fwp
Issuer Free
Writing Prospectus dated November 8, 2010
Filed by Booz Allen Hamilton Holding Corporation
Pursuant to Rule 433 under the Securities Act of 1933
Registration Statement
No. 333-167645
Booz
Allen Hamilton Holding Corporation
Free
Writing Prospectus
This Free Writing Prospectus is being filed to advise you of the
availability of a revised preliminary prospectus, dated
November 8, 2010 (the Updated Preliminary
Prospectus) and to provide you with a hyperlink to the
current version of the Registration Statement on
Form S-1
(File
No. 333-167645),
which includes the Updated Preliminary Prospectus. The Updated
Preliminary Prospectus updates, among other things, our
financial results for the six months ended September 30,
2010. This Free Writing Prospectus presents below certain
information included in the Updated Preliminary Prospectus under
Managements Discussion and Analysis of Financial
Condition and Results of Operations regarding our results
of operations and cash flows for the six months ended
September 30, 2010 under the following captions:
Results of Operations Financial
and Other Highlights Six Months Ended
September 30, 2010; Results of
Operations Six Months Ended September 30, 2010
Compared to Six Months Ended September 30, 2009; and
Liquidity and Capital Resources
Cash Flows. This Free Writing Prospectus also presents
below our consolidated financial statements which includes our
unaudited consolidated financial statements as of
September 30, 2010 and for the six months ended
September 30, 2009 and 2010, and these consolidated
financial statements are included in the Updated Preliminary
Prospectus. References to we, us,
our, our company, fiscal,
acquisition, recapitalization and
certain other defined terms have the meaning given to them in
the Updated Preliminary Prospectus. The Updated Preliminary
Prospectus forms a part of our Registration Statement on
Form S-1
(File
No. 333-167645)
to which this Free Writing Prospectus relates. You should
carefully read the Updated Preliminary Prospectus before
deciding to invest in our Class A common stock.
To review a filed copy of our current Registration Statement and
the Updated Preliminary Prospectus, click the following link on
the SEC website at www.sec.gov as follows (or if such address
has changed, by reviewing our filings for the relevant date on
the SEC website):
http://www.sec.gov/Archives/edgar/data/1443646/000095012310102320/w77668a5sv1za.htm
Results
of Operations
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The Company
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Six Months
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Ended September 30,
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2009
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2010
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(Unaudited)
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(Unaudited)
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(As adjusted)
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(In thousands)
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Revenue
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$
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2,508,716
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$
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2,709,143
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Operating costs and expenses:
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Cost of revenue
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1,304,396
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1,375,658
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Billable expenses
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673,292
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715,529
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General and administrative expenses
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372,711
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418,330
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Depreciation and amortization
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48,028
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38,972
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Total operating costs and expenses
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2,398,427
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2,548,489
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Operating income
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110,289
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160,654
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Interest income
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819
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478
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Interest (expense)
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(73,112
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)
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(85,824
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)
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Other expense, net
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(762
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)
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(947
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)
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Income (loss) from continuing operations before income taxes
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37,234
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74,361
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Income tax expense from continuing operations
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17,999
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31,375
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Income from continuing operations
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19,235
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42,986
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Loss from discontinued operations, net of tax
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Net income
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$
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19,235
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$
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42,986
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Financial
and Other Highlights Six Months Ended
September 30, 2010
Key financial highlights during the six months ended
September 30, 2010 include:
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Revenue increased 8.0% over the six months ended
September 30, 2009 driven primarily by the deployment
during the six months ended September 30, 2010 of
approximately 2,200 net additional consulting staff against
funded backlog. Net additional consulting staff reflects newly
hired consulting staff net of consulting staff attrition during
the twelve months ended September 30, 2010.
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Operating income as a percentage of revenue increased to 5.9% in
the six months ended September 30, 2010 from 4.4% in the
six months ended September 30, 2009. The increase in
operating margin reflects a reduction in the cost of revenue as
a percentage of revenue driven by a decrease in
acquisition-related expenses and cost efficiencies across our
overhead base primarily related to lower indirect labor costs.
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Income from continuing operations before taxes increased to
$74.4 million for the six months ended September 30,
2010 from $37.2 million for the six months ended
September 30, 2009 due to an increase in operating income
of $50.4 million, partially offset by a decrease in
interest expense.
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Six
Months Ended September 30, 2010 Compared to Six Months
Ended September 30, 2009
Revenue
Revenue increased to $2,709.1 million in the six months
ended September 30, 2010 from $2,508.7 million in the
six months ended September 30, 2009, or a 8.0% increase.
This increase was primarily driven by the deployment during the
six months ended September 30, 2010 of approximately
2,200 net additional consulting staff against funded
backlog. Consulting staff increased during the period due to
ongoing recruiting efforts, resulting in additions to consulting
staff in excess of attrition. Additions to funded backlog during
the twelve months ended September 30, 2010 totaled
$5.9 billion, including $3.3 billion in the six months
ended September 30, 2010, as a result of the conversion of
unfunded backlog to funded backlog, the award of new contracts
and task orders under which funding was appropriated and the
exercise and subsequent funding of priced options.
2
Cost of
Revenue
Cost of revenue increased to $1,375.7 million in the six
months ended September 30, 2010 from $1,304.4 million
in the six months ended September 30, 2009, or a 5.5%
increase. This increase was primarily due to an increase in
salaries and salary-related benefits of $69.7 million and
employer retirement plan contributions of $9.3 million. The
increase in salaries and salary-related benefits was driven by
headcount growth of approximately 2,200 net additional
consulting staff in the twelve months ended September 30,
2010 and annual base salary increases. The increase in employer
retirement plan contributions was due to an increase in the
number of employees who completed one year of service and became
eligible to participate in our Employees Capital
Accumulation Plan. The cost of revenue increase was partially
offset by decreases of $8.0 million in incentive
compensation and $5.9 million in stock-based compensation
expense for Rollover and EIP options for Class A common
stock and restricted shares, in each case issued in connection
with the acquisition (stock-based compensation expense related
to Rollover options and restricted shares issued in connection
with the acquisition and the initial grant of EIP options,
collectively referred to as acquisition-related compensation
expenses). The decrease in incentive compensation was primarily
due to a decrease in the number of senior personnel eligible for
incentive compensation engaged in
day-to-day
client management roles, and the decrease in acquisition-related
compensation expense was primarily due to a decrease in expense
recognition compared to the prior six-month period due to the
application of the accounting method for recognizing stock-based
compensation, which requires higher expenses initially and
declining expenses in subsequent years. The decrease in the
number of senior personnel eligible for incentive compensation
engaged in
day-to-day
client management roles and the related increase in the number
of senior personnel eligible for incentive compensation engaged
in internal management, development and strategic planning
discussed under general and administrative expenses reflects an
internal realignment of such senior personnel to better address
the changing needs of our company primarily as a result of
business growth generally. Cost of revenue as a percentage of
revenue was 50.8% and 52.0% for the six months ended
September 30, 2010 and 2009, respectively.
Billable
Expenses
Billable expenses increased to $715.5 million in the six
months ended September 30, 2010 from $673.3 million in
the six months ended September 30, 2009, or a 6.3%
increase. This increase was primarily due to increased direct
subcontractor expenses of $15.5 million and was partially
offset by decreases in travel and material expenses of
$6.7 million. The increase in direct subcontractor expenses
was primarily attributable to increased use of subcontractors
due to increased funded backlog. Billable expenses as a
percentage of revenue were 26.4% and 26.8% for the six months
ended September 30, 2010 and 2009, respectively.
General
and Administrative Expenses
General and administrative expenses increased to
$418.3 million in the six months ended September 30,
2010 from $372.7 million in the six months ended
September 30, 2009, or a 12.2% increase. This increase was
primarily due to increases in salaries and salary-related
benefits of $38.9 million and incentive compensation of
$14.5 million. The increase in incentive compensation was
primarily due to an increase in the number of senior personnel
that became eligible for incentive compensation and increased
compensation under our annual performance bonus program, as well
as an increase in the number of senior personnel eligible for
incentive compensation engaged in internal management,
development and strategic planning. The increase in general and
administrative expenses was also due to increased occupancy
expenses of $12.5 million, employer retirement plan
contributions of $4.1 million and other expenses associated
with increased headcount across our general corporate functions,
including finance, accounting, legal, and human resources, to
prepare us for operating as a public company and support the
increased scale of our business. The increase in general and
administrative expenses was partially offset by a decrease of
$11.4 million related to travel, recruiting and certain
other expenses, $9.2 million in acquisition-related
compensation expense and $5.8 million in professional fees.
General and administrative expenses as a percentage of revenue
were 15.4% and 14.9% for the six months ended September 30,
2010 and 2009, respectively.
Depreciation
and Amortization
Depreciation and amortization decreased to $39.0 million in
the six months ended September 30, 2010 from
$48.0 million in the six months ended September 30,
2009, or a 18.9% decrease. This decrease was
3
primarily due to a decrease of $6.0 million in the
amortization of our intangible assets, which includes below
market rate leases and contract backlog that were recorded in
connection with the acquisition and are amortized based on
contractual lease terms and projected future cash flows,
respectively, thereby reflecting higher amortization expense
initially and declining expense in subsequent periods.
Intangible asset amortization expense decreased to
$2.4 million per month in the six months ended
September 30, 2010 compared to $3.4 million per month
in the six months ended September 30, 2009.
Interest
Income, Interest (Expense) and Other Expense
Interest income is primarily related to interest on late client
payments, as well as interest earned on our cash balances.
Interest income decreased to $478,000 in the six months ended
September 30, 2010 from $819,000 in the six months ended
September 30, 2009, or a 41.6% decrease, due to declining
interest rates in the marketplace.
Interest expense increased to $85.8 million in the six
months ended September 30, 2010 from $73.1 million in
the six months ended September 30, 2009, or a 17.4%
increase. This increase was primarily due to debt incurred in
connection with the recapitalization transaction in December
2009, at which time we amended and restated our senior credit
facilities to add the Tranche C term facility, and the
acceleration of debt issuance costs and original issue discount
and a prepayment penalty of $2.6 million incurred in
connection with the repayment of $85.0 million of
indebtedness outstanding under our mezzanine credit facility in
August 2010. Interest accrued on our approximately
$1,474.9 million of debt as of September 30, 2010 at
contractually specified rates ranging from 4.0% to 13.0%, and is
generally required to be paid to our syndicate of lenders on a
quarterly basis. The increase in interest expense was partially
offset by a decrease of $2.2 million in interest expense
related to the deferred payment obligation. In December 2009, we
repaid $78.0 million of the original deferred payment
obligation plus interest accrued on the deferred payment
obligation of $22.4 million. Interest continues to be
accrued subsequent to December 2009 on the remaining
$80.0 million of the deferred payment obligation.
Other expense increased to $947,000 in the six months ended
September 30, 2010 from $762,000 in the six months ended
September 30, 2009, or an 24.3% increase.
Income
(Loss) from Continuing Operations before Income Taxes
Pre-tax income increased to $74.4 million in the six months
ended September 30, 2010 compared to $37.2 million in
2009. This increase was primarily due to revenue growth, cost
efficiencies across our overhead base, lower indirect cost
spending and lower acquisition-related compensation expense.
Income
Tax Expense
Income tax expense increased to $31.4 million in the six
months ended September 30, 2010 compared to
$18.0 million in the six months ended September 30,
2009. This increase was primarily due to higher pre-tax income
in the six months ended September 30, 2010 compared to the
six months ended September 30, 2009. The effective tax rate
decreased to 42.2% for the six months ended September 30,
2010 compared to 48.3% for the six months ended
September 30, 2009, primarily due to a significant increase
in pre-tax income, which reduced the impact of certain
non-deductible expenses on our effective rate. This effective
rate is higher than the statutory rate of 35% primarily due to
state taxes and the limitations on the deductibility of meal and
entertainment expenses. The tax expense calculated using this
effective tax rate does not equate to current cash tax payments
since existing NOLs were used to reduce our tax obligations.
4
Liquidity
and Capital Resources
Cash
Flows
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The Company
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Six Months
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Ended September 30,
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2009
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2010
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(Unaudited)
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(Unaudited)
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(In thousands)
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Net cash provided by operating activities
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$
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116,755
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$
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170,885
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Net cash provided by (used in) investing activities
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16,568
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(37,573
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)
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Net cash (used in) financing activities
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(120,183
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)
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(74,621
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)
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Total increase in cash and cash equivalents
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$
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13,140
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$
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58,691
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Net Cash
from Operating Activities
Net cash from operations is primarily affected by the overall
profitability of our contracts, our ability to invoice and
collect from our clients in a timely manner, and our ability to
manage our vendor payments. Net cash provided by operations was
$170.9 million in the six months ended September 30,
2010, compared to $116.8 million in the six months ended
September 30, 2009. The increase in net cash provided by
operations in the six months ended September 30, 2010
compared to the six months ended September 30, 2009 was
primarily due to net income growth and improved collections of
accounts receivable, partially offset by increased cash used for
accrued compensation and benefits.
Net Cash
from Investing Activities
Net cash used in investing activities was $37.6 million in
the six months ended September 30, 2010, compared to net
cash provided by investing activities of $16.6 million in
the six months ended September 30, 2009. The increase in
net cash used in investing activities in the six months ended
September 30, 2010 compared to the six months ended
September 30, 2009 was primarily due to an increase in
capital expenditures and expenditures for internally developed
software.
Net Cash
from Financing Activities
Net cash from financing activities are primarily associated with
proceeds from debt and the repayment thereof. Net cash used in
financing activities was $74.6 million in the six months
ended September 30, 2010, compared to $120.2 million
in the six months ended September 30, 2009. The decrease in
net cash used in financing activities in the six months ended
September 30, 2010 compared to the six months ended
September 30, 2009 was primarily due to the repayment of
$95.9 million of debt in the six months ended
September 30, 2010 compared to dividend payments of
$114.9 million in fiscal 2010.
5
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of
Booz Allen Hamilton Holding Corporation
We have audited the accompanying consolidated balance sheets of
Booz Allen Hamilton Holding Corporation (the Company) as of
March 31, 2009 and 2010 and the related consolidated
statements of operations, stockholders equity and cash
flows for the eight-month period ended March 31, 2009 and
the year ended March 31, 2010. We have also audited the
consolidated statements of operations, stockholders equity
and cash flows for the year ended March 31, 2008 and the
four month period ended July 31, 2008 of Booz Allen
Hamilton, Inc. (Predecessor). These financial statements are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. We were not engaged to perform an
audit of the Companys internal control over financial
reporting. Our audits included consideration of internal control
over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the Companys
internal control over financial reporting. Accordingly, we
express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles
used and significant estimates made by management and evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Booz Allen Hamilton Holding Corporation at
March 31, 2009 and 2010, and the consolidated results of
its operations and its cash flows for the eight months ended
March 31, 2009 and the year ended March 31, 2010 in
conformity with U.S. generally accepted accounting
principles. Also, in our opinion, the Predecessor financial
statements referred to above present fairly, in all material
respects, the consolidated results of operations and cash flows
of Booz Allen Hamilton, Inc. for the year ended March 31,
2008 and the four month period ended July 31, 2008 in
conformity with U.S. generally accepted accounting
principles.
As discussed in Note 2 to the financial statements, the
Company and the Predecessor changed their method of revenue
recognition.
McLean, Virginia
June 18, 2010
(except as to the first paragraph of Note 16,
as to which the date is November 8, 2010)
F-2
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
CONSOLIDATED
BALANCE SHEETS
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March 31,
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September 30,
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2009
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2010
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2010
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(As adjusted)
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(Unaudited)
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(In thousands, except share
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and per share data)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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420,902
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$
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307,835
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$
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366,526
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Accounts receivable, net of allowance
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925,925
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1,018,311
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972,542
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Prepaid expenses
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32,696
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32,546
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41,696
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Other current assets
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53,370
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|
|
|
11,476
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24,500
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Total current assets
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1,432,893
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1,370,168
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1,405,264
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Property and equipment, net
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142,543
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136,648
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150,952
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Accounts receivable
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13,051
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|
|
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17,072
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|
|
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17,991
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|
Deferred income taxes
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|
|
99,378
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|
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53,204
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|
48,998
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Intangible assets, net
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|
|
309,477
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|
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|
268,880
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|
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|
254,561
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Goodwill
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1,141,615
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1,163,129
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|
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1,152,238
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Other long-term assets
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43,292
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53,122
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52,100
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Total assets
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$
|
3,182,249
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$
|
3,062,223
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$
|
3,082,104
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LIABILITIES AND STOCKHOLDERS EQUITY
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Current liabilities:
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|
|
|
|
|
|
|
|
|
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Current portion of long-term debt
|
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$
|
15,225
|
|
|
$
|
21,850
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|
|
$
|
21,850
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|
Accounts payable and other accrued expenses
|
|
|
243,831
|
|
|
|
354,097
|
|
|
|
365,495
|
|
Accrued compensation and benefits
|
|
|
344,409
|
|
|
|
385,145
|
|
|
|
361,627
|
|
Deferred revenue
|
|
|
18,186
|
|
|
|
9,996
|
|
|
|
9,367
|
|
Deferred income taxes
|
|
|
21,934
|
|
|
|
14,832
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|
|
|
14,832
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|
|
|
|
|
|
|
|
|
|
|
|
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|
Total current liabilities
|
|
|
643,585
|
|
|
|
785,920
|
|
|
|
773,171
|
|
Long-term debt, net of current portion
|
|
|
1,220,502
|
|
|
|
1,546,782
|
|
|
|
1,453,081
|
|
Income tax reserve
|
|
|
99,394
|
|
|
|
100,178
|
|
|
|
101,317
|
|
Deferred payment obligation
|
|
|
108,969
|
|
|
|
20,028
|
|
|
|
22,545
|
|
Postretirement obligation
|
|
|
39,809
|
|
|
|
50,464
|
|
|
|
52,974
|
|
Other long-term liabilities
|
|
|
9,647
|
|
|
|
49,268
|
|
|
|
77,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,121,906
|
|
|
|
2,552,640
|
|
|
|
2,480,805
|
|
Commitments and contingencies (Note 20)
|
|
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|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
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|
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|
Common stock, Class A $0.01 par
value authorized, 600,000,000 shares; issued
and outstanding, 101,316,870 shares at March 31, 2009,
102,922,900 shares at March 31, 2010, and
106,622,350 shares at September 30, 2010
|
|
|
1,013
|
|
|
|
1,029
|
|
|
|
1,066
|
|
Non-voting common stock, Class B $0.01 par
value authorized, 16,000,000 shares; issued and
outstanding, 2,350,200 shares at March 31, 2009,
2,350,200 shares at March 31, 2010, and
3,053,130 shares at September 30, 2010
|
|
|
24
|
|
|
|
24
|
|
|
|
31
|
|
Restricted common stock, Class C $0.01 par
value authorized, 5,000,000 shares; issued and
outstanding, 2,028,270 shares at March 31, 2009,
2,028,270 shares at March 31, 2010, and
2,028,270 shares at September 30, 2010
|
|
|
20
|
|
|
|
20
|
|
|
|
20
|
|
Special voting common stock, Class E
$0.003 par value authorized,
25,000,000 shares; issued and outstanding,
14,802,880 shares at March 31, 2009,
13,345,880 shares at March 31, 2010, and
12,348,860 shares at September 30, 2010
|
|
|
44
|
|
|
|
40
|
|
|
|
37
|
|
Additional paid-in capital
|
|
|
1,097,327
|
|
|
|
525,652
|
|
|
|
574,177
|
|
(Accumulated deficit) Retained earnings
|
|
|
(38,783
|
)
|
|
|
(13,364
|
)
|
|
|
29,622
|
|
Accumulated other comprehensive income (loss)
|
|
|
698
|
|
|
|
(3,818
|
)
|
|
|
(3,654
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
1,060,343
|
|
|
|
509,583
|
|
|
|
601,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
3,182,249
|
|
|
$
|
3,062,223
|
|
|
$
|
3,082,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
Consolidated Financial Statements.
