ||||||||
10.375% senior unsecured notes | $ | 455,000 | $ | (2,835 | ) | $ | 452,165 | ||||
Term loan | 187,272 | (2,406 | ) | 184,866 | |||||||
Total indebtedness | 642,272 | (5,241 | ) | 637,031 | |||||||
Less current portion of long-term debt | (187,272 | ) | 2,406 | (184,866 | ) | ||||||
Total long-term debt | $ | 455,000 | $ | (2,835 | ) | $ | 452,165 |
• | a $207.4 million new term loan facility (the "New Term Loan"); |
• | a $24.8 million class A revolving facility, (or "class A revolving commitments") to terminate on July 7, 2016, and an $85.8 million class B revolving facility (or "class B revolving commitments"); (the class A and class B revolving commitments, together, the "Amended Revolver"); and |
• | up to $15.0 million in incremental revolving facilities provided by and at the discretion of certain non-debt fund affiliates that are controlled by Cerberus (as defined herein), which shall rank pari passu with, and be on the same terms as, the class B revolving facility. |
• | 100% of excess cash flow (as defined in Amendment No. 5) less the amount of certain voluntary prepayments as described in Amendment No. 5; and |
• | 100% of the net cash proceeds of all non-ordinary course asset sales and casualty and condemnation events, if we do not reinvest or commit to reinvest those proceeds in assets to be used in our business or to make certain other permitted investments within 6 months (and, if committed to be so reinvested, actually reinvested within 12 months). |
• | incur additional indebtedness; |
• | create liens on assets; |
• | enter into sale and leaseback transactions; |
• | make investments, loans, guarantees or advances; |
• | make certain acquisitions; |
• | sell assets; |
• | engage in mergers or acquisitions; |
• | pay dividends and make distributions or repurchase capital stock; |
• | repay certain other indebtedness; |
• | enter into agreements that restrict the ability of our subsidiaries to pay dividends; |
• | engage in certain transactions with affiliates; |
• | change the business conducted by us or our subsidiaries; |
• | amend our organizational documents; |
• | change our accounting policies or reporting practices or our fiscal year; and |
• | make capital expenditures. |
Period Ending | Total Leverage Ratio |
June 24, 2016 | 7.40 to 1.0 |
September 30, 2016 | 7.50 to 1.0 |
December 31, 2016 | 7.40 to 1.0 |
March 31, 2017 | 7.30 to 1.0 |
June 30, 2017 | 6.75 to 1.0 |
September 29, 2017 | 6.50 to 1.0 |
December 31, 2017 | 5.75 to 1.0 |
March 30, 2018 | 5.75 to 1.0 |
June 29, 2018 | 5.50 to 1.0 |
September 28, 2018 | 5.40 to 1.0 |
September 29, 2018 and thereafter | 4.75 to 1.0 |
Period Ending | Interest Coverage Ratio |
June 24, 2016 | 1.15 to 1.0 |
September 30, 2016 | 1.15 to 1.0 |
December 31, 2016 | 1.15 to 1.0 |
March 31, 2017 | 1.20 to 1.0 |
June 30, 2017 | 1.20 to 1.0 |
September 29, 2017 | 1.30 to 1.0 |
December 31, 2017 | 1.40 to 1.0 |
March 30, 2018 | 1.50 to 1.0 |
June 29, 2018 | 1.60 to 1.0 |
June 30, 2018 and thereafter | 1.70 to 1.0 |
• | incur additional indebtedness; |
• | pay dividends on capital stock or repurchase capital stock; |
• | make investments; |
• | create liens or use assets as security in other transactions; |
• | merge, consolidate or transfer or dispose of substantially all of its assets; |
• | engage in transactions with affiliates; and |
• | sell certain assets or merge with or into other companies. |
Period | Redemption Price | ||
2017 | 106.00 | % | |
2018 | 103.00 | % | |
2019 and thereafter | 100.00 | % |
Three Months Ended | Six Months Ended | ||||||||||||||
(Amounts in thousands) | June 24, 2016 | June 26, 2015 | June 24, 2016 | June 26, 2015 | |||||||||||
Revenue | |||||||||||||||
DynAviation | $ | 298,647 | $ | 324,507 | $ | 587,156 | $ | 634,412 | |||||||
DynLogistics | 152,670 | 166,194 | 283,859 | 322,594 | |||||||||||
Headquarters / Other (1) | (350 | ) | (531 | ) | (58 | ) | 186 | ||||||||
Total revenue | $ | 450,967 | $ | 490,170 | $ | 870,957 | $ | 957,192 | |||||||
Operating (loss) income | |||||||||||||||
DynAviation | $ | (252 | ) | $ | (76,969 | ) | $ | 10,466 | $ | (72,371 | ) | ||||
DynLogistics | 15,942 | 3,298 | 25,878 | 11,006 | |||||||||||
Headquarters / Other (2) | (20,619 | ) | (12,840 | ) | (35,795 | ) | (20,695 | ) | |||||||
Total operating (loss) income | $ | (4,929 | ) | $ | (86,511 | ) | $ | 549 | $ | (82,060 | ) | ||||
Depreciation and amortization | |||||||||||||||
DynAviation | $ | 521 | $ | 1,168 | $ | 685 | $ | 1,800 | |||||||
DynLogistics | 60 | 53 | 122 | 112 | |||||||||||
Headquarters / Other | 8,580 | 9,129 | 16,870 | 16,236 | |||||||||||
Total depreciation and amortization (3) | $ | 9,161 | $ | 10,350 | $ | 17,677 | $ | 18,148 |
(1) | Headquarters revenue primarily represents revenue earned on shared services arrangements for general and administrative services provided to unconsolidated joint ventures and elimination of intercompany items between segments. |
(2) | Headquarters operating expenses primarily relate to amortization of intangible assets and other costs that are not allocated to segments and are not billable to our U.S. government customers, Global Advisory Group costs and costs associated with the Refinancing Transactions, partially offset by equity method investee income. |
(3) | Includes amounts included in Cost of services of $0.3 million and $0.5 million and for the three and six months ended June 24, 2016, respectively, and $1.1 million and $1.6 million for the three and six months ended June 26, 2015, respectively. |
As Of | |||||||
(Amounts in thousands) | June 24, 2016 | December 31, 2015 | |||||
Assets | |||||||
DynAviation | $ | 304,277 | $ | 351,627 | |||
DynLogistics | 153,176 | 173,036 | |||||
Headquarters / Other (1) | 247,325 | 260,026 | |||||
Total assets | $ | 704,778 | $ | 784,689 |
(1) | Assets primarily include cash, investments in unconsolidated subsidiaries, and intangible assets (excluding goodwill). |
As Of | |||||||
(Amounts in millions) | June 24, 2016 | December 31, 2015 | |||||
Assets | $ | 5.1 | $ | 4.7 | |||
Liabilities | 1.9 | 1.1 |
Three Months Ended | Six Months Ended | ||||||||||||||
(Amounts in millions) | June 24, 2016 | June 26, 2015 | June 24, 2016 | June 26, 2015 | |||||||||||
Revenue | $ | 45.9 | $ | 55.6 | $ | 85.7 | $ | 107.3 |
As Of | |||||||
(Amounts in millions) | June 24, 2016 | December 31, 2015 | |||||
Current assets | $ | 41.8 | $ | 32.2 | |||
Total assets | 43.0 | 32.2 | |||||
Current liabilities | 20.4 | 12.5 | |||||
Total liabilities | 20.4 | 12.5 |
Three Months Ended | Six Months Ended | ||||||||||||||
(Amounts in millions) | June 24, 2016 | June 26, 2015 | June 24, 2016 | June 26, 2015 | |||||||||||
Revenue | $ | 22.5 | $ | 21.5 | $ | 37.4 | $ | 67.3 | |||||||
Gross profit | 1.0 | 3.5 | 1.5 | 8.7 | |||||||||||
Net income | 1.0 | 2.8 | 0.8 | 6.8 |
(Amounts in thousands) | Parent | Subsidiary Issuer | Subsidiary Guarantors | Subsidiary Non- Guarantors | Eliminations | Consolidated | |||||||||||||||||
Revenue | $ | — | $ | — | $ | 454,412 | $ | 51,980 | $ | (55,425 | ) | $ | 450,967 | ||||||||||
Cost of services | — | — | (414,335 | ) | (51,437 | ) | 55,411 | (410,361 | ) | ||||||||||||||
Selling, general and administrative expenses | — | — | (36,927 | ) | (44 | ) | 12 | (36,959 | ) | ||||||||||||||
Depreciation and amortization expense | — | — | (8,737 | ) | (176 | ) | 2 | (8,911 | ) | ||||||||||||||
Earnings from equity method investees | — | — | 335 | — | — | 335 | |||||||||||||||||
Impairment of goodwill, intangibles and long-lived assets | — | — | — | — | — | — | |||||||||||||||||
Operating income | — | — | (5,252 | ) | 323 | — | (4,929 | ) | |||||||||||||||
Interest expense | — | (16,762 | ) | (698 | ) | — | — | (17,460 | ) | ||||||||||||||
Loss on early extinguishment of debt | — | (328 | ) | — | — | — | (328 | ) | |||||||||||||||
Interest income | — | — | 20 | 2 | — | 22 | |||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | (25,121 | ) | (14,013 | ) | (97 | ) | — | 39,231 | — | ||||||||||||||
Other income, net | — | — | 4,690 | (79 | ) | — | 4,611 | ||||||||||||||||
(Loss) income before income taxes | (25,121 | ) | (31,103 | ) | (1,337 | ) | 246 | 39,231 | (18,084 | ) | |||||||||||||
Benefit (provision) for income taxes | — | 5,982 | (12,676 | ) | (35 | ) | — | (6,729 | ) | ||||||||||||||
Net (loss) income | (25,121 | ) | (25,121 | ) | (14,013 | ) | 211 | 39,231 | (24,813 | ) | |||||||||||||
Noncontrolling interests | — | — | — | (308 | ) | — | (308 | ) | |||||||||||||||
Net (loss) income attributable to Delta Tucker Holdings, Inc. | $ | (25,121 | ) | $ | (25,121 | ) | $ | (14,013 | ) | $ | (97 | ) | $ | 39,231 | $ | (25,121 | ) |
(Amounts in thousands) | Parent | Subsidiary Issuer | Subsidiary Guarantors | Subsidiary Non- Guarantors | Eliminations | Consolidated | |||||||||||||||||
Revenue | $ | — | $ | — | $ | 494,516 | $ | 62,041 | $ | (66,387 | ) | $ | 490,170 | ||||||||||
Cost of services | — | — | (444,118 | ) | (61,447 | ) | 66,372 | (439,193 | ) | ||||||||||||||
Selling, general and administrative expenses | — | — | (41,454 | ) | (22 | ) | 15 | (41,461 | ) | ||||||||||||||
Depreciation and amortization expense | — | — | (9,087 | ) | (201 | ) | — | (9,288 | ) | ||||||||||||||
Earnings from equity method investees | — | — | 56 | — | — | 56 | |||||||||||||||||
Impairment of goodwill, intangibles and long-lived assets | — | — | (86,795 | ) | — | — | (86,795 | ) | |||||||||||||||
Operating (loss) income | — | — | (86,882 | ) | 371 | — | (86,511 | ) | |||||||||||||||
Interest expense | — | (16,363 | ) | (809 | ) | — | — | (17,172 | ) | ||||||||||||||
Interest income | — | — | 25 | — | — | 25 | |||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | (90,055 | ) | (79,419 | ) | 58 | — | 169,416 | — | |||||||||||||||
Other income, net | — | — | 608 | — | — | 608 | |||||||||||||||||
(Loss) income before income taxes | (90,055 | ) | (95,782 | ) | (87,000 | ) | 371 | 169,416 | (103,050 | ) | |||||||||||||
Benefit for income taxes | — | 5,727 | 7,581 | (15 | ) | — | 13,293 | ||||||||||||||||
Net (loss) income | (90,055 | ) | (90,055 | ) | (79,419 | ) | 356 | 169,416 | (89,757 | ) | |||||||||||||
Noncontrolling interests | — | — | — | (298 | ) | — | (298 | ) | |||||||||||||||
Net (loss) income attributable to Delta Tucker Holdings, Inc. | $ | (90,055 | ) | $ | (90,055 | ) | $ | (79,419 | ) | $ | 58 | $ | 169,416 | $ | (90,055 | ) |
(Amounts in thousands) | Parent | Subsidiary Issuer | Subsidiary Guarantors | Subsidiary Non- Guarantors | Eliminations | Consolidated | |||||||||||||||||
Revenue | $ | — | $ | — | $ | 877,839 | $ | 96,798 | $ | (103,680 | ) | $ | 870,957 | ||||||||||
Cost of services | — | — | (790,113 | ) | (96,396 | ) | 103,650 | (782,859 | ) | ||||||||||||||
Selling, general and administrative expenses | — | — | (71,009 | ) | (65 | ) | 26 | (71,048 | ) | ||||||||||||||
Depreciation and amortization expense | — | — | (16,862 | ) | (345 | ) | 4 | (17,203 | ) | ||||||||||||||
Earnings from equity method investees | — | — | 702 | — | — | 702 | |||||||||||||||||
Impairment of goodwill, intangibles and long-lived assets | — | — | — | — | — | — | |||||||||||||||||
Operating (loss) income | — | — | 557 | (8 | ) | — | 549 | ||||||||||||||||
Interest expense | — | (32,040 | ) | (1,387 | ) | — | — | (33,427 | ) | ||||||||||||||
Loss on early extinguishment of debt | — | (328 | ) | — | — | — | (328 | ) | |||||||||||||||
Interest income | — | — | 79 | 3 | — | 82 | |||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | (39,881 | ) | (18,842 | ) | (644 | ) | — | 59,367 | — | ||||||||||||||
Other income, net | — | — | 5,049 | (86 | ) | — | 4,963 | ||||||||||||||||
(Loss) income before income taxes | (39,881 | ) | (51,210 | ) | 3,654 | (91 | ) | 59,367 | (28,161 | ) | |||||||||||||
Benefit (provision) for income taxes | — | 11,329 | (22,496 | ) | (57 | ) | — | (11,224 | ) | ||||||||||||||
Net (loss) income | (39,881 | ) | (39,881 | ) | (18,842 | ) | (148 | ) | 59,367 | (39,385 | ) | ||||||||||||
Noncontrolling interests | — | — | — | (496 | ) | — | (496 | ) | |||||||||||||||
Net (loss) income attributable to Delta Tucker Holdings, Inc. | $ | (39,881 | ) | $ | (39,881 | ) | $ | (18,842 | ) | $ | (644 | ) | $ | 59,367 | $ | (39,881 | ) |
(Amounts in thousands) | Parent | Subsidiary Issuer | Subsidiary Guarantors | Subsidiary Non- Guarantors | Eliminations | Consolidated | |||||||||||||||||
Revenue | $ | — | $ | — | $ | 966,041 | $ | 119,307 | $ | (128,156 | ) | $ | 957,192 | ||||||||||
Cost of services | — | — | (873,509 | ) | (117,967 | ) | 128,125 | (863,351 | ) | ||||||||||||||
Selling, general and administrative expenses | — | — | (72,685 | ) | (29 | ) | 31 | (72,683 | ) | ||||||||||||||
Depreciation and amortization expense | — | — | (15,770 | ) | (778 | ) | — | (16,548 | ) | ||||||||||||||
Earnings from equity method investees | — | — | 125 | — | — | 125 | |||||||||||||||||
Impairment of goodwill, intangibles and long-lived assets | — | — | (86,795 | ) | — | — | (86,795 | ) | |||||||||||||||
Operating (loss) income | — | — | (82,593 | ) | 533 | — | (82,060 | ) | |||||||||||||||
Interest expense | — | (31,937 | ) | (1,291 | ) | — | — | (33,228 | ) | ||||||||||||||
Interest income | — | — | 40 | 2 | — | 42 | |||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | (104,888 | ) | (84,129 | ) | (446 | ) | — | 189,463 | — | ||||||||||||||
Other income, net | — | — | 1,520 | 82 | — | 1,602 | |||||||||||||||||
(Loss) income before income taxes | (104,888 | ) | (116,066 | ) | (82,770 | ) | 617 | 189,463 | (113,644 | ) | |||||||||||||
Benefit for income taxes | — | 11,178 | (1,359 | ) | (334 | ) | — | 9,485 | |||||||||||||||
Net (loss) income | (104,888 | ) | (104,888 | ) | (84,129 | ) | 283 | 189,463 | (104,159 | ) | |||||||||||||
Noncontrolling interests | — | — | — | (729 | ) | — | (729 | ) | |||||||||||||||
Net (loss) income attributable to Delta Tucker Holdings, Inc. | $ | (104,888 | ) | $ | (104,888 | ) | $ | (84,129 | ) | $ | (446 | ) | $ | 189,463 | $ | (104,888 | ) |
(Amounts in thousands) | Parent | Subsidiary Issuer | Subsidiary Guarantors | Subsidiary Non- Guarantors | Eliminations | Consolidated | |||||||||||||||||
Net (loss) income | $ | (25,121 | ) | $ | (25,121 | ) | $ | (14,013 | ) | $ | 211 | $ | 39,231 | $ | (24,813 | ) | |||||||
Other comprehensive income: | |||||||||||||||||||||||
Currency translation adjustment | (1 | ) | (1 | ) | — | (1 | ) | 2 | (1 | ) | |||||||||||||
Other comprehensive income, before tax | (1 | ) | (1 | ) | — | (1 | ) | 2 | (1 | ) | |||||||||||||
Income tax expense related to items of other comprehensive income | — | — | — | — | — | — | |||||||||||||||||
Other comprehensive income | (1 | ) | (1 | ) | — | (1 | ) | 2 | (1 | ) | |||||||||||||
Comprehensive loss | (25,122 | ) | (25,122 | ) | (14,013 | ) | 210 | 39,233 | (24,814 | ) | |||||||||||||
Noncontrolling interests | — | — | — | (308 | ) | — | (308 | ) | |||||||||||||||
Comprehensive loss attributable to Delta Tucker Holdings, Inc. | $ | (25,122 | ) | $ | (25,122 | ) | $ | (14,013 | ) | $ | (98 | ) | $ | 39,233 | $ | (25,122 | ) |
(Amounts in thousands) | Parent | Subsidiary Issuer | Subsidiary Guarantors | Subsidiary Non- Guarantors | Eliminations | Consolidated | |||||||||||||||||
Net (loss) income | $ | (90,055 | ) | $ | (90,055 | ) | $ | (79,419 | ) | $ | 356 | $ | 169,416 | $ | (89,757 | ) | |||||||
Other comprehensive loss: | |||||||||||||||||||||||
Currency translation adjustment | 11 | 11 | — | 11 | (22 | ) | 11 | ||||||||||||||||
Other comprehensive loss, before tax | 11 | 11 | — | 11 | (22 | ) | 11 | ||||||||||||||||
Income tax benefit related to items of other comprehensive loss | (4 | ) | (4 | ) | — | (4 | ) | 8 | (4 | ) | |||||||||||||
Other comprehensive loss | 7 | 7 | — | 7 | (14 | ) | 7 | ||||||||||||||||
Comprehensive (loss) income | (90,048 | ) | (90,048 | ) | (79,419 | ) | 363 | 169,402 | (89,750 | ) | |||||||||||||
Noncontrolling interests | — | — | — | (298 | ) | — | (298 | ) | |||||||||||||||
Comprehensive (loss) income attributable to Delta Tucker Holdings, Inc. | $ | (90,048 | ) | $ | (90,048 | ) | $ | (79,419 | ) | $ | 65 | $ | 169,402 | $ | (90,048 | ) |
(Amounts in thousands) | Parent | Subsidiary Issuer | Subsidiary Guarantors | Subsidiary Non- Guarantors | Eliminations | Consolidated | |||||||||||||||||
Net (loss) income | $ | (39,881 | ) | $ | (39,881 | ) | $ | (18,842 | ) | $ | (148 | ) | $ | 59,367 | $ | (39,385 | ) | ||||||
Other comprehensive loss: | |||||||||||||||||||||||
Currency translation adjustment | 2 | 2 | — | 2 | (4 | ) | 2 | ||||||||||||||||
Other comprehensive loss, before tax | 2 | 2 | — | 2 | (4 | ) | 2 | ||||||||||||||||
Income tax benefit related to items of other comprehensive loss | (1 | ) | (1 | ) | — | (1 | ) | 2 | (1 | ) | |||||||||||||
Other comprehensive loss | 1 | 1 | — | 1 | (2 | ) | 1 | ||||||||||||||||
Comprehensive (loss) income | (39,880 | ) | (39,880 | ) | (18,842 | ) | (147 | ) | 59,365 | (39,384 | ) | ||||||||||||
Noncontrolling interests | — | — | — | (496 | ) | — | (496 | ) | |||||||||||||||
Comprehensive loss attributable to Delta Tucker Holdings, Inc. | $ | (39,880 | ) | $ | (39,880 | ) | $ | (18,842 | ) | $ | (643 | ) | $ | 59,365 | $ | (39,880 | ) |
(Amounts in thousands) | Parent | Subsidiary Issuer | Subsidiary Guarantors | Subsidiary Non- Guarantors | Eliminations | Consolidated | |||||||||||||||||
Net (loss) income | $ | (104,888 | ) | $ | (104,888 | ) | $ | (84,129 | ) | $ | 283 | $ | 189,463 | $ | (104,159 | ) | |||||||
Other comprehensive loss: | |||||||||||||||||||||||
Currency translation adjustment | (101 | ) | (101 | ) | — | (101 | ) | 202 | (101 | ) | |||||||||||||
Other comprehensive loss, before tax | (101 | ) | (101 | ) | — | (101 | ) | 202 | (101 | ) | |||||||||||||
Income tax benefit related to items of other comprehensive loss | 36 | 36 | — | 36 | (72 | ) | 36 | ||||||||||||||||
Other comprehensive loss | (65 | ) | (65 | ) | — | (65 | ) | 130 | (65 | ) | |||||||||||||
Comprehensive (loss) income | (104,953 | ) | (104,953 | ) | (84,129 | ) | 218 | 189,593 | (104,224 | ) | |||||||||||||
Noncontrolling interests | — | — | — | (729 | ) | — | (729 | ) | |||||||||||||||
Comprehensive (loss) income attributable to Delta Tucker Holdings, Inc. | $ | (104,953 | ) | $ | (104,953 | ) | $ | (84,129 | ) | $ | (511 | ) | $ | 189,593 | $ | (104,953 | ) |
(Amounts in thousands) | Parent | Subsidiary Issuer | Subsidiary Guarantors | Subsidiary Non- Guarantors | Eliminations | Consolidated | |||||||||||||||||
ASSETS | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 72,240 | $ | 24,024 | $ | — | $ | 96,264 | |||||||||||
Restricted cash | — | 20,499 | 464 | — | — | 20,963 | |||||||||||||||||
Accounts receivable, net | — | — | 345,770 | 4,190 | (20,175 | ) | 329,785 | ||||||||||||||||
Intercompany receivables | — | — | 220,170 | 12,444 | (232,614 | ) | — | ||||||||||||||||
Prepaid expenses and other current assets | — | — | 53,495 | 2,231 | (401 | ) | 55,325 | ||||||||||||||||
Total current assets | — | 20,499 | 692,139 | 42,889 | (253,190 | ) | 502,337 | ||||||||||||||||
Property and equipment, net | — | — | 14,799 | 988 | — | 15,787 | |||||||||||||||||
Goodwill | — | — | 9,694 | 32,399 | — | 42,093 | |||||||||||||||||
Tradenames, net | — | — | 28,536 | — | — | 28,536 | |||||||||||||||||
Other intangibles, net | — | — | 99,692 | 14 | — | 99,706 | |||||||||||||||||
Investment in subsidiaries | — | 599,117 | 54,520 | — | (653,637 | ) | — | ||||||||||||||||
Other assets, net | — | — | 11,636 | 4,683 | — | 16,319 | |||||||||||||||||
Total assets | $ | — | $ | 619,616 | $ | 911,016 | $ | 80,973 | $ | (906,827 | ) | $ | 704,778 | ||||||||||
LIABILITIES & DEFICIT | |||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||
Current portion of long-term debt | $ | — | $ | 60,001 | $ | — | $ | — | $ | — | $ | 60,001 | |||||||||||
Accounts payable | — | — | 83,009 | 2,237 | (2,030 | ) | 83,216 | ||||||||||||||||
Accrued payroll and employee costs | — | — | 88,734 | 3,682 | — | 92,416 | |||||||||||||||||
