x | 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 | 22-1852179 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
12015 Lee Jackson Highway, Fairfax, VA | 22033 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | o |
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | o |
Emerging growth company | o |
Page No. | ||
Item 1. | ||
Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016 | ||
Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2017 and 2016 | ||
Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2017 and 2016 | ||
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2016 | ||
Notes to Condensed Consolidated Financial Statements | ||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 6. |
Item 1. | Financial Statements |
(unaudited) | |||||||
June 30, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 108,210 | $ | 64,936 | |||
Receivables—net | 318,128 | 320,677 | |||||
Prepaid expenses and other | 30,771 | 34,423 | |||||
Contractual inventory | 2,515 | 1,277 | |||||
Total Current Assets | 459,624 | 421,313 | |||||
Goodwill | 955,874 | 955,874 | |||||
Other intangible assets—net | 146,318 | 154,931 | |||||
Employee supplemental savings plan assets | 31,455 | 29,383 | |||||
Property and equipment—net | 23,595 | 23,121 | |||||
Investments | 11,808 | 11,691 | |||||
Other assets | 2,199 | 2,151 | |||||
TOTAL ASSETS | $ | 1,630,873 | $ | 1,598,464 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
LIABILITIES | |||||||
Accounts payable and accrued expenses | $ | 104,143 | $ | 108,888 | |||
Accrued salaries and related expenses | 78,585 | 70,768 | |||||
Billings in excess of revenue earned | 13,948 | 11,998 | |||||
Total Current Liabilities | 196,676 | 191,654 | |||||
Deferred income taxes | 129,960 | 122,081 | |||||
Accrued retirement | 31,081 | 30,581 | |||||
Other long-term liabilities | 11,721 | 12,481 | |||||
TOTAL LIABILITIES | 369,438 | 356,797 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
STOCKHOLDERS' EQUITY | |||||||
Common stock, Class A—$0.01 par value; 150,000,000 shares authorized; 25,922,608 and 25,795,973 shares issued at June 30, 2017 and December 31, 2016; 25,678,495 and 25,551,860 shares outstanding at June 30, 2017 and December 31, 2016 | 259 | 258 | |||||
Common stock, Class B—$0.01 par value; 50,000,000 shares authorized; 13,190,745 and 13,190,745 shares issued and outstanding at June 30, 2017 and December 31, 2016 | 132 | 132 | |||||
Additional paid-in capital | 477,545 | 471,906 | |||||
Treasury stock, 244,113 and 244,113 shares at cost at June 30, 2017 and December 31, 2016 | (9,158 | ) | (9,158 | ) | |||
Retained earnings | 792,883 | 778,710 | |||||
Accumulated other comprehensive loss | (226 | ) | (181 | ) | |||
TOTAL STOCKHOLDERS’ EQUITY | 1,261,435 | 1,241,667 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,630,873 | $ | 1,598,464 |
(unaudited) Three months ended June 30, | (unaudited) Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
REVENUES | $ | 413,694 | $ | 401,354 | $ | 832,068 | $ | 792,016 | |||||||
Cost of services | 350,674 | 341,511 | 707,721 | 675,025 | |||||||||||
General and administrative expenses | 38,085 | 35,629 | 75,022 | 70,832 | |||||||||||
OPERATING INCOME | 24,935 | 24,214 | 49,325 | 46,159 | |||||||||||
Interest expense | (317 | ) | (306 | ) | (611 | ) | (595 | ) | |||||||
Interest income | 28 | 19 | 52 | 63 | |||||||||||
Other income (expense), net | 5 | 45 | 44 | 53 | |||||||||||
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND EQUITY METHOD INVESTMENTS | 24,651 | 23,972 | 48,810 | 45,680 | |||||||||||
Provision for income taxes | (9,126 | ) | (9,250 | ) | (18,226 | ) | (17,810 | ) | |||||||
Equity in gains of unconsolidated subsidiaries | 36 | 60 | 5 | 128 | |||||||||||
NET INCOME | $ | 15,561 | $ | 14,782 | $ | 30,589 | $ | 27,998 | |||||||
BASIC EARNINGS PER SHARE: | |||||||||||||||
Class A common stock | $ | 0.40 | $ | 0.39 | $ | 0.79 | $ | 0.74 | |||||||
Class B common stock | $ | 0.40 | $ | 0.39 | $ | 0.79 | $ | 0.74 | |||||||
DILUTED EARNINGS PER SHARE: | |||||||||||||||
Class A common stock | $ | 0.40 | $ | 0.39 | $ | 0.78 | $ | 0.74 | |||||||
Class B common stock | $ | 0.40 | $ | 0.39 | $ | 0.78 | $ | 0.74 |
(unaudited) Three months ended June 30, | (unaudited) Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
NET INCOME | $ | 15,561 | $ | 14,782 | $ | 30,589 | $ | 27,998 | |||||||
OTHER COMPREHENSIVE INCOME (LOSS): | |||||||||||||||
Translation adjustments, net of tax | 9 | 4 | (45 | ) | 4 | ||||||||||
COMPREHENSIVE INCOME | $ | 15,570 | $ | 14,786 | $ | 30,544 | $ | 28,002 |
(unaudited) Six months ended June 30, | |||||||
2017 | 2016 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 30,589 | $ | 27,998 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 15,522 | 15,150 | |||||
Deferred income taxes | 7,951 | 9,090 | |||||
Stock-based compensation | 2,256 | 1,291 | |||||
Equity in gains of unconsolidated subsidiaries | (5 | ) | (128 | ) | |||
Excess tax benefits from exercise of stock options | — | (421 | ) | ||||
Change in assets and liabilities—net of effects from acquired businesses: | |||||||
Receivables—net | 2,491 | 5,149 | |||||
Prepaid expenses and other | 3,769 | (830 | ) | ||||
Contractual inventory | (1,238 | ) | — | ||||
Employee supplemental savings plan asset | (2,072 | ) | (590 | ) | |||
Accounts payable and accrued expenses | (4,718 | ) | (10,679 | ) | |||
Accrued salaries and related expenses | 7,809 | 3,724 | |||||
Billings in excess of revenue earned | 1,624 | 2,619 | |||||
Accrued retirement | 500 | (1,617 | ) | ||||
Other | (1,174 | ) | 430 | ||||
Net cash flow from operating activities | 63,304 | 51,186 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (4,385 | ) | (3,346 | ) | |||
Investment in capitalized software for internal use | (2,537 | ) | (740 | ) | |||
Proceeds from previous acquisition | 112 | — | |||||
Payments to acquire investments | (110 | ) | (201 | ) | |||
Acquisition of businesses—net of cash acquired | — | (47,682 | ) | ||||
Net cash flow from investing activities | (6,920 | ) | (51,969 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Dividends paid | (16,308 | ) | (15,927 | ) | |||
Proceeds from exercise of stock options | 3,198 | 15,092 | |||||
Excess tax benefits from exercise of stock options | — | 421 | |||||
Net cash flow from financing activities | (13,110 | ) | (414 | ) | |||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 43,274 | (1,197 | ) | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 64,936 | 41,314 | |||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 108,210 | $ | 40,117 | |||
SUPPLEMENTAL CASH FLOW INFORMATION | |||||||
Cash paid for income taxes, net | $ | 986 | $ | 5,618 | |||
Cash paid for interest | $ | 488 | $ | 490 | |||
Noncash investing and financing activities: | |||||||
Capital expenditures incurred but not yet paid | $ | 141 | $ | — |
1. | Description of the Business |
2. | Basis of Presentation |
3. | Acquisitions |
Cash and cash equivalents | $ | 1,955 | |
Receivables | 10,892 | ||
Prepaid expenses and other | 261 | ||
Goodwill | 6,193 | ||
Other intangible assets | 1,689 | ||
Property and equipment | 502 | ||
Other assets | 116 | ||
Accounts payable and accrued expenses | (5,777 | ) | |
Accrued salaries and related expenses | (2,324 | ) | |
Billings in excess of revenue earned | (326 | ) | |
Net assets acquired and liabilities assumed | $ | 13,181 |
4. | Earnings Per Share |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Distributed earnings | $ | 8,161 | $ | 8,004 | $ | 16,301 | $ | 15,918 | |||||||
Undistributed earnings | 7,400 | 6,778 | 14,288 | 12,080 | |||||||||||