F-3
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
|
The Company
|
|
|
|
Fiscal Year
|
|
|
Four Months
|
|
|
|
Eight Months
|
|
|
Fiscal Year
|
|
|
Six Months
|
|
|
Six Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
March 31,
|
|
|
July 31,
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2008
|
|
|
2008
|
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
|
(As adjusted)
|
|
|
(As adjusted)
|
|
|
|
(As adjusted)
|
|
|
|
|
|
(As adjusted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
3,625,055
|
|
|
$
|
1,409,943
|
|
|
|
$
|
2,941,275
|
|
|
$
|
5,122,633
|
|
|
$
|
2,508,716
|
|
|
$
|
2,709,143
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
2,028,848
|
|
|
|
722,986
|
|
|
|
|
1,566,763
|
|
|
|
2,654,143
|
|
|
|
1,304,396
|
|
|
|
1,375,658
|
|
Billable expenses
|
|
|
935,459
|
|
|
|
401,387
|
|
|
|
|
756,933
|
|
|
|
1,361,229
|
|
|
|
673,292
|
|
|
|
715,529
|
|
General and administrative expenses
|
|
|
474,188
|
|
|
|
726,929
|
|
|
|
|
505,226
|
|
|
|
811,944
|
|
|
|
372,711
|
|
|
|
418,330
|
|
Depreciation and amortization
|
|
|
33,079
|
|
|
|
11,930
|
|
|
|
|
79,665
|
|
|
|
95,763
|
|
|
|
48,028
|
|
|
|
38,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
3,471,574
|
|
|
|
1,863,232
|
|
|
|
|
2,908,587
|
|
|
|
4,923,079
|
|
|
|
2,398,427
|
|
|
|
2,548,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
153,481
|
|
|
|
(453,289
|
)
|
|
|
|
32,688
|
|
|
|
199,554
|
|
|
|
110,289
|
|
|
|
160,654
|
|
Interest income
|
|
|
2,442
|
|
|
|
734
|
|
|
|
|
4,578
|
|
|
|
1,466
|
|
|
|
819
|
|
|
|
478
|
|
Interest expense
|
|
|
(2,319
|
)
|
|
|
(1,044
|
)
|
|
|
|
(98,068
|
)
|
|
|
(150,734
|
)
|
|
|
(73,112
|
)
|
|
|
(85,824
|
)
|
Other expense, net
|
|
|
(1,931
|
)
|
|
|
(54
|
)
|
|
|
|
(128
|
)
|
|
|
(1,292
|
)
|
|
|
(762
|
)
|
|
|
(947
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
151,673
|
|
|
|
(453,653
|
)
|
|
|
|
(60,930
|
)
|
|
|
48,994
|
|
|
|
37,234
|
|
|
|
74,361
|
|
Income tax expense (benefit) from continuing operations
|
|
|
62,693
|
|
|
|
(56,109
|
)
|
|
|
|
(22,147
|
)
|
|
|
23,575
|
|
|
|
17,999
|
|
|
|
31,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
88,980
|
|
|
|
(397,544
|
)
|
|
|
|
(38,783
|
)
|
|
|
25,419
|
|
|
|
19,235
|
|
|
|
42,986
|
|
Loss from discontinued operations, net of tax
|
|
|
(71,106
|
)
|
|
|
(848,371
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
17,874
|
|
|
$
|
(1,245,915
|
)
|
|
|
$
|
(38,783
|
)
|
|
$
|
25,419
|
|
|
$
|
19,235
|
|
|
$
|
42,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations per common share
(Note 3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
50.64
|
|
|
$
|
(181.28
|
)
|
|
|
$
|
(0.37
|
)
|
|
$
|
0.24
|
|
|
$
|
0.18
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
43.33
|
|
|
$
|
(181.28
|
)
|
|
|
$
|
(0.37
|
)
|
|
$
|
0.22
|
|
|
$
|
0.17
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share (Note 3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
10.17
|
|
|
$
|
(568.13
|
)
|
|
|
$
|
(0.37
|
)
|
|
$
|
0.24
|
|
|
$
|
0.18
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
8.70
|
|
|
$
|
(568.13
|
)
|
|
|
$
|
(0.37
|
)
|
|
$
|
0.22
|
|
|
$
|
0.17
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
Consolidated Financial Statements.
F-4
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
|
The Company
|
|
|
|
Fiscal Year
|
|
|
Four Months
|
|
|
|
Eight Months
|
|
|
Fiscal Year
|
|
|
Six Months
|
|
|
Six Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
March 31,
|
|
|
July 31,
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2008
|
|
|
2008
|
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As adjusted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(As adjusted)
|
|
|
(As adjusted)
|
|
|
|
(As adjusted)
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
17,874
|
|
|
$
|
(1,245,915
|
)
|
|
|
$
|
(38,783
|
)
|
|
$
|
25,419
|
|
|
$
|
19,235
|
|
|
$
|
42,986
|
|
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of taxes
|
|
|
71,106
|
|
|
|
848,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
33,079
|
|
|
|
11,930
|
|
|
|
|
79,665
|
|
|
|
95,763
|
|
|
|
48,028
|
|
|
|
38,972
|
|
Amortization of debt issuance costs
|
|
|
|
|
|
|
|
|
|
|
|
3,106
|
|
|
|
5,700
|
|
|
|
2,439
|
|
|
|
7,186
|
|
Amortization of original issuance discount on debt
|
|
|
|
|
|
|
|
|
|
|
|
1,480
|
|
|
|
2,505
|
|
|
|
1,145
|
|
|
|
2,224
|
|
Excess tax benefit from the exercise of stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,915
|
)
|
|
|
|
|
|
|
(15,779
|
)
|
Stock-based compensation expense
|
|
|
35,013
|
|
|
|
511,653
|
|
|
|
|
62,059
|
|
|
|
71,897
|
|
|
|
39,601
|
|
|
|
27,295
|
|
Loss on disposition of property and equipment
|
|
|
|
|
|
|
|
|
|
|
|
166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
(39,988
|
)
|
|
|
(54,236
|
)
|
|
|
|
(22,147
|
)
|
|
|
19,837
|
|
|
|
13,838
|
|
|
|
27,022
|
|
Changes in assets and liabilities, net of effect of business
combination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
(181,365
|
)
|
|
|
(19,765
|
)
|
|
|
|
(33,675
|
)
|
|
|
(92,386
|
)
|
|
|
(25,701
|
)
|
|
|
45,769
|
|
Income taxes receivable / payable
|
|
|
(35,934
|
)
|
|
|
(70,781
|
)
|
|
|
|
21,303
|
|
|
|
(14,429
|
)
|
|
|
4,117
|
|
|
|
(3
|
)
|
Prepaid expenses
|
|
|
(6,236
|
)
|
|
|
(4,717
|
)
|
|
|
|
(26,030
|
)
|
|
|
150
|
|
|
|
(4,971
|
)
|
|
|
(9,150
|
)
|
Other current assets
|
|
|
(1,859
|
)
|
|
|
(327
|
)
|
|
|
|
(6,491
|
)
|
|
|
15,672
|
|
|
|
17,523
|
|
|
|
(11,721
|
)
|
Other long-term assets
|
|
|
2,627
|
|
|
|
280
|
|
|
|
|
|
|
|
|
(3,742
|
)
|
|
|
(3,666
|
)
|
|
|
(7,083
|
)
|
Accrued compensation and benefits
|
|
|
(7,913
|
)
|
|
|
(44,050
|
)
|
|
|
|
99,094
|
|
|
|
33,760
|
|
|
|
(20,202
|
)
|
|
|
(25,565
|
)
|
Accounts payable and accrued expenses
|
|
|
72,654
|
|
|
|
57,054
|
|
|
|
|
7,186
|
|
|
|
110,265
|
|
|
|
19,130
|
|
|
|
11,398
|
|
Accrued interest
|
|
|
|
|
|
|
|
|
|
|
|
10,604
|
|
|
|
(10,633
|
)
|
|
|
7,110
|
|
|
|
4,146
|
|
Income tax reserve
|
|
|
73,036
|
|
|
|
(7,220
|
)
|
|
|
|
1,177
|
|
|
|
2,483
|
|
|
|
908
|
|
|
|
680
|
|
Deferred revenue
|
|
|
2,716
|
|
|
|
(4,036
|
)
|
|
|
|
10,499
|
|
|
|
(8,190
|
)
|
|
|
(8,247
|
)
|
|
|
(629
|
)
|
Postretirement obligation
|
|
|
(4,630
|
)
|
|
|
21,793
|
|
|
|
|
1,849
|
|
|
|
6,139
|
|
|
|
1,989
|
|
|
|
2,674
|
|
Other long-term liabilities
|
|
|
13,611
|
|
|
|
(26,582
|
)
|
|
|
|
9,647
|
|
|
|
12,189
|
|
|
|
4,479
|
|
|
|
30,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities of
continuing operations
|
|
|
43,791
|
|
|
|
(26,548
|
)
|
|
|
|
180,709
|
|
|
|
270,484
|
|
|
|
116,755
|
|
|
|
170,885
|
|
Net cash provided by (used in) operating activities of
discontinued operations
|
|
|
115,650
|
|
|
|
(160,368
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
159,441
|
|
|
|
(186,916
|
)
|
|
|
|
180,709
|
|
|
|
270,484
|
|
|
|
116,755
|
|
|
|
170,885
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(35,179
|
)
|
|
|
(9,314
|
)
|
|
|
|
(36,835
|
)
|
|
|
(49,271
|
)
|
|
|
(21,712
|
)
|
|
|
(38,957
|
)
|
Cash paid in merger transaction, net of cash acquired
|
|
|
|
|
|
|
|
|
|
|
|
(1,623,683
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in discontinued operations
|
|
|
(3,348
|
)
|
|
|
(153,662
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Escrow payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,280
|
|
|
|
38,280
|
|
|
|
1,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities of continuing operations
|
|
|
(38,527
|
)
|
|
|
(162,976
|
)
|
|
|
|
(1,660,518
|
)
|
|
|
(10,991
|
)
|
|
|
16,568
|
|
|
|
(37,573
|
)
|
Net cash (used in) provided by investing activities of
discontinued operations
|
|
|
(68,516
|
)
|
|
|
58,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(107,043
|
)
|
|
|
(104,653
|
)
|
|
|
|
(1,660,518
|
)
|
|
|
(10,991
|
)
|
|
|
16,568
|
|
|
|
(37,573
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
18,891
|
|
|
|
|
|
|
|
|
956,500
|
|
|
|
|
|
|
|
|
|
|
|
1,002
|
|
Cash dividends paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(612,401
|
)
|
|
|
(114,912
|
)
|
|
|
|
|
Redemption of common stock and Class B common stock
|
|
|
(15,543
|
)
|
|
|
(16,422
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of debt
|
|
|
(4,761
|
)
|
|
|
|
|
|
|
|
(251,050
|
)
|
|
|
(16,100
|
)
|
|
|
(6,050
|
)
|
|
|
(95,925
|
)
|
Proceeds from debt
|
|
|
|
|
|
|
227,534
|
|
|
|
|
1,240,300
|
|
|
|
346,500
|
|
|
|
|
|
|
|
|
|
Debt issuance costs
|
|
|
|
|
|
|
|
|
|
|
|
(45,039
|
)
|
|
|
(15,808
|
)
|
|
|
|
|
|
|
|
|
Payment of deferred payment obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(78,000
|
)
|
|
|
|
|
|
|
|
|
Excess tax benefits from the exercise of stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,915
|
|
|
|
|
|
|
|
15,779
|
|
Stock option exercises
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,334
|
|
|
|
779
|
|
|
|
4,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities of
continuing operations
|
|
|
(1,413
|
)
|
|
|
211,112
|
|
|
|
|
1,900,711
|
|
|
|
(372,560
|
)
|
|
|
(120,183
|
)
|
|
|
(74,621
|
)
|
Net cash (used in) provided by financing activities of
discontinued operations
|
|
|
(5,908
|
)
|
|
|
128,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(7,321
|
)
|
|
|
339,824
|
|
|
|
|
1,900,711
|
|
|
|
(372,560
|
)
|
|
|
(120,183
|
)
|
|
|
(74,621
|
)
|
Net increase (decrease) in cash and cash equivalents of
continuing operations
|
|
|
3,851
|
|
|
|
21,588
|
|
|
|
|
420,902
|
|
|
|
(113,067
|
)
|
|
|
13,140
|
|
|
|
58,691
|
|
Cash and cash equivalents beginning of period
|
|
|
3,272
|
|
|
|
7,123
|
|
|
|
|
|
|
|
|
420,902
|
|
|
|
420,902
|
|
|
|
307,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents end of period
|
|
$
|
7,123
|
|
|
$
|
28,711
|
|
|
|
$
|
420,902
|
|
|
$
|
307,835
|
|
|
$
|
434,042
|
|
|
$
|
366,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
1,448
|
|
|
$
|
720
|
|
|
|
$
|
82,879
|
|
|
$
|
126,744
|
|
|
$
|
61,034
|
|
|
$
|
69,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
$
|
19,841
|
|
|
$
|
42,336
|
|
|
|
$
|
34
|
|
|
$
|
5,474
|
|
|
$
|
2,069
|
|
|
$
|
2,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
Consolidated Financial Statements.
F-5
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY
PREDECESSOR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Additional
|
|
|
Earnings
|
|
|
Other
|
|
|
Total
|
|
|
|
Redeemable
|
|
|
Subscription
|
|
|
Paid-In
|
|
|
(Accumulated
|
|
|
Comprehensive
|
|
|
Stockholders
|
|
|
|
Common Stock
|
|
|
Receivable
|
|
|
Capital
|
|
|
Deficit)
|
|
|
Income (Loss)
|
|
|
Equity
|
|
|
|
(In thousands, except share data)
|
|
|
Balance at March 31, 2007
|
|
$
|
242,963
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
16,024
|
|
|
$
|
(15,800
|
)
|
|
$
|
243,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue recognition cumulative effect of change in
accounting principle
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,881
|
|
|
|
|
|
|
|
28,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2007 (as adjusted)
|
|
|
242,963
|
|
|
|
|
|
|
|
|
|
|
|
44,905
|
|
|
|
(15,800
|
)
|
|
|
272,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (as adjusted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,874
|
|
|
|
|
|
|
|
17,874
|
|
Issuance of redeemable common stock
|
|
|
42,831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,831
|
|
Cash dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(217
|
)
|
|
|
|
|
|
|
(217
|
)
|
Redemption of common stock
|
|
|
(15,543
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,543
|
)
|
Stock compensation expenses
|
|
|
17,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,216
|
|
Mark to put value for redeemable shares
|
|
|
178
|
|
|
|
|
|
|
|
|
|
|
|
(178
|
)
|
|
|
|
|
|
|
|
|
Change in accounting principle for the adoption of
ASC 740-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,081
|
)
|
|
|
(10,081
|
)
|
Decrease in minimum pension liability, net of tax of $10,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,800
|
|
|
|
15,800
|
|
Change in accounting principle for the adoption of ASC 715,
net of tax of $17,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,883
|
)
|
|
|
(26,883
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2008 (as adjusted)
|
|
|
287,645
|
|
|
|
|
|
|
|
|
|
|
|
62,384
|
|
|
|
(36,964
|
)
|
|
|
313,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss (as adjusted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,245,915
|
)
|
|
|
|
|
|
|
(1,245,915
|
)
|
Reclassification of liability for share-based payments for
shares held over six months
|
|
|
5,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,479
|
|
Dividends declared
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(52
|
)
|
|
|
|
|
|
|
(52
|
)
|
Redemption of redeemable common stock
|
|
|
(16,422
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,422
|
)
|
Redemption of common stock marked to redemption value in
stock-based compensation
|
|
|
854,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
854,494
|
|
Redemption of common stock marked to redemption value in equity
|
|
|
180,985
|
|
|
|
|
|
|
|
|
|
|
|
(180,985
|
)
|
|
|
|
|
|
|
|
|
Unrealized loss on benefit plan, net of income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(846
|
)
|
|
|
(846
|
)
|
Receivable from shareholders for exercise of stock rights of
Booz Allen Hamilton Inc.
|
|
|
|
|
|
|
(87,007
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(87,007
|
)
|
Distribution of Booz & Company, Inc. common stock to
shareholders of Booz Allen Hamilton, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(134,874
|
)
|
|
|
22,252
|
|
|
|
(112,622
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at July 31, 2008 (as adjusted)
|
|
$
|
1,312,181
|
|
|
$
|
(87,007
|
)
|
|
$
|
|
|
|
$
|
(1,499,442
|
)
|
|
$
|
(15,558
|
)
|
|
$
|
(289,826
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
Consolidated Financial Statements.