Intercompany payables | 43,524 | 176,646 | 12,419 | 25 | (232,614 | ) | — | ||||||||||||||||
Deferred income taxes | — | — | — | — | — | ||||||||||||||||||
Accrued liabilities | 208,390 | 25,222 | 80,304 | 20,509 | (226,896 | ) | 107,529 | ||||||||||||||||
Income taxes payable | — | — | 14,042 | — | (40 | ) | 14,002 | ||||||||||||||||
Total current liabilities | 251,914 | 261,869 | 278,508 | 26,453 | (461,580 | ) | 357,164 | ||||||||||||||||
Long-term debt | — | 566,137 | — | — | — | 566,137 | |||||||||||||||||
Long-term deferred taxes | 1,556 | — | 15,408 | — | — | 16,964 | |||||||||||||||||
Other long-term liabilities | — | — | 12,488 | — | — | 12,488 | |||||||||||||||||
Noncontrolling interests | — | — | 5,495 | — | — | 5,495 | |||||||||||||||||
(Deficit) equity | (253,470 | ) | (208,390 | ) | 599,117 | 54,520 | (445,247 | ) | (253,470 | ) | |||||||||||||
Total liabilities and deficit | $ | — | $ | 619,616 | $ | 911,016 | $ | 80,973 | $ | (906,827 | ) | $ | 704,778 |
(Amounts in thousands) | Parent | Subsidiary Issuer | Subsidiary Guarantors | Subsidiary Non- Guarantors | Eliminations | Consolidated | |||||||||||||||||
ASSETS | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 95,365 | $ | 13,417 | $ | — | $ | 108,782 | |||||||||||
Restricted cash | — | — | 721 | — | — | 721 | |||||||||||||||||
Accounts receivable, net | — | — | 389,773 | 11 | (3,687 | ) | 386,097 | ||||||||||||||||
Intercompany receivables | — | — | 199,364 | 15,180 | (214,544 | ) | — | ||||||||||||||||
Prepaid expenses and other current assets | — | — | 54,364 | 1,825 | (506 | ) | 55,683 | ||||||||||||||||
Assets held for sale | — | — | 7,913 | — | — | 7,913 | |||||||||||||||||
Total current assets | — | — | 747,500 | 30,433 | (218,737 | ) | 559,196 | ||||||||||||||||
Property and equipment, net | — | — | 14,617 | 1,077 | — | 15,694 | |||||||||||||||||
Goodwill | — | — | 9,694 | 32,399 | — | 42,093 | |||||||||||||||||
Tradenames, net | — | — | 28,536 | — | — | 28,536 | |||||||||||||||||
Other intangibles, net | — | — | 113,256 | 223 | — | 113,479 | |||||||||||||||||
Investment in subsidiaries | — | 650,005 | 55,460 | — | (705,465 | ) | — | ||||||||||||||||
Long-term deferred taxes | — | — | 13,364 | — | — | 13,364 | |||||||||||||||||
Other assets, net | — | — | 10,616 | 1,711 | — | 12,327 | |||||||||||||||||
Total assets | $ | — | $ | 650,005 | $ | 993,043 | $ | 65,843 | $ | (924,202 | ) | $ | 784,689 | ||||||||||
LIABILITIES & DEFICIT | |||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||
Current portion of long-term debt | $ | — | $ | 184,866 | $ | — | $ | — | $ | — | $ | 184,866 | |||||||||||
Accounts payable | — | — | 85,374 | 6,138 | (902 | ) | 90,610 | ||||||||||||||||
Accrued payroll and employee costs | — | — | 96,800 | 3,881 | — | 100,681 | |||||||||||||||||
Intercompany payables | 45,079 | 154,285 | 15,180 | — | (214,544 | ) | — | ||||||||||||||||
Deferred income taxes | — | — | 27,310 | 24 | — | 27,334 | |||||||||||||||||
Accrued liabilities | 168,883 | 27,572 | 90,013 | 340 | (172,090 | ) | 114,718 | ||||||||||||||||
Liabilities held for sale | — | — | 784 | — | — | 784 | |||||||||||||||||
Income taxes payable | — | — | 8,214 | — | (84 | ) | 8,130 | ||||||||||||||||
Total current liabilities | 213,962 | 366,723 | 323,675 | 10,383 | (387,620 | ) | 527,123 | ||||||||||||||||
Long-term debt | — | 452,165 | — | — | — | 452,165 | |||||||||||||||||
Other long-term liabilities | — | — | 13,571 | — | — | 13,571 | |||||||||||||||||
Noncontrolling interests | — | — | 5,792 | — | — | 5,792 | |||||||||||||||||
(Deficit) Equity | (213,962 | ) | (168,883 | ) | 650,005 | 55,460 | (536,582 | ) | (213,962 | ) | |||||||||||||
Total liabilities and deficit | $ | — | $ | 650,005 | $ | 993,043 | $ | 65,843 | $ | (924,202 | ) | $ | 784,689 |
(Amounts in thousands) | Parent | Subsidiary Issuer | Subsidiary Guarantors | Subsidiary Non- Guarantors | Eliminations | Consolidated | |||||||||||||||||
Net cash provided by (used in) operating activities | $ | 2,119 | $ | 45,981 | $ | (15,849 | ) | $ | (4,098 | ) | $ | (530 | ) | $ | 27,623 | ||||||||
Cash flows from investing activities: | |||||||||||||||||||||||
Purchase of property and equipment | — | — | (1,858 | ) | (24 | ) | — | (1,882 | ) | ||||||||||||||
Proceeds from sale of property, plant and equipment | — | — | 799 | — | — | 799 | |||||||||||||||||
Purchase of software | — | — | (1,417 | ) | — | — | (1,417 | ) | |||||||||||||||
Restriction on cash related to Cerberus 3L Notes | — | (20,242 | ) | — | — | — | (20,242 | ) | |||||||||||||||
Return of capital from equity method investees | — | — | 1,104 | — | — | 1,104 | |||||||||||||||||
Contributions to equity method investees | — | — | (4,056 | ) | — | — | (4,056 | ) | |||||||||||||||
Transfers from (to) affiliates | — | — | 13,938 | 15,787 | (29,725 | ) | — | ||||||||||||||||
Net cash provided by investing activities | — | (20,242 | ) | 8,510 | 15,763 | (29,725 | ) | (25,694 | ) | ||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||
Borrowings on revolving credit facilities | — | 18,000 | — | — | — | 18,000 | |||||||||||||||||
Payments on revolving credit facilities | — | (18,000 | ) | — | — | — | (18,000 | ) | |||||||||||||||
Payments on senior secured credit facility | — | (187,272 | ) | — | — | — | (187,272 | ) | |||||||||||||||
Borrowing under new senior credit facility | — | 192,882 | — | — | — | 192,882 | |||||||||||||||||
Borrowing under Cerberus 3L notes | — | 30,000 | — | — | — | 30,000 | |||||||||||||||||
Payment to bondholders for Exchange Offer | — | (45,000 | ) | — | — | — | (45,000 | ) | |||||||||||||||
Payment of deferred financing costs | — | (4,878 | ) | — | — | — | (4,878 | ) | |||||||||||||||
Equity contribution from affiliates to Cerberus | — | 350 | — | — | — | 350 | |||||||||||||||||
Payments of dividends to noncontrolling interests | — | — | — | (1,058 | ) | 529 | (529 | ) | |||||||||||||||
Net transfers from/(to) Parent/subsidiary | (2,119 | ) | (11,821 | ) | (15,786 | ) | — | 29,726 | — | ||||||||||||||
Net cash used in financing activities | (2,119 | ) | (25,739 | ) | (15,786 | ) | (1,058 | ) | 30,255 | (14,447 | ) | ||||||||||||
Net (decrease) increase in cash and cash equivalents | — | — | (23,125 | ) | 10,607 | — | (12,518 | ) | |||||||||||||||
Cash and cash equivalents, beginning of period | — | — | 95,365 | 13,417 | — | 108,782 | |||||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | — | $ | 72,240 | $ | 24,024 | $ | — | $ | 96,264 |
(Amounts in thousands) | Parent | Subsidiary Issuer | Subsidiary Guarantors | Subsidiary Non- Guarantors | Eliminations | Consolidated | |||||||||||||||||
Net cash provided by (used in) operating activities | $ | 1,574 | $ | 20,133 | $ | (47,370 | ) | $ | 13,222 | $ | (514 | ) | $ | (12,955 | ) | ||||||||
Cash flows from investing activities: | |||||||||||||||||||||||
Purchase of property and equipment | — | — | (977 | ) | (1,146 | ) | — | (2,123 | ) | ||||||||||||||
Purchase of software | — | — | (847 | ) | — | — | (847 | ) | |||||||||||||||
Return of capital from equity method investees | — | — | 3,683 | — | — | 3,683 | |||||||||||||||||
Contributions to equity method investees | — | — | (500 | ) | — | — | (500 | ) | |||||||||||||||
Transfers from (to) affiliates | — | — | 21,708 | 14,680 | (36,388 | ) | — | ||||||||||||||||
Net cash provided by investing activities | — | — | 23,067 | 13,534 | (36,388 | ) | 213 | ||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||
Borrowings on long-term debt | — | 100,000 | — | — | — | 100,000 | |||||||||||||||||
Payments on long-term debt | — | (100,000 | ) | — | — | — | (100,000 | ) | |||||||||||||||
Payments related to financed insurance | — | — | (2,055 | ) | — | — | (2,055 | ) | |||||||||||||||
Payments of dividends to Parent | — | — | — | (1,028 | ) | 514 | (514 | ) | |||||||||||||||
Net transfers from/(to) Parent/subsidiary | (1,574 | ) | (20,133 | ) | (14,681 | ) | — | 36,388 | — | ||||||||||||||
Net cash used in financing activities | (1,574 | ) | (20,133 | ) | (16,736 | ) | (1,028 | ) | 36,902 | (2,569 | ) | ||||||||||||
Net (decrease) increase in cash and cash equivalents | — | — | (41,039 | ) | 25,728 | — | (15,311 | ) | |||||||||||||||
Cash and cash equivalents, beginning of period | — | — | 87,300 | 6,704 | — | 94,004 | |||||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | — | $ | 46,261 | $ | 32,432 | $ | — | $ | 78,693 |
• | Adhering to discretionary spending caps mandated by the Budget Control Act of 2011 ("BCA"); |
• | Troop levels and tempo of operations in Afghanistan; |
• | Conflicts in Iraq, Syria and the wider Middle East; and |
• | Increased instability and challenges to the existing international framework. |
• | Realignment of the military force structure, leading to increased outsourcing of non-combat functions, including life cycle; |
• | Asset management of equipment ranging from organizational to depot-level maintenance; |
• | Requirement to maintain, overhaul and upgrade for returning rolling stocks and aging platforms; |
• | Sustain and support forward-deployed rotational troops and equipment; |
• | Growth in outsourcing by foreign allies of maintenance, supply-support, facilities management, infrastructure upgrades, and construction management related services; |
• | Continued focus on smart power initiatives by the DoS, USAID, the United Nations ("UN"), and the DoD, including development and smaller-scale stability operations; and |
• | Further efforts by the U.S. government to move from single-award to multiple-award IDIQ contracts, which offer an opportunity to increase revenue by competing for task orders with the other contract awardees. |
• | In March 2016, DynLogistics was awarded the G4 Worldwide Logistics Support contract from the United States Army's Intelligence and Security Command to provide multi-disciplined engineering, facilities and logistical support. The contract has a one-year base period, with four one-year options and a total potential contract value of $320.5 million. |
• | On April 30, 2016, the Company entered into Amendment No. 5 to the Senior Credit Facility, which became effective on June 15, 2016, and on May 2, 2016, the Company launched the Exchange Offer and Consent Solicitation, as further described in Note 7 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. |
• | In May 2016, DynAviation announced the award of a contract in support of the Advanced Military Maintenance and Repair Overhaul Center ("AMMROC") and the United Arab Emirates ("UAE") military to provide support to the military aircraft and facilities of the UAE. The contract has a one-year base period with two, one-year options with a total potential value of $102 million. |
• | On May 26, 2016, we were notified that the Company’s claim before the Armed Services Board of Contract Appeals seeking contractual reinterpretation and restructure on a specific U.S. Air Force contract was denied. Based on the outcome, the customer is now requiring the Company to process additional engines. We have reached an agreement with the U.S. Air Force related to performance requirements on this contract and we recorded a charge associated with this matter in the second quarter of 2016. |
• | In June 2016, DynLogistics announced the award of the Al Udeid Civil Engineer ("CE") Base Operation Support ("BOS") Services task order on the Air Force Augmentation Program ("AFCAP IV") from the U.S. Air Force to provide engineering support, fire support, pavement sweeping, facility management, Industrial Chilled Water Systems ("ICWS") and Industrial Controls Systems ("ICS") training, and electrical power production and distribution at the Al Udeid Air Base in Qatar. The task order has a one-year base period, with four one-year options and a total potential task order value of $42.3 million. |
• | In June 2016, DynLogistics announced the award of the Al Dhafra CE Support Services task order on AFCAP IV from the U.S. Air Force to provide all personnel, labor, vehicles, supervision, training, design, equipment, safety equipment and other items necessary to perform security barriers maintenance and repair, fire alarm and fire suppression system maintenance and repair, and engineering and design support services at Al Dhafra Air Base in the UAE. The task order has a one-year base period, with two one-year options and one six-month option period and a total potential task order value of $8.6 million. |
• | In June 2016, DynLogistics announced the award of the Southwest Asia ("SWA") Transient Aircraft Services ("TAS") task order on AFCAP IV from the U.S. Air Force to provide personnel, supervision and other services as necessary to operate fixed and rotary wing aircraft. The task order has a one-year base period, with four one-year options and one six-month option period and a total potential task order value of $29.0 million. |
• | On June 3, 2016 the DoS Office of Acquisition Management posted a J&A for other than full and open competition detailing its intent to extend the INL Air Wing contract for a period of 12 months. |
• | On June 15, 2016, in connection with the consummation of the Exchange Offer and Consent Solicitation, $415.7 million principal amount of our Senior Unsecured Notes were exchanged for $45.0 million cash and $370.6 million aggregate principal amount of newly issued New Notes, and the amendments to the Senior Unsecured Notes Indenture that were the subject of the Consent Solicitation became effective, as further described in Note 7 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. |
• | On June 15, 2016, DynCorp Funding LLC, a limited liability company managed by Cerberus, entered into the Cerberus 3L Notes, in which $30 million was provided to us, as further described in Note 7 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. |
• | Fixed-Price Type Contracts: In a fixed-price contract, the price is generally not subject to adjustment based on costs incurred, which can favorably or adversely impact our profitability depending upon our execution in performing the contracted service. Our fixed-price contracts may include firm fixed-price, fixed-price with economic adjustment, and fixed-price incentive elements. |
• | Time-and-Materials Type Contracts: Time-and-materials type contracts provide for acquiring supplies or services on the basis of direct labor hours at fixed hourly/daily rates plus materials at cost. |
• | Cost-Reimbursement Type Contracts: Cost-reimbursement type contracts provide for payment of allowable incurred costs, to the extent prescribed in the contract, plus a fixed-fee, award-fee, incentive-fee or a combination thereof. Award-fees or incentive-fees are generally based upon various objective and subjective criteria, such as aircraft mission capability rates and meeting cost targets. Award and incentive fees are excluded from estimated total contract revenue until a reasonably determinable estimate of award and incentive fees can be made. |
Three Months Ended | Six Months Ended | ||||||||||
June 24, 2016 | June 26, 2015 | June 24, 2016 | June 26, 2015 | ||||||||
Fixed-Price | 46 | % | 37 | % | 46 | % | 38 | % | |||
Time-and-Materials | 5 | % | 14 | % | 4 | % | 13 | % | |||
Cost-Reimbursement | 49 | % | 49 | % | 50 | % | 49 | % | |||
Total | 100 | % | 100 | % | 100 | % | 100 | % |
As Of | |||||||
(Amounts in millions) | June 24, 2016 | December 31, 2015 | |||||
Funded backlog | $ | 1,194 | $ | 1,183 | |||
Unfunded backlog | 1,501 | 1,859 | |||||
Total | $ | 2,695 | $ | 3,042 |
Three Months Ended | |||||||||||||
(Amounts in thousands) | June 24, 2016 | June 26, 2015 | |||||||||||
Revenue | $ | 450,967 | 100.0 | % | $ | 490,170 | 100.0 | % | |||||
Cost of services | (410,361 | ) | (91.0 | ) | (439,193 | ) | (89.6 | ) | |||||
Selling, general and administrative expenses | (36,959 | ) | (8.2 | ) | (41,461 | ) | (8.5 | ) | |||||
Depreciation and amortization expense | (8,911 | ) | (2.0 | ) | (9,288 | ) | (1.9 | ) | |||||
Earnings from equity method investees | 335 | 0.1 | 56 | — | |||||||||
Impairment of goodwill, intangibles and long lived assets | — | — | (86,795 | ) | (17.7 | ) | |||||||
Operating loss | (4,929 | ) | (1.1 | ) | (86,511 | ) | (17.7 | ) | |||||
Interest expense | (17,460 | ) | (3.9 | ) | (17,172 | ) | (3.5 | ) | |||||
Loss on early extinguishment of debt | (328 | ) | (0.1 | ) | — | — | |||||||
Interest income | 22 | — | 25 | — | |||||||||
Other income, net | 4,611 | 1.0 | 608 | 0.1 | |||||||||
Loss before income taxes | (18,084 | ) | (4.1 | ) | (103,050 | ) | (21.1 | ) | |||||
(Provision) benefit for income taxes | (6,729 | ) | (1.5 | ) | 13,293 | 2.7 | |||||||
Net loss | (24,813 | ) | (5.6 | ) | (89,757 | ) | (18.4 | ) | |||||
Noncontrolling interests | (308 | ) | (0.1 | ) | (298 | ) | (0.1 | ) | |||||
Net loss attributable to Delta Tucker Holdings, Inc. | $ | (25,121 | ) | (5.7 | ) | $ | (90,055 | ) | (18.5 | ) |
Six Months Ended | |||||||||||||
(Amounts in thousands) | June 24, 2016 | June 26, 2015 | |||||||||||
Revenue | $ | 870,957 | 100.0 | % | $ | 957,192 | 100.0 | % | |||||
Cost of services | (782,859 | ) | (89.9 | ) | (863,351 | ) | (90.2 | ) | |||||
Selling, general and administrative expenses | (71,048 | ) | (8.2 | ) | (72,683 | ) | (7.6 | ) | |||||
Depreciation and amortization expense | (17,203 | ) | (2.0 | ) | (16,548 | ) | (1.7 | ) | |||||
Earnings from equity method investees | 702 | 0.1 | 125 | — | |||||||||
Impairment of goodwill, intangibles and long lived assets | — | — | (86,795 | ) | (9.1 | ) | |||||||
Operating income (loss) | 549 | — | (82,060 | ) | (8.6 | ) | |||||||
Interest expense | (33,427 | ) | (3.8 | ) | (33,228 | ) | (3.5 | ) | |||||
Loss on early extinguishment of debt | (328 | ) | — | — | — | ||||||||
Interest income | 82 | — | 42 | — | |||||||||
Other income, net | 4,963 | 0.6 | 1,602 | 0.2 | |||||||||
Loss before income taxes | (28,161 | ) | (3.2 | ) | (113,644 | ) | (11.9 | ) | |||||
(Provision) benefit for income taxes | (11,224 | ) | (1.3 | ) | 9,485 | 1.0 | |||||||
Net loss | (39,385 | ) | (4.5 | ) | (104,159 | ) | (10.9 | ) | |||||
Noncontrolling interests | (496 | ) | (0.1 | ) | (729 | ) | (0.1 | ) | |||||
Net loss attributable to Delta Tucker Holdings, Inc. | $ | (39,881 | ) | (4.6 | ) | $ | (104,888 | ) | (11.0 | ) |
Three Months Ended | |||||||||||||
June 24, 2016 | June 26, 2015 | ||||||||||||
(Amounts in thousands) | Revenue | % of Total Revenue | Revenue | % of Total Revenue | |||||||||
DynAviation | $ | 298,647 | 66.2 | % | $ | 324,507 | 66.2 | % | |||||
DynLogistics | 152,670 | 33.9 | 166,194 | 33.9 | |||||||||
Headquarters (1) | (350 | ) | (0.1 | ) | (531 | ) | (0.1 | ) | |||||
Consolidated revenue | $ | 450,967 | 100.0 | $ | 490,170 | 100.0 | |||||||
Operating (Loss) Income | Profit Margin | Operating (Loss) Income | (Loss) Profit Margin | ||||||||||
DynAviation | $ | (252 | ) | (0.1 | )% | $ | (76,969 | ) | (23.7 | )% | |||
DynLogistics | 15,942 | 10.4 | 3,298 | 2.0 | |||||||||
Headquarters (2) | (20,619 | ) | (12,840 | ) | |||||||||
Consolidated operating loss | $ | (4,929 | ) | $ | (86,511 | ) |
(1) | Represents revenue earned on shared service arrangements for general and administrative services provided to unconsolidated joint ventures and elimination of intercompany items between segments. |
(2) | Headquarters operating loss primarily relates to amortization of intangible assets and other costs that are not allocated to segments and are not billable to our U.S. government customers, Global Advisory Group costs and costs associated with the Refinancing Transactions, partially offset by equity method investee income. |
Six Months Ended | |||||||||||||
June 24, 2016 | June 26, 2015 | ||||||||||||
(Amounts in thousands) | Revenue | % of Total Revenue | Revenue | % of Total Revenue | |||||||||
DynAviation | $ | 587,156 | 67.4 | % | $ | 634,412 | 66.3 | % | |||||
DynLogistics | 283,859 | 32.6 | 322,594 | 33.7 | |||||||||
Headquarters (1) | (58 | ) | — | 186 | (0.1 | ) | |||||||