Net income | $ | 15,561 | $ | 14,782 | $ | 30,589 | $ | 27,998 | |||||||
Class A common stock: | |||||||||||||||
Basic net income available to common stockholders | $ | 10,272 | $ | 9,635 | $ | 20,183 | $ | 18,223 | |||||||
Basic weighted average common shares outstanding | 25,618 | 24,707 | 25,583 | 24,591 | |||||||||||
Basic earnings per share | $ | 0.40 | $ | 0.39 | $ | 0.79 | $ | 0.74 | |||||||
Diluted net income available to common stockholders | $ | 10,300 | $ | 9,662 | $ | 20,242 | $ | 18,261 | |||||||
Effect of potential exercise of stock options | 209 | 209 | 220 | 150 | |||||||||||
Diluted weighted average common shares outstanding | 25,827 | 24,916 | 25,803 | 24,741 | |||||||||||
Diluted earnings per share | $ | 0.40 | $ | 0.39 | $ | 0.78 | $ | 0.74 | |||||||
Class B common stock: | |||||||||||||||
Basic net income available to common stockholders | $ | 5,289 | $ | 5,147 | $ | 10,406 | $ | 9,775 | |||||||
Basic weighted average common shares outstanding | 13,191 | 13,192 | 13,191 | 13,192 | |||||||||||
Basic earnings per share | $ | 0.40 | $ | 0.39 | $ | 0.79 | $ | 0.74 | |||||||
Diluted net income available to common stockholders | $ | 5,261 | $ | 5,120 | $ | 10,347 | $ | 9,737 | |||||||
Effect of potential exercise of stock options | — | — | — | — | |||||||||||
Diluted weighted average common shares outstanding | 13,191 | 13,192 | 13,191 | 13,192 | |||||||||||
Diluted earnings per share | $ | 0.40 | $ | 0.39 | $ | 0.78 | $ | 0.74 |
5. | Receivables |
June 30, 2017 | December 31, 2016 | ||||||
Billed receivables | $ | 249,940 | $ | 247,114 | |||
Unbilled receivables: | |||||||
Amounts billable | 46,098 | 52,640 | |||||
Revenues recorded in excess of funding | 15,900 | 20,078 | |||||
Retainage | 13,695 | 8,353 | |||||
Allowance for doubtful accounts | (7,505 | ) | (7,508 | ) | |||
Receivables—net | $ | 318,128 | $ | 320,677 |
6. | Property and Equipment |
June 30, 2017 | December 31, 2016 | ||||||
Furniture and equipment | $ | 54,458 | $ | 51,806 | |||
Leasehold improvements | 38,362 | 36,439 | |||||
Property and equipment—gross | 92,820 | 88,245 | |||||
Accumulated depreciation and amortization | (69,225 | ) | (65,124 | ) | |||
Property and equipment—net | $ | 23,595 | $ | 23,121 |
7. | Goodwill and Other Intangible Assets |
Goodwill Balance | |||
Goodwill at December 31, 2015 | $ | 919,591 | |
Acquisitions | 36,283 | ||
Goodwill at December 31, 2016 | $ | 955,874 |
June 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Other intangible assets: | |||||||||||||||||||||||
Contract and program intangible assets | $ | 301,082 | $ | 168,264 | $ | 132,818 | $ | 301,082 | $ | 158,671 | $ | 142,411 | |||||||||||
Capitalized software cost for internal use | 41,823 | 28,323 | 13,500 | 39,332 | 26,815 | 12,517 | |||||||||||||||||
Other | 58 | 58 | — | 58 | 55 | 3 | |||||||||||||||||
Total other intangible assets—net | $ | 342,963 | $ | 196,645 | $ | 146,318 | $ | 340,472 | $ | 185,541 | $ | 154,931 |
For the remaining six months ending December 31, 2017 | $ | 11,454 | |
For the year ending: | |||
December 31, 2018 | $ | 19,921 | |
December 31, 2019 | $ | 17,370 | |
December 31, 2020 | $ | 15,076 | |
December 31, 2021 | $ | 12,986 | |
December 31, 2022 | $ | 11,207 |
8. | Debt |
9. | Commitments and Contingencies |
10. | Stock-Based Compensation |
• | Volatility—The expected volatility of the options granted was estimated based upon historical volatility of our share price through weekly observations of our trading history. |
• | Expected life of options—The expected life of options granted to employees was determined from historical exercises of the grantee population. The options had graded vesting over three years in equal installments beginning on the first anniversary of the date of grant and a contractual term of five years. |
• | Risk-free interest rate—The yield on zero-coupon U.S. Treasury strips was used to extrapolate a forward-yield curve. This “term structure” of future interest rates was then input into a numeric model to provide the equivalent risk-free rate to be used in the Black-Scholes-Merton model based on the expected term of the underlying grants. |
• | Dividend Yield—The Black-Scholes-Merton valuation model requires an expected dividend yield as an input. We have calculated our expected dividend yield based on an expected annual cash dividend of $0.84 per share. |
Six months ended June 30, | |||||
2017 | 2016 | ||||
Volatility | 25.12 | % | 23.66 | % | |
Expected life of options | 3 years | 3 years | |||
Risk-free interest rate | 1.67 | % | 1.20 | % | |
Dividend yield | 2.75 | % | 3.00 | % |
Number of Shares | Weighted Average Exercise Price | Aggregate Intrinsic Value (in thousands) | Weighted Average Remaining Contractual Life | |||||||||
Stock options outstanding at December 31, 2015 | 2,495,310 | $ | 30.86 | $ | 3,583 | |||||||
Granted | 199,938 | $ | 34.22 | |||||||||
Exercised | (1,045,789 | ) | $ | 29.24 | $ | 8,858 | ||||||
Cancelled and expired | (489,040 | ) | $ | 37.91 | ||||||||
Stock options outstanding at December 31, 2016 | 1,160,419 | $ | 29.93 | $ | 14,299 | |||||||
Granted | 265,865 | $ | 36.87 | |||||||||
Exercised | (102,936 | ) | $ | 31.15 | $ | 690 | ||||||
Cancelled and expired | (32,871 | ) | $ | 32.88 | ||||||||
Stock options outstanding at June 30, 2017 | 1,290,477 | $ | 31.19 | $ | 13,156 | 3 years | ||||||
Stock options exercisable at June 30, 2017 | 656,654 | $ | 28.53 | $ | 8,441 | 2 years |
Number of Shares | Weighted Average Fair Value | |||||
Non-vested stock options at December 31, 2016 | 562,927 | $ | 4.66 | |||
Granted | 265,865 | $ | 5.63 | |||
Vested | (175,348 | ) | $ | 4.79 | ||
Cancelled | (19,621 | ) | $ | 4.81 | ||
Non-vested stock options at June 30, 2017 | 633,823 | $ | 5.03 |
Number of Shares | Weighted Average Fair Value | |||||
Non-vested restricted stock at December 31, 2015 | 21,000 | $ | 28.98 | |||
Granted | 18,000 | $ | 33.84 | |||
Vested | (21,000 | ) | $ | 28.98 | ||
Non-vested restricted stock at December 31, 2016 | 18,000 | $ | 33.84 | |||
Granted | 24,000 | $ | 37.90 | |||
Vested | (18,000 | ) | $ | 33.84 | ||
Non-vested restricted stock at June 30, 2017 | 24,000 | $ | 37.90 |
Number of Units | Weighted Average Fair Value | |||||
Non-vested RSUs at December 31, 2015 | 93,450 | $ | 30.84 | |||
Granted | 132,988 | $ | 29.50 | |||
Cancelled and expired | (20,100 | ) | $ | 29.56 | ||
Non-vested RSUs at December 31, 2016 | 206,338 | $ | 30.10 | |||
Granted | 55,380 | $ | 35.31 | |||
Cancelled and expired | (87,125 | ) | $ | 30.80 | ||
Non-vested RSUs at June 30, 2017 | 174,593 | $ | 31.41 |
11. | Business Segment and Geographic Area Information |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | Failure to maintain our relationship with the U.S. government, or the failure to compete effectively for new contract awards or to retain existing U.S. government contracts; |
• | Issues relating to competing effectively for awards procured through the competitive bidding process, including the adverse impact of delays caused by competitors' protests of contract awards received by us; |
• | Inability to recruit and retain a sufficient number of employees with specialized skill sets who are in great demand and limited supply; |
• | Adverse changes in U.S. government spending for programs we support, whether due to changing mission priorities, socio-economic policies that reduce contracts that we may bid on, cost reduction and efficiency initiatives by our customers, or federal budget constraints generally; |
• | Failure to obtain option awards, task orders or funding under contracts; |
• | Increased exposure to risks associated with conducting business internationally; |