F-6
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY THE
COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company
|
|
|
|
|
|
|
|
|
|
Class B
|
|
|
Class C
|
|
|
Class E
|
|
|
|
|
|
(Accumulated
|
|
|
Accumulated
|
|
|
|
|
|
|
Class A
|
|
|
Non-Voting
|
|
|
Restricted
|
|
|
Special Voting
|
|
|
Additional
|
|
|
Deficit)
|
|
|
Other
|
|
|
Total
|
|
|
|
Common Stock
|
|
|
Common Stock
|
|
|
Common Stock
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Stockholders
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Income (Loss)
|
|
|
Equity
|
|
|
|
(In thousands, except share data)
|
|
|
Balance at August 1, 2008
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange of rollover equity
|
|
|
5,641,870
|
|
|
|
56
|
|
|
|
2,350,200
|
|
|
|
24
|
|
|
|
2,028,270
|
|
|
|
20
|
|
|
|
14,802,880
|
|
|
|
44
|
|
|
|
79,725
|
|
|
|
|
|
|
|
|
|
|
|
79,869
|
|
Issuance of common stock
|
|
|
95,675,000
|
|
|
|
957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
955,543
|
|
|
|
|
|
|
|
|
|
|
|
956,500
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(38,783
|
)
|
|
|
|
|
|
|
(38,783
|
)
|
Actuarial gain related to employee benefits, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
698
|
|
|
|
698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(38,085
|
)
|
Stock compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,059
|
|
|
|
|
|
|
|
|
|
|
|
62,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2009
|
|
|
101,316,870
|
|
|
|
1,013
|
|
|
|
2,350,200
|
|
|
|
24
|
|
|
|
2,028,270
|
|
|
|
20
|
|
|
|
14,802,880
|
|
|
|
44
|
|
|
|
1,097,327
|
|
|
|
(38,783
|
)
|
|
|
698
|
|
|
|
1,060,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
|
|
|
19,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options exercised
|
|
|
1,586,960
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,457,000
|
)
|
|
|
(4
|
)
|
|
|
1,322
|
|
|
|
|
|
|
|
|
|
|
|
1,334
|
|
Recognition of liability related to future stock option
exercises (Note 17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,408
|
)
|
|
|
|
|
|
|
|
|
|
|
(34,408
|
)
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,419
|
|
|
|
|
|
|
|
25,419
|
|
Actuarial loss related to employee benefits, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,516
|
)
|
|
|
(4,516
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,903
|
|
Stock compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,897
|
|
|
|
|
|
|
|
|
|
|
|
71,897
|
|
Dividends paid (Notes 1 and 17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(612,401
|
)
|
|
|
|
|
|
|
|
|
|
|
(612,401
|
)
|
Excess tax benefits from exercise of stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,915
|
|
|
|
|
|
|
|
|
|
|
|
1,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2010
|
|
|
102,922,900
|
|
|
$
|
1,029
|
|
|
|
2,350,200
|
|
|
$
|
24
|
|
|
|
2,028,270
|
|
|
$
|
20
|
|
|
|
13,345,880
|
|
|
$
|
40
|
|
|
$
|
525,652
|
|
|
$
|
(13,364
|
)
|
|
$
|
(3,818
|
)
|
|
$
|
509,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
|
|
|
89,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
702,930
|
|
|
|
2
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
1,002
|
|
Stock options exercised
|
|
|
4,312,550
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,699,950
|
)
|
|
|
(5
|
)
|
|
|
11,460
|
|
|
|
|
|
|
|
|
|
|
|
11,499
|
|
Excess tax benefits from exercise of stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,779
|
|
|
|
|
|
|
|
|
|
|
|
15,779
|
|
Share exchange
|
|
|
(702,930
|
)
|
|
|
(7
|
)
|
|
|
702,930
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognition of liability related to future stock option
exercises (Note 17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,009
|
)
|
|
|
|
|
|
|
|
|
|
|
(7,009
|
)
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,986
|
|
|
|
|
|
|
|
42,986
|
|
Actuarial gain related to employee benefits, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
164
|
|
|
|
164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,150
|
|
Stock compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,295
|
|
|
|
|
|
|
|
|
|
|
|
27,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2010 (unaudited)
|
|
|
106,622,350
|
|
|
$
|
1,066
|
|
|
|
3,053,130
|
|
|
$
|
31
|
|
|
|
2,028,270
|
|
|
$
|
20
|
|
|
|
12,348,860
|
|
|
$
|
37
|
|
|
$
|
574,177
|
|
|
$
|
29,622
|
|
|
$
|
(3,654
|
)
|
|
$
|
601,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
Consolidated Financial Statements.
F-7
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
March 31,
2010
Our
Business
Booz Allen Hamilton Holding Corporation, including its wholly
owned subsidiaries (Holding or the
Company), is an affiliate of The Carlyle Group
(Carlyle) and was incorporated in Delaware in May
2008. The Company and its subsidiaries provide management and
technology consulting services primarily to the
U.S. government and its agencies in the defense,
intelligence, and civil markets. The Company offers clients
functional knowledge spanning strategy and organization,
analytics, technology and operations, which it combines with
specialized expertise in clients mission and domain areas
to help solve critical problems. The Company reports operating
results and financial data in one operating segment. The Company
is headquartered in McLean, Virginia, with approximately
23,300 employees as of March 31, 2010.
Spin-off
and Merger Transactions
On July 31, 2008, pursuant to a merger agreement (the
Merger Agreement), the then-existing shareholders of
Booz Allen Hamilton, Inc. completed the spin-off of the
commercial business to the commercial partners. Effective
August 1, 2008, Holding acquired the outstanding common
stock of Booz Allen Hamilton, Inc., which consisted of the
U.S. government consulting business, through the merger of
Booz Allen Hamilton, Inc. with a wholly-owned subsidiary of
Holding (the Merger Transaction or the
Acquisition). The Company acquired Booz Allen
Hamilton, Inc. for total consideration of $1,828.0 million.
As discussed in Note 4, the acquisition consideration was
allocated to the acquired net assets, identified intangibles of
$353.8 million, and goodwill of $1,163.1 million.
Prior to the Merger Transaction, Booz Allen Hamilton, Inc. is
referred to as the Predecessor for accounting purposes. The
Predecessors consolidated financial statements have been
presented for fiscal 2008 and the four months ended
July 31, 2008. The consolidated financial statements of
Holding subsequent to the Merger Transaction, which is referred
to as the Company, have been presented from August 1, 2008
through March 31, 2009, for fiscal 2010 and for the six
months ended September 30, 2009 and 2010. From May through
July 2008, Holding had no operations. As a result, the Company
is presented as commencing on August 1, 2008.
In connection with the Acquisition, the Company issued certain
shares of its common stock in exchange for shares of the
Predecessor. The Officers Rollover Stock Plan (the
Rollover Plan) was adopted as a mechanism to enable
the exchange of a portion of previous equity interests in the
Predecessor for equity interests in Holding. Common Stock owned
by the Predecessors U.S. government consulting
partners were exchanged for Class A Common Stock of
Holding, while common stock owned by a limited number of the
Predecessors commercial consulting partners were exchanged
for Class B Non-Voting Common Stock of Holding. Fully
vested shares of the Predecessor were exchanged for vested
shares of the Company, with a fair value of $79.7 million.
This amount was included as a component of the total acquisition
consideration. The Company also exchanged restricted shares and
options for previously issued and outstanding stock rights of
the Predecessor held by the Predecessors U.S. government
consulting partners. The Predecessors commercial
consulting partners exercised their previously outstanding stock
rights and received cash for the underlying shares surrendered.
Based on the vesting terms of the Companys newly issued
Class C Restricted Common Stock and the new options granted
under the Rollover Plan, the fair value of the issued awards of
$147.4 million is being recognized as compensation expense
by the Company subsequent to the Acquisition, as discussed
further in Note 17.
In connection with the Merger Transaction, the Company entered
into a senior secured credit agreement (the Senior Secured
Agreement) and a mezzanine credit agreement (the
Mezzanine Credit Agreement) for a total amount of
$1,240.3 million. The total debt proceeds received by the
Company at Closing were net of debt issuance costs of
$45.0 million and original issue discount on the debt of
$19.7 million. Prior to the Merger Transaction, the
Predecessor had an outstanding line of credit of
$245.0 million. The Company paid
F-8
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
off the Predecessors line of credit with proceeds from the
financing. In addition to the debt used to finance the
Companys acquisition of Booz Allen Hamilton, Inc.,
Carlyle, along with a consortium of other investors, provided
$956.5 million in cash in exchange for equity interests in
the Company.
Recapitalization
Transaction and Repricing
On December 11, 2009, the Company consummated a
recapitalization transaction (the Recapitalization
Transaction), which included amendments of the Senior
Secured Agreement to include a new term loan
(Tranche C) with $350.0 million of
principal, and the Mezzanine Credit Agreement primarily to allow
for the recapitalization and payment of a special dividend. This
special dividend was declared by the Companys Board of
Directors on December 7, 2009, to be paid to holders of
record as of December 8, 2009. Net proceeds from
Tranche C of $341.3 million less transaction costs of
$13.2 million, along with cash on hand of
$321.9 million, were used to fund a partial payment of the
Companys deferred payment obligation (DPO) in
the amount of $100.4 million, and a dividend payment of
$4.642 per share, or $497.5 million, which was paid on all
issued and outstanding shares of Holdings Class A
Common Stock, Class B Non-Voting Common Stock, and
Class C Restricted Common Stock. As required by the
Officers Rollover Stock Plan and the Equity Incentive
Plan, the exercise price per share of each outstanding option
was reduced. Because the reduction in per share value exceeded
the exercise price for certain of the options granted under the
Officers Rollover Stock Plan, the exercise price for those
options was reduced to the $0.01 par value of the shares
issuable on exercise, and the holders became entitled to receive
a cash payment equal to the excess of the reduction in per share
value over the reduction in exercise price to the par value. The
difference between one cent and the reduced value for shares
vested and not yet exercised of approximately $54.4 million
will be paid in cash upon exercise of the options. As of
March 31, 2010, the Company reported $27.4 million in
other long-term liabilities and $7.0 million in accrued
compensation and benefits in the consolidated balance sheets for
the portion of stock-based compensation recognized as of
March 31, 2010, which is reflective of the options vested
with an exercise price of one cent. Transaction fees incurred in
connection with the Recapitalization Transaction were
approximately $22.4 million, of which approximately
$15.8 million were deferred financing costs and will be
amortized over the lives of the loans. Refer to Note 10 for
further discussion of the DPO, Note 11 for further
discussion of the amended credit agreements, Note 12 for
further discussion of the accounting for deferred financing
costs, and Note 17 for further discussion of the December
2009 dividend and associated future cash payments as related to
stock options.
|
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis
of Presentation
The accompanying consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries, and
have been prepared in accordance with accounting principles
generally accepted in the United States (GAAP). All
intercompany balances and transactions are eliminated in
consolidation.
The operating results of the global commercial business that was
spun off by the Predecessor effective July 31, 2008 have
been presented as discontinued operations in the
Predecessors consolidated financial statements and the
related notes included in these financial statements. These
operations and cash flows are clearly distinguished from the
continuing business, the operations have been disposed of, and
there was no continuing involvement in the operations after
August 1, 2008.
The statement of cash flows for the year ended March 31,
2008 reflects the reclassification of certain amounts resulting
in an increase of $3.3 million in net cash used in
financing activities of continuing operations and a
corresponding decrease in net cash used in investing activities
of continuing operations.
The Companys fiscal year ends on March 31 and unless
otherwise noted, references to fiscal year or fiscal are for
fiscal years ended March 31. The accompanying audited
financial statements present the
F-9
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
financial position of the Company as of March 31, 2009 and
2010, the Companys results of operations for the eight
months ended March 31, 2009 and fiscal 2010, and the
Predecessors results of operations for fiscal 2008 and
four months ended July 31, 2008.
Unaudited
Interim Financial Information
The accompanying unaudited interim consolidated balance sheet as
of September 30, 2010, the consolidated statements of
operations and cash flows for the six months ended
September 30, 2009 and 2010, and the consolidated statement
of stockholders equity for the six months ended
September 30, 2010 are unaudited. These unaudited interim
consolidated financial statements have been prepared in
accordance with GAAP. In the opinion of the Companys
management, the unaudited interim consolidated financial
statements have been prepared on the same basis as the audited
consolidated financial statements and include all adjustments
necessary for the fair presentation of the Companys
statement of financial position, results of operations, and its
cash flows for the six months ended September 30, 2009 and
2010. The results for the six months ended September 30,
2010 are not necessarily indicative of the results to be
expected for the year ending March 31, 2011. All references
to September 30, 2010 or to the six months ended
September 30, 2009 and 2010 in the notes to the
consolidated financial statements are unaudited.
Use of
Estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenue
and expenses during the reporting periods. Areas of the
financial statements where estimates may have the most
significant effect include allowance for doubtful accounts,
contractual and regulatory reserves, lives of tangible and
intangible assets, impairment of long-lived and other assets,
realization of deferred tax assets, accrued liabilities, revenue
recognition, bonus and other incentive compensation, stock-based
compensation, provisions for income taxes, and postretirement
obligations. Actual results experienced by the Company may
differ materially from managements estimates.
Change
in Accounting Principle
In fiscal 2010, the Company and the Predecessor changed their
methodology of recognizing revenue for all U.S. government
contracts to apply the accounting guidance of Financial
Accounting Standards Board (FASB) Accounting
Standards
Codificationtm
(ASC or the Codification) Subtopic
605-35, as
directed by ASC Topic 912, which permits revenue recognition on
a
percentage-of-completion
basis. Previously, the Company applied this guidance only to
contracts related to the construction or development of tangible
assets. For contracts not related to those activities, the
Company had applied the general revenue recognition guidance of
Staff Accounting Bulletin (SAB) Topic 13, Revenue
Recognition. Upon contract completion, both methods yield
the same results, but the Company believes that the application
of contract accounting under
ASC 605-35
to contracts not related to the construction or development of
tangible assets is preferable to the application of contract
accounting under SAB Topic 13 based on the fact that the
percentage-of-completion
model utilized under
ASC 605-35
is a recognized accounting model, that better reflects the
economics of a U.S. government contract during the contract
performance period. The only material financial statement impact
of the revenue recognition change was the recognition of award
fees over the performance period. The Company concluded that
this change is appropriate as the award fees earned by the
Company are estimable based on historical information and
managements monitoring of fees earned and is reflective of
the economics of such contracts.
F-10
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
All prior periods presented have been retrospectively adjusted
to apply the new method of accounting. The cumulative effect of
this change represents the difference between the amount of
retained earnings at the beginning of the period of change and
the amount of retained earnings that would have been reported at
the date if the new accounting principle had been applied
retroactively for all prior periods. The cumulative effect of
the change in accounting principle on periods prior to those
presented of $28.9 million has been reflected as an
adjustment to the opening balance of retained earnings, net of
tax, as of April 1, 2007.
F-11
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The table below presents the impact of the change in this
accounting principle on accounts receivable, net, accounts
payable and other accrued expenses, revenue, net earnings
(loss), and net earnings (loss) per share as if the change had
been in place throughout all periods presented (in thousands,
except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
|
The Company
|
|
|
|
Fiscal Year
|
|
|
Four Months
|
|
|
|
Eight Months
|
|
|
Fiscal Year
|
|
|
Six Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
March 31,
|
|
|
July 31,
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
September 30,
|
|
|
|
2008
|
|
|
2008
|
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of change in application of accounting principle applied
retrospectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
$
|
842,593
|
|
|
$
|
876,280
|
|
|
|
$
|
883,311
|
|
|
$
|
980,095
|
|
|
$
|
909,412
|
|
Impact of change in revenue recognition
|
|
|
55,175
|
|
|
|
41,253
|
|
|
|
|
42,614
|
|
|
|
38,216
|
|
|
|
42,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net, as adjusted
|
|
$
|
897,768
|
|
|
$
|
917,533
|
|
|
|
$
|
925,925
|
|
|
$
|
1,018,311
|
|
|
$
|
951,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and other accrued expenses
|
|
$
|
187,096
|
|
|
$
|
244,024
|
|
|
|
$
|
234,412
|
|
|
$
|
344,678
|
|
|
$
|
253,619
|
|
Impact of change in revenue recognition
|
|
|
9,443
|
|
|
|
8,813
|
|
|
|
|
9,419
|
|
|
|
9,419
|
|
|
|
9,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and other accrued expenses, as adjusted
|
|
$
|
196,539
|
|
|
$
|
252,837
|
|
|
|
$
|
243,831
|
|
|
$
|
354,097
|
|
|
$
|
262,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
3,625,951
|
|
|
$
|
1,423,865
|
|
|
|
$
|
2,912,610
|
|
|
$
|
5,121,895
|
|
|
$
|
2,503,980
|
|
Impact of change in revenue recognition
|
|
|
(896
|
)
|
|
|
(13,922
|
)
|
|
|
|
28,665
|
|
|
|
738
|
|
|
|
4,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, as adjusted
|
|
$
|
3,625,055
|
|
|
$
|
1,409,943
|
|
|
|
$
|
2,941,275
|
|
|
$
|
5,122,633
|
|
|
$
|
2,508,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) from continuing operations
|
|
$
|
90,175
|
|
|
$
|
(389,497
|
)
|
|
|
$
|
(55,770
|
)
|
|
$
|
24,681
|
|
|
$
|
14,424
|
|
Impact of change in revenue recognition
|
|
|
(1,195
|
)
|
|
|
(8,047
|
)
|
|
|
|
16,987
|
|
|
|
738
|
|
|
|
4,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) from continuing operations, as adjusted
|
|
$
|
88,980
|
|
|
$
|
(397,544
|
)
|
|
|
$
|
(38,783
|
)
|
|
$
|
25,419
|
|
|
$
|
19,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
$
|
19,069
|
|
|
$
|
(1,237,868
|
)
|
|
|
$
|
(55,770
|
)
|
|
$
|
24,681
|
|
|
$
|
14,424
|
|
Impact of change in revenue recognition
|
|
|
(1,195
|
)
|
|
|
(8,047
|
)
|
|
|
|
16,987
|
|
|
|
738
|
|
|
|
4,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss), as adjusted
|
|
$
|
17,874
|
|
|
$
|
(1,245,915
|
)
|
|
|
$
|
(38,783
|
)
|
|
$
|
25,419
|
|
|
$
|
19,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) from continuing operations per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
51.32
|
|
|
$
|
(177.61
|
)
|
|
|
$
|
0.53
|
|
|
$
|
0.23
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
43.92
|
|
|
$
|
(177.61
|
)
|
|
|
$
|
0.53
|
|
|
$
|
0.21
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of change in revenue recognition per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.68
|
)
|
|
$
|
(3.67
|
)
|
|
|
$
|
0.16
|
|
|
$
|
0.01
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(0.59
|
)
|
|
$
|
(3.67
|
)
|
|
|
$
|
0.16
|
|
|
$
|
0.01
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) from continuing operations per share, as
adjusted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
50.64
|
|
|
$
|
(181.28
|
)
|
|
|
$
|
0.37
|
|
|
$
|
0.24
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
43.33
|
|
|
$
|
(181.28
|
)
|
|
|
$
|
0.37
|
|
|
$
|
0.22
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
10.85
|
|
|
$
|
(546.46
|
)
|
|
|
$
|
0.53
|
|
|
$
|
0.23
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
9.29
|
|
|
$
|
(564.46
|
)
|
|
|
$
|
0.53
|
|
|
$
|
0.21
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of change in revenue recognition per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.68
|
)
|
|
$
|
(3.67
|
)
|
|
|
$
|
0.16
|
|
|
$
|
0.01
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(0.59
|
)
|
|
$
|
(3.67
|
)
|
|
|
$
|
0.16
|
|
|
$
|
0.01
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share, as adjusted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
10.17
|
|
|
$
|
(568.13
|
)
|
|
|
$
|
0.37
|
|
|
$
|
0.24
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
8.70
|
|
|
$
|
(568.13
|
)
|
|
|
$
|
0.37
|
|
|
$
|
0.22
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-12
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Revenue
Recognition
The majority of the Companys revenue is derived from
services and solutions provided to the U.S. government and
its agencies, primarily by the Companys employees and, to
a lesser extent, subcontractors. The Company generates its
revenue from the following types of contractual arrangements:
cost-plus-fee contracts,
time-and-materials
contracts, and fixed-price contracts.