Consolidated revenue | $ | 870,957 | 100.0 | $ | 957,192 | 100.0 | |||||||
Operating Income (Loss) | Profit Margin | Operating (Loss) Income | (Loss) Profit Margin | ||||||||||
DynAviation | $ | 10,466 | 1.8 | % | $ | (72,371 | ) | (11.4 | )% | ||||
DynLogistics | 25,878 | 9.1 | 11,006 | 3.4 | |||||||||
Headquarters (2) | (35,795 | ) | (20,695 | ) | |||||||||
Consolidated operating income (loss) | $ | 549 | $ | (82,060 | ) |
(1) | Represents revenue earned on shared service arrangements for general and administrative services provided to unconsolidated joint ventures and elimination of intercompany items between segments. |
(2) | Headquarters operating loss primarily relates to amortization of intangible assets and other costs that are not allocated to segments and are not billable to our U.S. government customers, Global Advisory Group costs and costs associated with the Refinancing Transactions, partially offset by equity method investee income. |
Six Months Ended | |||||||
(Amounts in thousands) | June 24, 2016 | June 26, 2015 | |||||
Net cash provided by (used in) operating activities | $ | 27,623 | $ | (12,955 | ) | ||
Net cash (used in) provided by investing activities | (25,694 | ) | 213 | ||||
Net cash used in financing activities | (14,447 | ) | (2,569 | ) |
• | a $207.4 million New Term Loan; |
• | the Amended Revolver, consisting of the $24.8 million class A revolving commitments to terminate on July 7, 2016, and $85.8 million class B revolving commitments; and |
• | up to $15.0 million in incremental revolving facilities provided by and at the discretion of certain non-debt fund affiliates that are controlled by Cerberus, which shall rank pari passu with, and be on the same terms as, the class B revolving facility. |
• | incur additional indebtedness; |
• | create liens on assets; |
• | enter into sale and leaseback transactions; |
• | make investments, loans, guarantees or advances; |
• | make certain acquisitions; |
• | sell assets; |
• | engage in mergers or acquisitions; |
• | pay dividends and make distributions or repurchase capital stock; |
• | repay certain other indebtedness; |
• | enter into agreements that restrict the ability of our subsidiaries to pay dividends; |
• | engage in certain transactions with affiliates; |
• | change the business conducted by us or our subsidiaries; |
• | amend our organizational documents; |
• | change our accounting policies or reporting practices or our fiscal year; and |
• | make capital expenditures. |
Period Ending | Total Leverage Ratio |
June 24, 2016 | 7.40 to 1.0 |
September 30, 2016 | 7.50 to 1.0 |
December 31, 2016 | 7.40 to 1.0 |
March 31, 2017 | 7.30 to 1.0 |
June 30, 2017 | 6.75 to 1.0 |
September 29, 2017 | 6.50 to 1.0 |
December 31, 2017 | 5.75 to 1.0 |
March 30, 2018 | 5.75 to 1.0 |
June 29, 2018 | 5.50 to 1.0 |
September 28, 2018 | 5.40 to 1.0 |
September 29, 2018 and thereafter | 4.75 to 1.0 |
Period Ending | Interest Coverage Ratio |
June 24, 2016 | 1.15 to 1.0 |
September 30, 2016 | 1.15 to 1.0 |
December 31, 2016 | 1.15 to 1.0 |
March 31, 2017 | 1.20 to 1.0 |
June 30, 2017 | 1.20 to 1.0 |
September 29, 2017 | 1.30 to 1.0 |
December 31, 2017 | 1.40 to 1.0 |
March 30, 2018 | 1.50 to 1.0 |
June 29, 2018 | 1.60 to 1.0 |
June 30, 2018 and thereafter | 1.70 to 1.0 |
• | incur additional indebtedness; |
• | pay dividends on capital stock or repurchase capital stock; |
• | make investments; |
• | create liens or use assets as security in other transactions; |
• | merge, consolidate or transfer or dispose of substantially all of its assets; |
• | engage in transactions with affiliates; and |
• | sell certain assets or merge with or into other companies. |
Delta Tucker Holdings, Inc. Unaudited Adjusted EBITDA | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
(Amounts in thousands) | June 24, 2016 | June 26, 2015 | June 24, 2016 | June 26, 2015 | ||||||||||||
Net loss attributable to Delta Tucker Holdings, Inc. | $ | (25,121 | ) | $ | (90,055 | ) | $ | (39,881 | ) | $ | (104,888 | ) | ||||
Provision (benefit) for income taxes | 6,729 | (13,293 | ) | 11,224 | (9,485 | ) | ||||||||||
Interest expense, net of interest income | 17,438 | 17,147 | 33,345 | 33,186 | ||||||||||||
Depreciation and amortization (1) | 9,161 | 10,350 | 17,677 | 18,148 | ||||||||||||
EBITDA | 8,207 | (75,851 | ) | 22,365 | (63,039 | ) | ||||||||||
Non-recurring or unusual gains or losses or income or expenses (2) | 7,871 | 99,042 | 8,411 | 101,251 | ||||||||||||
Employee share based compensation, severance, relocation and retention expense (3) | 267 | 1,985 | 661 | 3,662 | ||||||||||||
Cerberus fees (4) | 723 | 1,284 | 1,632 | 2,043 | ||||||||||||
Global Advisory Group expenses (5) | 4,907 | — | 9,758 | — | ||||||||||||
Other (6) | 75 | (261 | ) | (284 | ) | (486 | ) | |||||||||
Adjusted EBITDA | $ | 22,050 | $ | 26,199 | $ | 42,543 | $ | 43,431 |
(1) | Includes certain depreciation and amortization amounts which are classified as Cost of services in our unaudited condensed consolidated statements of operations. |
(2) | Includes the impairment of goodwill within the Aviation reporting unit in the second quarter of 2015, as well as certain unusual income and expense items, as defined in the Indenture and New Senior Credit Facility. |
(3) | Includes post-employment benefit expense related to severance in accordance with ASC 712 - Compensation, relocation expenses, retention expense and share based compensation expense. |
(4) | Includes Cerberus Operations and Advisory Company expenses, net of recovery. |
(5) | Reflects Global Advisory Group cost incurred during the three and six months ended June 24, 2016, respectively, which we are able to add back to Adjusted EBITDA under the Indenture and New Senior Credit Facility in an aggregate amount up to a total of $30 million. |
(6) | Includes changes due to fluctuations in foreign exchange rates, earnings from affiliates not received in cash, costs incurred pursuant to ASC 805 - Business Combination and other immaterial items. |
Exhibit No. | Description | |
4.1 | Supplemental Indenture No. 2, dated as of May 23, 2016, to the Senior Unsecured Notes Indenture (incorporated by reference to Exhibit 4.1 to Delta Tucker Holdings, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 23, 2016). | |
4.2 | Indenture, dated as of June 15, 2016, among DynCorp International, the Guarantors party thereto and Wilmington Trust, National Association (incorporated by reference to Exhibit 4.1 to Delta Tucker Holdings, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 16, 2016). | |
4.3 | Intercreditor Agreement, dated as of June 15, 2016, among the administrative agent and the collateral agent under the Credit Agreement, the Collateral Agent under the Indenture, and the collateral agent under the Third Lien Credit Agreement (incorporated by reference to Exhibit 4.2 to Delta Tucker Holdings, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 16, 2016). | |
10.1 | Amendment No. 5 and Waiver, dated as of April 30, 2016, to the Credit Agreement, dated as of July 7, 2010, among DynCorp International, Delta Tucker Holdings, Inc., the other Guarantors party thereto, the several banks and other financial institutions or entities from time to time parties thereto and Bank of America, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to Delta Tucker Holdings, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 23, 2016). | |
10.2 | Third Lien Credit Agreement, dated as of June 15, 2016, among DynCorp International, Holdings, the Guarantors party thereto and DynCorp Funding LLC (incorporated by reference to Exhibit 10.1 to Delta Tucker Holdings, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 16, 2016). | |
31.1* | Certification of the Chief Executive Officer of Delta Tucker Holdings, Inc. pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2* | Certification of the Chief Financial Officer of Delta Tucker Holdings, Inc. pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1* | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2* | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS XBRL | Instance document | |
101.SCH XBRL | Taxonomy Extension Schema | |
101.CAL XBRL | Taxonomy Extension Calculation Linkbase | |
101.DEF XBRL | Taxonomy Extension Definition Linkbase | |
101.LAB XBRL | Taxonomy Extension Labels Linkbase | |
101.PRE XBRL | Taxonomy Extension Presentation Linkbase | |
* | Filed herewith |
Date: | August 5, 2016 | DELTA TUCKER HOLDINGS, INC. |
/s/ William T. Kansky | ||
William T. Kansky | ||
Senior Vice President and Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Delta Tucker Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 5, 2016 | ||
/s/ Lewis Von Thaer | |||
Lewis Von Thaer | |||
Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Delta Tucker Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 5, 2016 | ||
/s/ William T. Kansky | |||
William T. Kansky | |||
Senior Vice President and Chief Financial Officer |
(1) | the Quarterly Report of the Company on Form 10-Q for the period ended June 24, 2016, as filed with the Securities and Exchange Commission on the date hereof (the "Quarterly Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 5, 2016 | ||
/s/ Lewis Von Thaer | |||
Lewis Von Thaer | |||
Chief Executive Officer |
(1) | the Quarterly Report of the Company on Form 10-Q for the period ended June 24, 2016, as filed with the Securities and Exchange Commission on the date hereof (the "Quarterly Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 5, 2016 | ||
/s/ William T. Kansky | |||
William T. Kansky | |||
Senior Vice President and Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
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Jun. 24, 2016 |
Aug. 05, 2016 |
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Document and Entity Information [Abstract] | ||
Entity Registrant Name | Delta Tucker Holdings, Inc. | |
Entity Central Index Key | 0001514226 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 24, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 100 |
Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 24, 2016 |
Jun. 26, 2015 |
Jun. 24, 2016 |
Jun. 26, 2015 |
|
Income Statement [Abstract] | ||||
Revenue | $ 450,967 | $ 490,170 | $ 870,957 | $ 957,192 |
Cost of services | (410,361) | (439,193) | (782,859) | (863,351) |
Selling, general and administrative expenses | (36,959) | (41,461) | (71,048) | (72,683) |
Depreciation and amortization expense | (8,911) | (9,288) | (17,203) | (16,548) |
Earnings from equity method investees | 335 | 56 | 702 | 125 |
Impairment of goodwill, intangibles and long lived assets | 0 | (86,795) | 0 | (86,795) |
Operating (loss) income | (4,929) | (86,511) | 549 | (82,060) |
Interest expense | (17,460) | (17,172) | (33,427) | (33,228) |
Loss on early extinguishment of debt | (328) | 0 | (328) | 0 |
Interest income | 22 | 25 | 82 | 42 |
Other income, net | 4,611 | 608 | 4,963 | 1,602 |
Loss before income taxes | (18,084) | (103,050) | (28,161) | (113,644) |
(Provision) benefit for income taxes | (6,729) | 13,293 | (11,224) | 9,485 |
Net loss | (24,813) | (89,757) | (39,385) | (104,159) |
Noncontrolling interests | (308) | (298) | (496) | (729) |
Net loss attributable to Delta Tucker Holdings, Inc. | $ (25,121) | $ (90,055) | $ (39,881) | $ (104,888) |
Unaudited Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 24, 2016 |
Jun. 26, 2015 |
Jun. 24, 2016 |
Jun. 26, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (24,813) | $ (89,757) | $ (39,385) | $ (104,159) |
Other comprehensive loss, net of tax: | ||||
Foreign currency translation adjustment | (1) | 11 | 2 | (101) |
Other comprehensive income (loss), before tax | (1) | 11 | 2 | (101) |
Income tax (expense) benefit related to items of other comprehensive loss | 0 | (4) | (1) | 36 |
Other comprehensive income (loss) | (1) | 7 | 1 | (65) |
Comprehensive loss | (24,814) | (89,750) | (39,384) | (104,224) |
Comprehensive loss attributable to noncontrolling interests | (308) | (298) | (496) | (729) |
Comprehensive loss attributable to Delta Tucker Holdings, Inc. | $ (25,122) | $ (90,048) | $ (39,880) | $ (104,953) |
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 24, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 17,535 | $ 16,283 |
Common stock, par value (in dollars per share) | $ 0.01000 | $ 0.01000 |
Common stock, shares authorized (in shares) | 1,000 | 1,000 |
Common stock, shares issued (in shares) | 100 | 100 |
Common stock, shares outstanding (in shares) | 100 | 100 |
Basis of Presentation and Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Accounting Policies | Basis of Presentation and Accounting Policies Basis of Presentation Delta Tucker Holdings, Inc. ("Holdings"), the parent of DynCorp International Inc. ("DynCorp International"), through its subsidiaries (together, "the Company"), provides defense and technical services and government outsourced solutions primarily to U.S. government agencies domestically and internationally. The Company was incorporated in the state of Delaware on April 1, 2010. Our customers include the DoD, the U.S. Department of State ("DoS"), the U.S. Agency for International Development ("USAID"), foreign governments, commercial customers and certain other U.S. federal, state and local government departments and agencies. Unless the context otherwise indicates, references herein to "we," "our," "us," or "the Company" refer to Delta Tucker Holdings, Inc. and our consolidated subsidiaries. The unaudited condensed consolidated financial statements include the accounts of the Company and our domestic and foreign subsidiaries. These unaudited condensed consolidated financial statements have been prepared pursuant to accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, we believe that all disclosures are adequate and do not make the information presented misleading. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. In the opinion of management, normal recurring adjustments necessary to fairly present our financial position as of June 24, 2016 and December 31, 2015, the results of operations and statements of comprehensive loss for the three and six months ended June 24, 2016 and June 26, 2015 and the statements of deficit and cash flows for the six months ended June 24, 2016 and June 26, 2015 have been included. The results of operations and statements of comprehensive loss for the three and six months ended June 24, 2016 and June 26, 2015 and the statements of deficit and cash flows for the six months ended June 24, 2016 and June 26, 2015 are not necessarily indicative of the results to be expected for the full calendar year or for any future periods. We use estimates and assumptions required for preparation of the financial statements. The estimates are primarily based on historical experience and business knowledge and are revised as circumstances change. Our actual results may differ from these estimates. Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of both our domestic and foreign subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company has investments in joint ventures that are variable interest entities ("VIEs"). The VIE investments are accounted for in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810 — Consolidation. In cases where the Company has (i) the power to direct the activities of the VIE that most significantly impact its economic performance and (ii) the obligation to absorb losses of the VIE that could potentially be significant or the right to receive benefits from the entity that could potentially be significant to the VIE, the Company consolidates the entity. Alternatively, in cases where all of the aforementioned criteria are not met, the investment is accounted for under the equity method. We classify our equity method investees in two distinct groups based on management’s day-to-day involvement in the operations of each entity and the nature of each joint venture’s business. If the joint venture is deemed to be an extension of one of our segments and operationally integral to the business, our share of the joint venture’s earnings is reported within operating loss in Earnings from equity method investees in the consolidated statement of operations. If the Company considers our involvement less significant, the share of the joint venture’s net earnings is reported in Other income, net in the consolidated statement of operations. Noncontrolling Interests We record the impact of our partners' interests in less than wholly owned consolidated joint ventures as noncontrolling interests. Currently, DynCorp International FZ-LLC ("DIFZ") is our only consolidated joint venture for which we do not own 100% of the entity. We hold 25% ownership interest in DIFZ. We continue to consolidate DIFZ as we still exercise power over activities that significantly impact DIFZ’s economic performance and have the obligation to absorb losses or receive benefits of DIFZ that could potentially be significant to DIFZ. Noncontrolling interests is presented on the face of the statements of operations as an increase or reduction in arriving at "Net loss attributable to Delta Tucker Holdings, Inc." Noncontrolling interests is located in the equity section on the consolidated balance sheets. See Note 10 for further discussion regarding DIFZ. Use of Estimates The preparation of the financial statements requires us to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Our estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the consolidated statements of operations in the period that they are determined. Changes in contract estimates related to certain types of contracts accounted for using the percentage of completion method of accounting are recognized in the period in which such changes are made for the inception-to-date effect of the changes. Changes in these estimates can occur over the life of a contract for a variety of reasons, including changes in scope, estimated incentive or award fees, cost estimates, level of effort and/or other assumptions impacting revenue or cost to perform a contract. The following table presents the aggregate gross favorable and unfavorable adjustments to income before income taxes resulting from changes in contract estimates, excluding new or completed contracts where no comparative estimates exist between reporting periods, and certain routine contract actions such as changes resulting from the execution of contract options, for the three and six months ended June 24, 2016 and June 26, 2015.