• | Failure to realize the full amount of our backlog, or adverse changes in the timing of receipt of revenues under contracts included in backlog; |
• | Renegotiation, modification or termination of our contracts, or failure to perform in conformity with contract terms or our expectations; |
• | Disruption of our business or damage to our reputation resulting from security breaches in customer systems, internal systems or service failures (including as a result of cyber or other security threats), or employee or subcontractor misconduct; |
• | Failure to successfully integrate acquired companies or businesses into our operations or to realize any accretive or synergistic effects from such acquisitions; |
• | Adverse changes in business conditions that may cause our investments in recorded goodwill to become impaired; |
• | Non-compliance with, or adverse changes in, complex U.S. government laws, procurement regulations or processes; and |
• | Adverse results of U.S. government audits or other investigations of our government contracts. |
Three months ended June 30, | Period-to-Period Change | |||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2016 to 2017 | ||||||||||||||||
Dollars | Percentage | Dollars | Percentage | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
REVENUES | $ | 413,694 | $ | 401,354 | 100.0 | % | 100.0 | % | $ | 12,340 | 3.1 | % | ||||||||
Cost of services | 350,674 | 341,511 | 84.8 | % | 85.1 | % | 9,163 | 2.7 | % | |||||||||||
General and administrative expenses | 38,085 | 35,629 | 9.2 | % | 8.9 | % | 2,456 | 6.9 | % | |||||||||||
OPERATING INCOME | 24,935 | 24,214 | 6.0 | % | 6.0 | % | 721 | 3.0 | % | |||||||||||
Interest expense | (317 | ) | (306 | ) | — | % | — | % | 11 | 3.6 | % | |||||||||
Interest income | 28 | 19 | — | % | — | % | 9 | 47.4 | % | |||||||||||
Other income (expense), net | 5 | 45 | — | % | — | % | (40 | ) | (88.9 | )% | ||||||||||
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND EQUITY METHOD INVESTMENTS | 24,651 | 23,972 | 6.0 | % | 6.0 | % | 679 | 2.8 | % | |||||||||||
Provision for income taxes | (9,126 | ) | (9,250 | ) | 2.2 | % | 2.3 | % | (124 | ) | (1.3 | )% | ||||||||
Equity in gains of unconsolidated subsidiaries | 36 | 60 | — | % | — | % | (24 | ) | (40.0 | )% | ||||||||||
NET INCOME | $ | 15,561 | $ | 14,782 | 3.8 | % | 3.7 | % | $ | 779 | 5.3 | % |
Six months ended June 30, | Period-to-Period Change | |||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2016 to 2017 | ||||||||||||||||
Dollars | Percentage | Dollars | Percentage | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
REVENUES | $ | 832,068 | $ | 792,016 | 100.0 | % | 100.0 | % | $ | 40,052 | 5.1 | % | ||||||||
Cost of services | 707,721 | 675,025 | 85.1 | % | 85.2 | % | 32,696 | 4.8 | % | |||||||||||
General and administrative expenses | 75,022 | 70,832 | 9.0 | % | 9.0 | % | 4,190 | 5.9 | % | |||||||||||
OPERATING INCOME | 49,325 | 46,159 | 5.9 | % | 5.8 | % | 3,166 | 6.9 | % | |||||||||||
Interest expense | (611 | ) | (595 | ) | — | % | — | % | 16 | 2.7 | % | |||||||||
Interest income | 52 | 63 | — | % | — | % | (11 | ) | (17.5 | )% | ||||||||||
Other income (expense), net | 44 | 53 | — | % | — | % | (9 | ) | (17.0 | )% | ||||||||||
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND EQUITY METHOD INVESTMENTS | 48,810 | 45,680 | 5.9 | % | 5.8 | % | 3,130 | 6.9 | % | |||||||||||
Provision for income taxes | (18,226 | ) | (17,810 | ) | 2.2 | % | 2.3 | % | 416 | 2.3 | % | |||||||||
Equity in gains of unconsolidated subsidiaries | 5 | 128 | — | % | — | % | (123 | ) | (96.1 | )% | ||||||||||
NET INCOME | $ | 30,589 | $ | 27,998 | 3.7 | % | 3.5 | % | $ | 2,591 | 9.3 | % |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 6. | Exhibits |
Exhibit | Description of Exhibit | |
31.1‡ | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. | |
31.2‡ | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. | |
32‡ | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. | |
101 | The following materials from the ManTech International Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at June 30, 2017 and December 31, 2016; (ii) Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2017 and 2016; (iii) Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2017 and 2016; (iv) Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2016; and (v) Notes to Condensed Consolidated Financial Statements. | |
‡ Filed herewith. |
MANTECH INTERNATIONAL CORPORATION | |||
By: | /s/ GEORGE J. PEDERSEN | ||
Date: | August 4, 2017 | Name: | George J. Pedersen |
Title: | Chairman of the Board of Directors and Chief Executive Officer |
By: | /s/ JUDITH L. BJORNAAS | ||
Date: | August 4, 2017 | Name: | Judith L. Bjornaas |
Title: | Chief Financial Officer |
By: | /s/ GEORGE J. PEDERSEN | |
Name: | George J. Pedersen | |
Title: | Chairman of the Board of Directors and Chief Executive Officer |
By: | /s/ JUDITH L. BJORNAAS | |
Name: | Judith L. Bjornaas | |
Title: | Chief Financial Officer |
(1) | The 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 Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ GEORGE J. PEDERSEN | |
Name: | George J. Pedersen | |
Title: | Chairman of the Board of Directors and Chief Executive Officer |
By: | /s/ JUDITH L. BJORNAAS | |
Name: | Judith L. Bjornaas | |
Title: | Chief Financial Officer |
Document and Entity Information Document - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Aug. 02, 2017 |
|
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | MANT | |
Entity Registrant Name | MANTECH INTERNATIONAL CORP | |
Entity Central Index Key | 0000892537 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Class A common stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 25,696,363 | |
Class B common stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 13,190,745 |
Condensed Consolidated Balance Sheets Parentheticals - $ / shares |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Treasury stock, Shares | 244,113 | 244,113 |
Class A common stock | ||
Common stock, Par value per share | $ 0.01 | $ 0.01 |
Common stock, Shares authorized | 150,000,000 | 150,000,000 |
Common stock, Shares issued | 25,922,608 | 25,795,973 |
Common stock, Shares outstanding | 25,678,495 | 25,551,860 |
Class B common stock | ||
Common stock, Par value per share | $ 0.01 | $ 0.01 |
Common stock, Shares authorized | 50,000,000 | 50,000,000 |
Common stock, Shares issued | 13,190,745 | 13,190,745 |
Common stock, Shares outstanding | 13,190,745 | 13,190,745 |
Condensed Consolidated Statements of Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
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REVENUES | $ 413,694 | $ 401,354 | $ 832,068 | $ 792,016 |
Cost of services | 350,674 | 341,511 | 707,721 | 675,025 |
General and administrative expenses | 38,085 | 35,629 | 75,022 | 70,832 |
OPERATING INCOME | 24,935 | 24,214 | 49,325 | 46,159 |
Interest expense | (317) | (306) | (611) | (595) |
Interest income | 28 | 19 | 52 | 63 |
Other income (expense), net | 5 | 45 | 44 | 53 |
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND EQUITY METHOD INVESTMENTS | 24,651 | 23,972 | 48,810 | 45,680 |
Provision for income taxes | (9,126) | (9,250) | (18,226) | (17,810) |
Equity in gains of unconsolidated subsidiaries | 36 | 60 | 5 | 128 |
NET INCOME | $ 15,561 | $ 14,782 | $ 30,589 | $ 27,998 |
Class A common stock | ||||
BASIC EARNINGS PER SHARE: | ||||
Basic earnings per share | $ 0.40 | $ 0.39 | $ 0.79 | $ 0.74 |
DILUTED EARNINGS PER SHARE: | ||||
Diluted earnings per share | 0.40 | 0.39 | 0.78 | 0.74 |
Class B common stock | ||||
BASIC EARNINGS PER SHARE: | ||||