Revenue on cost-plus-fee contracts is recognized as services are
performed, generally based on the allowable costs incurred
during the period plus any recognizable earned fee. The Company
considers fixed fees under cost-plus-fee contracts to be earned
in proportion to the allowable costs incurred in performance of
the contract. For cost-plus-fee contracts that include
performance-based fee incentives, which are principally award
fee arrangements, the Company recognizes income when such fees
are probable and estimable. Estimates of the total fee to be
earned are made based on contract provisions, prior experience
with similar contracts or clients, and managements
monitoring of the performance on such contracts. Contract costs,
including indirect expenses, are subject to audit by the Defense
Contract Audit Agency and, accordingly, are subject to possible
cost disallowances.
Revenue for
time-and-materials
contracts is recognized as services are performed, generally on
the basis of contract allowable labor hours worked multiplied by
the contract-defined billing rates, plus allowable direct costs
and indirect cost burdens associated with materials used in and
other direct expenses incurred in connection with the
performance of the contract.
Revenue on fixed-price completion contracts is recognized using
percentage-of-completion
based on actual costs incurred relative to total estimated costs
for the contract. These estimated costs are updated during the
term of the contract, and may result in revision by the Company
of recognized revenue and estimated costs in the period in which
they are identified. Profits on fixed-price contracts result
from the difference between incurred costs and revenue earned.
Contract accounting requires significant judgment relative to
assessing risks, estimating contract revenue and costs, and
making assumptions for schedule and technical issues. Due to the
size and nature of many of the Companys contracts,
developing total revenue and cost at completion requires the use
of estimates. Contract costs include direct labor and billable
expenses, as well as an allocation of allowable indirect costs.
Billable expenses is comprised of subcontracting costs and other
out of pocket costs that often include, but are not
limited to, travel-related costs and telecommunications charges.
The Company recognizes revenue and billable expenses from these
transactions on a gross basis. Assumptions regarding the length
of time to complete the contract also include expected increases
in wages and prices for materials. Estimates of total contract
revenue and costs are monitored during the term of the contract
and are subject to revision as the contract progresses.
Anticipated losses on contracts are recognized in the period
they are deemed probable and can be reasonably estimated.
The Companys contracts may include the delivery of a
combination of one or more of the Companys service
offerings. In these situations, the Company determines whether
such arrangements with multiple elements should be treated as
separate units of accounting, with revenue allocated to each
element of the arrangement based on the fair value of each
element.
Cash
and Cash Equivalents
Cash and cash equivalents include cash on hand and highly liquid
investments having an original maturity of three months or less.
The Companys investments consist primarily of
institutional money market funds and U.S. Treasury
securities. The Companys investments are carried at cost,
which approximates fair value. The Company maintains its cash
and cash equivalents in bank accounts that, at times, exceed the
federally insured limits. The Company has not experienced any
losses in such accounts.
F-13
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Valuation
of Accounts Receivable
The Company maintains allowances for doubtful accounts against
certain billed receivables based upon the latest information
regarding whether invoices are ultimately collectible. Assessing
the collectability of customer receivables requires management
judgment. The Company determines its allowance for doubtful
accounts by specifically analyzing individual accounts
receivable, historical bad debts, customer credit-worthiness,
current economic conditions, and accounts receivable aging
trends. Valuation reserves are periodically re-evaluated and
adjusted as more information about the ultimate collectability
of accounts receivable becomes available. Upon determination
that a receivable is uncollectible, the receivable balance and
any associated reserve are written off.
Concentrations
of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash
equivalents and accounts receivable. The Companys cash
equivalents are generally invested in U.S. government
insured money market funds and Treasury bills. The Company
believes that credit risk, with respect to accounts receivable,
are limited as they are primarily U.S. government
receivables.
As of March 31, 2009, March 31, 2010, and
September 30, 2010, the Company had no derivative financial
instruments.
Property
and Equipment
Property and equipment are stated at cost, and the balances are
presented net of depreciation. The cost of software purchased or
internally developed is capitalized. Depreciation is calculated
using the straight-line method over the estimated useful lives
of the assets. Furniture and equipment is depreciated over five
to ten years, computer equipment is depreciated over three
years, and software purchased or developed for internal use is
depreciated over one to three years. Leasehold improvements are
amortized over the shorter of the useful life of the asset or
the lease term. Maintenance and repairs are charged to expense
as incurred.
Goodwill
Goodwill is the amount by which the cost of acquired net assets
in a business acquisition exceeds the fair value of net
identifiable assets on the date of purchase. The Company
assesses goodwill for impairment on at least an annual basis on
January 1, and whenever impairment indicators are present
in events or changes in circumstances indicate that the carrying
value of the asset may not be recoverable. The Company defines
its reporting unit as its operating segment. The Company
considers itself to be a single reporting segment, as discussed
in Note 21, and operating unit structure given that the
Company is managed and operated as one business. There were no
impairment charges for the eight months ended March 31,
2009 or fiscal 2010.
Intangible
Assets
Intangible assets consist of trade name, contract backlog, and
favorable lease terms. Trade name is not amortized, but is
tested annually for impairment. Contract backlog is amortized
over the expected backlog life based on projected future cash
flows of approximately nine years. Favorable lease terms are
amortized over the remaining contractual terms of approximately
five years.
Valuation
of Long-Lived Assets
The Company reviews its long-lived assets, including property
and equipment and intangible assets with finite lives, for
impairment whenever events or changes in circumstances indicate
that the carrying amounts of the assets may not be fully
recoverable or that the useful lives are no longer appropriate.
If the total of the expected undiscounted future net cash flows
expected to result from the use and eventual disposition of the
F-14
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
asset is less than its carrying amount, a loss is recorded for
the amount required to reduce the carrying amount to fair value.
There were no impairment charges for the eight months ended
March 31, 2009, or fiscal 2010.
Foreign
Currency Transactions
Foreign currency gains (losses) are reported as a component of
other expense, net in the accompanying consolidated statements
of operations. For fiscal 2008, four months ended July 31,
2008, eight months ended March 31, 2009, and fiscal 2010,
net exchange (losses) gains were approximately $(529,000),
$(53,000) , $49,000, and $(105,000), respectively.
Income
Taxes
Deferred tax assets and liabilities are recorded to recognize
the expected future tax benefits or costs of events that have
been, or will be, reported in different years for financial
statement purposes than for tax purposes. Deferred tax assets
and liabilities are computed based on the difference between the
financial statement and tax basis of assets and liabilities
using enacted tax rates and laws for the years in which these
items are expected to reverse. If management determines that a
deferred tax asset is not more likely than not to be
realized, an offsetting valuation allowance is recorded,
reducing income and the deferred tax asset in that period.
Management records valuation allowances primarily based on an
assessment of historical earnings and future taxable income that
incorporates prudent, feasible tax-planning strategies. The
Company assesses deferred tax assets on an individual
jurisdiction basis. The Company reviews tax laws, regulations,
and related guidance on an ongoing basis in order to properly
record any uncertain tax liabilities.
Comprehensive
Income
Comprehensive income is the change in equity of a business
enterprise during a period from transactions and other events
and circumstances from nonowner sources. Comprehensive income is
presented in the consolidated statements of stockholders
equity. Accumulated other comprehensive income as of
March 31, 2009, March 31, 2010 and September 30,
2010, consisted of unrealized gains (losses) on the
Companys defined and postretirement benefit plans.
Stock-Based
Compensation
Share-based payments to employees are recognized in the
consolidated statements of operations based on their grant date
fair values with the expense being recognized over the requisite
service period. The Company uses the Black-Scholes model to
determine the fair value of its awards at the time of the grant.
Redeemable
Common Stock
Prior to the Merger Transaction, the Predecessor had Redeemable
Common Stock. Shares of Redeemable Common Stock issued upon
exercise of rights granted prior to April 1, 2006 were
marked to the redemption amount at the end of each reporting
period with changes recorded in stock-based compensation
expense. For shares of Redeemable Common Stock issued upon
exercise of rights granted on or after April 1, 2006, the
Redeemable Common Stock was marked to the redemption amount
through stock-based compensation expense until such shares had
been outstanding for six months. After such time, changes in the
redemption amount were recorded as a component of
stockholders equity.
Defined
Benefit Plan and Other Postretirement Benefits
The Company recognizes the underfunded status of pension and
other postretirement benefit plans on the consolidated balance
sheets. Gains and losses, prior service costs and credits, and
any remaining transition amounts that have not yet been
recognized through net periodic benefit cost will be recognized
in
F-15
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
accumulated other comprehensive income, net of tax effects,
until they are amortized as a component of net periodic cost.
The measurement date, the date at which the benefit obligation
and plan assets are measured, is the Companys fiscal year
end.
Self-Funded
Medical Plans
The Company maintains self-funded medical insurance. Self-funded
plans include a health maintenance organization, preferred
provider organization, point of service, qualified point of
service, and traditional choice. Further, self-funded plans also
include prescription drug benefits. The Company records an
incurred but unpaid claim liability in the accrued compensation
and benefits line of the consolidated balance sheets for
self-funded plans based on an external actuarial valuation.
Estimates are calculated as the midpoint of reasonable ranges.
Primary data that drives this estimate is based on claims and
enrollment data received provided by a third party valuation
firm for medical and pharmacy related costs. These reports
detail claims paid and incurred through one month prior to the
quarter end.
Deferred
Compensation Plan
The Company accounts for its deferred compensation plan on an
accrual basis, in accordance with the terms of the underlying
contract. To the extent the terms of the contract attribute all
or a portion of the expected future benefit to an individual
year of the employees service, the cost of the benefits
are recognized in that year. Therefore, the Company estimates
that the cost of any and all future benefits that are expected
to be paid as a result of the deferred compensation and expenses
the present value of those costs in the year as services are
provided.
Fair
Value Measurements
The accounting standard for fair value measurements defines fair
value, establishes a market-based framework or hierarchy for
measuring fair value, and expands disclosures about fair value
measurements. The standard establishes a three-tier value
hierarchy, which prioritizes the inputs used in measuring fair
value as follows: observable inputs such as quoted prices in
active markets (Level 1); inputs other than the
quoted prices in active markets that are observable either
directly or indirectly (Level 2); and
observable inputs in which there is little or no market data,
which requires the Company to develop its own assumptions
(Level 3).
New
Accounting Pronouncements
During the fiscal year ended March 31, 2010, the Company
adopted the following accounting pronouncements, none of which
had a material impact on the Companys present or
historical consolidated financial statements:
During June 2009, the FASB approved the Codification as the
single source of authoritative nongovernmental
U.S. generally accepted accounting principles. The
Codification reorganizes thousands of pronouncements into
roughly 90 accounting topics and displays the topics using a
consistent structure. All existing accounting standard documents
are superseded, and all other accounting literature not included
in the Codification is considered nonauthoritative. The
Codification became effective for interim and annual periods
ending after September 15, 2009. The Codification did not
have a material impact on the Companys results of
operations or financial position.
During December 2007, the FASB issued ASC 805, Business
Combinations, which the Company adopted effective
January 1, 2009. This guidance replaced existing guidance
and significantly changed accounting and reporting relative to
business combinations in consolidated financial statements,
including requirements to
F-16
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
recognize acquisition-related transaction costs and post
acquisition restructuring costs in the results of operations as
incurred. There was not a material impact to the Companys
consolidated financial statements upon adoption of this
standard. Any future business combinations will be presented in
accordance with ASC 805, but the nature and magnitude of
the specific effects will depend on the nature, terms and size
of the acquisitions. Additionally, ASC 805 changes the
accounting for uncertain tax positions that are settled
subsequent to adoption, but relate to preacquisition tax
contingencies that existed prior to the adoption of
ASC 805. To the extent that the Companys established
tax contingencies are realized at an amount greater or less than
the contingency recorded, this adoption could materially impact
the Companys results of operations.
During June 2009, the FASB issued ASC 855, Subsequent
Events, which the Company adopted effective June 30,
2009. This guidance establishes general standards of accounting
for, and disclosures of, events that occur after the balance
sheet date but before the financial statements are issued.
During February 2010, the FASB amended the evaluation and
disclosure requirements for subsequent events for companies that
are not required to file with the U.S. Securities and
Exchange Commission. The Company adopted the amended subsequent
event requirements effective March 31, 2010. There was no
material impact to the Companys consolidated financial
statements upon adoption of the original or amended standard.
In October 2009, the FASB issued Accounting Standards Update
No. 2009-13,
Multiple-Deliverable Revenue Arrangements, which amends
ASC 605, Revenue Recognition. The guidance relates
to the determination of when the individual deliverables
included in a multiple-element arrangement may be treated as
separate units of accounting and modifies the manner in which
the transaction consideration is allocated across the individual
deliverables, thereby affecting the timing of revenue
recognition. The guidance also expands the disclosure
requirements for revenue arrangements with multiple
deliverables. The guidance will be effective beginning on
April 1, 2011, and may be applied retrospectively for all
periods presented or prospectively to arrangements entered into
or materially modified after the adoption date. Early adoption
is permitted provided that the guidance is retroactively applied
to the beginning of the year of adoption. The Company is
currently assessing the potential effect, if any, on its
consolidated financial statements.
The Company computes basic and diluted per share amounts based
on net income (loss) for the periods presented. The Company uses
the weighted average number of common shares outstanding during
the period to calculate basic earnings (loss) per share. Diluted
EPS is computed similar to basic EPS, except the weighted
average number of shares outstanding is increased to include the
dilutive effect of outstanding common stock options and other
stock-based awards.
The Company currently has outstanding shares of Class A
Common Stock, Class B Non-Voting Common Stock, Class C
Restricted Common Stock, and Class E Special Voting Common
Stock. Class E shares are not included in the calculation
of EPS as these shares represent voting rights only and are not
entitled to participate in dividends or other distributions.
F-17
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
A reconciliation of the income (loss) used to compute basic and
diluted EPS for the periods presented are as follows (in
thousands, except share and per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
|
The Company
|
|
|
|
Fiscal Year
|
|
|
Four Months
|
|
|
|
Eight Months
|
|
|
Fiscal Year
|
|
|
Six Months
|
|
|
Six Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
March 31,
|
|
|
July 31,
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2008
|
|
|
2008
|
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
Earnings (loss) from continuing operations for basic and diluted
computations
|
|
$
|
88,980
|
|
|
$
|
(397,544
|
)
|
|
|
$
|
(38,783
|
)
|
|
$
|
25,419
|
|
|
$
|
19,235
|
|
|
$
|
42,986
|
|
Earnings (loss) for basic and diluted computations
|
|
|
17,874
|
|
|
|
(1,245,915
|
)
|
|
|
|
(38,783
|
)
|
|
|
25,419
|
|
|
|
19,235
|
|
|
|
42,986
|
|
Weighted-average Class A Common Stock outstanding
|
|
|
1,757,000
|
|
|
|
2,193,000
|
|
|
|
|
101,316,870
|
|
|
|
102,099,180
|
|
|
|
101,369,787
|
|
|
|
103,543,008
|
|
Weighted-average Class B Non-Voting Common Stock outstanding
|
|
|
|
|
|
|
|
|
|
|
|
2,350,200
|
|
|
|
2,350,200
|
|
|
|
2,350,200
|
|
|
|
2,861,073
|
|
Weighted-average Class C Restricted Common Stock outstanding
|
|
|
|
|
|
|
|
|
|
|
|
2,028,270
|
|
|
|
2,028,270
|
|
|
|
2,028,270
|
|
|
|
2,028,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total weighted-average common shares outstanding for basic
computations
|
|
|
1,757,000
|
|
|
|
2,193,000
|
|
|
|
|
105,695,340
|
|
|
|
106,477,650
|
|
|
|
105,748,257
|
|
|
|
108,432,351
|
|
Dilutive stock options and restricted stock
|
|
|
296,338
|
|
|
|
|
|
|
|
|
|
|
|
|
9,750,730
|
|
|
|
7,217,039
|
|
|
|
13,305,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares outstanding for diluted
computations
|
|
|
2,053,338
|
|
|
|
2,193,000
|
|
|
|
|
105,695,340
|
|
|
|
116,228,380
|
|
|
|
112,965,296
|
|
|
|
121,737,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
50.64
|
|
|
$
|
(181.28
|
)
|
|
|
$
|
(0.37
|
)
|
|
$
|
0.24
|
|
|
$
|
0.18
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
43.33
|
|
|
$
|
(181.28
|
)
|
|
|
$
|
(0.37
|
)
|
|
$
|
0.22
|
|
|
$
|
0.17
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
10.17
|
|
|
$
|
(568.13
|
)
|
|
|
$
|
(0.37
|
)
|
|
$
|
0.24
|
|
|
$
|
0.18
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
8.70
|
|
|
$
|
(568.13
|
)
|
|
|
$
|
(0.37
|
)
|
|
$
|
0.22
|
|
|
$
|
0.17
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company acquired the outstanding common stock of Booz Allen
Hamilton, Inc. effective August 1, 2008. The purchase price
was $1,828.0 million as of March 31, 2010. Pursuant to
the Merger Agreement, spin-off, indemnification and working
capital escrow accounts in the amounts of $15.0 million,
$25.0 million, and $50.0 million, respectively, were
established for a period of one year from the date of the
closing or until all outstanding claims made against the escrow
accounts are resolved, whichever is later. As of March 31,
2010, payments in the aggregate amount of $52.5 million
were made out of the escrow accounts, of which
$13.0 million has been released to selling shareholders.