Accounting Policies There have been no material changes to our significant accounting policies from those described in our Annual Report on Form 10-K for the year ended December 31, 2015, except as described below. Restricted Cash Restricted cash includes cash restricted by certain contracts and available for use to pay specified costs and vendors on work performed on specific contracts. On some contracts, advance payments are not available for use and cash is to be disbursed for specified costs for work performed on the specific contract. Changes in restricted cash related to our contracts are included as operating activities within our consolidated statement of cash flows. In June 2016, we received $30 million in cash from the execution of the Third Lien Credit Agreement. The proceeds are restricted to pay fees and expenses in support of or related to the Company's Global Advisory Group. As of June 24, 2016, the Company classified the restricted cash related to the Third Lien Credit Agreement as a current asset. The increase and decrease of restricted cash related to the Third Lien Credit Agreement are included as investing activities within our consolidated statement of cash flows. Recently Adopted Accounting Standards In January 2015, the FASB issued Accounting Standards Update ("ASU") No. 2015-01, Income Statement-Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU 2015-01 eliminates from GAAP the concept of extraordinary items. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, and may be applied either prospectively or retrospectively to all prior periods presented in the financial statements. We prospectively adopted ASU No. 2015-01 during the quarter ended March 25, 2016. The adoption of this guidance did not have a material impact on our consolidated financial statements. In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 changes the consolidation guidance to address concerns of stakeholders that current accounting for certain legal entities might require a reporting entity to consolidate another legal entity in situations in which the reporting entity’s contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entity’s voting rights, or the reporting entity is not exposed to a majority of the legal entity’s economic benefits or obligations. ASU 2015-02 will be effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. We retrospectively adopted ASU No. 2015-02 during the quarter ended March 25, 2016. The adoption of this guidance did not have a material impact on our consolidated financial position, results of operations or cash flows. In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that deferred financing costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset, consistent with debt discounts. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update is effective for fiscal years beginning after December 15, 2015, and required retrospective application. We adopted ASU 2015-03 during the quarter ended March 25, 2016 and applied its provisions retrospectively. The adoption of ASU 2015-03 resulted in the reclassification of current deferred financing costs, net, of $2.4 million related to our term loan (the "Term Loan") under the Senior Credit Facility (as defined in Note 7) and revolving credit facility under the Senior Credit Facility (the "Revolver") from prepaid expenses and other current assets to the current portion of long-term debt and the reclassification of deferred financing costs, net, of $2.8 million related to our Senior Unsecured Notes from total other assets, net, to long-term debt within our Condensed Consolidated Balance Sheets as of December 31, 2015. Adoption of this standard did not impact the results of operations, retained earnings, or cash flows in the current or previous interim and annual reporting periods. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent amounts in a classified statement of financial position. Instead, entities will be required to classify all deferred tax assets and liabilities as noncurrent in a statement of financial position. This standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We adopted ASU No. 2015-17 during the quarter ended March 25, 2016 and applied it prospectively to the period ended March 25, 2016. Prior periods were not retroactively adjusted. Adoption of this standard did not impact the results of operations, retained earnings, or cash flows in the current or previous interim and annual reporting periods. Recently Issued Accounting Developments In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which outlines a single set of comprehensive principles for recognizing revenue under GAAP. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. ASU 2016-12 clarifies the revenue recognition guidance regarding collectability, noncash consideration, presentation of sales tax and transition. These ASUs apply to all entities that enter into contracts with customers to transfer goods or services. These ASUs are effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but not before interim and annual reporting periods beginning after December 15, 2016. Entities have the choice to apply these ASUs either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying these standards at the date of initial application and not adjusting comparative information. We are currently evaluating both methods of adoption as well as the effect of these standards will have on our consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. ASU 2015-11 requires an entity who measures inventory using FIFO or average cost to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs. The update is effective for fiscal years beginning after December 15, 2016 and interim periods within fiscal years beginning after December 15, 2016 and applied prospectively. Early adoption is permitted, including adoption in an interim period. We are currently evaluating the potential effects of the adoption of ASU 2015-11 on our consolidated financial position. In February 2016, the FASB issued ASU No. 2016-02, Leases. The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. Entities are required to adopt ASU 2016-02 using a modified retrospective approach, subject to certain optional practice expedients, and apply the provisions of ASU 2016-02 to leasing arrangements existing at or entered into after the earliest comparative period presented in the financial statements. We are currently evaluating the potential effects of the adoption of ASU 2016-02 on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-06, Derivatives and Hedging: Contingent Put and Call Options in Debt Instruments. ASU 2016-06 clarifies how to assess whether an embedded contingent put or call option is clearly and closely related to a debt host. The amendments are effective for annual reporting periods, and interim periods therein, beginning after December 15, 2016. The amendments are effective for annual reporting periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted. Entities should apply ASU 2016-06 on a modified retrospective basis to existing debt instruments as of the beginning of the fiscal year for which the amendments are effective. We are currently evaluating the potential effects of the adoption of ASU 2016-06 on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-07, Investments - Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting. ASU 2016-07 simplifies the equity method by eliminating the requirement to apply it retrospectively to an investment that subsequently qualifies for such accounting as a result of an increase in the level of ownership interest or degree of influence. The amendments are effective for annual reporting periods, and interim periods therein, beginning after December 15, 2016 and applied prospectively. Early adoption is permitted. We are currently evaluating the potential effects of the adoption of ASU 2016-07 on our consolidated financial statements. Other accounting standards updates effective after June 24, 2016 are not expected to have a material effect on our consolidated financial position or results of operations and cash flows for the period ended June 24, 2016. |
Composition of Certain Financial Statement Captions |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Composition of Certain Financial Statement Captions | Composition of Certain Financial Statement Captions The following tables present financial information of certain consolidated balance sheet captions. Prepaid expenses and other current assets
Prepaid expenses include prepaid insurance, prepaid vendor deposits, and prepaid rent, none of which individually exceed 5% of current assets. We adopted ASU 2015-03 during the quarter ended March 25, 2016 and applied its provisions retrospectively. The adoption of ASU 2015-03 resulted in the reclassification of current deferred financing costs, net, of $2.4 million related to our Term Loan and Revolver under our Senior Credit Facility from Prepaid expenses and other current assets to the current portion of long-term debt within its consolidated balance sheets as of December 31, 2015. See Note 7 for a tabular presentation of our deferred financing costs, net, classified by debt balance, as of June 24, 2016 and December 31, 2015. See Note 1 for further discussion. Held for Sale Assets During the third quarter of 2015, we took strategic actions to begin the sale of the remaining assets of Heliworks LLC ("Heliworks"). As of December 31, 2015, Assets held for sale of $7.9 million consisted primarily of accounts receivable, inventory, property and equipment, net, and intangible assets and Liabilities held for sale of $0.8 million consisted primarily of accounts payables and accruals. Since the third quarter of 2015 we took certain steps and sold certain assets, but at the end of the second quarter of 2016 we re-evaluated our Heliworks strategic plan and determined that the remaining assets could be utilized in support of our other contracts and therefore we will no longer pursue the sale of Heliworks. The remaining Heliworks assets and liabilities previously classified as held for sale as of December 31, 2015 were reclassified to the applicable asset and liability accounts stated above as of June 24, 2016. As part of the reclassification, we recorded catch-up depreciation on any previously depreciable assets during the quarter ended June 24, 2016 totaling $0.3 million. Property and equipment, net
As of June 24, 2016 and December 31, 2015, Property and equipment, net, included the accrual for property additions of $0.2 million and $0.3 million, respectively. Depreciation expense, including certain depreciation amounts classified as Cost of services, was $1.2 million and $2.2 million during the three and six months ended June 24, 2016, respectively. Depreciation expense, including certain depreciation amounts classified as Cost of services, was $2.1 million and $3.6 million during the three and six months ended June 26, 2015, respectively. Other assets, net
We adopted ASU 2015-03 during the quarter ended March 25, 2016 and applied its provisions retrospectively. The adoption of ASU 2015-03 resulted in the reclassification of deferred financing costs, net, of $2.8 million related to our Senior Unsecured Notes from Other assets, net, to Long-term debt within its consolidated balance sheets as of December 31, 2015. See Note 7 for a tabular presentation of our deferred financing costs, net, classified by debt balance, as of June 24, 2016 and December 31, 2015. See Note 1 for further discussion. Investment in affiliates increased from $6.7 million as of December 31, 2015 to $10.5 million as of June 24, 2016 primarily due to contributions to Global Linguist Solutions ("GLS"). Accrued payroll and employee costs
Accrued liabilities
Customer liabilities represent amounts received from customers in excess of revenue recognized or for amounts due back to a customer. The decrease in accrued insurance is primarily due to the timing of payments and the closing of certain insurance policies with our carriers. Contract losses represent our best estimate of forward losses using currently available information and could change in future periods as new facts and circumstances emerge. Legal matters include reserves related to various lawsuits and claims that arise in the normal course of business. See Note 8 for further discussion. Other is comprised primarily of accrued rent and workers' compensation related claims and other balances that are not individually material to the consolidated financial statements. Other long-term liabilities As of June 24, 2016 and December 31, 2015, Other long-term liabilities were $12.5 million and $13.6 million, respectively. Other long-term liabilities are primarily due to our long-term incentive bonus plan and nonqualified unfunded deferred compensation plan of $3.7 million and $4.4 million as of June 24, 2016 and December 31, 2015, respectively, and a long-term leasehold obligation related to our Tysons Corner facility in McLean, Virginia, of $3.6 million and $3.8 million as of June 24, 2016 and December 31, 2015, respectively. Other long-term liabilities also include an uncertain tax benefit of $3.3 million and $3.3 million as of June 24, 2016 and December 31, 2015, respectively. See Note 4 for further discussion. |
Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets We have two operating and reporting segments: DynAviation and DynLogistics. DynAviation and DynLogistics provide services domestically and in foreign countries primarily under contracts with the U.S. government. Our current structure includes five reporting units: two reporting units in DynAviation and three reporting units in DynLogistics. Of our five reporting units, only two had a goodwill balance as of June 24, 2016 which we assess for potential goodwill impairment. We assess goodwill and other intangible assets with indefinite lives for impairment annually in October or when an event occurs or circumstances change that would suggest a triggering event. If a triggering event is identified, a step one assessment is performed to identify any possible impairment in the period in which the event is identified. In connection with our annual assessment of goodwill during the fourth quarter of each year, we update our key assumptions, including our forecasts of revenue and income for each reporting unit. The projections for these reporting units include significant estimates related to new business opportunities. If we are unsuccessful in obtaining these opportunities in 2016, a triggering event could be identified and a step one assessment would be performed to identify any possible goodwill impairment in the period in which the event is identified. There can be no assurance that the estimates and assumptions regarding forecasted earnings and cash flows, the period of strength of the U.S. defense spending, and other inputs used in forecasting the present value of forecasted cash flows will prove to be accurate projections of future performance. There were no triggering events identified in our remaining reporting units and the estimated fair values of each of our remaining reporting units exceed their respective carrying values as of June 24, 2016 and December 31, 2015. The carrying amounts of goodwill for each of our segments as of June 24, 2016 were as follows:
The following tables provide information about changes relating to certain intangible assets:
Amortization expense for customer-related intangibles, other intangibles and finite-lived tradenames was $7.9 million and $15.5 million for the three and six months ended June 24, 2016, respectively. Amortization expense for customer-related intangibles, other intangibles and finite-lived tradenames was $8.3 million and $14.6 million for the three and six months ended June 26, 2015, respectively. Other intangibles are primarily representative of our capitalized software which had a net carrying value of $3.8 million and $2.9 million as of June 24, 2016 and December 31, 2015, respectively. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The domestic and foreign components of Loss before income taxes are as follows:
Deferred tax liabilities, net consist of the following:
During the quarter ended March 25, 2016, we adopted ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent amounts in a classified statement of financial position and requires us to classify all deferred tax assets and liabilities as noncurrent in a statement of financial position. We applied ASU 2015-17 prospectively and prior periods were not retroactively adjusted. Our effective tax rate ("ETR") was (37.2)% and (39.9)% for the three and six months ended June 24, 2016, respectively. Our ETR was 12.9% and 8.3% for the three and six months ended June 26, 2015, respectively. For the three and six months ended June 24, 2016, the ETR was primarily impacted by an increase in the valuation allowance related to a deferred tax asset which was created by cancellation of debt income resulting from the effects of the refinancing transactions we completed on June 15, 2016 as described further in Note 7 (the "Refinancing Transactions"). Our ETR for the three and six months ended June 26, 2015 was primarily impacted by a goodwill impairment of our Aviation reporting unit and an increase in the valuation allowance. Management assesses both the available positive and negative evidence to determine whether it is more likely than not that there will be sufficient sources of future taxable income to recognize deferred tax assets. We incurred cumulative losses over the three-year period ended December 31, 2015. Cumulative losses in recent years are considered significant objective negative evidence in evaluating deferred tax assets under the more likely than not criteria for recognition of deferred tax assets. As of June 24, 2016 and December 31, 2015, we had $2.6 million and $2.6 million of total unrecognized tax benefits, respectively, of which $2.3 million would impact our effective tax rate if recognized. We do not expect the unrecognized tax benefit and any related interest or penalties to be settled within the next twelve months. During the six months ended June 24, 2016, we made no estimated federal income tax payments. All income taxes paid or refunds received during the six months ended June 24, 2016 were related to state or foreign jurisdictions. |
Accounts Receivable |
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Accounts Receivable | Accounts Receivable Accounts receivable, net consisted of the following:
Unbilled receivables as of June 24, 2016 and December 31, 2015 include $26.0 million and $21.3 million, respectively, related to costs incurred on projects for which we have been requested by the customer to begin new work or extend work under an existing contract and for which formal contracts, contract modifications or other contract actions have not been executed as of the end of the respective periods. As of June 24, 2016 and December 31, 2015, we had no significant accounts receivable balances associated with contract claims. The balance of unbilled receivables above consists of costs and fees billable immediately upon contract completion or other specified events, all of which are expected to be billed and collected within one year, except items that may result in a request for equitable adjustment. We do not believe we have significant exposure to credit risk as our receivables are primarily with the U.S. government. Our allowance for doubtful accounts was $16.3 million as of December 31, 2015 compared to $17.5 million as of June 24, 2016, and is primarily due to outstanding receivables of approximately $26.0 million, net of reserves, for which we have yet to be paid where we operated under a subcontract for a prime contractor on a U.S. government program that ended December 31, 2014. We are currently seeking payment through legal action to resolve the matter. See Note 8 for further discussion. |
Fair Value of Financial Assets and Liabilities |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Assets and Liabilities | Fair Value of Financial Assets and Liabilities ASC 820 – Fair Value Measurements and Disclosures establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
Fair Value of Financial Instruments Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable, and borrowings. Because of the short-term nature of cash and cash equivalents, accounts receivable, and accounts payable, the fair value of these instruments approximates the carrying value. Our estimate of the fair value of our Senior Unsecured Notes, 11.875% senior secured second lien notes (the "New Notes"), and New Senior Credit Facility is based on Level 1 and Level 2 inputs, as defined above. Our estimate of the fair value of our Cerberus 3L Notes (as defined in Note 7) is based on Level 3 inputs, as defined above. We used the following techniques in determining the fair value disclosed for the Cerberus 3L Notes classified as Level 3. The fair value as June 24, 2016, has been calculated by discounting the expected cash flows using a discount rate of 18.1%. This discount rate is determined using the Moody's credit rating for the New Notes and reducing the rating one level lower for the Cerberus 3L Notes as they are subordinated to the New Notes.