Basic earnings per share | 0.40 | 0.39 | 0.79 | 0.74 |
DILUTED EARNINGS PER SHARE: | ||||
Diluted earnings per share | $ 0.40 | $ 0.39 | $ 0.78 | $ 0.74 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
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NET INCOME | $ 15,561 | $ 14,782 | $ 30,589 | $ 27,998 |
OTHER COMPREHENSIVE INCOME (LOSS): | ||||
Translation adjustments, net of tax | 9 | 4 | (45) | 4 |
COMPREHENSIVE INCOME | $ 15,570 | $ 14,786 | $ 30,544 | $ 28,002 |
Description of the Business (Notes) |
6 Months Ended |
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Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business [Text Block] | Description of the Business We provide innovative technologies and solutions for mission-critical national security programs for the intelligence community; the departments of Defense, State, Homeland Security, Health and Human Services, Veteran Affairs and Justice, including the Federal Bureau of Investigations (FBI); the health and space community; and other U.S. government customers. Our expertise includes cybersecurity; software and systems development; enterprise information technology; multi-disciplined intelligence; command, control, communications, computers, intelligence, surveillance and reconnaissance; program protection and mission assurance; systems engineering; supply chain management and logistics; test and evaluation; training; and management consulting. Additional information can be found at www.mantech.com. |
Basis of Presentation (Notes) |
6 Months Ended |
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Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation [Text Block] | Basis of Presentation The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and note disclosures normally included in the annual financial statements, prepared in accordance with accounting principles generally accepted in the U.S., have been condensed or omitted pursuant to those rules and regulations. The preparation of these condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We recommend that you read these condensed consolidated financial statements in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, previously filed with the SEC. We believe that the condensed consolidated financial statements in this Form 10-Q reflect all adjustments that are necessary to fairly present the financial position, results of operations and cash flows for the interim periods presented. The results of operations for such interim periods are not necessarily indicative of the results that can be expected for the full year. |
Acquisitions (Notes) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions [Text Block] | Acquisitions Edaptive Systems LLC (Edaptive)—On December 15, 2016, we completed the acquisition of Edaptive. The results of Edaptive's operations have been included in our condensed consolidated financial statements since that date. The acquisition was completed through a membership interest purchase agreement dated December 15, 2016, by and among Edaptive, Everest Holdco, Inc., and certain members of Edaptive and ManTech Advanced Systems International, Inc. Edaptive provides innovative information technology (IT) solutions primarily to federal health agencies, with a significant focus on the Centers for Medicare & Medicaid Services. The acquisition strategically expands our reach within the federal health community. We funded the acquisition with cash on hand. The membership interest purchase agreement did not contain provisions for contingent consideration. The purchase price of $13.2 million was allocated to the underlying assets and liabilities based on their estimated fair value at the date of acquisition. The goodwill recorded related to this transaction will be deductible for tax purposes over 15 years. Recognition of goodwill is largely attributed to the value paid for Edaptive's capabilities to support Department of Health and Human Services customers and, specifically, in agile software development, testing and automation and business intelligence. In allocating the purchase price, we considered, among other factors, analysis of historical financial performance and estimates of future performance of Edaptive's contracts. The components of other intangible assets associated with the acquisition were customer relationships and backlog valued at $1.1 million and $0.3 million, respectively. Customer contracts and related relationships represent the underlying relationships and agreements with Edaptive's existing customers. Customer relationships are amortized using the pattern of benefits method over their estimated useful lives of approximately 10 years. Backlog is amortized straight-line over its estimated useful life of 1 year. The weighted-average amortization period for the intangible assets is 8 years. The following table represents the purchase price allocation for Edaptive (in thousands):
We have not disclosed current period, nor pro forma, revenues and earnings attributable to Edaptive as our integration of these operations post-acquisition and the entity's accounting methods pre-acquisition make it impracticable. |
Earnings Per Share (Notes) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] | Earnings Per Share Under Accounting Standards Codification (ASC) 260, Earnings per Share, the two-class method is an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared (or accumulated) and participation rights in undistributed earnings. Under that method, basic and diluted earnings per share data are presented for each class of common stock. In applying the two-class method, we determined that undistributed earnings should be allocated equally on a per share basis between Class A and Class B common stock. Under our Certificate of Incorporation, the holders of the common stock are entitled to participate ratably, on a share-for-share basis as if all shares of common stock were of a single class, in such dividends as may be declared by the Board of Directors. During each of the six months ended June 30, 2017 and 2016, we declared and paid quarterly dividends in the amount of $0.21 per share on both classes of common stock. Basic earnings per share has been computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding during each period. Shares issued during the period and shares reacquired during the period are weighted for the portion of the period in which the shares were outstanding. Diluted earnings per share have been computed in a manner consistent with that of basic earnings per share while giving effect to all potentially dilutive common shares that were outstanding during each period. The net income available to common stockholders and weighted average number of common shares outstanding used to compute basic and diluted earnings per share for each class of common stock are as follows (in thousands, except per share amounts):
For the three months ended June 30, 2017 and 2016, options to purchase 381,987 shares and 130,276 shares, respectively, were outstanding but not included in the computation of diluted earnings per share because the options' effect would have been anti-dilutive. For the six months ended June 30, 2017 and 2016, options to purchase 270,649 shares and 701,113 shares, respectively, were outstanding but not included in the computation of diluted earnings per share because the options' effect would have been anti-dilutive. For the six months ended June 30, 2017 and 2016, there were 102,936 shares and 525,212 shares, respectively, issued from the exercise of stock options. |