In connection with the Merger Transaction, the Company
established a DPO of $158.0 million, of which
$78.0 million was set aside to be paid in full to the
selling shareholders. As discussed in Note 10, on
December 11, 2009, in connection with the Recapitalization
Transaction, $100.4 million was paid to the
F-18
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
selling shareholders, of which $78.0 million was the
repayment of that portion of the DPO, with approximately
$22.4 million representing accrued interest. The DPO also
was established for additional consideration for the selling
shareholders of up to $80.0 million plus accrued interest,
payable by the tenth anniversary of the July 31, 2008
Merger Transaction closing date, and following favorable
settlement of any indemnified pre-acquisition contingency claims
made against the DPO. As of March 31, 2009 and 2010,
$59.6 million and $62.4 million, respectively, may be
indemnified under the DPO. As the indemnified claims are settled
favorably, any amount remaining after settlement will be
reflected as an increase in the DPO. An adjustment to the
purchase price equal to the DPO adjustment will be recorded as
additional consideration to be paid to the selling shareholders.
As of March 31, 2009 and 2010, there were no significant
settled claims and, accordingly, no adjustments to purchase
price. Refer to note 10 for further discussion of the DPO.
As discussed in Note 1, the total purchase price was
allocated to net tangible and identifiable intangible assets
based on their estimated fair values as of the effective date of
the acquisition. In allocating the purchase price, the Company
considered, among other factors, its intention for future use of
acquired assets, analysis of historical financial performance,
and estimates of future performance of contracts. The components
of intangible assets associated with the acquisition were
contract backlog, favorable lease terms, and trade name, valued
at $160.8 million, $2.8 million, and
$190.2 million, respectively. Trade name, an indefinite
lived intangible, represents the estimated fair value for all
trade names and trademarks employed by the Company as of the
closing date. Backlog consists of services that the Company is
committed to fulfill according to the terms of its contracts and
task orders. Favorable lease terms represent the differential
between the payment terms of in-place leases and market lease
rates. Backlog and favorable lease terms are amortized over nine
and five years, respectively.
Purchase
Price Allocation
The following table represents the purchase price allocation
which includes the resolution of certain working capital, tax
adjustments and purchase negotiation matters during fiscal 2010
(in thousands):
|
|
|
|
|
Current assets
|
|
$
|
1,009,589
|
|
Property and equipment
|
|
|
141,219
|
|
Other noncurrent assets
|
|
|
40,289
|
|
Current liabilities
|
|
|
(489,611
|
)
|
Notes payable, current and long-term
|
|
|
(245,000
|
)
|
Other long-term liabilities
|
|
|
(145,417
|
)
|
|
|
|
|
|
Net assets acquired
|
|
|
311,069
|
|
Definite-lived intangible assets acquired
|
|
|
163,600
|
|
Indefinite-lived intangible assets acquired
|
|
|
190,200
|
|
Goodwill
|
|
|
1,163,129
|
|
|
|
|
|
|
Total purchase price
|
|
$
|
1,827,998
|
|
|
|
|
|
|
The following unaudited pro forma combined condensed statement
of income sets forth the consolidated results of operations of
the Company as if the above described acquisition had occurred
at April 1, 2008. The
F-19
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
unaudited pro forma information does not purport to be
indicative of the actual results that would have occurred if the
combination had occurred at this earlier date (in thousands,
except per share amounts):
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
March 31, 2009
|
|
Revenue
|
|
$
|
4,351,218
|
|
Net loss
|
|
|
(49,441
|
)
|
Loss per common share:
|
|
|
|
|
Basic
|
|
$
|
(0.47
|
)
|
Diluted
|
|
$
|
(0.47
|
)
|
|
|
5.
|
GOODWILL
AND OTHER INTANGIBLE ASSETS
|
Goodwill
As of March 31, 2009, March 31, 2010, and
September 30, 2010, goodwill was $1,141.6 million,
$1,163.1 million, and $1,152.2 million, respectively.
Goodwill, which is associated with the Merger Transaction, was
primarily attributed to the employees of the Company, their
presence in the marketplace, and the value paid for by companies
that operate in the Companys industry (see Note 4).
The change in the carrying amount of goodwill is attributable to
the resolution of certain working capital, tax adjustments and
purchase negotiation matters during fiscal 2010 and the six
months ended September 30, 2010.
The Company performed an annual valuation of indefinite-lived
intangible assets including goodwill as of January 1, 2010,
noting no impairment. Goodwill was assessed for the
Companys one reporting unit utilizing a two-step
methodology. The first step requires the Company to estimate the
fair value of its reporting unit and compare it to the carrying
value. If the carrying value of a reporting unit were to exceed
its fair value, the goodwill of that reporting unit would be
potentially impaired, and the Company would proceed to step two
of the impairment analysis. In step two of the impairment
analysis, the Company would measure and record an impairment
loss equal to the excess of the carrying value of the reporting
units goodwill over its implied fair value should such a
circumstance arise. The outcome of the first step of the
Companys test indicated that there was no potential
impairment, and therefore the second step of the test was not
required. The trademark was evaluated as an indefinite life
intangible asset prior to the testing of goodwill. At
January 1, 2010, the fair value of the Companys
goodwill and trademark each exceeded their carrying value. There
were no additional events or changes that indicated any
impairment as of March 31, 2010.
Other
Intangible Assets
The following tables set forth information for intangible assets
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2009
|
|
As of March 31, 2010
|
|
As of September 30, 2010
|
|
|
Gross
|
|
|
|
Net
|
|
Gross
|
|
|
|
Net
|
|
Gross
|
|
|
|
Net
|
|
|
Carrying
|
|
Accumulated
|
|
Carrying
|
|
Carrying
|
|
Accumulated
|
|
Carrying
|
|
Carrying
|
|
Accumulated
|
|
Carrying
|
|
|
Value
|
|
Amortization
|
|
Value
|
|
Value
|
|
Amortization
|
|
Value
|
|
Value
|
|
Amortization
|
|
Value
|
|
Amortized Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract backlog
|
|
$
|
160,800
|
|
|
$
|
43,613
|
|
|
$
|
117,187
|
|
|
$
|
160,800
|
|
|
$
|
83,405
|
|
|
$
|
77,395
|
|
|
$
|
160,800
|
|
|
$
|
97,363
|
|
|
$
|
63,437
|
|
Favorable leases
|
|
|
2,800
|
|
|
|
710
|
|
|
|
2,090
|
|
|
|
2,800
|
|
|
|
1,515
|
|
|
|
1,285
|
|
|
|
2,800
|
|
|
|
1,876
|
|
|
|
924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
163,600
|
|
|
$
|
44,323
|
|
|
$
|
119,277
|
|
|
$
|
163,600
|
|
|
$
|
84,920
|
|
|
$
|
78,680
|
|
|
$
|
163,600
|
|
|
$
|
99,239
|
|
|
$
|
64,361
|
|
Unamortized Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade name
|
|
$
|
190,200
|
|
|
$
|
|
|
|
$
|
190,200
|
|
|
$
|
190,200
|
|
|
$
|
|
|
|
$
|
190,200
|
|
|
$
|
190,200
|
|
|
$
|
|
|
|
$
|
190,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
353,800
|
|
|
$
|
44,323
|
|
|
$
|
309,477
|
|
|
$
|
353,800
|
|
|
$
|
84,920
|
|
|
$
|
268,880
|
|
|
$
|
353,800
|
|
|
$
|
99,239
|
|
|
$
|
254,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a result of the Merger Transaction, amortization expense for
the eight months ended March 31, 2009 and fiscal 2010, was
$44.3 million and $40.6 million, respectively.
Amortization expense for the six months
F-20
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
ended September 30, 2009 and 2010 was $20.3 million
and $14.3 million, respectively. There were no intangible
assets prior to the Merger Transaction. The following table
summarizes the estimated annual amortization expense for future
periods indicated below (in thousands):
|
|
|
|
|
For the Fiscal Year Ending March 31,
|
|
|
|
|
2011
|
|
$
|
28,645
|
|
2012
|
|
|
16,364
|
|
2013
|
|
|
12,549
|
|
2014
|
|
|
8,450
|
|
2015
|
|
|
4,225
|
|
Thereafter
|
|
|
8,447
|
|
|
|
|
|
|
|
|
$
|
78,680
|
|
|
|
|
|
|
The Company reviews its long-lived assets, including property
and equipment and intangible assets, for impairment whenever
events or changes in circumstances indicate that the carrying
amounts of the assets may not be fully recoverable. If the total
of the expected undiscounted future net cash flows is less than
the carrying amount of the asset, a loss is recognized for the
difference between the fair value and carrying amount of the
asset. There were no impairment charges for the eight months
ended March 31, 2009 or fiscal 2010.
Accounts receivable, net consisted of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
September 30,
|
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
Accounts receivable billed
|
|
$
|
460,215
|
|
|
$
|
437,256
|
|
|
$
|
433,144
|
|
Accounts receivable unbilled
|
|
|
467,358
|
|
|
|
583,182
|
|
|
|
540,388
|
|
Allowance for doubtful accounts
|
|
|
(1,648
|
)
|
|
|
(2,127
|
)
|
|
|
(990
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net, current
|
|
|
925,925
|
|
|
|
1,018,311
|
|
|
|
972,542
|
|
Long-term unbilled receivables related to retainage and holdbacks
|
|
|
13,051
|
|
|
|
17,072
|
|
|
|
17,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accounts receivable, net
|
|
$
|
938,976
|
|
|
$
|
1,035,383
|
|
|
$
|
990,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company recognized a provision for doubtful accounts of
$7.1 million, $1.0 million, $2.1 million, and
$1.4 million for fiscal 2008, four months ended
July 31, 2008, eight months ended March 31, 2009, and
fiscal 2010, respectively. The Company recognized a provision
for doubtful accounts of $1.1 million for the six months
ended September 30, 2010. Long-term unbilled receivables
related to retainage, holdbacks, and long-term rate settlements
to be billed at contract closeout are included in non-current
assets as accounts receivable in the accompanying consolidated
balance sheets.
F-21
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
7.
|
PROPERTY
AND EQUIPMENT
|
The components of property and equipment, net were as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2010
|
|
|
Furniture and equipment
|
|
$
|
66,748
|
|
|
$
|
82,759
|
|
Computer equipment
|
|
|
34,077
|
|
|
|
43,824
|
|
Software
|
|
|
10,164
|
|
|
|
20,693
|
|
Leasehold improvements
|
|
|
66,883
|
|
|
|
79,501
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
177,872
|
|
|
|
226,777
|
|
Less accumulated depreciation and amortization
|
|
|
(35,329
|
)
|
|
|
(90,129
|
)
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
$
|
142,543
|
|
|
$
|
136,648
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net, includes $3.1 million and
$12.1 million of internally developed software, net of
depreciation as of March 31, 2009 and 2010, respectively.
Depreciation and amortization expense relating to property and
equipment for fiscal 2008, four months ended July 31, 2008,
eight months ended March 31, 2009, and fiscal 2010, was
$33.1 million, $11.9 million, $35.3 million, and
$55.2 million, respectively.
|
|
8.
|
ACCOUNTS
PAYABLE AND OTHER ACCRUED EXPENSES
|
Accounts payable and other accrued expenses consist of the
following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
September 30,
|
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
Vendor payables
|
|
$
|
184,394
|
|
|
$
|
257,418
|
|
|
$
|
243,177
|
|
Accrued expenses
|
|
|
56,774
|
|
|
|
93,317
|
|
|
|
117,772
|
|
Other
|
|
|
2,663
|
|
|
|
3,362
|
|
|
|
4,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accounts payable and other accrued expenses
|
|
$
|
243,831
|
|
|
$
|
354,097
|
|
|
$
|
365,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.
|
ACCRUED
COMPENSATION AND BENEFITS
|
Accrued compensation and benefits consist of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
September 30,
|
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
Bonus
|
|
$
|
135,566
|
|
|
$
|
146,035
|
|
|
$
|
67,312
|
|
Retirement
|
|
|
74,614
|
|
|
|
89,200
|
|
|
|
140,566
|
|
Vacation
|
|
|
104,249
|
|
|
|
119,912
|
|
|
|
121,611
|
|
Other
|
|
|
29,980
|
|
|
|
29,998
|
|
|
|
32,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accrued compensation and benefits
|
|
$
|
344,409
|
|
|
$
|
385,145
|
|
|
$
|
361,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.
|
DEFERRED
PAYMENT OBLIGATION
|
In connection with the Merger Transaction, on July 31, 2008
(the Closing Date) the Company established a DPO of
$158.0 million, payable by
81/2
years after the Closing Date, less any settled claims. Pursuant
to the Merger Agreement, $78.0 million of the
$158.0 million DPO was required to be paid in full to the
selling shareholders. On December 11, 2009, in connection
with the Recapitalization Transaction,
F-22
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
$100.4 million was paid to the selling shareholders, of
which $78.0 million was the repayment of that portion of
the DPO, with approximately $22.4 million representing
accrued interest.
The remaining $80.0 million is available to indemnify the
Company for certain pre-acquisition tax contingencies, related
interest and penalties and other matters pursuant to the Merger
Agreement. Any amounts remaining after the settlement of claims
will be paid out to the selling shareholders. As of
March 31, 2009 and 2010, the Company has recorded
$99.4 million and $100.2 million, respectively, for
pre-acquisition uncertain tax positions, of which approximately
$59.6 million and $62.4 million, respectively, may be
indemnified under the remaining available DPO. In addition,
other tax contingencies not currently recorded on the
Companys consolidated balance sheets may arise and may be
indemnified by any remaining DPO. Accordingly, the
$109.0 million and $20.0 million DPO balance recorded
as of March 31, 2009 and 2010, respectively, includes the
residual balance to be paid to the selling shareholders based on
consideration of contingent tax claims and accrued interest.
Interest is accrued at a rate of 5.0% per six-month period on
the total remaining $158.0 million and $80.0 million
DPO, net of any settled claims or payments as of March 31,
2009 and 2010, respectively. As of March 31, 2009 and 2010,
there have been no significant settled claims or payments from
the DPO related to indemnified claims.
Long-term debt, net of discount, consists of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
September 30,
|
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
Senior secured credit agreement:
|
|
|
|
|
|
|
|
|
|
|
|
|
Tranche A
|
|
$
|
119,708
|
|
|
$
|
110,829
|
|
|
$
|
104,828
|
|
Tranche B
|
|
|
571,260
|
|
|
|
566,811
|
|
|
|
564,622
|
|
Tranche C
|
|
|
|
|
|
|
345,790
|
|
|
|
344,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
690,968
|
|
|
|
1,023,430
|
|
|
|
1,013,781
|
|
Unsecured credit agreement:
|
|
|
|
|
|
|
|
|
|
|
|
|
Mezzanine Term Loan
|
|
|
544,759
|
|
|
|
545,202
|
|
|
|
461,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,235,727
|
|
|
|
1,568,632
|
|
|
|
1,474,931
|
|
Current portion of long-term debt
|
|
|
(15,225
|
)
|
|
|
(21,850
|
)
|
|
|
(21,850
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
$
|
1,220,502
|
|
|
$
|
1,546,782
|
|
|
$
|
1,453,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company maintains a Senior Secured Agreement and a Mezzanine
Credit Agreement with a syndicate of lenders. In connection with
the Recapitalization Transaction, the Senior Secured Agreement
was amended and restated effective December 11, 2009, to
add Tranche C term loans in the aggregate principal amount
of $350.0 million and provide for an increase to the
Companys revolving credit facility of $145.0 million.
The Senior Secured Agreement, as amended, provides for
$1,060.0 million in term loans ($125.0 million
Tranche A, $585.0 million Tranche B, and
$350.0 million Tranche C), and a $245.0 million
revolving credit facility. In September 2008, a member of the
syndicate of lenders filed for bankruptcy. Therefore, management
believes that $21.3 million of the $245.0 million
revolving credit facility under the Senior Secured Agreement
will not be available to the Company.
The Senior Secured Agreement requires scheduled principal
payments in equal consecutive quarterly installments of the
stated principal amount of Tranche A, which commenced on
December 31, 2008, with incremental increases prior to the
Tranche A maturity date of July 31, 2014. As of
March 31, 2009 and 2010, the quarterly installment amount
is 1.25% and 2.5% of the stated principal amount of
Tranche A, respectively. The Senior Secured Agreement also
requires scheduled principal payments in equal consecutive
quarterly
F-23
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
installments of 0.25% of the stated principal amount of
Tranche B, which commenced on December 31, 2008, and
0.25% of the stated principal amount of Tranche C, which
commenced on March 31, 2010. The remaining balances thereof
on Tranche B and Tranche C are payable on their
maturity date of July 31, 2015. The revolving credit
facility matures on July 31, 2014, at which time any
remaining principal balance is due in full.