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Debt consisted of the following:
We adopted ASU 2015-03 as of March 25, 2016 and applied its provisions retrospectively. The adoption of ASU 2015-03 resulted in the reclassification of current deferred financing costs, net, of $2.4 million related to our Term Loan and Revolver under our Senior Credit Facility from Prepaid expenses and other current assets to the current portion of long-term debt and the reclassification of deferred financing costs, net, of $2.8 million related to our Senior Unsecured Notes from Other assets, net, to Long-term debt within its consolidated balance sheets as of December 31, 2015. See Note 1 for further discussion. Deferred financing costs are amortized through interest expense. Amortization related to deferred financing costs was $1.5 million and $3.0 million during the three and six months ended June 24, 2016, respectively. Amortization related to deferred financing costs was $1.6 million and $3.2 million during the three and six months ended June 26, 2015, respectively. Deferred financing costs for the three and six months ended June 24, 2016 were reduced $0.3 million related to the pro rata write-off of deferred financing costs to loss on early extinguishment of debt as a result of the $4.6 million in principal prepayment made on the term loan facility under the Senior Credit Facility and the completion of the Refinancing Transactions. New Senior Credit Facility On July 7, 2010, we entered into a senior secured credit facility (the "Senior Credit Facility"), with a banking syndicate and Bank of America, N.A. as Administrative Agent (the "Agent"). On January 21, 2011, August 10, 2011, June 19, 2013 and November 5, 2014, DynCorp International entered into amendments to the Senior Credit Facility. On April 30, 2016, we entered into Amendment No. 5 ("Amendment No. 5") to the Senior Credit Facility which provided for a new senior secured credit facility (the "New Senior Credit Facility") upon the satisfaction of certain conditions, including the consummation of the Exchange Offer and the other Refinancing Transactions. Pursuant to Amendment No. 5, required lenders under the Senior Credit Facility agreed to temporarily waive the requirement to comply with the covenant that the Company’s annual financial statements include a report from its independent registered public accounting firm without a qualification as to the Company’s ability to continue as a going concern until the earlier of the effectiveness of the New Senior Credit Facility (at which time the temporary waiver of this requirement for the fiscal year ended December 31, 2015 would become permanent) and June 30, 2016 (the “Senior Credit Facility Waiver”). On June 15, 2016, we satisfied the conditions set forth in Amendment No. 5, and therefore, on June 15, 2016, the New Senior Credit Facility became effective, and the Senior Credit Facility Waiver for the year ended December 31, 2015 became permanent. The New Senior Credit Facility is secured by substantially all of our assets and guaranteed by substantially all of our subsidiaries. As of June 24, 2016, the New Senior Credit Facility provided for the following:
The New Term Loan was subject to a 700 basis point fee, totaling approximately $14.4 million, which is reflected as an original issue discount in the balance of the New Term Loan as of June 24, 2016 and classified as a financing activity in our Condensed Consolidated Statements of Cash Flows for the six months ended June 24, 2016. Availability under the Amended Revolver during the two years immediately after June 15, 2016 will be subject to a condition that, if, at the time of a request for revolving loans, the aggregate principal amount of revolving loans plus the face amount of outstanding letters of credit exceeds 50% of the aggregate amount of Amended Revolver commitments at such time, the aggregate amount of unrestricted cash and cash equivalents of DynCorp International and its subsidiaries (giving pro forma effect to requested revolving loans and any application of proceeds thereof or other cash on hand) may not exceed $60 million. As of June 24, 2016 and December 31, 2015, the available borrowing capacity under the New Senior Credit Facility and the Senior Credit Facility was approximately $66.0 million and $102.2 million, respectively, and included $44.6 million and $42.6 million, respectively, in issued letters of credit. Amounts borrowed under the Amended Revolver and Revolver are used to fund operations. As of June 24, 2016 and December 31, 2015 there were no amounts borrowed under the Amended Revolver and Revolver. The class B revolving facility and the New Term Loan mature on July 7, 2019 and July 7, 2020, respectively. See further discussion of potential maturity date acceleration below. Interest Rates on Term Loan & Revolver Under the Senior Credit Facility, both the Term Loan and Revolver bore interest at one of two options, based on our election, using either the (i) base rate ("Base Rate") as defined in the Senior Credit Facility plus an applicable margin or the (ii) London Interbank Offered Rate ("Eurocurrency Rate") as defined in the Senior Credit Facility plus an applicable margin. The applicable margin for the Term Loan was fixed at 3.5% for the Base Rate option and 4.5% for the Eurocurrency Rate option. The applicable margin for the Revolver ranged from 3.0% to 3.5% for the Base Rate option or 4.0% to 4.5% for the Eurocurrency Rate option based on our Secured Leverage Ratio at the end of the quarter. The Secured Leverage Ratio is calculated by the ratio of total secured consolidated debt (net of up to $75.0 million of unrestricted cash and cash equivalents) to consolidated earnings before interest, taxes, depreciation and amortization ("Consolidated EBITDA"), as defined in the Senior Credit Facility. Interest payments on both the Term Loan and Revolver were payable at the end of the interest period as defined in the Senior Credit Facility, but not less than quarterly. Under the New Senior Credit Facility, the interest rate per annum applicable to the New Term Loan is, at our option, equal to either the Base Rate or the Eurocurrency Rate, in each case, plus (i) 5.00% in the case of Base Rate loans and (ii) 6.00% in the case of Eurocurrency Rate loans. The interest rate per annum applicable to the class B revolving facility is, at our option, equal to either a Base Rate or a Eurocurrency Rate plus (i) a range of 4.50% to 5.00% based on the First-Lien Secured Leverage Ratio in the case of Base Rate loans and (ii) a range of 5.50% to 6.00% based on the First-Lien Secured Leverage Ratio in the case of Eurocurrency Rate loans. The First Lien Secured Leverage Ratio is calculated by the ratio of total first lien secured consolidated debt (net of up to $75 million of unrestricted cash and cash equivalents) to Consolidated EBITDA, as defined in the New Senior Credit Facility. The interest rate per annum applicable to the class A revolving commitments remains the same as the Revolver under the Senior Credit Facility. Interest payments on both the New Term Loan and Amended Revolver are payable at the end of the interest period as defined in the New Senior Credit Facility, but not less than quarterly. Under the Senior Credit Facility and the New Senior Credit Facility, the Base Rate is equal to the higher of (a) the Federal Funds Rate (as defined in Amendment No. 5) plus one half of one percent and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America, N.A. as its prime rate; provided that in no event shall the Base Rate be less than 1.00% plus the Eurocurrency Rate applicable to one month interest periods on the date of determination of the Base Rate. The variable Base Rate has a floor of 2.75%. Under the Senior Credit Facility, the Eurocurrency Rate was the rate per annum equal to the British Bankers Association London Interbank Offered Rate (“BBA LIBOR”) as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Agent from time to time) two business days prior to the commencement of such interest period. The variable Eurocurrency Rate had a floor of 1.75%. Under the New Senior Credit Facility, the Eurocurrency Rate is the rate per annum equal to the London Interbank Offered Rate (“LIBOR”) as published on the applicable Bloomberg screen page (or other commercially available source providing quotations of LIBOR as designated by the Administrative Agent from time to time) two London Banking Days (as defined in Amendment No. 5) prior to the commencement of such interest period. The variable Eurocurrency Rate has a floor of 1.75%. As of June 24, 2016 and December 31, 2015, the applicable interest rate on the New Term Loan and the Term Loan was 7.75% and 6.25%, respectively. Interest Rates on Letter of Credit Subfacility and Unused Commitment Fees Under the Senior Credit Facility, the letter of credit subfacility bore interest at an applicable rate that ranges from 4.0% to 4.5%. The unused commitment fee on our Revolver ranged from 0.50% to 0.75% depending on the Secured Leverage Ratio. Interest payments on both the letter of credit subfacility and unused commitments were payable quarterly in arrears. All of our letters of credit under the Senior Credit Facility and the New Senior Credit Facility are also subject to a 0.25% fronting fee. Under the New Senior Credit Facility, the letter of credit subfacility bears interest at an applicable rate that ranges from 4.0% to 4.5% with respect to the class A revolving commitments and ranges from 5.5% to 6.0% with respect to the class B revolving commitments. The unused commitment fee on our Amended Revolver ranges from 0.50% to 0.75% on the undrawn amount of the facility depending on the Secured Leverage Ratio with respect to the class A revolving commitments and depending on the First Lien Secured Leverage Ratio with respect to the class B revolving commitments. Interest payments on both the letter of credit subfacility and unused commitments are payable quarterly in arrears. We will also pay customary letter of credit and agency fees. The applicable interest rates for our letter of credit subfacility was 6.0% with respect to the class B revolving commitments and 4.25% with respect to the class A revolving commitments as of June 24, 2016. The applicable interest rate for our letter of credit subfacility was 4.25% as of December 31, 2015. The applicable rate for our unused commitment fees was 0.75% with respect to the class B revolving commitments and 0.50% with respect to the class A revolving commitments as of June 24, 2016. The applicable interest rate for our unused commitment fees was 0.50% as of December 31, 2015. Principal Payments Our Senior Credit Facility contained an annual requirement to submit a portion of our Excess Cash Flow, as defined in the Senior Credit Facility, as additional principal payments. Based on our annual financial results for the year ended December 31, 2015, we made an additional principal payment as required under the Excess Cash Flow provision of $4.6 million on April 6, 2016. Certain other transactions can trigger mandatory principal payments such as tax refunds, a disposition of a portion of our business or a significant asset sale. We had no such transactions during the six months ended June 24, 2016. During the six months ended June 24, 2016 and June 26, 2015, we made $4.6 million and zero principal payments on the Term Loan, respectively. The New Senior Credit Facility requires us to prepay outstanding term loans, subject to certain exceptions, with:
We are permitted to voluntarily repay outstanding loans under the New Senior Credit Facility at any time without premium or penalty, other than customary “breakage” costs with respect to eurocurrency loans. Maturity and Amortization Under the New Senior Credit Facility, we are required to make amortization payments with respect to the New Term Loan of $22.5 million on or prior to June 15, 2017 and $22.5 million on or prior to June 15, 2018. The current portion of long-term debt as of June 24, 2016 includes our New Term Loan payment of $22.5 million due on June 15, 2017 and all of the outstanding Senior Unsecured Notes which, as further described below, must be refinanced or repaid with the proceeds of new equity, capital contributions or new unsecured debt by May 8, 2017. The principal amount of the New Term Loan may be reduced as a result of prepayments, with the remaining amount payable on July 7, 2020. The New Senior Credit Facility contains a provision that would result in all outstanding principal under the New Term Loan maturing on May 8, 2017 if by May 8, 2017, all of the outstanding Senior Unsecured Notes have not been extended to a date that is on or after October 6, 2020, or paid in full with the proceeds of new equity, capital contributions or new unsecured debt that is expressly subordinated to the New Senior Credit Facility. Principal amounts outstanding under the class A revolving facility will be due and payable in full on, and the commitments in respect thereof will terminate on, July 7, 2016. Principal amounts outstanding under the class B revolving facility will be due and payable in full on, and the commitments in respect thereof will terminate on, July 7, 2019. The same springing maturity provision impacting the New Term Loan as described above also applies to the class B revolving facility with respect to addressing the Senior Unsecured Notes by May 8, 2017. Guarantee and Security The guarantors of the obligations under the New Senior Credit Facility are identical to those under the Senior Credit Facility, the Unsecured Notes, the New Notes and the Cerberus 3L Notes. The New Senior Credit Facility is secured on a first lien basis by the same collateral that secured the Senior Credit Facility and that secures the New Notes on a second lien basis and the Cerberus 3L Notes on a third lien basis. Covenants The New Senior Credit Facility contains a number of financial, as well as non-financial, affirmative and negative covenants that we believe are usual and customary. These covenants, among other things, limit our ability to:
In addition, the New Senior Credit Facility requires us to maintain a maximum total leverage ratio and a minimum interest coverage ratio. The New Senior Credit Facility also requires, solely for the benefit of the lenders under the Amended Revolver, for us to maintain minimum liquidity (based on availability of revolving credit commitments under the New Senior Credit Facility plus unrestricted cash and cash equivalents) as of the end of each fiscal quarter of not less than $60 million through the fiscal quarter ending December 31, 2017, and of not less than $50 million thereafter. The New Senior Credit Facility also contains customary representations and warranties, affirmative covenants and events of default. The total leverage ratio under the New Senior Credit Facility is Consolidated Total Debt, as defined in Amendment No. 5 (which definition excludes debt under the Cerberus 3L Notes), less unrestricted cash and cash equivalents (up to $75.0 million) to Consolidated EBITDA, as defined in Amendment No. 5, for the applicable period. The maximum total leverage ratios under the New Senior Credit Facility are set forth below as follows:
The interest coverage ratio under the New Senior Credit Facility is the ratio of Consolidated EBITDA to Consolidated Interest Expense, as defined in Amendment No. 5 (which provides that interest expense with respect to the Cerberus 3L Notes is excluded). The minimum interest coverage ratios under the New Senior Credit Facility are set forth below as follows:
As of June 24, 2016 and December 31, 2015, we were in compliance with our financial maintenance covenants under the New Senior Credit Facility and the Senior Credit Facility, respectively, and we expect, based on current projections and estimates, to be in compliance with our covenants in the next twelve months. New Notes On June 15, 2016, in connection with the consummation of the exchange offer (the "Exchange Offer") and consent solicitation (the “Consent Solicitation”), $415.7 million principal amount of the Senior Unsecured Notes were exchanged for $45.0 million cash and $370.6 million aggregate principal amount of newly issued New Notes due November 30, 2020. The $370.6 million non-cash exchange of the Existing Notes for the New Notes was classified as a noncash financing activity for the six months ended June 24, 2016. The New Notes are governed by the terms of the indenture dated as of June 15, 2016 (the “Indenture”), among DynCorp International, the Guarantors (as defined below) and Wilmington Trust, National Association, as trustee (the “Trustee”) and collateral agent (the “Collateral Agent”). The New Notes are senior secured obligations of DynCorp International, as issuer, and of the Guarantors, as guarantors. The New Notes are secured by second-priority liens on the assets that secure DynCorp International’s and the Guarantors’ obligations under DynCorp International’s senior secured credit facility, subject to permitted liens and certain exceptions. The New Notes are guaranteed by (1) Holdings, and (2) all of DynCorp International’s subsidiaries that currently guarantee the Senior Unsecured Notes (the “Subsidiary Guarantors,” and collectively with Holdings, the “Guarantors”). Interest on the New Notes accrues at the rate of 11.875% per annum, comprised of 10.375% per annum in cash and 1.500% per annum payable in kind (“PIK,” and such interest “PIK Interest”). The cash portion of the interest on the New Notes is payable in cash and the PIK Interest on the New Notes is payable in kind, each semi-annually in arrears on January 1 and July 1, commencing on July 1, 2016. PIK Interest was accrued from January 1, 2016, which was the last date interest was paid on the Senior Unsecured Notes prior to the completion of the Exchange Offer. The New Notes were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws. The Exchange Offer was made, and the New Notes were offered and issued, in reliance on the exemption from the registration requirements of the Securities Act provided under Section 3(a)(9) of the Securities Act and on the exemption from the registration requirements of state securities laws and regulations provided under Section 18(b)(4)(D) of the Securities Act. Consistent with past interpretations of Section 3(a)(9) by the staff of the SEC, the New Notes received in exchange for the Senior Unsecured Notes tendered pursuant to the Exchange Offer have the same characteristics as the Senior Unsecured Notes as to their transferability and are freely transferable without registration under the Securities Act and without regard to any holding period by those tendering holders who are not our “affiliates” (as defined in the Securities Act). Covenants The Indenture contains covenants that limit, among other things, each of Holdings’, DynCorp International's and the Subsidiary Guarantors’ ability to:
These covenants are subject to a number of important exceptions and qualifications as set forth in the Indenture. In addition, the Indenture (i) requires that any principal to be paid on any Senior Unsecured Notes that remain outstanding that were not tendered in the Exchange Offer may only be paid with the proceeds of new equity, capital contributions or new unsecured debt that is expressly subordinated to the New Notes (and such non-exchanged Senior Unsecured Notes are not permitted to be exchanged into secured obligations of any kind) and (ii) requires the DynCorp International to make amortization payments of (x) $22.5 million principal amount of the New Term Loan under the Credit Agreement no later than June 15, 2017, and (y) an additional $22.5 million principal amount of the New Term Loan no later than June 15, 2018, which amounts may be reduced as a result of the application of certain prepayments. If we sell certain assets without applying proceeds in a specified manner, holders of the New Notes will have the right to require us to repurchase some or all of the New Notes at 100% of their face amount, plus accrued and unpaid interest to the repurchase date. Upon the occurrence of specific kinds of change of control events (unless we elect to redeem the New Notes at our option prior thereto), holders of New Notes will have the right to require us to repurchase some or all of the New Notes at 101% of their face amount, plus accrued and unpaid interest to the repurchase date. Optional Redemption DynCorp International is permitted to redeem the New Notes prior to July 1, 2017, in whole but not in part, at its option, at 100% of their principal amount, together with any accrued and unpaid cash interest and additional interest, if any, together with an amount of cash equal to all accrued and unpaid PIK Interest to but excluding the redemption date. In addition, on or after July 1, 2017, the New Notes will be redeemable at the option of the Company, in whole or in part, at any time and from time to time, upon not less than 30 nor more than 60 days’ prior notice, at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid cash interest, if any, together with an amount of cash equal to all accrued and unpaid PIK Interest to but excluding the redemption date, if redeemed during the 12-month period commencing on July 1 of the years set forth below:
Events of Default The Indenture contains customary events of default, including for failure to pay the Senior Unsecured Notes by their maturity or for failure to pay other debt in a total amount exceeding $10.0 million after final maturity or acceleration of such indebtedness (including acceleration of the New Senior Credit Facility, such as due to failure to refinance or pay with proceeds of sales of equity or capital contributions the remaining Senior Unsecured Notes as described above). If the New Notes are accelerated or otherwise become due and payable prior to their maturity, in each case, as a result of an event of default under the Indenture, on or after July 1, 2017, the amount of principal of, accrued and unpaid interest and premium on the New Notes that becomes due and payable will equal the redemption price plus accrued and unpaid cash interest, if any, together with an amount of cash equal to all accrued and unpaid PIK Interest, applicable with respect to an optional redemption of the New Notes. If the New Notes are accelerated or otherwise become due and payable prior to their maturity, in each case, as a result of an event of default under the Indenture, at any time prior to July 1, 2017, the amount of principal of, accrued and unpaid interest and premium on the New Notes that becomes due and payable will equal 100% of the principal amount of the New Notes plus an Acceleration Premium (as defined in the Indenture) plus accrued and unpaid cash interest, if any, together with an amount of cash equal to all accrued and unpaid PIK Interest. Senior Unsecured Notes On July 7, 2010, DynCorp International completed an offering of $455.0 million in aggregate principal of the Senior Unsecured Notes. The initial purchasers were Bank of America Securities LLC, Citigroup Global Markets Inc., Barclays Capital Inc. and Deutsche Bank Securities Inc. The Senior Unsecured Notes were issued under an indenture dated July 7, 2010 (the "Senior Unsecured Notes Indenture"), by and among us, the guarantors party thereto, including DynCorp International and Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB) as Trustee. On June 15, 2016, in connection with the consummation of the Exchange Offer, $415.7 million principal amount of the Senior Unsecured Notes were exchanged for $45.0 million cash and $370.6 million principal amount of newly issued New Notes. The remaining $39.3 million principal amount of 10.375% Senior Unsecured Notes were not exchanged and mature on July 1, 2017. Although the Senior Unsecured Notes mature on July 1, 2017, we classified the Senior Unsecured Notes within the current portion of long-term debt as of June 24, 2016, as we expect that we will either refinance or repay the remaining Senior Unsecured Notes through capital contributions, equity sales or refinancing on or before May 8, 2017. This requirement within our New Senior Credit Facility specifies that we either extend the maturity date of the Senior Unsecured Notes to a date on or after October 6, 2020 or repay the Senior Unsecured Notes in full by May 8, 2017 with the proceeds of new equity, capital contributions or new unsecured debt that is expressly subordinated to the New Senior Credit Facility. Interest on the Senior Unsecured Notes is payable on January 1 and July 1 of each year, and commenced on January 1, 2011. Pursuant to the Consent Solicitation, DynCorp International amended the Senior Unsecured Notes Indenture to eliminate substantially all of the restrictive covenants and certain of the default provisions therein. Subject to restrictions on repayment of the Senior Unsecured Notes in the New Senior Credit Facility and our other debt, after July 1, 2016, we can voluntarily settle all or a portion of the Senior Unsecured Notes at any time prior to maturity at 100% of their principal amount plus accrued and unpaid interest, if any, as of the applicable redemption date. The fair value of the Senior Unsecured Notes is based on their quoted market value. As of June 24, 2016 and December 31, 2015, the quoted market value of the Senior Unsecured Notes was approximately 79.5% and 74.3%, respectively, of stated value. Cerberus 3L Notes Based on the completion of the Exchange Offer and the satisfaction of conditions set forth in the Third Lien Credit Facility Commitment Letter, dated April 30, 2016, DynCorp Funding LLC, a limited liability company managed by Cerberus Capital Management, L.P. ("Cerberus"), entered into a Third Lien Credit Agreement, dated as of June 15, 2016 (the “Third Lien Credit Agreement”) with us. Under the Third Lien Credit Agreement, DynCorp Funding LLC has made a $30 million term loan to us (the "Cerberus 3L Notes"). The proceeds of the Cerberus 3L Notes are restricted to pay fees and expenses (including reimbursement of out-of-pocket expenses) in support of or related to the Company’s Global Advisory Group until June 15, 2018 and, thereafter, for working capital and general corporate purposes. For the six months ended June 24, 2016, we utilized approximately $9.8 million of these funds for fees and expenses related to the Company's Global Advisory Group. Interest Rate and Fees The interest rate per annum applicable to the Cerberus 3L Notes is 5.00%, payable in kind on a quarterly basis. Prepayments The Cerberus 3L Notes does not require any mandatory prepayments, and, subject to the terms of the Intercreditor Agreement (as defined below), we are permitted to voluntarily repay outstanding loans under the Cerberus 3L Notes without premium or penalty. The New Senior Credit Facility and the Indenture governing the New Notes restrict us from making any principal payments on the Cerberus 3L Notes. Maturity and Amortization The Cerberus 3L Notes do not require any mandatory amortization payments prior to maturity and the outstanding principal amounts shall be payable on June 15, 2026. Covenants The Cerberus 3L Notes include covenants consistent with the covenants set forth in the New Notes; provided that each “basket” or “cushion” set forth in the covenants is at least 25% less restrictive than the corresponding provision set forth in the New Notes. Events of Default The Third Lien Credit Agreement contains customary events of default, including for failure to pay the remaining Senior Unsecured Notes by their maturity or for failure to pay other debt in a total amount exceeding $12.5 million after final maturity or acceleration of such indebtedness (including acceleration of the New Senior Credit Facility, such as due to failure to refinance or pay with proceeds of sales of equity or capital contributions the remaining Senior Unsecured Notes as described above). Intercreditor Agreement The collateral granted to secure the indebtedness under the New Senior Credit Facility, on a first-priority basis, has also been granted to secure (a) the New Notes and the guarantees under the Indenture on a second-priority basis and (b) the Cerberus 3L Notes and the guarantees under the Third Lien Credit Agreement on a third-priority basis. The relative priority of the liens afforded to the New Senior Credit Facility, New Notes and Cerberus 3L Notes and the subordination in right of payment of the Cerberus 3L Notes to the Credit Agreement and the New Notes are set forth in the Intercreditor Agreement (the “Intercreditor Agreement”), dated as of June 15, 2016, by and among the administrative agent under the Credit Agreement, the collateral agent under the Indenture, and the collateral agent under the Third Lien Credit Agreement. |
Commitments and Contingencies |
6 Months Ended |
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Jun. 24, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments We have operating leases for the use of real estate and certain property and equipment which are either non-cancelable, cancelable only by the payment of penalties or cancelable upon one month’s notice. All lease payments are based on the lapse of time but include, in some cases, payments for insurance, maintenance and property taxes. There are no purchase options on operating leases at favorable terms, but most leases have one or more renewal options. Certain real estate leases are subject to annual escalations for increases in base rents, utilities and property taxes. Lease rental expense was $10.4 million and $18.6 million for the three and six months ended June 24, 2016, respectively. Lease rental expense was $15.5 million and $29.4 million for the three and six months ended June 26, 2015, respectively. We have no significant long-term purchase agreements with service providers. Contingencies General Legal Matters We are involved in various lawsuits and claims that arise in the normal course of business. We have established reserves for matters in which it is believed that losses are probable and can be reasonably estimated. Reserves related to these matters have been recorded in Other accrued liabilities totaling approximately $4.6 million and $5.1 million as of June 24, 2016 and December 31, 2015, respectively. We believe that appropriate accruals have been established for such matters based on information currently available; however, some of the matters may involve compensatory, punitive, or other claims or sanctions that, if granted, could require us to pay damages or make other expenditures in amounts that could not be reasonably estimated at June 24, 2016. These accrued reserves represent the best estimate of amounts believed to be our liability in a range of expected losses. In addition to matters that are considered probable and that can be reasonably estimated, we also have certain matters considered reasonably possible. Other than matters disclosed below, we believe the aggregate range of possible loss related to matters considered reasonably possible was not material as of June 24, 2016. Litigation is inherently unpredictable and unfavorable resolutions could occur. Accordingly, it is possible that an adverse outcome from such proceedings could (i) exceed the amounts accrued for probable matters; or (ii) require a reserve for a matter we did not originally believe to be probable or could be reasonably estimated. Such changes could be material to our financial condition, results of operations and cash flows in any particular reporting period. Our view of the matters not specifically disclosed could possibly change in future periods as events thereto unfold. Pending Litigation and Claims On December 4, 2006, December 29, 2006, March 14, 2007 and April 24, 2007, four lawsuits were served, seeking unspecified monetary damages against DynCorp International LLC and several of its former affiliates in the U.S. District Court for the Southern District of Florida, concerning the spraying of narcotic plant crops along the Colombian border adjacent to Ecuador. Three of the lawsuits, filed on behalf of the Provinces of Esmeraldas, Sucumbíos, and Carchi in Ecuador, allege violations of Ecuadorian law, International law, and statutory and common law tort violations, including negligence, trespass, and nuisance. The fourth lawsuit, filed on behalf of citizens of the Ecuadorian provinces of Esmeraldas and Sucumbíos, alleges personal injury, various counts of negligence, trespass, battery, assault, intentional infliction of emotional distress, violations of the Alien Tort Claims Act and various violations of International law. The four lawsuits were consolidated, and based on our motion granted by the court, the case was subsequently transferred to the U.S. District Court for the District of Columbia. On March 26, 2008, a First Amended Consolidated Complaint was filed that identified 3,266 individual plaintiffs. As of January 12, 2010, 1,256 of the plaintiffs were dismissed by court orders and, on September 15, 2010, the Provinces of Esmeraldas, Sucumbíos, and Carchi were dismissed by court order. We filed multiple motions for summary judgment and, on February 15, 2013, the court granted summary judgment and dismissed all claims. On March 18, 2013, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the District of Columbia. On May 30, 2014, the U.S. Court of Appeals for the District of Columbia affirmed the dismissal of the majority of the case, but remanded the case to the trial court concerning a few remaining tort claims. At this time, we believe the likelihood of an unfavorable outcome in this case is remote. A lawsuit filed on September 11, 2001, and amended on March 24, 2008, seeking unspecified damages on behalf of twenty-six residents of the Sucumbíos Province in Ecuador, was brought against our operating company and several of its former affiliates in the U.S. District Court for the District of Columbia. The action alleges violations of the laws of nations and U.S. treaties, negligence, emotional distress, nuisance, battery, trespass, strict liability, and medical monitoring arising from the spraying of herbicides near the Ecuador-Colombia border in connection with the performance of the DoS, International Narcotics and Law Enforcement contract for the eradication of narcotic plant crops in Colombia. As of January 12, 2010, fifteen of the plaintiffs have been dismissed by court order. We filed multiple motions for summary judgment and, on February 15, 2013, the court granted summary judgment and dismissed all claims. On March 18, 2013, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the District of Columbia. On May 30, 2014, the U.S. Court of Appeals for the District of Columbia affirmed the dismissal of the majority of the case, but remanded the case to the trial court concerning a few remaining tort claims. We filed another motion for summary judgment, which is fully briefed and remains pending. The above cases now are fully defended and indemnified by the Company’s previous owner, Computer Sciences Corporation and also by its spin-off company, CSRA Inc. The insurance litigation arising out of the above cases that was described in prior filings has now been fully resolved and settled. In October 2007, we entered into a subcontract with Northrop Grumman Technical Services, Inc. (“Northrop”) to support Northrop’s prime contract with the DoD Counter Narcotics Terrorism Program Office ("CNTPO"). We performed the services requested by Northrop, the government determined that it received “intended quality and skills of personnel,” and Northrop paid our invoices until July 2014. Subsequent to July 2014, Northrop stopped paying our periodic invoices. The contract operations ended on December 31, 2014. In March 2015, Northrop filed a civil action against us to obtain documents regarding our invoices and now asserts approximately $5 million in damages. We believe the damages asserted by Northrop represent a loss contingency that is remote. In September 2015, we filed an Answer and Counterclaim seeking approximately $41 million for unpaid invoices. An unfavorable judgment which denies us a substantial amount of the full amount owed to us could have a material effect on our performance. On February 24, 2012, we were advised by the Department of Justice Civil Litigation Division (“the Civil Division”) that they are conducting an investigation regarding the CivPol and Department of State Advisor Support Mission ("DASM") contracts in Iraq and Corporate Bank, a former subcontractor. The issues include allowable hours worked under a specific task order and invoices to the Department of State for certain hotel leasing, labor rates and overhead within the 2003 to 2008 timeframe. Since 2012, the Company has been in discussions with the Civil Division, and has been cooperating with the Civil Division’s requests for information. On July 19, 2016, the Civil Division filed a civil lawsuit asserting violations of underlying contract terms and also the False Claims Act. If our operations are found to be in violation of any laws or government regulations, we may be subject to penalties, damages or fines, any or all of which could adversely affect our financial results; however, the complaint does not include any specific monetary demand and as such we are unable to estimate a range of loss at this time. We are continuing to evaluate this lawsuit and at this time believe the potential for penalties, damages or fines resulting from this matter do not represent a probable loss contingency. U.S. Government Investigations We primarily sell our services to the U.S. government. These contracts are subject to extensive legal and regulatory requirements, and we are occasionally the subject of investigations by various agencies of the U.S. government who investigate whether our operations are being conducted in accordance with these requirements. Such investigations, whether related to our U.S. government contracts or conducted for other reasons, could result in administrative, civil or criminal liabilities, including repayments, fines or penalties being imposed on us, or could lead to suspension or debarment from future U.S. government contracting. U.S. government investigations often take years to complete and many result in adverse action against us. We believe that any adverse actions arising from such matters could have a material effect on our ability to invoice and receive timely payment on our contracts, perform contracts or compete for contracts with the U.S. government and could have a material effect on our operating performance. U.S. Government Audits Our contracts are regularly audited by the Defense Contract Audit Agency ("DCAA") and other government agencies. These agencies review our contract performance, cost structure and compliance with applicable laws, regulations and standards. The government also reviews the adequacy of, and our compliance with, our internal control systems and policies, including our purchasing, property, estimating, accounting and material management business systems. Any costs found to be improperly allocated to a specific contract will not be reimbursed. The DCAA will in some cases issue a Form 1 representing the non-conformance of such costs or requirements as it relates to our government contracts. If we are unable to provide sufficient evidence of the costs in question, the costs could be suspended or disallowed which could be material to our financial statements. Government contract payments received by us for direct and indirect costs are subject to adjustment after government audit and repayment to the government if the payments exceed allowable costs as defined in the government regulations. On our CivPol program, we had received a series of audit reports and related Form 1s from the DCAA based on their examination of certain incurred, invoiced and reimbursed costs. Over the course of multiple years, we have worked extensively with the DoS to settle the outstanding issues. Through our efforts, which included a series of contract actions (e.g. modifications) and negotiations, the issues have been resolved, resulting in final settlements of all audited costs of approximately $1.4 million. On April 30, 2013, we received several Form 1s from the DCAA for the periods ranging between 2000 to 2011 on the War Reserve Materiel program related to concerns on items such as the adequacy of documentation and reasonableness of costs. In July 2016, we received the contracting officer's final decision on these Form 1s which effectively settles this matter and we are awaiting final contract modifications. We have received a series of audit reports from the DCAA related to their examination of certain incurred, invoiced and reimbursed costs on the LOGCAP IV. In July 2016, we received two Form 1s from the DCAA questioning approximately $2.7 million for which we concur with approximately $20,000. We believe more Form 1s could be issued in the future for approximately $50.0 million. Over the past several years, we have been successful in working with the DCAA, Defense Contract Management Agency and our customer in resolving matters included in Form 1s as well as other transmittals. Specific to the LOGCAP IV audit reports, we have provided responses to the DCAA that have articulated our position on each issue and have attempted to answer their questions and provide clarification of the facts to resolve the issues raised. While we believe that we will be successful in defending our position, there can be no guarantees that we will be able to address all of their concerns or entirely avoid financial loss. Foreign Contingencies On January 22, 2014, a tax assessment from the Large Tax Office of the Afghanistan Ministry of Finance (“MOF”) was received, seeking approximately $64.2 million in taxes and penalties specific to one of our business licenses in Afghanistan for periods between 2009 to 2012. The majority of this assessment was income tax related; however, $10.2 million of the assessed amount is non-income tax related and represents loss contingencies that we consider reasonably possible. We filed our initial appeal of the assessment with the MOF on February 19, 2014. In May 2014, the MOF ruled in our favor for the income tax related issue which totaled approximately $54.0 million. We are still working with the MOF to remove the assessment on the remaining non-income tax related items. As of June 24, 2016, a reasonable estimate of loss or range of loss could not be made as we could not reasonably estimate the ultimate outcome related to the issues assessed. Credit Risk We are subject to concentrations of credit risk primarily by virtue of our accounts receivable. Departments and agencies of the U.S. federal government account for all but minor portions of our customer base, minimizing this credit risk. Furthermore, we continuously review all accounts receivable and record provisions for doubtful accounts when necessary. Risk Management Liabilities and Reserves We are insured for domestic workers' compensation liabilities and a significant portion of our employee medical costs. However, we bear risk for a portion of claims pursuant to the terms of the applicable insurance contracts. We account for these programs based on actuarial estimates of the amount of loss inherent in that period’s claims, including losses for which claims have not been reported of $10.6 million and $11.0 million as of June 24, 2016 and December 31, 2015, respectively. These loss estimates rely on actuarial observations of ultimate loss experience for similar historical events. We limit our risk by purchasing stop-loss insurance policies for significant claims incurred for both domestic workers' compensation liabilities and medical costs. Our exposure under the stop-loss policies for domestic workers' compensation and medical costs is limited based on fixed dollar amounts. For domestic workers' compensation and employers' liability under state and federal law, the fixed dollar amount of stop-loss coverage is $1.0 million per occurrence on most policies; but, $0.25 million on a California based policy. For medical costs, the fixed dollar amount of stop-loss coverage is $0.4 million for total costs per covered participant per calendar year. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information We have two operating and reporting segments: DynAviation and DynLogistics. The DynAviation and DynLogistics segments operate principally within a regulatory environment subject to governmental contracting and accounting requirements, including Federal Acquisition Regulations, Cost Accounting Standards and audits by various U.S. federal agencies. The following is a summary of the financial information of the reportable segments reconciled to the amounts reported in the condensed consolidated financial statements:
The following is a summary of the assets of the reportable segments reconciled to the amounts reported in the consolidated financial statements:
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Related Parties, Joint Ventures and Variable Interest Entities |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Parties, Joint Ventures and Variable Interest Entities | Related Parties, Joint Ventures and Variable Interest Entities Cerberus 3L Notes DynCorp Funding LLC, a limited liability company managed by Cerberus Capital Management, L.P., entered into a Third Lien Credit Agreement, dated as of June 15, 2016 to fund the Cerberus 3L Notes, a $30 million term loan to us. The interest rate per annum applicable to the Cerberus 3L Notes is 5.00%, payable in kind on a quarterly basis. The Cerberus 3L Notes do not require any mandatory amortization payments prior to maturity and the outstanding principal amounts shall be payable on June 15, 2026. See Note 7 for further discussion. Consulting Fee We have a Master Consulting and Advisory Services agreement ("COAC Agreement") with Cerberus Operations and Advisory Company, LLC ("COAC") where, pursuant to the terms of the agreement, they make personnel available to us for the purpose of providing reasonably requested business advisory services. The services are priced on a case by case basis depending on the requirements of the project and agreements in pricing. We incurred $1.4 million and $3.2 million of consulting fees on a gross basis before considering the effect of our contract mix which provides for partial recovery, during the three and six months ended June 24, 2016, respectively, and $2.5 million and $4.2 million during the three and six months ended June 26, 2015, respectively. We have two executives who are COAC employees, who are seconded to us: (i) our Senior Vice President, Chief Administrative Officer, Chief Legal Officer and Corporate Secretary; and (ii) our Senior Vice President, DynGlobal. Inclusive of the $1.4 million and $3.2 million recognized during the three and six months ended June 24, 2016 in COAC consulting fees, we recognized $0.7 million and $1.3 million of administrative expense in conjunction with these two COAC individuals for the three months and six months ended June 24, 2016, respectively. Inclusive of the $2.5 million and $4.2 million recognized during the three and six months ended June 26, 2015 in COAC consulting fees, we recognized $1.4 million and $2.3 million of administrative expense in conjunction with seconded COAC employees for the three and six months ended June 26, 2015, respectively. The New Senior Credit Facility permits payments under the COAC Agreement or any transaction contemplated thereby not to exceed $6 million per fiscal year with respect to executives seconded from COAC and personnel of COAC that provide services to us at cost on a weekly, monthly or pro-rated basis. Certain members of executive management and board members of the Company and seconded COAC individuals may have agreements and conduct business with Cerberus and its affiliates for which they receive compensation. We recognize such compensation as an expense in the consolidated financial statements. Joint Ventures and Variable Interest Entities We account for our investments in VIEs in accordance with ASC 810 - Consolidation. In cases where we have (i) the power to direct the activities of the VIE that most significantly impact its economic performance and (ii) the obligation to absorb losses of the VIE that could potentially be significant or the right to receive benefits from the entity that could potentially be significant to the VIE, we consolidate the entity. Alternatively, in cases where all of the aforementioned criteria are not met, the investment is accounted for under the equity method. As of June 24, 2016, we accounted for PaTH, CRS, Babcock, GRS and GLS as equity method investments. Alternatively, we consolidated DIFZ based on the aforementioned criteria. We present our share of the PaTH, CRS, GRS and GLS earnings in Earnings from equity method investees as these joint ventures are considered operationally integral. Alternatively, we present our share of the Babcock earnings in Other income, net as it is not considered operationally integral. Receivables due from our unconsolidated joint ventures totaled $0.8 million and $0.5 million as of June 24, 2016 and December 31, 2015, respectively. These receivables are a result of items purchased and services rendered by us on behalf of our unconsolidated joint ventures. We have assessed these receivables as having minimal collection risk based on our historic experience with these joint ventures and our inherent influence through our ownership interest. We did not earn revenue from our unconsolidated joint ventures during the three and six months ended June 24, 2016. The related revenue we earned from our unconsolidated joint ventures totaled $0.3 million and $0.4 million during the three and six months ended June 26, 2015, respectively. The related cost of services was $0.1 million and $0.3 million during the three and six months ended June 24, 2016 and $0.2 million and $0.4 million during the three and six months ended June 26, 2015, respectively. Additionally, we earned $0.3 million and $0.7 million in equity method income (includes operationally integral and non-integral income) during the three and six months ended June 24, 2016 and $0.4 million and $0.9 million in equity method income during the three and six months ended June 26, 2015, respectively. GLS’ revenue was $11.2 million and $21.1 million during the three and six months ended June 24, 2016, respectively, and $6.8 million and $13.5 million during the three and six months ended June 26, 2015. GLS’ operating and net loss was $0.7 million and $1.5 million during the three and six months ended June 24, 2016, and $0.1 million and $0.6 million during the three and six months ended June 26, 2015, respectively. We currently hold one promissory note included in Other assets on our consolidated balance sheet from Palm Trading Investment Corp, which had an aggregate initial value of $9.2 million. The loan balance outstanding was $2.4 million and $2.5 million as of June 24, 2016 and December 31, 2015, respectively, reflecting the initial value plus accrued interest, less payments against the promissory note. The fair value of the note receivable is not materially different from its carrying value. As discussed above and in accordance with ASC 810 - Consolidation, we consolidate DIFZ. The following tables present selected financial information for DIFZ as of June 24, 2016 and December 31, 2015 and for the three and six months ended June 24, 2016 and June 26, 2015:
The following tables present selected financial information for our equity method investees as of June 24, 2016 and December 31, 2015 and for the three and six months ended June 24, 2016 and June 26, 2015:
Many of our joint ventures and VIEs only perform on a single contract. The modification or termination of a contract under a joint venture or VIE could trigger an impairment in the fair value of our investment in these entities. In the aggregate, our maximum exposure to losses as a result of our investment consists of our (i) $10.5 million investment in unconsolidated joint ventures, (ii) $0.8 million in receivables from our unconsolidated joint ventures, (iii) $2.4 million note receivable from Palm Trading Investment Corp. and (iv) contingent liabilities that were neither probable nor reasonably estimable as of June 24, 2016. |
Consolidating Financial Statements of Subsidiary Guarantors |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidating Financial Statements of Subsidiary Guarantors | Consolidating Financial Statements of Subsidiary Guarantors The Senior Unsecured Notes and the New Notes issued by DynCorp International Inc. ("Subsidiary Issuer"), the Senior Credit Facility and the term loan under the Third Lien Credit Agreement are fully and unconditionally guaranteed, jointly and severally, by the Company ("Parent") and the following domestic subsidiaries of Subsidiary Issuer: DynCorp International LLC, DTS Aviation Services LLC, DynCorp Aerospace Operations LLC, DynCorp International Services LLC, DIV Capital Corporation, Dyn Marine Services of Virginia LLC, Services International LLC, Worldwide Management and Consulting Services LLC, Worldwide Recruiting and Staffing Services LLC, Heliworks LLC, Phoenix Consulting Group, LLC and Casals & Associates, Inc. ("Subsidiary Guarantors"). Each of the Subsidiary Issuer and the Subsidiary Guarantors is 100% owned by the Company. Under the Senior Unsecured Notes Indenture and the Indenture governing the New Notes, a guarantee of a Subsidiary Guarantor will terminate upon the following customary circumstances: (i) the sale of the capital stock of such Subsidiary Guarantor if such sale complies with the indenture; (ii) the designation of such Subsidiary Guarantor as an unrestricted subsidiary; (iii) if such Subsidiary Guarantor no longer guarantees certain other indebtedness of the Subsidiary Issuer or (iv) the defeasance or discharge of the indenture. The following condensed consolidating financial statements present (i) unaudited condensed consolidating balance sheets as of June 24, 2016 and December 31, 2015, (ii) unaudited condensed consolidating statements of operations and comprehensive loss for the three and six months ended June 24, 2016 and June 26, 2015, (iii) unaudited condensed consolidating statements of cash flows for the six months ended June 24, 2016 and June 26, 2015 and (iii) elimination entries necessary to consolidate Parent and its subsidiaries. The Parent company, the Subsidiary Issuer, the combined Subsidiary Guarantors and the combined subsidiary non-guarantors account for their investments in subsidiaries using the equity method of accounting; therefore, the Parent column reflects the equity income of the subsidiary and its subsidiary guarantors, and subsidiary non-guarantors. Additionally, the Subsidiary Guarantors’ column reflects the equity income of its subsidiary non-guarantors. DynCorp International Inc. is considered the Subsidiary Issuer as it issued the Senior Unsecured Notes and the New Notes. Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Operations Information For the Three Months Ended June 24, 2016
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Operations Information For the Three Months Ended June 26, 2015
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Operations Information For the Six Months Ended June 24, 2016
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Operations Information For the Six Months Ended June 26, 2015
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Comprehensive Loss Information For the Three Months Ended June 24, 2016
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Comprehensive (Loss) Income Information For the Three Months Ended June 26, 2015
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Comprehensive Loss Information For the Six Months Ended June 24, 2016
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Comprehensive (Loss) Income Information For the Six Months Ended June 26, 2015
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Balance Sheet Information June 24, 2016
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Balance Sheet Information December 31, 2015
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Cash Flow Information For the Six Months Ended June 24, 2016
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Cash Flow Information For The Six Months Ended June 26, 2015
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Subsequent Events |
6 Months Ended |
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Jun. 24, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events We evaluated potential subsequent events occurring after the period end date through the date the financial statements were issued and concluded that there were no material subsequent events for the quarter ended June 24, 2016, except as disclosed within the Notes to the unaudited condensed consolidated financial statements. |
Basis of Presentation and Accounting Policies (Policies) |
6 Months Ended |
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Jun. 24, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Delta Tucker Holdings, Inc. ("Holdings"), the parent of DynCorp International Inc. ("DynCorp International"), through its subsidiaries (together, "the Company"), provides defense and technical services and government outsourced solutions primarily to U.S. government agencies domestically and internationally. The Company was incorporated in the state of Delaware on April 1, 2010. Our customers include the DoD, the U.S. Department of State ("DoS"), the U.S. Agency for International Development ("USAID"), foreign governments, commercial customers and certain other U.S. federal, state and local government departments and agencies. Unless the context otherwise indicates, references herein to "we," "our," "us," or "the Company" refer to Delta Tucker Holdings, Inc. and our consolidated subsidiaries. The unaudited condensed consolidated financial statements include the accounts of the Company and our domestic and foreign subsidiaries. These unaudited condensed consolidated financial statements have been prepared pursuant to accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, we believe that all disclosures are adequate and do not make the information presented misleading. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. In the opinion of management, normal recurring adjustments necessary to fairly present our financial position as of June 24, 2016 and December 31, 2015, the results of operations and statements of comprehensive loss for the three and six months ended June 24, 2016 and June 26, 2015 and the statements of deficit and cash flows for the six months ended June 24, 2016 and June 26, 2015 have been included. The results of operations and statements of comprehensive loss for the three and six months ended June 24, 2016 and June 26, 2015 and the statements of deficit and cash flows for the six months ended June 24, 2016 and June 26, 2015 are not necessarily indicative of the results to be expected for the full calendar year or for any future periods. We use estimates and assumptions required for preparation of the financial statements. The estimates are primarily based on historical experience and business knowledge and are revised as circumstances change. Our actual results may differ from these estimates. |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of both our domestic and foreign subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company has investments in joint ventures that are variable interest entities ("VIEs"). The VIE investments are accounted for in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810 — Consolidation. In cases where the Company has (i) the power to direct the activities of the VIE that most significantly impact its economic performance and (ii) the obligation to absorb losses of the VIE that could potentially be significant or the right to receive benefits from the entity that could potentially be significant to the VIE, the Company consolidates the entity. Alternatively, in cases where all of the aforementioned criteria are not met, the investment is accounted for under the equity method. We classify our equity method investees in two distinct groups based on management’s day-to-day involvement in the operations of each entity and the nature of each joint venture’s business. If the joint venture is deemed to be an extension of one of our segments and operationally integral to the business, our share of the joint venture’s earnings is reported within operating loss in Earnings from equity method investees in the consolidated statement of operations. If the Company considers our involvement less significant, the share of the joint venture’s net earnings is reported in Other income, net in the consolidated statement of operations. Noncontrolling Interests We record the impact of our partners' interests in less than wholly owned consolidated joint ventures as noncontrolling interests. Currently, DynCorp International FZ-LLC ("DIFZ") is our only consolidated joint venture for which we do not own 100% of the entity. We hold 25% ownership interest in DIFZ. We continue to consolidate DIFZ as we still exercise power over activities that significantly impact DIFZ’s economic performance and have the obligation to absorb losses or receive benefits of DIFZ that could potentially be significant to DIFZ. Noncontrolling interests is presented on the face of the statements of operations as an increase or reduction in arriving at "Net loss attributable to Delta Tucker Holdings, Inc." Noncontrolling interests is located in the equity section on the consolidated balance sheets. See Note 10 for further discussion regarding DIFZ. |
Use of Estimates | Use of Estimates The preparation of the financial statements requires us to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Our estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the consolidated statements of operations in the period that they are determined. Changes in contract estimates related to certain types of contracts accounted for using the percentage of completion method of accounting are recognized in the period in which such changes are made for the inception-to-date effect of the changes. Changes in these estimates can occur over the life of a contract for a variety of reasons, including changes in scope, estimated incentive or award fees, cost estimates, level of effort and/or other assumptions impacting revenue or cost to perform a contract. |
Accounting Policies | Accounting Policies There have been no material changes to our significant accounting policies from those described in our Annual Report on Form 10-K for the year ended December 31, 2015, except as described below. |
Restricted Cash | Restricted Cash Restricted cash includes cash restricted by certain contracts and available for use to pay specified costs and vendors on work performed on specific contracts. On some contracts, advance payments are not available for use and cash is to be disbursed for specified costs for work performed on the specific contract. Changes in restricted cash related to our contracts are included as operating activities within our consolidated statement of cash flows. In June 2016, we received $30 million in cash from the execution of the Third Lien Credit Agreement. The proceeds are restricted to pay fees and expenses in support of or related to the Company's Global Advisory Group. As of June 24, 2016, the Company classified the restricted cash related to the Third Lien Credit Agreement as a current asset. The increase and decrease of restricted cash related to the Third Lien Credit Agreement are included as investing activities within our consolidated statement of cash flows. |
Recently Adopted Accounting Developments | Recently Adopted Accounting Standards In January 2015, the FASB issued Accounting Standards Update ("ASU") No. 2015-01, Income Statement-Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU 2015-01 eliminates from GAAP the concept of extraordinary items. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, and may be applied either prospectively or retrospectively to all prior periods presented in the financial statements. We prospectively adopted ASU No. 2015-01 during the quarter ended March 25, 2016. The adoption of this guidance did not have a material impact on our consolidated financial statements. In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 changes the consolidation guidance to address concerns of stakeholders that current accounting for certain legal entities might require a reporting entity to consolidate another legal entity in situations in which the reporting entity’s contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entity’s voting rights, or the reporting entity is not exposed to a majority of the legal entity’s economic benefits or obligations. ASU 2015-02 will be effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. We retrospectively adopted ASU No. 2015-02 during the quarter ended March 25, 2016. The adoption of this guidance did not have a material impact on our consolidated financial position, results of operations or cash flows. In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that deferred financing costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset, consistent with debt discounts. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update is effective for fiscal years beginning after December 15, 2015, and required retrospective application. We adopted ASU 2015-03 during the quarter ended March 25, 2016 and applied its provisions retrospectively. The adoption of ASU 2015-03 resulted in the reclassification of current deferred financing costs, net, of $2.4 million related to our term loan (the "Term Loan") under the Senior Credit Facility (as defined in Note 7) and revolving credit facility under the Senior Credit Facility (the "Revolver") from prepaid expenses and other current assets to the current portion of long-term debt and the reclassification of deferred financing costs, net, of $2.8 million related to our Senior Unsecured Notes from total other assets, net, to long-term debt within our Condensed Consolidated Balance Sheets as of December 31, 2015. Adoption of this standard did not impact the results of operations, retained earnings, or cash flows in the current or previous interim and annual reporting periods. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent amounts in a classified statement of financial position. Instead, entities will be required to classify all deferred tax assets and liabilities as noncurrent in a statement of financial position. This standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We adopted ASU No. 2015-17 during the quarter ended March 25, 2016 and applied it prospectively to the period ended March 25, 2016. Prior periods were not retroactively adjusted. Adoption of this standard did not impact the results of operations, retained earnings, or cash flows in the current or previous interim and annual reporting periods. Recently Issued Accounting Developments In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which outlines a single set of comprehensive principles for recognizing revenue under GAAP. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. ASU 2016-12 clarifies the revenue recognition guidance regarding collectability, noncash consideration, presentation of sales tax and transition. These ASUs apply to all entities that enter into contracts with customers to transfer goods or services. These ASUs are effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but not before interim and annual reporting periods beginning after December 15, 2016. Entities have the choice to apply these ASUs either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying these standards at the date of initial application and not adjusting comparative information. We are currently evaluating both methods of adoption as well as the effect of these standards will have on our consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. ASU 2015-11 requires an entity who measures inventory using FIFO or average cost to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs. The update is effective for fiscal years beginning after December 15, 2016 and interim periods within fiscal years beginning after December 15, 2016 and applied prospectively. Early adoption is permitted, including adoption in an interim period. We are currently evaluating the potential effects of the adoption of ASU 2015-11 on our consolidated financial position. In February 2016, the FASB issued ASU No. 2016-02, Leases. The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. Entities are required to adopt ASU 2016-02 using a modified retrospective approach, subject to certain optional practice expedients, and apply the provisions of ASU 2016-02 to leasing arrangements existing at or entered into after the earliest comparative period presented in the financial statements. We are currently evaluating the potential effects of the adoption of ASU 2016-02 on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-06, Derivatives and Hedging: Contingent Put and Call Options in Debt Instruments. ASU 2016-06 clarifies how to assess whether an embedded contingent put or call option is clearly and closely related to a debt host. The amendments are effective for annual reporting periods, and interim periods therein, beginning after December 15, 2016. The amendments are effective for annual reporting periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted. Entities should apply ASU 2016-06 on a modified retrospective basis to existing debt instruments as of the beginning of the fiscal year for which the amendments are effective. We are currently evaluating the potential effects of the adoption of ASU 2016-06 on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-07, Investments - Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting. ASU 2016-07 simplifies the equity method by eliminating the requirement to apply it retrospectively to an investment that subsequently qualifies for such accounting as a result of an increase in the level of ownership interest or degree of influence. The amendments are effective for annual reporting periods, and interim periods therein, beginning after December 15, 2016 and applied prospectively. Early adoption is permitted. We are currently evaluating the potential effects of the adoption of ASU 2016-07 on our consolidated financial statements. Other accounting standards updates effective after June 24, 2016 are not expected to have a material effect on our consolidated financial position or results of operations and cash flows for the period ended June 24, 2016. |
Basis of Presentation and Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate gross favorable and unfavorable adjustments to income before income taxes | The following table presents the aggregate gross favorable and unfavorable adjustments to income before income taxes resulting from changes in contract estimates, excluding new or completed contracts where no comparative estimates exist between reporting periods, and certain routine contract actions such as changes resulting from the execution of contract options, for the three and six months ended June 24, 2016 and June 26, 2015.