Receivables (Notes) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Text Block] | Receivables We deliver a broad array of IT and technical services solutions under contracts with the U.S. government, state and local governments and commercial customers. The components of contract receivables are as follows (in thousands):
Amounts billable consist principally of amounts to be billed within the next month. Revenues recorded in excess of funding are billable upon receipt of contractual amendments or other modifications. The retainage is billable upon completion of contract performance and approval of final indirect expense rates by the government. Accounts receivable at June 30, 2017 are expected to be substantially collected within one year except for approximately $1.2 million, of which 97.2% is related to receivables from sales to the U.S. government. The remainder is related to receivables from contracts in which we acted as a subcontractor to other contractors. We do not believe that we have significant exposure to credit risk as accounts receivable and the related unbilled amounts are primarily due from the U.S. government. The allowance for doubtful accounts represents our estimate for exposure to compliance, contractual issues and bad debts related to prime contractors. |
Property and Equipment (Notes) |
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Property and Equipment [Text Block] | Property and Equipment Major classes of property and equipment are summarized as follows (in thousands):
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Goodwill and Other Intangible Assets (Notes) |
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Goodwill and Other Intangible Assets [Text Block] | Goodwill and Other Intangible Assets There was no change in the carrying amount of goodwill during the six months ended June 30, 2017. The change in the carrying amount of goodwill during the year ended December 31, 2016 is as follows (in thousands):
Other intangible assets consisted of the following (in thousands):
Amortization expense relating to intangible assets for the three months ended June 30, 2017 and 2016 was $5.5 million and $5.3 million, respectively. Amortization expense relating to intangible assets for the six months ended June 30, 2017 and 2016 was $11.1 million and $10.7 million, respectively. We estimate that we will have the following amortization expense for the future periods indicated below (in thousands):
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Debt (Notes) |
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Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt [Text Block] | Debt Revolving Credit Facility—We maintain a credit facility with a syndicate of lenders led by Bank of America, N.A, as sole administrative agent. The credit agreement provides for a $500 million revolving credit facility, with a $50 million letter of credit sublimit and a $30 million swing line loan sublimit. The credit agreement also includes an accordion feature that permits us to arrange with the lenders for the provision of additional commitments. The maturity date is June 13, 2019. Borrowings under our credit agreement are collateralized by substantially all of our assets and our Material Subsidiaries (as defined in the credit agreement) and bear interest at one of the following variable rates as selected by us at the time of borrowing: a London Interbank Offer Rate based rate plus market-rate spreads (1.25% to 2.25% based on our consolidated total leverage ratio) or Bank of America's base rate plus market spreads (0.25% to 1.25% based on our consolidated total leverage ratio). The terms of the credit agreement permit prepayment and termination of the loan commitments at any time, subject to certain conditions. The credit agreement requires us to comply with specified financial covenants, including the maintenance of certain leverage ratios and a certain consolidated coverage ratio. The credit agreement also contains various covenants, including affirmative covenants with respect to certain reporting requirements and maintaining certain business activities, and negative covenants that, among other things, may limit or impose restrictions on our ability to incur liens, incur additional indebtedness, make investments, make acquisitions and undertake certain other actions. As of and during the six months ended June 30, 2017 and 2016, we were in compliance with the financial covenants under the credit agreement. There was no outstanding balance on our revolving credit facility at both June 30, 2017 and December 31, 2016. The maximum available borrowing under the revolving credit facility at June 30, 2017 was $480.7 million. As of June 30, 2017, we were contingently liable under letters of credit totaling $19.3 million, which reduces our availability to borrow under our revolving credit facility. |
Commitments and Contingencies (Notes) |
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Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies [Text Block] | Commitments and Contingencies Contracts with the U.S. government, including subcontracts, are subject to extensive legal and regulatory requirements and, from time-to-time, agencies of the U.S. government, in the ordinary course of business, investigate whether our operations are conducted in accordance with these requirements and the terms of the relevant contracts. U.S. government investigations of us, 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 upon us, or could lead to suspension or debarment from future U.S. government contracting activities. Management believes it has adequately reserved for any losses that may be experienced from any investigation of which it is aware. The Defense Contract Audit Agency has substantially completed our incurred cost audits through 2012 with no material adjustments. The remaining audits for 2013 through 2016 are not expected to have a material effect on our financial position, results of operations or cash flow and management believes it has adequately reserved for any losses. In the normal course of business, we are involved in certain governmental and legal proceedings, claims and disputes and have litigation pending under several suits. We believe that the ultimate resolution of these matters will not have a material effect on our financial position, results of operations or cash flows, except for the matter noted below. We are a defendant in a lawsuit filed by two former employees alleging retaliation under both the False Claims Act (FCA) and the Defense Contractor Whistleblower Protection Act (DCWPA). In November 2016, we went to trial and the jury returned a verdict in favor of both plaintiffs, finding us liable for retaliation under both the FCA and the DCWPA, and awarded $0.8 million in compensatory damages for emotional distress. As a result of the jury's verdict, these plaintiffs are also entitled to awards of (i) back pay, (ii) front pay and (iii) attorney’s fees and costs. We challenged the jury’s verdict at the trial court level - both in terms of liability and in terms of the amount of the compensatory damages awarded. Specifically, we have asked the trial judge to: (i) grant us judgment as a matter of law and dismiss the retaliation claims under both the FCA and the DCWPA, and (ii) vacate the jury’s awards of compensatory damages. On May 19, 2017, the court, by a Memorandum Opinion and Order, vacated the jury's verdict with respect to the awards of $0.8 million in compensatory damages for emotional distress and awarded damages in the total amount of $1.8 million for back pay and front pay. Interest and attorney's fees were also awarded and the amount will be determined at a later date. We filed an appeal in the Fourth Circuit Court of Appeals. As of June 30, 2017, we adjusted a related liability and receivable to $2.6 million. Through the appeals process, our liability could be further reduced or, if the plaintiffs are successful, increased an additional $0.8 million. We have an insurance policy that covers the amount of the liability, therefore, there was no loss recognized as of the period ended June 30, 2017. We determined that it is remote that future events will result in financial statement losses. We have $19.3 million outstanding on our letter of credit, of which $15.2 million is related to an outstanding performance bond in connection with a contract between ManTech MENA, LLC and Jadwalean International Operations and Management Company to fulfill technical support requirements for the Royal Saudi Air Force. |