At the Companys option, the interest rate on loans under
the Senior Secured Agreement may be based on the Eurocurrency
rate or alternate base rate (ABR). Subject to a
pricing grid, the applicable interest rate margins on
Tranche A are 3.75% with respect to Eurocurrency loans, or
2.75% with respect to ABR loans, as defined in the Senior
Secured Agreement. The applicable interest rate margins on
Tranche B are 4.5% with respect to Eurocurrency Loans, or
3.5% with respect to ABR loans, as defined in the Senior Secured
Agreement. The Tranche B interest rate may not be lower
than 7.5% on either a Eurocurrency Loan or an ABR loan. The
applicable interest rate margins on Tranche C are 4.0% with
respect to Eurocurrency Loans, or 3.0% with respect to ABR
loans, as defined in the Senior Secured Agreement. The
Tranche C interest rate may not be lower than 6.0% on
either a Eurocurrency Loan or an ABR loan.
As of March 31, 2009, interest accrued at a rate of 4.2%
and 7.5% for Tranches A and B, respectively. Interest payments
in the amounts of $4.9 million and $29.5 million were
made for Tranches A and B, respectively, during the eight months
ended March 31, 2009. As of March 31, 2010, interest
accrued at a rate of 4.0%, 7.5%, and 6.0% for Tranches A, B, and
C, respectively. Interest payments in the amounts of
$4.9 million, $44.1 million, and $5.3 million
were made for Tranches A, B, and C, respectively, during fiscal
2010. Interest payments in the amounts of $2.5 million and
$22.2 million were made for Tranches A and B, respectively,
for the six months ended September 30, 2009. Interest
payments in the amounts of $2.3 million,
$21.9 million, and $10.8 million were made for
Tranches A, B, and C, respectively, during the six months ended
September 30, 2010. The applicable interest rate margins on
the revolving credit facility are 3.75% with respect to
Eurocurrency Loans, or 2.75% with respect to ABR loans, as
defined in the Senior Secured Agreement. The revolving credit
facility margin and commitment fee are subject to the pricing
grid, as defined in the Senior Secured Agreement. As of
March 31, 2009, March 31, 2010, and September 30,
2010, no amounts have been drawn on the revolving credit
facility.
The Mezzanine Credit Agreement provides for a
$550.0 million term loan (the Mezzanine Term
Loan). The Mezzanine Term Loan does not require scheduled
principal payment installments, but reaches maturity on
July 31, 2016, at which time the remaining principal
balance is due in full. Optional prepayment of the Mezzanine
Term Loan requires a prepayment fee equal to 3.0% of the
principal amount prepaid if paid on or after the second
anniversary but before the third anniversary of the original
July 31, 2008 closing date, 2.0% if paid on or after the
third anniversary but before the fourth anniversary of the
closing date, and a mandatory 1.0% if paid on or after the
fourth anniversary of the closing date. The Company records the
mandatory 1% payment as additional interest expense over the
life of the Mezzanine Term Loan on the consolidated statements
of operations. Prepayments made before the second anniversary of
closing date are subject to additional premiums and penalties
based on the present value of the debt and remaining interest
payments at the time of such prepayment. The applicable fixed
interest rate on the Mezzanine Term Loan is 13.0%, with the
option that, in lieu of interest payment in cash, up to 2.0% of
that amount would be added to the then outstanding aggregate
principal balance. The Company made interest payments in the
amount of $48.3 million and $72.5 million during the
eight months ended 2009, and fiscal 2010, respectively. The
Company made interest payments in the amount of
$36.3 million and $34.5 million during the six months
ended September 30, 2009 and 2010, respectively.
The total outstanding debt balance is recorded in the
accompanying consolidated balance sheets, net of unamortized
discount of $18.2 million and $19.2 million as of
March 31, 2009 and 2010, respectively.
On August 2, 2010, the Company made an optional prepayment
of the Mezzanine Term Loan of $85.0 million. In accordance
with the prepayment terms of the Mezzanine Term Loan, a
prepayment penalty
F-24
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
of $2.6 million was incurred and reflected in interest
expense in the accompanying consolidated statement of operations
for the six months ended September 30, 2010.
The following tables summarizes required future debt principal
repayments (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due By March 31,
|
|
|
|
Total
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
Thereafter
|
|
|
Tranche A
|
|
|
112,500
|
|
|
$
|
12,500
|
|
|
$
|
15,625
|
|
|
$
|
21,875
|
|
|
$
|
62,500
|
|
|
$
|
|
|
|
$
|
|
|
Tranche B
|
|
|
576,225
|
|
|
|
5,850
|
|
|
|
5,850
|
|
|
|
5,850
|
|
|
|
5,850
|
|
|
|
5,850
|
|
|
|
546,975
|
|
Tranche C
|
|
|
349,125
|
|
|
|
3,500
|
|
|
|
3,500
|
|
|
|
3,500
|
|
|
|
3,500
|
|
|
|
3,500
|
|
|
|
331,625
|
|
Mezzanine Term Loan
|
|
|
550,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
550,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,587,850
|
|
|
$
|
21,850
|
|
|
$
|
24,975
|
|
|
$
|
31,225
|
|
|
$
|
71,850
|
|
|
$
|
9,350
|
|
|
$
|
1,428,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2009 and 2010, the Company was contingently
liable under open standby letters of credit and bank guarantees
issued by the Companys banks in favor of third parties.
These letters of credit and bank guarantees primarily relate to
leases and support of insurance obligations that total
$1.4 million. These instruments reduce the Companys
available borrowings under the revolving credit facility.
The loans under the Senior Secured Agreement are secured by
substantially all of the Companys assets. The Senior
Secured Agreement requires the maintenance of certain financial
and non-financial covenants. The Mezzanine Term Loan is
unsecured, and the Mezzanine Credit Agreement requires the
maintenance of certain financial and non-financial covenants. As
of March 31, 2009, March 31, 2010, and
September 30, 2010, the Company was in compliance with all
of its covenants.
|
|
12.
|
DEFERRED
FINANCING COSTS
|
Costs incurred in connection with securing the loans under the
Senior Secured Agreement as well as the Mezzanine Credit
Agreement in 2008 were $45.0 million, which is recorded as
other long-term assets and will be amortized over the life of
the loan. Costs incurred in connection with the Recapitalization
Transaction, including amending the Senior Secured Agreement and
Mezzanine Credit Agreement, were approximately
$18.9 million. Of this amount, approximately
$15.8 million was recorded as other long-term assets in the
consolidated balance sheets and will be amortized and reflected
in interest expense in the consolidated statements of operations
over the lives of the loans. Amortization of these costs will be
accelerated to the extent that any prepayment is made on the
term loans. The remaining amount of approximately
$3.1 million was recorded as general and administrative
expense in the consolidated statement of operations for fiscal
2010.
At March 31, 2009 and 2010, the unamortized debt issuance
costs of $41.9 million and $52.0 million,
respectively, were reflected as other long-term assets in the
consolidated balance sheets. During the eight months ended
March 31, 2009 and fiscal 2010, $3.1 million and
$5.7 million of costs, respectively, were amortized and
reflected in interest expense in the consolidated statements of
operations.
In connection with the prepayment under the Mezzanine Credit
Agreement, the Company wrote off $3.4 million of deferred
financing costs, which is reflected as a component of interest
expense in the accompanying consolidated statement of operations
for the six months ended September 30, 2010. The Company
has recorded $39.8 million and $45.2 million of
deferred financing costs as of September 30, 2009 and 2010,
respectively.
F-25
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The components of income tax expense (benefit) were as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company
|
|
|
|
Fiscal Year
|
|
|
Four Months
|
|
|
|
Eight Months
|
|
|
Fiscal Year
|
|
|
Six Months
|
|
|
Six Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
March 31,
|
|
|
July 31,
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2008
|
|
|
2008
|
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Federal
|
|
$
|
93,374
|
|
|
$
|
(1,414
|
)
|
|
|
$
|
|
|
|
$
|
2,664
|
|
|
$
|
2,250
|
|
|
$
|
3,524
|
|
State and local
|
|
|
9,307
|
|
|
|
(459
|
)
|
|
|
|
|
|
|
|
1,074
|
|
|
|
1,911
|
|
|
|
829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current
|
|
|
102,681
|
|
|
|
(1,873
|
)
|
|
|
|
|
|
|
|
3,738
|
|
|
|
4,161
|
|
|
|
4,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Federal
|
|
|
(37,566
|
)
|
|
|
(44,996
|
)
|
|
|
|
(16,133
|
)
|
|
|
18,004
|
|
|
|
12,154
|
|
|
|
24,165
|
|
State and local
|
|
|
(2,422
|
)
|
|
|
(9,240
|
)
|
|
|
|
(6,014
|
)
|
|
|
1,833
|
|
|
|
1,684
|
|
|
|
2,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred
|
|
|
(39,988
|
)
|
|
|
(54,236
|
)
|
|
|
|
(22,147
|
)
|
|
|
19,837
|
|
|
|
13,838
|
|
|
|
27,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
62,693
|
|
|
$
|
(56,109
|
)
|
|
|
$
|
(22,147
|
)
|
|
$
|
23,575
|
|
|
$
|
17,999
|
|
|
$
|
31,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation between income tax computed at the
U.S. federal statutory income tax rate to income tax
expense (benefit) from continuing operations follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
|
The Company
|
|
|
|
Fiscal Year
|
|
|
Four Months
|
|
|
|
Eight Months
|
|
|
Fiscal Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
March 31,
|
|
|
July 31,
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2008
|
|
|
|
2009
|
|
|
2010
|
|
Income tax expense (benefit) computed at U.S. statutory rate
(35)%
|
|
$
|
53,086
|
|
|
$
|
(158,779
|
)
|
|
|
$
|
(21,326
|
)
|
|
$
|
17,148
|
|
Increases (reductions) in taxes due to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State income taxes, net of the federal tax benefit
|
|
|
8,541
|
|
|
|
(6,889
|
)
|
|
|
|
(2,651
|
)
|
|
|
2,913
|
|
Meals and entertainment
|
|
|
738
|
|
|
|
|
|
|
|
|
1,321
|
|
|
|
2,552
|
|
Nondeductible stock-based compensation
|
|
|
|
|
|
|
97,048
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
328
|
|
|
|
12,511
|
|
|
|
|
509
|
|
|
|
962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) from continuing operations
|
|
$
|
62,693
|
|
|
$
|
(56,109
|
)
|
|
|
$
|
(22,147
|
)
|
|
$
|
23,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-26
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Significant components of the Companys net deferred income
tax asset were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2010
|
|
|
Deferred income tax assets:
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
$
|
21,677
|
|
|
$
|
36,655
|
|
Stock-based compensation
|
|
|
26,148
|
|
|
|
47,461
|
|
Pension and postretirement insurance
|
|
|
15,503
|
|
|
|
844
|
|
Property and equipment
|
|
|
11,087
|
|
|
|
28,728
|
|
Net operating loss carryforwards
|
|
|
243,430
|
|
|
|
141,472
|
|
Capital loss carryforward
|
|
|
10,056
|
|
|
|
42,379
|
|
AMT
|
|
|
|
|
|
|
3,091
|
|
Other
|
|
|
640
|
|
|
|
8,960
|
|
|
|
|
|
|
|
|
|
|
Total gross deferred income taxes
|
|
|
328,541
|
|
|
|
309,590
|
|
Less valuation allowance
|
|
|
(10,056
|
)
|
|
|
(42,379
|
)
|
|
|
|
|
|
|
|
|
|
Total net deferred income tax assets
|
|
|
318,485
|
|
|
|
267,211
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax liabilities:
|
|
|
|
|
|
|
|
|
Unbilled receivables
|
|
|
116,687
|
|
|
|
122,733
|
|
Intangible assets
|
|
|
122,845
|
|
|
|
106,106
|
|
Other
|
|
|
1,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
241,041
|
|
|
|
228,839
|
|
|
|
|
|
|
|
|
|
|
Net deferred income tax asset
|
|
$
|
77,444
|
|
|
$
|
38,372
|
|
|
|
|
|
|
|
|
|
|
Deferred tax balances reflect the impact of temporary
differences between the carrying amount of assets and
liabilities and their tax basis and are stated at the tax rates
expected to be in effect when taxes are actually paid or
recovered. A valuation allowance is provided against deferred
tax assets when it is more likely than not that some or all of
the deferred tax asset will not be realized. In determining if
our deferred tax assets are realizable, we consider the
Companys history of generating taxable earnings,
forecasted future taxable income, as well as any tax planning
strategies. The Company recorded a valuation allowance of
$10.1 million and $42.4 million as of March 31,
2009 and 2010, respectively, against deferred tax assets
associated with the capital loss carryforward. For all other
deferred tax assets, the Company believes it is more likely than
not that the results of future operations will generate
sufficient taxable income to realize these deferred tax assets.
At March 31, 2009 and 2010, the Company has approximately
$608.2 million and $367.6 million, respectively, of
net operating loss (NOL) carryforwards, which will
begin to expire in 2028. Section 382 of the Internal
Revenue Code limits the use of a corporations NOLs and
certain other tax benefits following a change in ownership of
the corporation. As discussed in Notes 1 and 4, Holding
acquired the Predecessor in a nontaxable merger effective
August 1, 2008. The transaction resulted in an ownership
change, which subjects the NOL generated at July 31, 2008
to the limitation under Section 382.
The Patient Protection and Affordable Care Act and subsequent
modifications made in the Health Care and Education
Reconciliation Act of 2010 were signed into law in March 2010.
Under the new legislation, companies will no longer be able to
claim an income tax deduction related to the costs of
prescription drug benefits provided to retirees and reimbursed
under the Medicare Part D retiree drug subsidy. Although
this tax change does not take effect until 2013, the Company is
required to recognize the impact to the deferred taxes in the
period in which the law is enacted. The impact to the Company is
immaterial.
F-27
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Uncertain
Tax Positions
As of March 31, 2009 and 2010, the Company has recorded
$99.4 million and $100.2 million, respectively, for
pre-acquisition uncertain tax positions, of which approximately
$59.6 million and $62.4 million, respectively, may be
indemnified under the remaining available DPO. Refer to
Note 10 for further explanation.
A reconciliation of the beginning and ending amount of total
unrecognized tax benefits is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2010
|
|
|
Uncertain tax positions:
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
$
|
86,690
|
|
|
$
|
87,867
|
|
Increases related to prior-year tax positions
|
|
|
1,077
|
|
|
|
|
|
Increases related to current-year tax positions
|
|
|
100
|
|
|
|
|
|
Settlements
|
|
|
|
|
|
|
(1,885
|
)
|
|
|
|
|
|
|
|
|
|
End of year
|
|
$
|
87,867
|
|
|
$
|
85,982
|
|
|
|
|
|
|
|
|
|
|
Included in the balance of unrecognized tax benefits at
March 31, 2009 and 2010 are potential tax benefits of
$87.9 million and $86.0 million, respectively, that,
if recognized, would affect the effective tax rate.
The Company recognizes accrued interest and penalties related to
unrecognized tax benefits in the income tax provision. Included
in the total unrecognized tax benefit are accrued penalties and
interest of $11.5 million and $14.2 million at
March 31, 2009 and 2010, respectively.
The Company and its subsidiaries file a U.S. consolidated
income tax return and file in various state and foreign
jurisdictions. The Internal Revenue Service (IRS) is
completing its examination of the Predecessors income tax
returns, as assumed by the Company, for 2004, 2005, and 2006. As
of March 31, 2010, the IRS has proposed certain significant
adjustments to the Companys claim on research credits.
Management is currently appealing the proposed adjustments and
does not anticipate that the adjustments will result in a
material change to its financial position. Additionally, due to
statute of limitations expirations and audit settlements, it is
reasonably possible that approximately $18.5 million of
currently remaining unrecognized tax positions, each of which
are individually insignificant, may be effectively settled by
March 31, 2011.
|
|
14.
|
EMPLOYEE
BENEFIT PLANS
|
Defined
Contribution Plan
The Company sponsors the Employees Capital Accumulation
Plan (ECAP), which is a qualified defined
contribution plan that covers eligible U.S. and
international employees. ECAP provides for distributions,
subject to certain vesting provisions, to participants by reason
of retirement, death, disability, or termination of employment.
Total expense under ECAP for fiscal 2008, four months ended
July 31, 2008, eight months ended March 31, 2009, and
fiscal 2010, was $150.2 million, $53.3 million,
$116.8 million, and $210.3 million, respectively, and
the Company-paid contributions were $147.9 million,
$32.9 million, $127.3 million, and
$196.3 million, respectively. Total expense under ECAP for
the six months ended September 30, 2009 and 2010 was
$100.3 million and $113.6 million, respectively, and
the Company-paid contributions were $49.6 million and
$62.2 million, respectively.
F-28
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Defined
Benefit Plan and Other Postretirement Benefit
Plans
The Company maintains and administers a defined benefit
retirement plan and a postretirement medical plan for current,
retired, and resigned officers.
The Company established a non-qualified defined benefit plan for
all Officers in May 1995 (the Retired Officers Bonus
Plan), which pays a lump-sum amount of $10,000 per year of
service as an Officer, provided the Officer meets retirement
vesting requirements. The Company also provides a fixed annual
allowance after retirement to cover financial counseling and
other expenses. The Retired Officers Bonus Plan is not
salary related, but rather is based primarily on years of
service.
In addition, the Company provides postretirement healthcare
benefits to former or active Officers under a medical indemnity
insurance plan, with premiums paid by the Company. This plan is
referred to as the Officer Medical Plan.
The Company recognizes an asset or liability for a defined
benefit plans overfunded or underfunded status, measures a
defined benefit plans assets and its obligations that
determine its funded status as of the end of the employers
fiscal year, and recognizes as a component of other
comprehensive income the changes in a defined benefit
plans funded status that are not recognized as components
of net periodic benefit cost.