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Composition of Certain Financial Statement Captions (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid expenses and other current assets | Prepaid expenses and other current assets
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Property, plant and equipment | Property and equipment, net
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Other assets, net | Other assets, net
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Accrued payroll and employee costs | Accrued payroll and employee costs
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Accrued liabilities | Accrued liabilities
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Goodwill and Other Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill balances for segments | The carrying amounts of goodwill for each of our segments as of June 24, 2016 were as follows:
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Information about changes relating to certain intangible assets | The following tables provide information about changes relating to certain intangible assets:
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic and foreign components of Income (loss) before income taxes | The domestic and foreign components of Loss before income taxes are as follows:
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Deferred tax liabilities, net | Deferred tax liabilities, net consist of the following:
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Accounts Receivable (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts receivable | Accounts receivable, net consisted of the following:
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Fair Value of Financial Assets and Liabilities (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimate of fair value of long-term debt based on quoted prices in active markets | Our estimate of the fair value of our Senior Unsecured Notes, 11.875% senior secured second lien notes (the "New Notes"), and New Senior Credit Facility is based on Level 1 and Level 2 inputs, as defined above. Our estimate of the fair value of our Cerberus 3L Notes (as defined in Note 7) is based on Level 3 inputs, as defined above. We used the following techniques in determining the fair value disclosed for the Cerberus 3L Notes classified as Level 3. The fair value as June 24, 2016, has been calculated by discounting the expected cash flows using a discount rate of 18.1%. This discount rate is determined using the Moody's credit rating for the New Notes and reducing the rating one level lower for the Cerberus 3L Notes as they are subordinated to the New Notes.
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | Debt consisted of the following:
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Schedule of maximum leverage ratios by period end | The maximum total leverage ratios under the New Senior Credit Facility are set forth below as follows:
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Schedule of interest coverage ratios by period end | The minimum interest coverage ratios under the New Senior Credit Facility are set forth below as follows:
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Schedule of debt redemption prices | In addition, on or after July 1, 2017, the New Notes will be redeemable at the option of the Company, in whole or in part, at any time and from time to time, upon not less than 30 nor more than 60 days’ prior notice, at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid cash interest, if any, together with an amount of cash equal to all accrued and unpaid PIK Interest to but excluding the redemption date, if redeemed during the 12-month period commencing on July 1 of the years set forth below:
|
Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the financial information of the reportable segments reconciled | The following is a summary of the financial information of the reportable segments reconciled to the amounts reported in the condensed consolidated financial statements:
|
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Schedule of assets allocation to segment | The following is a summary of the assets of the reportable segments reconciled to the amounts reported in the consolidated financial statements:
|
Related Parties, Joint Ventures and Variable Interest Entities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ownership percentage of Joint Ventures and Variable Interest Entities | The following tables present selected financial information for DIFZ as of June 24, 2016 and December 31, 2015 and for the three and six months ended June 24, 2016 and June 26, 2015:
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Selected financial information for related parties and equity method investees | The following tables present selected financial information for our equity method investees as of June 24, 2016 and December 31, 2015 and for the three and six months ended June 24, 2016 and June 26, 2015:
|
Consolidating Financial Statements of Subsidiary Guarantors (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Statement of Operations | Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Operations Information For the Three Months Ended June 24, 2016
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Operations Information For the Three Months Ended June 26, 2015
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Operations Information For the Six Months Ended June 24, 2016
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Operations Information For the Six Months Ended June 26, 2015
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Condensed Consolidating Statement of Comprehensive (Loss) Income | Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Comprehensive Loss Information For the Three Months Ended June 24, 2016
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Comprehensive (Loss) Income Information For the Three Months Ended June 26, 2015
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Comprehensive Loss Information For the Six Months Ended June 24, 2016
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Comprehensive (Loss) Income Information For the Six Months Ended June 26, 2015
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Condensed Consolidating Balance Sheet | Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Balance Sheet Information June 24, 2016
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Balance Sheet Information December 31, 2015
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Condensed Consolidating Statement of Cash Flow | Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Cash Flow Information For the Six Months Ended June 24, 2016
Delta Tucker Holdings, Inc. and Subsidiaries Unaudited Condensed Consolidating Statement of Cash Flow Information For The Six Months Ended June 26, 2015
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Basis of Presentation and Accounting Policies (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 24, 2016 |
Jun. 26, 2015 |
Jun. 24, 2016 |
Jun. 26, 2015 |
|
Accounting Policies [Abstract] | ||||
Gross favorable adjustments | $ 8.1 | $ 7.9 | $ 7.8 | $ 12.2 |
Gross unfavorable adjustments | (13.2) | (1.7) | (13.5) | (5.8) |
Net adjustments | $ (5.1) | $ 6.2 | $ (5.7) | $ 6.4 |
Composition of Certain Financial Statement Captions (Details) - USD ($) $ in Thousands |
Jun. 24, 2016 |
Dec. 31, 2015 |
---|---|---|
Prepaid expenses and other current assets | ||
Prepaid expenses | $ 29,708 | $ 30,985 |
Income tax refunds receivable | 87 | 204 |
Inventories | 15,743 | 14,776 |
Work-in-process inventory | 1,923 | 1,733 |
Joint venture receivables | 789 | 460 |
Other current assets | 7,075 | 7,525 |
Total prepaid expenses and other current assets | $ 55,325 | $ 55,683 |
Composition of Certain Financial Statement Captions (Details 1) - USD ($) $ in Thousands |
Jun. 24, 2016 |
Dec. 31, 2015 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Helicopters | $ 983 | $ 983 |
Computers and other equipment | 11,568 | 10,392 |
Leasehold improvements | 21,429 | 19,639 |
Office furniture and fixtures | 4,930 | 4,541 |
Gross property and equipment | 38,910 | 35,555 |
Less accumulated depreciation | (23,123) | (19,861) |
Total property and equipment, net | $ 15,787 | $ 15,694 |
Composition of Certain Financial Statement Captions (Details 2) - USD ($) $ in Thousands |
Jun. 24, 2016 |
Dec. 31, 2015 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Investment in affiliates | $ 10,484 | $ 6,712 |
Palm promissory note, long-term portion | 2,268 | 2,079 |
Other | 3,567 | 3,536 |
Total other assets, net | $ 16,319 | $ 12,327 |
Composition of Certain Financial Statement Captions (Details 3) - USD ($) $ in Thousands |
Jun. 24, 2016 |
Dec. 31, 2015 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Wages, compensation and other benefits | $ 73,364 | $ 85,216 |
Accrued vacation | 17,839 | 14,433 |
Accrued contributions to employee benefit plans | 1,213 | 1,032 |
Total accrued payroll and employee costs | $ 92,416 | $ 100,681 |
Composition of Certain Financial Statement Captions (Details 4) - USD ($) $ in Thousands |
Jun. 24, 2016 |
Dec. 31, 2015 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Customer liabilities | $ 24,991 | $ 21,183 |
Accrued insurance | 24,536 | 35,530 |
Accrued interest | 23,875 | 24,370 |
Contract losses | 14,868 | 15,718 |
Legal reserves | 4,574 | 5,063 |
Subcontractor retention | 1,125 | 1,646 |
Other | 13,560 | 11,208 |
Total accrued liabilities | $ 107,529 | $ 114,718 |
Goodwill and Other Intangible Assets (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 24, 2016
USD ($)
| |
Goodwill balances for segments | |
Goodwill balance as of December 31, 2015 | $ 42,093 |
Goodwill balance as of June 24, 2016 | 42,093 |
Operating Segments | |
Goodwill balances for segments | |
Goodwill balance as of December 31, 2015 | 42,093 |
Changes between January 1, 2016 and June 24, 2016 | 0 |
Goodwill balance as of June 24, 2016 | 42,093 |
Operating Segments | DynAviation | |
Goodwill balances for segments | |
Goodwill balance as of December 31, 2015 | 0 |
Changes between January 1, 2016 and June 24, 2016 | 0 |
Goodwill balance as of June 24, 2016 | 0 |
Operating Segments | DynLogistics | |
Goodwill balances for segments | |
Goodwill balance as of December 31, 2015 | 42,093 |
Changes between January 1, 2016 and June 24, 2016 | 0 |
Goodwill balance as of June 24, 2016 | $ 42,093 |
Goodwill and Other Intangible Assets (Details Textual) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 24, 2016
USD ($)
|
Jun. 26, 2015
USD ($)
|
Jun. 24, 2016
USD ($)
reporting_unit
operating_and_reporting_segment
|
Jun. 26, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Subsidiary or Equity Method Investee [Line Items] | |||||
Number of operating and reportable segment | operating_and_reporting_segment | 2 | ||||
Number of reportable segments | 5 | ||||
Number of reporting segments with recorded goodwill | 2 | ||||
Amortization expense | $ | $ 7.9 | $ 8.3 | $ 15.5 | $ 14.6 | |
Capitalized software gross value | $ | $ 3.8 | $ 3.8 | $ 2.9 | ||
DynAviation | |||||
Subsidiary or Equity Method Investee [Line Items] | |||||
Number of reportable segments | 2 | ||||
DynLogistics | |||||
Subsidiary or Equity Method Investee [Line Items] | |||||
Number of reportable segments | 3 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 24, 2016 |
Jun. 26, 2015 |
Jun. 24, 2016 |
Jun. 26, 2015 |
|
Domestic and foreign components of Income (loss) before income taxes | ||||
Domestic | $ (19,469) | $ (100,930) | $ (30,061) | $ (112,256) |
Foreign | 1,385 | (2,120) | 1,900 | (1,388) |
Loss before income taxes | $ (18,084) | $ (103,050) | $ (28,161) | $ (113,644) |
Income Taxes (Details 2) - USD ($) $ in Thousands |
Jun. 24, 2016 |
Dec. 31, 2015 |
---|---|---|
Deferred tax assets and liabilities | ||
Current deferred tax liabilities, net | $ 0 | $ (27,334) |
Non-current deferred tax (liabilities) assets, net | (16,964) | 0 |
Non-current deferred tax (liabilities) assets, net | 0 | 13,364 |
Deferred tax liabilities, net | $ (16,964) | $ (13,970) |
Income Taxes (Details Textual) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 24, 2016 |
Jun. 26, 2015 |
Jun. 24, 2016 |
Jun. 26, 2015 |
Dec. 31, 2015 |
|
Operating Loss Carryforwards [Line Items] | |||||
Effective tax rate, percent | (37.20%) | 12.90% | (39.90%) | 8.30% | |
Unrecognized tax benefit | $ 2,600,000 | $ 2,600,000 | $ 2,600,000 | ||
Unrecognized tax benefits if recognized, affect effective tax rate | 2,300,000 | 2,300,000 | 2,300,000 | ||
Unrecognized tax benefits, inclusive of penalties | $ 3,300,000 | 3,300,000 | $ 3,300,000 | ||
Income taxes paid, net | 2,323,000 | $ 4,761,000 | |||
Domestic Tax Authority | |||||
Operating Loss Carryforwards [Line Items] | |||||
Income taxes paid, net | $ 0 |
Accounts Receivable (Details) - USD ($) $ in Thousands |
Jun. 24, 2016 |
Dec. 31, 2015 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net | $ 329,785 | $ 386,097 |
Billed | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net | 125,223 | 136,127 |
Unbilled | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net | $ 204,562 | $ 249,970 |
Accounts Receivable (Details Textual) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 24, 2016 |
Dec. 31, 2015 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Contracts receivable, claims | $ 0 | $ 0 |
Unbilled receivables | 26,000 | 21,300 |
Allowance for doubtful accounts receivable, period increase (decrease) | 17,500 | $ 16,300 |
UNITED STATES | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net | $ 26,000 |
Debt (Details 2) |
Apr. 30, 2016 |
---|---|
Leverage Ratios [Abstract] | |
June 24, 2016 | 7.40 |
September 30, 2016 | 7.50 |
December 31, 2016 | 7.40 |
March 31, 2017 | 7.30 |
June 30, 2017 | 6.75 |
September 29, 2017 | 6.50 |
December 31, 2017 | 5.75 |
March 30, 2018 | 5.75 |
June 29, 2018 | 5.50 |
September 28, 2018 | 5.4 |
September 29, 2018 | 4.75 |
Risk Based Ratios [Abstract] | |
June 24, 2016 | 1.15 |
September 30, 2016 | 1.15 |
December 31, 2016 | 1.15 |
March 31, 2017 | 1.20 |
June 30, 2017 | 1.20 |
September 29, 2017 | 1.30 |
December 31, 2017 | 1.40 |
March 30, 2018 | 1.50 |
June 29, 2018 | 1.60 |
June 30, 2018 and thereafter | 1.70 |
Debt (Details 3) - 10.375% Senior Unsecured Notes |
6 Months Ended |
---|---|
Jun. 24, 2016 | |
Prior to July 1, 2017 | |
Debt Instrument, Redemption [Line Items] | |
Redemption price, percentage of principle | 100.00% |
2017 | |
Debt Instrument, Redemption [Line Items] | |
Redemption price, percentage of principle | 106.00% |
2018 | |
Debt Instrument, Redemption [Line Items] | |
Redemption price, percentage of principle | 103.00% |
2019 and thereafter | |
Debt Instrument, Redemption [Line Items] | |
Redemption price, percentage of principle | 100.00% |
Segment Information (Details Textual) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 24, 2016
USD ($)
|
Jun. 26, 2015
USD ($)
|
Jun. 24, 2016
USD ($)
operating_and_reporting_segment
|
Jun. 26, 2015
USD ($)
|
|
Segment Reporting [Abstract] | ||||
Number of operating and reportable segment | operating_and_reporting_segment | 2 | |||
Cost of services | $ | $ 0.3 | $ 1.1 | $ 0.5 | $ 1.6 |
Segment Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 24, 2016 |
Jun. 26, 2015 |
Jun. 24, 2016 |
Jun. 26, 2015 |
||||||||
Summary of the financial information of the reportable segments reconciled | |||||||||||
Revenue | $ 450,967 | $ 490,170 | $ 870,957 | $ 957,192 | |||||||
Operating (loss) income | (4,929) | (86,511) | 549 | (82,060) | |||||||
Depreciation and amortization | 17,677 | 18,148 | |||||||||
Operating Segments | |||||||||||
Summary of the financial information of the reportable segments reconciled | |||||||||||
Revenue | 450,967 | 490,170 | 870,957 | 957,192 | |||||||
Operating (loss) income | (4,929) | (86,511) | 549 | (82,060) | |||||||
Depreciation and amortization | [1] | 9,161 | 10,350 | 17,677 | 18,148 | ||||||
Operating Segments | DynAviation | |||||||||||
Summary of the financial information of the reportable segments reconciled | |||||||||||
Revenue | 298,647 | 324,507 | 587,156 | 634,412 | |||||||
Operating (loss) income | (252) | (76,969) | 10,466 | (72,371) | |||||||
Depreciation and amortization | 521 | 1,168 | 685 | 1,800 | |||||||
Operating Segments | DynLogistics | |||||||||||
Summary of the financial information of the reportable segments reconciled | |||||||||||
Revenue | 152,670 | 166,194 | 283,859 | 322,594 | |||||||
Operating (loss) income | 15,942 | 3,298 | 25,878 | 11,006 | |||||||
Depreciation and amortization | 60 | 53 | 122 | 112 | |||||||
Operating Segments | Headquarters / Other | |||||||||||
Summary of the financial information of the reportable segments reconciled | |||||||||||
Revenue | [2] | (350) | (531) | (58) | 186 | ||||||
Operating (loss) income | [3] | (20,619) | (12,840) | (35,795) | (20,695) | ||||||
Depreciation and amortization | $ 8,580 | $ 9,129 | $ 16,870 | $ 16,236 | |||||||
|
Segment Information (Details 1) - USD ($) $ in Thousands |
Jun. 24, 2016 |
Dec. 31, 2015 |
||
---|---|---|---|---|
ASSETS | ||||
Assets | $ 704,778 | $ 784,689 | ||
Operating Segments | ||||
ASSETS | ||||
Assets | 704,778 | 784,689 | ||
Operating Segments | DynAviation | ||||
ASSETS | ||||
Assets | 304,277 | 351,627 | ||
Operating Segments | DynLogistics | ||||
ASSETS | ||||
Assets | 153,176 | 173,036 | ||
Operating Segments | Headquarters / Other | ||||
ASSETS | ||||
Assets | [1] | $ 247,325 | $ 260,026 | |
|
Related Parties, Joint Ventures and Variable Interest Entities (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 24, 2016 |
Jun. 26, 2015 |
Jun. 24, 2016 |
Jun. 26, 2015 |
Dec. 31, 2015 |
|
Variable Interest Entity [Line Items] | |||||
Assets | $ 704,778 | $ 704,778 | $ 784,689 | ||
Liabilities | 952,753 | 952,753 | 992,859 | ||
Revenue | 450,967 | $ 490,170 | 870,957 | $ 957,192 | |
DynCorp International FZ-LLC | |||||
Variable Interest Entity [Line Items] | |||||
Assets | 5,100 | 5,100 | 4,700 | ||
Liabilities | 1,900 | 1,900 | 1,100 | ||
Revenue | 45,900 | 55,600 | 85,700 | 107,300 | |
Equity Method Investee | |||||
Variable Interest Entity [Line Items] | |||||
Current assets | 41,800 | 41,800 | 32,200 | ||
Total assets | 43,000 | 43,000 | 32,200 | ||
Current liabilities | 20,400 | 20,400 | 12,500 | ||
Total liabilities | 20,400 | 20,400 | $ 12,500 | ||
Revenue | 22,500 | 21,500 | 37,400 | 67,300 | |
Gross profit | 1,000 | 3,500 | 1,500 | 8,700 | |
Net income | $ 1,000 | $ 2,800 | $ 800 | $ 6,800 |
Consolidating Financial Statements of Subsidiary Guarantors (Details Textual) |
Jun. 24, 2016 |
---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Percentage of ownership | 100.00% |
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