Stock-Based Compensation (Notes) |
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Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation [Text Block] | Stock-Based Compensation Our 2016 Management Incentive Plan (the Plan) was designed to attract, retain and motivate key employees. The types of awards available under the Plan include stock options, restricted stock and restricted stock units (RSUs). Equity awards granted under the Plan are settled in shares of Class A common stock. At the beginning of each year, the Plan provides that the number of shares available for issuance automatically increases by an amount equal to 1.5% of the total number of shares of Class A and Class B common stock outstanding on December 31st of the previous year. On January 2, 2017, there were 581,139 additional shares made available for issuance under the Plan. Through June 30, 2017, the Board of Directors has authorized the issuance of up to 13,963,435 shares under this Plan. Through June 30, 2017, the remaining aggregate number of shares of our common stock available for future grants under the Plan was 6,220,389. The Plan expires in March 2026. The Plan is administered by the compensation committee of our Board of Directors, along with its delegates. Subject to the express provisions of the Plan, the committee has the Board of Directors’ authority to administer and interpret the Plan, including the discretion to determine the exercise price, vesting schedule, contractual life and the number of shares to be issued. On January 1, 2017, we adopted Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation (Topic 718), which simplifies several aspects of the accounting for employee share-based payment transactions. All excess tax benefits (deficiencies) will be recognized as income tax expense (benefit) in the condensed consolidated income statement. For the six months ended June 30, 2017, we recorded $(0.1) million to income tax expense for tax benefits related to the exercise of stock options, vested cancellations and the vesting of restricted stock. For the six months ended June 30, 2016, we recorded $1.2 million to paid in capital related to tax deficiencies from the exercise of stock options, vested cancellations and the vesting of restricted stock. The ASU eliminates the requirement to estimate forfeitures. We have elected to account for forfeitures when they occur. Upon transition we recognized a cumulative-effect adjustment to retained earnings of $0.2 million related to previously estimated forfeitures. Excess tax benefits no longer represent financing activities as they are recognized in the income statement; therefore, excess tax benefits are not separate cash flows and will be classified as operating activities in the same manner as other cash flows related to income taxes. The ASU eliminates the requirement to reclassify excess tax benefits from operating activities to financing activities. The change in the presentation of the cash flows was applied prospectively starting January 1, 2017. Therefore, prior periods were not adjusted. Furthermore, there was no effect on the condensed consolidated statement of cash flows related to statutory tax withholding requirements on prior periods because we do not withhold shares from an employee's award for tax-withholding purposes. Stock Compensation Expense—For the three months ended June 30, 2017 and 2016, we recorded $1.3 million and $0.2 million of stock-based compensation expense, respectively. For the six months ended June 30, 2017 and 2016, we recorded $2.3 million and $1.3 million of stock-based compensation expense, respectively. No compensation expense of employees with stock awards, including stock-based compensation expense, was capitalized during the periods. Stock Options—Under the Plan, we have issued stock options. A stock option granted gives the holder the right, but not the obligation to purchase a certain number of shares at a predetermined price for a specific period of time. We typically issue options that vest over three years in equal installments beginning on the first anniversary of the date of grant. Under the terms of the Plan, the contractual life of the option grants may not exceed eight years. During the six months ended June 30, 2017 and 2016, we issued options that expire five years from the date of grant. Fair Value Determination—We have used the Black-Scholes-Merton option pricing model to determine the fair value of our awards on the date of grant. We will reconsider the use of the Black-Scholes-Merton model if additional information becomes available in the future that indicates another model would be more appropriate or if grants issued in future periods have characteristics that cannot be reasonably estimated under this model. The following weighted-average assumptions were used for option grants during the six months ended June 30, 2017 and 2016:
The following table summarizes weighted-average assumptions used in our calculations of fair value for the six months ended June 30, 2017 and 2016:
Stock Option Activity—The weighted-average fair value of options granted during the six months ended June 30, 2017 and 2016, as determined under the Black-Scholes-Merton valuation model, was $5.63 and $3.99, respectively. Option grants that vested during the six months ended June 30, 2017 and 2016 had a combined fair value of $0.8 million and $1.4 million, respectively. The following table summarizes stock option activity for the year ended December 31, 2016 and the six months ended June 30, 2017:
The following table summarizes non-vested stock options for the six months ended June 30, 2017:
Unrecognized compensation expense related to non-vested awards was $2.4 million as of June 30, 2017, which is expected to be recognized over a weighted-average period of 2 years. Restricted Stock—Under the Plan, we have issued restricted stock. A restricted stock award is an issuance of shares that cannot be sold or transferred by the recipient until the vesting period lapses. Restricted stock issued to members of our Board of Directors vests in one year. The related compensation expense is recognized over the service period and is based on the grant date fair value of the stock. The grant date fair value of the restricted stock is equal to the closing market price of our common stock on the date of grant. Restricted Stock Activity—The following table summarizes the restricted stock activity during the year ended December 31, 2016 and the six months ended June 30, 2017:
RSUs—Under the Plan, we have issued RSUs. RSUs are not actual shares, but rather a right to receive shares in the future. The shares are not issued and the employee cannot sell or transfer shares prior to vesting and have no voting rights until the RSUs vest. Employees who are granted RSUs do not receive dividend payments during the vesting period. Generally, our employees are granted performance-based RSUs. These RSUs will result in the delivery of shares only if (a) performance criteria is met and (b) the employee remains employed, in good standing, through the date of the performance period. The performance period is two years. In addition, in 2016 we granted 26,788 time-based RSUs to an officer, which do not contain performance criteria (half will vest four years after the date of grant and the other half will vest five years after the date of grant). The grant date fair value of the RSUs is equal to the closing market price of our common stock on the grant date less the present value of dividends expected to be awarded during the service period. We recognize the grant date fair value of RSUs of shares we expect to issue as compensation expense ratably over the requisite service period. RSU Activity—The following table summarizes the non-vested RSU activity during the year ended December 31, 2016 and the six months ended June 30, 2017:
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Business Segment and Geographic Area Information (Notes) |
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Segment Reporting [Abstract] | |
Business Segment and Geographic Area Information [Text Block] | Business Segment and Geographic Area Information We have one reportable segment. We deliver a broad array of IT and technical services solutions under contracts with the U.S. government. Our U.S. government customers typically exercise independent contracting authority, and even offices or divisions within an agency or department may directly, or through a prime contractor, use our services as a separate customer so long as that customer has independent decision-making and contracting authority within its organization. Revenues from the U.S. government under prime contracts and subcontracts were approximately 98% and 98% of our revenues for the six months ended June 30, 2017 and 2016, respectively. We treat sales to U.S. government customers as sales within the U.S. regardless of where the services are performed. U.S. revenues were approximately 98% and 98% of our total revenues for the three months ended June 30, 2017 and 2016, respectively. U.S. revenues were approximately 98% and 99% of our total revenues for the six months ended June 30, 2017 and 2016, respectively. International revenues were approximately 2% and 2% of our total revenues for the three months ended June 30, 2017 and 2016, respectively. International revenues were approximately 2% and 1% of our total revenues for the six months ended June 30, 2017 and 2016, respectively. Furthermore, substantially all assets from continuing operations were held in the U.S. for the six months ended June 30, 2017 and year ended December 31, 2016. |
Acquisitions (Tables) |
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Schedule of Purchase Price Allocations [Table Text Block] | The following table represents the purchase price allocation for Edaptive (in thousands):
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The net income available to common stockholders and weighted average number of common shares outstanding used to compute basic and diluted earnings per share for each class of common stock are as follows (in thousands, except per share amounts):
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Receivables (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Contract Receivables [Table Text Block] | The components of contract receivables are as follows (in thousands):
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Property and Equipment (Tables) |
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Property and Equipment [Table Text Block] | Major classes of property and equipment are summarized as follows (in thousands):
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Goodwill and Other Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill [Table Text Block] | The change in the carrying amount of goodwill during the year ended December 31, 2016 is as follows (in thousands):
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Schedule of Other Intangible Assets [Table Text Block] | Other intangible assets consisted of the following (in thousands):
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Schedule of Other Intangible Assets, Future Amortization Expense [Table Text Block] | We estimate that we will have the following amortization expense for the future periods indicated below (in thousands):
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Stock-Based Compensation (Tables) |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The following table summarizes weighted-average assumptions used in our calculations of fair value for the six months ended June 30, 2017 and 2016:
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Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | The following table summarizes stock option activity for the year ended December 31, 2016 and the six months ended June 30, 2017:
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Schedule of Non-vested Share Activity [Table Text Block] | The following table summarizes non-vested stock options for the six months ended June 30, 2017:
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Restricted Stock Activity [Table Text Block] | The following table summarizes the restricted stock activity during the year ended December 31, 2016 and the six months ended June 30, 2017:
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Restricted Stock Activity [Table Text Block] | The following table summarizes the non-vested RSU activity during the year ended December 31, 2016 and the six months ended June 30, 2017:
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Acquisitions (Narrative) (Details) - Edaptive Systems LLC [Member] $ in Millions |
6 Months Ended |
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Jun. 30, 2017
USD ($)
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Business Acquisition [Line Items] | |
Business Combination, Consideration Transferred | $ 13.2 |
Expected Goodwill Tax Amortization Period | 15 years |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 8 years |
Customer Relationships [Member] | |
Business Acquisition [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 1.1 |
Finite-Lived Intangible Asset, Useful Life | 10 years |
Backlog [Member] | |
Business Acquisition [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 0.3 |
Finite-Lived Intangible Asset, Useful Life | 1 year |
Acquisitions (Schedule of Purchase Price Allocation) (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Business Acquisition [Line Items] | |||
Goodwill | $ 955,874 | $ 955,874 | $ 919,591 |
Edaptive Systems LLC [Member] | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | 1,955 | ||
Receivables | 10,892 | ||
Prepaid expenses and other | 261 | ||
Goodwill | 6,193 | ||
Other intangible assets | 1,689 | ||
Property and equipment | 502 | ||
Other assets | 116 | ||
Accounts payable and accrued expenses | (5,777) | ||
Accrued salaries and related expenses | (2,324) | ||
Billings in excess of revenue earned | (326) | ||
Net assets acquired and liabilities assumed | $ 13,181 |
Earnings Per Share (Narrative) (Details) - $ / shares |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
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Jun. 30, 2017 |
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Jun. 30, 2016 |