The components of net postretirement medical expense for the
Officer Medical Plan were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
The Company
|
|
|
Fiscal Year
|
|
Four Months
|
|
|
Eight Months
|
|
Fiscal Year
|
|
Six Months
|
|
Six Months
|
|
|
Ended
|
|
Ended
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
March 31,
|
|
July 31,
|
|
|
March 31,
|
|
March 31,
|
|
September 30,
|
|
September 30,
|
|
|
2008
|
|
2008
|
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Service cost
|
|
$
|
1,894
|
|
|
$
|
755
|
|
|
|
$
|
2,325
|
|
|
$
|
2,682
|
|
|
$
|
1,341
|
|
|
$
|
1,682
|
|
Interest cost
|
|
|
1,568
|
|
|
|
666
|
|
|
|
|
1,395
|
|
|
|
2,269
|
|
|
|
1,135
|
|
|
|
1,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total postretirement medical expense
|
|
$
|
3,462
|
|
|
$
|
1,421
|
|
|
|
$
|
3,720
|
|
|
$
|
4,951
|
|
|
$
|
2,476
|
|
|
$
|
2,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted-average assumptions used to determine the year-end
benefit obligations are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
Officer Medical Plan
|
|
Retired Officers Bonus Plan
|
|
|
Fiscal Year
|
|
Four Months
|
|
Fiscal Year
|
|
Four Months
|
|
|
Ending
|
|
Ending
|
|
Ending
|
|
Ending
|
|
|
March 31,
|
|
July 31,
|
|
March 31,
|
|
July 31,
|
|
|
2008
|
|
2008
|
|
2008
|
|
2008
|
|
Discount rate
|
|
|
6.25
|
%
|
|
|
6.50
|
%
|
|
|
6.25
|
%
|
|
|
6.50
|
%
|
Rate of increase in future compensation
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company
|
|
|
Officer Medical Plan
|
|
|
|
Retired Officers Bonus Plan
|
|
|
March 31,
|
|
|
|
March 31,
|
|
|
2009
|
|
2010
|
|
|
|
2009
|
|
2010
|
|
Discount rate
|
|
|
6.50
|
%
|
|
|
5.75
|
%
|
|
|
|
|
|
|
6.50
|
%
|
|
|
5.75
|
%
|
Rate of increase in future compensation
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
F-29
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Assumed healthcare cost trend rates for the Officer Medical Plan
at March 31, 2008, 2009, and 2010, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-65 initial rate
|
|
2008
|
|
2009
|
|
2010
|
|
Healthcare cost trend rate assumed for next year
|
|
|
11.0
|
%
|
|
|
7.5
|
%
|
|
|
8.0
|
%
|
Rate to which the cost trend rate is assumed to decline (the
ultimate trend rate)
|
|
|
5.0
|
%
|
|
|
5.0
|
%
|
|
|
5.0
|
%
|
Year that the rate reaches the ultimate trend rate
|
|
|
2013
|
|
|
|
2015
|
|
|
|
2017
|
|
Assumed healthcare cost trend rates have a significant effect on
the amounts reported for the healthcare plans. A
one-percentage-point change in assumed healthcare cost trend
rates calculated as of March 31, 2010 would have the
following effects (in thousands):
|
|
|
|
|
|
|
|
|
|
|
1% Increase
|
|
1% Decrease
|
|
Effect on total of service and interest cost
|
|
$
|
828
|
|
|
$
|
(676
|
)
|
Effect on postretirement benefit obligation
|
|
$
|
6,357
|
|
|
$
|
(5,271
|
)
|
Total pension expense, consisting of service and interest,
associated with the Retired Officers Bonus Plan was
$900,000, $300,000, $800,000, and $800,000 for fiscal 2008, four
months ended July 31, 2008, eight months ended
March 31, 2009, and fiscal 2010, respectively. Benefits
paid associated with the Retired Officers Bonus Plan were
$400,000, $400,000, $600,000, and $300,000 for fiscal 2008, four
months ended July 31, 2008, eight months ended
March 31, 2009, and fiscal 2010, respectively. The
end-of-period
benefit obligation of $4.2 million and $5.0 million as
of March 31, 2009 and 2010, respectively, is included in
postretirement obligation in the accompanying consolidated
balance sheets.
Accumulated other comprehensive income as of March 31,
2009, includes unrecognized net actuarial gain of
$1.1 million, net of taxes, and net actuarial loss of
$400,000, net of taxes, that have not yet been recognized in net
periodic pension cost for the Retired Officers Bonus Plan
and the Officer Medical Plan, respectively. Accumulated other
comprehensive income as of March 31, 2010, includes
unrecognized net actuarial loss of $3.8 million, net of
taxes, that have not yet been recognized in net periodic pension
cost for the Retired Officers Bonus Plan and the Officer
Medical Plan. A primary driver for the net actuarial loss of
$3.8 million in fiscal 2010 was the change in the actuarial
discount rate from 6.50% to 5.75%.
F-30
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The changes in the benefit obligation, plan assets and funded
status of the Officer Medical Plan were as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
The Company
|
|
|
Fiscal Year
|
|
Four Months
|
|
|
Eight Months
|
|
Fiscal Year
|
|
|
Ended
|
|
Ended
|
|
|
Ended
|
|
Ended
|
|
|
March 31,
|
|
July 31,
|
|
|
March 31,
|
|
March 31,
|
|
|
2008
|
|
2008
|
|
|
2009
|
|
2010
|
Benefit obligation, beginning of the year
|
|
$
|
26,624
|
|
|
$
|
32,605
|
|
|
|
$
|
32,157
|
|
|
$
|
35,577
|
|
Service cost
|
|
|
1,894
|
|
|
|
755
|
|
|
|
|
2,325
|
|
|
|
2,682
|
|
Interest cost
|
|
|
1,569
|
|
|
|
666
|
|
|
|
|
1,395
|
|
|
|
2,270
|
|
Actuarial (gain) loss
|
|
|
3,609
|
|
|
|
(1,518
|
)
|
|
|
|
797
|
|
|
|
6,673
|
|
Benefits paid
|
|
|
(1,091
|
)
|
|
|
(351
|
)
|
|
|
|
(1,097
|
)
|
|
|
(1,747
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation, end of the year
|
|
$
|
32,605
|
|
|
$
|
32,157
|
|
|
|
$
|
35,577
|
|
|
$
|
45,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets, beginning of the year
|
|
$
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
$
|
|
|
Actual return on plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer contributions
|
|
|
1,091
|
|
|
|
351
|
|
|
|
|
1,097
|
|
|
|
1,747
|
|
Benefits paid
|
|
|
(1,091
|
)
|
|
|
(351
|
)
|
|
|
|
(1,097
|
)
|
|
|
(1,747
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets, end of the year
|
|
$
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2009 and 2010, the unfunded status of the
Officer Medical Plan was $35.6 million and
$45.5 million, respectively. As of September 30, 2010,
the unfunded status of the Officer Medical Plan was
$47.6 million. There were no employer contributions or
benefits paid during the six months ended September 30,
2010.
The postretirement benefit liability for the Officer Medical
Plan is included in postretirement obligation in the
accompanying consolidated balance sheets.
Funded
Status for Defined Benefit Plans
Generally, annual contributions are made at such times and in
amounts as required by law and may, from time to time, exceed
minimum funding requirements. The Retired Officers Bonus
Plan is an unfunded plan and contributions are made as benefits
are paid, for all periods presented. As of March 31, 2009
and 2010, there were no plan assets for the Retired
Officers Bonus Plan and therefore, the accumulated
liability of $4.2 million and $5.0 million,
respectively, is unfunded. The liability will be distributed in
a lump-sum payment as each Officer retires.
The expected future medical benefits to be paid are as follows
(in thousands):
|
|
|
|
|
|
|
Officer
|
|
|
Medical Plan
|
For the Fiscal Year Ending March 31,
|
|
Benefits
|
|
2012
|
|
$
|
1,641
|
|
2013
|
|
|
1,870
|
|
2014
|
|
|
2,143
|
|
2015
|
|
|
2,398
|
|
2016
|
|
|
2,758
|
|
2017-2021
|
|
|
19,623
|
|
F-31
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Companys Officer Medical Plan provides prescription
drug benefits to its plan participants. Under the Medicare
Prescription Drug, Improvement and Modernization Act of 2003,
the U.S. government makes subsidy payments to eligible
employers to offset a portion of the cost incurred for
prescription drug benefits provided to the employers
Medicare-eligible retired plan participants. The Companys
expected future subsidy receipts are not material.
|
|
15.
|
OTHER
LONG-TERM LIABILITIES
|
Other long-term liabilities consist of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
2009
|
|
2010
|
|
Deferred rent
|
|
$
|
4,790
|
|
|
$
|
10,255
|
|
Deferred compensation
|
|
|
4,770
|
|
|
|
11,289
|
|
Stock-based compensation
|
|
|
|
|
|
|
27,432
|
|
Other
|
|
|
87
|
|
|
|
292
|
|
|
|
|
|
|
|
|
|
|
Total other long-term liabilities
|
|
$
|
9,647
|
|
|
$
|
49,268
|
|
|
|
|
|
|
|
|
|
|
Deferred rent liabilities result from recording rent expense on
a straight-line basis over the life of the respective lease and
recording incentives for tenant improvements. The increase of
$5.5 million as of March 31, 2010 as compared to
March 31, 2009 was primarily for accrual of deferred rent
on existing leases.
In fiscal 2010, the Company recorded a stock-based compensation
liability of $34.4 million, including $7.0 million
expected to be paid within one year, related to the reduction in
stock option exercise price associated with the December 2009
dividend. Options vested and not yet exercised that would have
had an exercise price below zero as a result of the dividend
were reduced to one cent, with the remaining reduction to be
paid in cash upon exercise of the options. Refer to Note 17
for further discussion of the December 2009 dividend.
The Company maintains a deferred compensation plan, the EPP,
established in January 2009, for the benefit of certain
employees. The EPP allows eligible participants to defer all or
a portion of their annual performance bonus, reduced by amounts
withheld for the payment of taxes or other deductions required
by law. The Company makes no contributions to the EPP, but
maintains participant accounts for deferred amounts and interest
earned. The amounts deferred into the EPP will earn interest at
a rate of return indexed to the results of the Companys
growth as defined by the EPP. In each subsequent year, interest
will be compounded on the total deferred balance. Employees must
leave the money in the EPP until 2014. The deferred balance
generally will be paid within 180 days of the final
determination of the interest to be accrued for 2014, upon
retirement, or termination. As of March 31, 2009 and 2010,
the Companys liability associated with the EPP was
$4.8 million and $11.3 million, respectively. Accrued
amounts related to the EPP are included in other long-term
liabilities on the accompanying consolidated balance sheets.
Stock
Split
On September 21, 2010, the Companys board of
directors approved an amended and restated certificate of
incorporation that was filed on November 8, 2010, thereby
effecting a
ten-for-one
stock split of all the outstanding shares of Class A Common
Stock, Class B Non-Voting Common Stock, Class C
Restricted Common Stock, and Class E Special Voting Common
Stock. Par value for Class A Common Stock, Class B
Non-Voting Common Stock, and Class C Restricted Common
Stock will remain at $0.01 par value per share. Par value
for Class E Special Voting Stock will split
ten-for-one
to become $0.003 per share. All issued and
F-32
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
outstanding common stock and stock options and per share amounts
of the Company contained in the financial statements have been
retroactively adjusted to reflect this stock split for all
periods presented.
Common
Stock
As of March 31, 2009, March 31, 2010, and
September 30, 2010, the Company has 600,000,000 shares
of authorized Class A Common Stock, par value $0.01 per
share, 16,000,000 shares of authorized Class B
Non-Voting Common Stock, par value $0.01, 5,000,000 shares
of authorized Class C Restricted Common Stock, par value
$0.01, 600,000 shares of authorized Class D Merger
Rolling Common Stock, par value $0.01, 25,000,000 shares of
authorized Class E Special Voting Common Stock, par value
$0.003, and 600,000 shares of authorized Class F
Non-Voting Restricted Common Stock, par value $0.01 per share.
The total number of shares of capital common stock the Company
has the authority to issue is 647,200,000.
The Common Stock shares outstanding are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
September 30,
|
|
|
2009
|
|
2010
|
|
2010
|
|
Class A Common Stock
|
|
|
101,316,870
|
|
|
|
102,922,900
|
|
|
|
106,622,350
|
|
Class B Non-Voting Common Stock
|
|
|
2,350,200
|
|
|
|
2,350,200
|
|
|
|
3,053,130
|
|
Class C Restricted Common Stock
|
|
|
2,028,270
|
|
|
|
2,028,270
|
|
|
|
2,028,270
|
|
Class E Special Voting Common Stock
|
|
|
14,802,880
|
|
|
|
13,345,880
|
|
|
|
12,348,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shares outstanding
|
|
|
120,498,220
|
|
|
|
120,647,250
|
|
|
|
124,052,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holders of Class A Common Stock, Class C Restricted
Common Stock, Class D Merger Rolling Common Stock, and
Class E Special Voting Common Stock are entitled to one
vote for each share as a holder. The holders of the Voting
Common Stock shall vote together as a single class. The holders
of Class B Non-Voting Common Stock and Class F
Non-Voting Restricted Common Stock have no voting rights. During
the six months ended September 30, 2010,
702,930 shares of Class A Common Stock held by an
officer were exchanged for the equivalent number of shares of
Class B Non-Voting Common Stock, and 702,930 shares of
Class E Special Voting Common Stock were issued to a family
trust of the same officer for an aggregate consideration of
$2,109.
Class C Restricted Common Stock is restricted in that a
holders shares vest as set forth in the Officers
Rollover Stock Plan. Refer to Note 17 for further
discussion of the Officers Rollover Stock Plan.
Class E Special Voting Common Stock represents the voting
rights that accompany the New Options program. The New Options
program has a fixed vesting and exercise schedule to comply with
IRS section 409(a). Upon exercise, the option will convert
to Class A Common Stock, and the corresponding Class E
Special Voting Common Stock will be repurchased by the Company
and retired. Refer to Note 17 for further discussion of the
New Options program.
Each share of Common Stock, except for Class E Special
Voting Common Stock, is entitled to participate equally, when
and if declared by the Board of Directors from time to time,
such dividends and other distributions in cash, stock, or
property from the Companys assets or funds become legally
available for such purposes subject to any dividend preferences
that may be attributable to preferred stock that may be
authorized.
In May 2009, 19,070 shares of Class A Common Stock,
with certain restrictions, were granted to certain unaffiliated
Board members. These shares were restricted based on the
unaffiliated Board members continued service to the
Company, and vested in equal installments on May 7, 2009,
September 30, 2009, and March 31, 2010. As of
March 31, 2010, these shares were fully vested. Such shares
and related equity balances are included in the Companys
Class A Common Stock. In April 2010, 11,730 shares of
Class A Common Stock,
F-33
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
with certain restrictions, were granted to certain unaffiliated
Board members. These shares were restricted based on the
unaffiliated Board members continued service to the
Company and will vest in equal installments on
September 30, 2010, and March 31, 2011. As of
September 30, 2010, half of these shares have vested. Such
shares and related equity balances are included in the
Companys Class A Common Stock. Refer to Note 17
for further discussion of Class A Restricted Common Stock.
Preferred
Stock
The Company is authorized to issue 54,000,000 shares of
Preferred Stock, $0.01 par value per share, the terms and
conditions of which are determined by the Board of Directors
upon issuance. The rights, preferences and privileges of holders
of common stock are subject to, and may be adversely affected
by, the rights of holders of any shares of preferred stock that
the Company may designate and issue in the future. At
March 31, 2009 and March 31, 2010, there were no
shares of preferred stock outstanding.
Predecessor
Redeemable Common Stock
Prior to the Merger Transaction, the Predecessors
authorized capital stock as of March 31 and July 31, 2008,
consisted of 5,000 shares of Common Stock,
5,000 shares of Class A Non-Voting Common Stock,
4,000 shares of Class B Common Stock, and
1,000 shares of Class B Non-Voting Common Stock. Each
share of Common Stock and each share of the Class B Common
Stock was entitled to one vote. Pursuant to the terms of the
Predecessors stock rights plan, shares of Common Stock and
shares of Class A Non-Voting Common Stock were redeemable
at the book value per share at the option of the holder.
|
|
17.
|
STOCK-BASED
COMPENSATION
|
Officers
Rollover Stock Plan
The Officers Rollover Stock Plan (the Rollover
Plan) was adopted as a mechanism to enable the exchange by
the Officers of the Companys U.S. government
consulting business who were required to exchange (and those
commercial officers who elected to exchange subject to an
aggregate limit) a portion of their previous equity interests in
the Predecessor for equity interests in the Company. Among the
equity interests that were eligible for exchange were common
stock and stock rights, both vested and unvested.
The stock rights that were unvested, but would have vested in
2008, were exchanged for 2,028,270 shares of new
Class C Restricted Common Stock (Class C
Restricted Stock) issued by the Company at an estimated
fair value of $10.00 at August 1, 2008. The aggregate grant
date fair value of the Class C Restricted Stock issued of
$20.3 million is being recorded as expense over the vesting
period. Total compensation expense recorded in conjunction with
this Class C Restricted Stock for the eight months ended
March 31, 2009, and fiscal 2010, was $7.9 million and
$7.1 million, respectively. Total compensation expense
recorded in conjunction with this Class C Restricted Stock
for the six months ended September 30, 2009, and 2010, was
$4.1 million and $2.2 million, respectively. As of
March 31, 2010 and September 30, 2010, unrecognized
compensation cost related to the non-vested Class C
Restricted Stock was $5.3 million and $3.1 million,
respectively, and is expected to be recognized over 3.25 and
2.75 years, respectively. For fiscal 2010 and the six
months ended September 30, 2010, 494,490 and
988,980 shares of Class C Restricted Stock vested,
respectively. At March 31, 2009, March 31, 2010, and
September 30, 2010, 3,971,730 shares of Class C
Restricted Stock were authorized but unissued under the Plan.
Notwithstanding the foregoing, Class C Restricted Stock was
intended to be issued only in connection with the exchange
process described above.