Mar. 31, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
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Earnings Per Share [Abstract] | |||||||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.21 | $ 0.21 | $ 0.21 | $ 0.21 | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 381,987 | 130,276 | 270,649 | 701,113 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 102,936 | 525,212 | 1,045,789 |
Receivables (Schedule of Contract Receivables) (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
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Receivables [Abstract] | ||
Billed receivables | $ 249,940 | $ 247,114 |
Unbilled receivables: | ||
Amounts billable | 46,098 | 52,640 |
Revenues recorded in excess of funding | 15,900 | 20,078 |
Retainage | 13,695 | 8,353 |
Allowance for doubtful accounts | (7,505) | (7,508) |
Receivables—net | $ 318,128 | $ 320,677 |
Receivables (Narrative) (Details) $ in Millions |
Jun. 30, 2017
USD ($)
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Receivables [Abstract] | |
Accounts Receivable Not Expected to be Substantially Collected within One Year | $ 1.2 |
Percentage of Accounts Receivable Not Expected to be Collected Within One Year related to Receivables from Direct Sales to U.S. Government | 97.20% |
Property and Equipment (Property and Equipment) (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
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Property, Plant and Equipment [Line Items] | ||
Property and equipment—gross | $ 92,820 | $ 88,245 |
Accumulated depreciation and amortization | (69,225) | (65,124) |
Property and equipment—net | 23,595 | 23,121 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment—gross | 54,458 | 51,806 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment—gross | $ 38,362 | $ 36,439 |
Goodwill and Other Intangible Assets (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of Intangible Assets | $ 5.5 | $ 5.3 | $ 11.1 | $ 10.7 |
Goodwill and Other Intangible Assets (Schedule of Goodwill) (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, period start | $ 919,591 |
Acquisitions | 36,283 |
Goodwill, period end | $ 955,874 |
Goodwill and Other Intangible Assets (Schedule of Other Intangible Assets) (Details) - USD ($) |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 342,963,000 | $ 340,472,000 |
Accumulated Amortization | 196,645,000 | 185,541,000 |
Net Carrying Amount | 146,318,000 | 154,931,000 |
Contract and program intangible assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 301,082,000 | 301,082,000 |
Accumulated Amortization | 168,264,000 | 158,671,000 |
Net Carrying Amount | 132,818,000 | 142,411,000 |
Capitalized software cost for internal use | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 41,823,000 | 39,332,000 |
Accumulated Amortization | 28,323,000 | 26,815,000 |
Net Carrying Amount | 13,500,000 | 12,517,000 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 58,000 | 58,000 |
Accumulated Amortization | 58,000 | 55,000 |
Net Carrying Amount | $ 0 | $ 3,000 |
Goodwill and Other Intangible Assets (Schedule of Other Intangible Assets, Future Amortization Expense) (Details) $ in Thousands |
Jun. 30, 2017
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
For the remaining six months ending December 31, 2017 | $ 11,454 |
For the year ending: | |
December 31, 2018 | 19,921 |
December 31, 2019 | 17,370 |
December 31, 2020 | 15,076 |
December 31, 2021 | 12,986 |
December 31, 2022 | $ 11,207 |
Commitments and Contingencies (Pending Litigation) (Narrative) (Details) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Loss Contingency, Damages Awarded, Value | $ 1,800,000 | $ 800,000 |
Loss Contingency Accrual | 2,600,000 | |
Loss Contingency, Receivable | 2,600,000 | |
Loss Contingency, Range of Possible Loss, Portion Not Accrued | 800,000 | |
Loss Contingency, Loss in Period | $ 0 |
Commitments and Contingencies (Letter of Credit) (Narrative) (Details) - Letter of Credit [Member] - Bank of America Syndicate [Member] $ in Millions |
Jun. 30, 2017
USD ($)
|
---|---|
Line of Credit Facility [Line Items] | |
Letters of Credit Outstanding, Amount | $ 19.3 |
Performance Guarantee [Member] | |
Line of Credit Facility [Line Items] | |
Letters of Credit Outstanding, Amount | $ 15.2 |
Stock-Based Compensation (Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions) (Details) |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Share-based Compensation [Abstract] | ||
Volatility | 25.12% | 23.66% |
Expected life of options | 3 years | 3 years |
Risk-free interest rate | 1.67% | 1.20% |
Dividend yield | 2.75% | 3.00% |
Stock-Based Compensation (Schedule of Non-vested Share Activity) (Details) - $ / shares |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Options, Non-vested [Roll Forward] | |||
Non-vested stock options, Number of Shares, Period Start | 562,927 | ||
Granted, Number of Shares | 265,865 | 199,938 | |
Vested, Number of Shares | (175,348) | ||
Cancelled, Number of Shares | (19,621) | ||
Non-vested stock options, Number of Shares, Period End | 633,823 | 562,927 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Non-vested, Weighted Average Grant Date Fair Value [Roll Forward] | |||
Non-vested stock options, Weighted Average Fair Value, Period Start | $ 4.66 | ||
Granted, Weighted Average Fair Value | 5.63 | $ 3.99 | |
Vested, Weighted Average Fair Value | 4.79 | ||
Cancelled, Weighted Average Fair Value | 4.81 | ||
Non-vested stock options, Weighted Average Fair Value, Period End | $ 5.03 | $ 4.66 |
Stock-Based Compensation (Schedule Of Share-based Compensation, Restricted Stock Activity) (Details) - Restricted Stock [Member] - $ / shares |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Restricted Stock, Non-vested [Roll Forward] | ||
Non-vested, Period Start | 18,000 | 21,000 |
Granted | 24,000 | 18,000 |
Vested | (18,000) | (21,000) |
Non-vested, Period End | 24,000 | 18,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||
Non-vested, Weighted Average Fair Value, Period Start | $ 33.84 | $ 28.98 |
Granted, Weighted Average Fair Value | 37.90 | 33.84 |
Vested, Weighted Average Fair Value | 33.84 | 28.98 |
Non-vested, Weighted Average Fair Value, Period End | $ 37.90 | $ 33.84 |
Stock-Based Compensation (Schedule of Share-based Compensation, Restricted Stock Unit Activity) (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Restricted Stock Units, Nonvested, Number of Shares [Roll Forward] | ||
Non-vested, Period Start | 206,338 | 93,450 |
Granted | 55,380 | 132,988 |
Cancelled and expired | (87,125) | (20,100) |
Non-vested, Period End | 174,593 | 206,338 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||
Non-vested, Weighted Average Fair Value, Period Start | $ 30.10 | $ 30.84 |
Granted, Weighted Average Fair Value | 35.31 | 29.50 |
Cancelled and expired, Weighted Average Fair Value | 30.80 | 29.56 |
Non-vested, Weighted Average Fair Value, Period End | $ 31.41 | $ 30.10 |
Business Segment and Geographic Area Information (Narrative) (Details) - reportable_segment |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Segment Reporting Information [Line Items] | ||||
Number of Reportable Segments | 1 | |||
Revenues [Member] | Government Contracts Concentration Risk [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Percentage | 98.00% | 98.00% | ||
Revenues [Member] | UNITED STATES [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Percentage | 98.00% | 98.00% | 98.00% | 99.00% |
Revenues [Member] | International [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Percentage | 2.00% | 2.00% | 2.00% | 1.00% |
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