In addition to the conversion of the stock rights that would
have vested in 2008 to Class C Restricted Stock, new
options (New Options) were issued in exchange for
old stock rights held by the Predecessors U.S. government
consulting partners that were issued under the stock rights plan
that existed for the Predecessors Officers prior to the
closing of the Merger Transaction. The New Options were granted
based on
F-34
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
the retirement eligibility of the Officer. For the purposes of
the New Options, there are two categories of
Officers retirement eligible and non-retirement
eligible. New Options granted to retirement eligible Officers
vest in equal annual installments on June 30, 2009, 2010,
and 2011.
The following table summarizes the exercise schedule for
Officers who were deemed retirement eligible. Exercise schedules
are based on original vesting dates applicable to the stock
rights surrendered:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of New Options to be Exercised
|
|
|
As of June 30,
|
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
Retirement Eligible
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Original vesting date of June 30, 2009
|
|
|
60
|
%
|
|
|
20
|
%
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Original vesting date of June 30, 2010
|
|
|
|
|
|
|
50
|
%
|
|
|
20
|
%
|
|
|
20
|
%
|
|
|
10
|
%
|
|
|
|
|
Original vesting date of June 30, 2011
|
|
|
|
|
|
|
|
|
|
|
20
|
%
|
|
|
20
|
%
|
|
|
30
|
%
|
|
|
30
|
%
|
Those individuals who were considered retirement eligible also
were given the opportunity to make a one-time election to be
treated as non-retirement eligible. The determination of
retirement eligibility was made as of a fixed period of time and
cannot be changed at a future date.
New Options granted to Officers who were categorized as
non-retirement eligible will vest 50% on June 30, 2011, and
25% on June 30, 2012 and 2013.
The following table summarizes the exercise schedule for
Officers who were deemed non-retirement eligible. Exercise
schedules are based on original vesting dates applicable to the
stock rights surrendered:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of New Options to be Exercised
|
|
|
As of June 30,
|
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
Non-Retirement Eligible
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Original vesting date of June 30, 2011
|
|
|
20
|
%
|
|
|
20
|
%
|
|
|
20
|
%
|
|
|
20
|
%
|
|
|
20
|
%
|
Original vesting date of June 30, 2012
|
|
|
|
|
|
|
25
|
%
|
|
|
25
|
%
|
|
|
25
|
%
|
|
|
25
|
%
|
Original vesting date of June 30, 2013
|
|
|
|
|
|
|
|
|
|
|
33
|
%
|
|
|
33
|
%
|
|
|
34
|
%
|
If a holders employment with the Company were to terminate
without cause, by reason of disability, or Company approved
termination, these shares will continue to vest as if the holder
continued to be employed as a retirement eligible or
non-retirement eligible employee, as the case may be. In the
event that a holders employment is terminated due to
death, any unvested New Options shall immediately vest in full.
In the event of a holders termination of employment due to
death, disability, or a Company approved termination, the
Company may, in its sole discretion, convert all or a portion of
unexercised New Options into the right to receive upon vesting
and exercise, in lieu of Company Common Stock, a cash payment
pursuant to a prescribed formula. The aggregate grant date fair
value of the New Options issued of $127.1 million is being
recorded as compensation expense over the vesting period. Total
compensation expense recorded in conjunction with the New
Options for the eight months ended March 31, 2009 and
fiscal 2010, was $42.7 million and $42.2 million,
respectively. Total compensation expense recorded in conjunction
with the New Options for the six months ended September 30,
2009 and 2010, was $22.6 million and $14.8 million,
respectively. As of March 31, 2010 and September 30,
2010, unrecognized compensation cost related to the non-vested
New Options was $42.0 million and $27.3 million, which
is expected to be recognized over 3.25 and 2.75 years,
respectively.
Equity
Incentive Plan
The Equity Incentive Plan (EIP) was created in
connection with the transaction for employees, directors, and
consultants of Holding and its subsidiaries. The Company created
a pool of options (the EIP
F-35
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Options) to draw upon for future grants that would be
governed by the EIP. All options under the EIP are exercisable,
upon vesting, for shares of common stock of Holding. The first
grant of options under the EIP occurred on November 19,
2008, which was for the grant of 11,900,000 non-qualified EIP
Options. The estimated fair value of the common stock at the
time of the first option grant was $10. A second grant of
1,420,000 non-qualified EIP Options occurred on May 7,
2009. The estimated fair value of the common stock at the time
of the second option grant was $11.81. Grants of 470,000 and
140,000 non-qualified EIP Options were issued on
January 27, 2010, and February 15, 2010, respectively.
The estimated fair value of the common stock at the time of the
third and fourth option grants was $11.49. A new grant of
1,700,000 non-qualified EIP options occurred on April 28,
2010.
Stock options are granted at the discretion of the Board of
Directors or its Compensation Committee and expire ten years
from the date of the grant. Options generally vest over a
five-year period based upon required service and performance
conditions. The Company calculates the pool of additional
paid-in capital associated with excess tax benefits using the
simplified method.
The aggregate grant date fair value of the EIP Options issued
during the eight months ended March 31, 2009, fiscal 2010,
and the six months ended September 30, 2010 was
$51.5 million, $10.6 million, and $10.1 million,
respectively, and is being recorded as expense over the vesting
period. Total compensation expense recorded in conjunction with
all options outstanding under the EIP for the eight months ended
March 31, 2009, and fiscal 2010, was $11.5 million and
$22.4 million, respectively. Total compensation expense
recorded in conjunction with all options outstanding under the
EIP for the six months ended September 30, 2009 and 2010,
was $12.8 million and $10.2 million, respectively.
Future compensation cost related to the non-vested stock options
not yet recognized in the consolidated statements of operations
was $28.1 million, and is expected to be recognized over
4.75 years. As of March 31, 2010 and
September 30, 2010, there were 7,633,600 and 5,843,720
options, respectively, available for future grant under the EIP.
Grants
of Class A Restricted Common Stock
On May 7, 2009, the Compensation Committee of the Board of
Directors granted Class A Common Stock with certain
restrictions (Class A Restricted Stock) to
certain unaffiliated Board members for their continued service
to the Company. A total of 19,070 shares of Class A
Restricted Stock were issued on May 7, 2009. These shares
will vest in equal installments on May 7, 2009,
September 30, 2009, and March 31, 2010, and were
issued with an aggregate grant date fair value of $225,000.
Total compensation expense recorded in conjunction with this
grant of Class A Restricted Stock for fiscal 2010 was
$225,000. For fiscal 2010, 19,070 shares of Class A
Restricted Stock vested. There were no additional shares
authorized to be issued under the May 2009 Compensation
Committee grant.
Predecessor
Stock Plan
Prior to the Merger Transaction, the Predecessors Officer
Stock Rights Plan enabled officers to purchase shares of
Class A Common Stock. The Board of Directors had sole
discretion to establish the book value applicable to shares of
common stock to be purchased by officers upon the exercise of
their stock rights. Rights were granted in connection with the
Class B Common Stock to purchase shares of Class A
Common Stock, and vested one-tenth each year based on nine years
of continuous service, with the first tenth vesting immediately.
The exercise price for the first tenth was equal to the book
value of the Predecessors Class A Common Stock on the
grant date, and for the remaining rights the exercise price was
equal to 50% of the book value on the grant date. Rights not
exercised upon vesting were forfeited. Rights also accelerated
upon retirement, in which case the exercise price was equal to
100% of the grant date book value.
Effective July 30, 2008, the Predecessor modified the
Officers Stock Rights Plan to provide for accelerated
vesting of stock rights in anticipation of a change in control
of the Predecessor. All unvested stock rights were accelerated
and vested with the exception of rights that would be exchanged
for equity instruments
F-36
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
in Holding after the Merger Transaction. Any stock rights that
were due to vest in June 2008 were exercised at a price of 50%
of the grant date book value and converted to Class A
Common Stock on July 30, 2008. The remaining stock rights
that were accelerated and vested were subsequently exercised at
100% of the grant date book value and converted to Class A
Common Stock on July 30, 2008.
The Predecessor accounted for the rights granted under the
Officers Stock Rights Plan as liability awards, which are
marked to intrinsic value for the life of the award, using an
accelerated method, through stock compensation expense.
Stock compensation expense of $193.5 million related to the
acceleration of stock rights, and $318.2 million related to
the mark-up
of redeemable common shares, was recorded during the four months
ended July 31, 2008.
Methodology
The Company uses the Black-Scholes option-pricing model to
determine the estimated fair value for stock-based awards. The
fair value of the Company stock on the date of the New Option
grant was determined based on the fair value of the Merger
Transaction involving Booz Allen Hamilton, Inc. and the Company
that occurred on July 31, 2008. For all subsequent grants
of options, the fair value of the Companys stock was
determined by an independent valuation specialist.
As the Company has no plans to issue regular dividends, a
dividend yield of zero was used in the Black-Scholes model.
Expected volatility was calculated as of each grant date based
on reported data for a peer group of publicly traded companies
for which historical information was available. The Company will
continue to use peer group volatility information until
historical volatility of the Company can be regularly measured
against an open market to measure expected volatility for future
option grants. The risk-free interest rate is determined by
reference to the U.S. Treasury yield curve rates with the
remaining term equal to the expected life assumed at the date of
grant. Due to the lack of historical exercise data, the average
expected life was estimated based on internal qualitative and
quantitative factors. Forfeitures were estimated based on the
Companys historical analysis of Officer attrition levels.
The weighted average assumptions used in the Black-Scholes
option-pricing model for stock option awards were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company
|
|
|
Eight Months Ended March 31, 2009
|
|
|
Rollover Stock Plan
|
|
Rollover Stock Plan
|
|
|
|
|
New Options
|
|
New Options
|
|
Equity Incentive
|
|
|
(Retirement)
|
|
(Non-Retirement)
|
|
Plan
|
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Expected volatility
|
|
|
33.6
|
%
|
|
|
36.0
|
%
|
|
|
40.0
|
%
|
Risk-free interest rate
|
|
|
2.76
|
%
|
|
|
3.26
|
%
|
|
|
2.50
|
%
|
Expected life (in years)
|
|
|
2.98
|
|
|
|
5.29
|
|
|
|
7.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended March 31, 2010
|
|
|
Rollover Stock Plan
|
|
Rollover Stock Plan
|
|
|
|
|
New Options
|
|
New Options
|
|
Equity Incentive
|
|
|
(Retirement)
|
|
(Non-Retirement)
|
|
Plan
|
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Expected volatility
|
|
|
33.6
|
%
|
|
|
36.0
|
%
|
|
|
40.0
|
%
|
Risk-free interest rate
|
|
|
2.76
|
%
|
|
|
3.26
|
%
|
|
|
2.56
|
%
|
Expected life (in years)
|
|
|
2.98
|
|
|
|
5.29
|
|
|
|
7.03
|
|
F-37
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended September 30, 2010
|
|
|
|
Rollover Stock Plan
|
|
|
Rollover Stock Plan
|
|
|
|
|
|
|
New Options
|
|
|
New Options
|
|
|
Equity Incentive
|
|
|
|
(Retirement)
|
|
|
(Non-Retirement)
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Expected volatility
|
|
|
33.6
|
%
|
|
|
36.0
|
%
|
|
|
40.1
|
%
|
Risk-free interest rate
|
|
|
2.76
|
%
|
|
|
3.26
|
%
|
|
|
2.63
|
%
|
Expected life (in years)
|
|
|
2.98
|
|
|
|
5.29
|
|
|
|
7.02
|
|
The weighted-average grant-date fair values of retirement
eligible New Options, non-retirement eligible New Options and
EIP Options were $8.54, $8.63, and $4.85, respectively.
December
2009 Dividend and July 2009 Dividend
On December 7, 2009, the Companys Board of Directors
approved a dividend of $4.642 per share paid to holders of
record as of December 8, 2009 of Class A Common Stock,
Class B Non-Voting Common Stock, and Class C
Restricted Common Stock. This dividend totaled
$497.5 million. As required by the Rollover Plan and the
EIP, and in accordance with applicable tax laws and regulatory
guidance, the exercise price per share of each outstanding New
Option and EIP Option was reduced in an amount equal to the
value of the dividend. The Company evaluated the reduction of
the exercise price associated with the dividend issuance. Both
the Rollover and EIP plans contained mandatory antidilution
provisions requiring modification of the options in the event of
an equity restructuring, such as the dividends declared in July
and December 2009. In addition, the structure of the
modifications, as a reduction in the exercise price of options,
did not result in an increase to the fair value of the awards.
As a result of these factors, the Company did not record
incremental compensation expense associated with the
modifications of the options as a result of the July and
December 2009 dividends. Options vested and not yet exercised
that would have had an exercise price below zero as a result of
the dividend were reduced to one cent. The difference between
one cent and the reduced value for shares vested and not yet
exercised of approximately $54.4 million will be paid in
cash upon exercise of the options subject to the continued
vesting of the options. As of March 31, 2010 and
September 30, 2010, the Company reported $27.4 million
and $25.4 million, respectively, in other long-term
liabilities and $7.0 million and $9.0 million,
respectively, in accrued compensation and benefits in the
consolidated balance sheets based on the proportion of the
potential payment of $54.4 million which is represented by
vested options for which stock based compensation expense has
been recorded.
On July 27, 2009, the Companys Board of Directors
approved a dividend of $1.087 per share paid to holders of
record as of July 29, 2009 of the Companys
Class A Common Stock, Class B Non-Voting Common Stock,
and Class C Restricted Common Stock. This dividend totaled
$114.9 million. In accordance with the Officers
Rollover Stock Plan, the exercise price per share of each
outstanding option, including New Options and EIP options, was
reduced in compliance with applicable tax laws and regulatory
guidance. Additionally, the Company evaluated the reduction of
the exercise price associated with the dividend issuance. As a
result, the Company did not record any additional incremental
compensation expense associated with the dividend and
corresponding decrease in the exercise and fair value of all
outstanding options.
F-38
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table summarizes stock-based compensation for
stock options (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
The Company
|
|
|
Fiscal Year
|
|
Four Months
|
|
|
Eight Months
|
|
Fiscal Year
|
|
Six Months
|
|
Six Months
|
|
|
Ended
|
|
Ended
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
March 31,
|
|
July 31,
|
|
|
March 31,
|
|
March 31,
|
|
September 30,
|
|
September 30,
|
|
|
2008
|
|
2008
|
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
Included in cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and other costs
|
|
$
|
35,013
|
|
|
$
|
|
|
|
|
$
|
20,479
|
|
|
$
|
23,652
|
|
|
$
|
13,068
|
|
|
$
|
7,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total included in cost of revenue
|
|
|
35,013
|
|
|
|
|
|
|
|
|
20,479
|
|
|
|
23,652
|
|
|
|
13,068
|
|
|
|
7,884
|
|
Included in general and administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and other costs
|
|
|
|
|
|
|
511,653
|
|
|
|
|
41,580
|
|
|
|
48,245
|
|
|
|
26,533
|
|
|
|
19,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total included in general and administrative expenses
|
|
|
|
|
|
|
511,653
|
|
|
|
|
41,580
|
|
|
|
48,245
|
|
|
|
26,533
|
|
|
|
19,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
35,013
|
|
|
$
|
511,653
|
|
|
|
$
|
62,059
|
|
|
$
|
71,897
|
|
|
$
|
39,601
|
|
|
$
|
27,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-39
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table summarizes stock option activity for the
periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
Number of
|
|
|
Exercise
|
|
|
|
Options
|
|
|
Price
|
|
|
Officers Rollover Stock Plan New Options
|
|
|
|
|
|
|
|
|
Retirement Eligible:
|
|
|
|
|
|
|
|
|
Granted at August 1, 2008
|
|
|
7,285,420
|
|
|
$
|
1.62
|
|
Forfeited
|
|
|
|
|
|
|
|
|
Expired
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at March 31, 2009
|
|
|
7,285,420
|
|
|
$
|
0.01
|
*
|
Granted
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
Expired
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
1,457,080
|
|
|
|
0.01
|
*
|
|
|
|
|
|
|
|
|
|
Options outstanding at March 31, 2010
|
|
|
5,828,340
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
Expired
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
1,699,930
|
|
|
|
0.01
|
*
|
|
|
|
|
|
|
|
|
|
Options outstanding at September 30, 2010
|
|
|
4,128,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Retirement Eligible:
|
|
|
|
|
|
|
|
|
Granted at August 1, 2008
|
|
|
7,517,500
|
|
|
$
|
1.68
|
|
Forfeited
|
|
|
|
|
|
|
|
|
Expired
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at March 31, 2009
|
|
|
7,517,500
|
|
|
|
0.01
|
*
|
Granted
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
Expired
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at March 31, 2010
|
|
|
7,517,500
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
Expired
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at September 30, 2010
|
|
|
7,517,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-40
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
Number of
|
|
|
Exercise
|
|
|
|
Options
|
|
|
Price
|
|
|
Equity Incentive Plan Options
|
|
|
|
|
|
|
|
|
Granted at November 19, 2008
|
|
|
11,900,000
|
|
|
$
|
10.00
|
|
Forfeited
|
|
|
|
|
|
|
|
|
Expired
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at March 31, 2009
|
|
|
11,900,000
|
|
|
$
|
4.27
|
*
|
Granted
|
|
|
2,030,000
|
|
|
|
7.70
|
*
|
Forfeited
|
|
|
735,070
|
|
|
|
4.38
|
|
Expired
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
129,960
|
|
|
|
4.27
|
*
|
|
|
|
|
|
|
|
|
|
Options outstanding at March 31, 2010
|
|
|
13,064,970
|
|
|
|
|
|
Granted
|
|
|
1,750,000
|
|
|
$
|
12.92
|
|
Forfeited
|
|
|
84,020
|
|
|
|
4.27
|
|
Expired
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
2,612,720
|
|
|
|
4.40
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at September 30, 2010
|
|
|
12,118,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Reflects adjustment for $1.087 dividend issued July 27,
2009, and $4.642 dividend issued December 11, 2009. |
F-41
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table summarizes unvested stock options for the
periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
Weighted
|
|
|
Intrinsic
|
|
|
|
Number of
|
|
|
Average
|
|
|
Value on
|
|
|
|
Options
|
|
|
Fair Value
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Officers Stock Rights Plan
Predecessor
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at March 31, 2008
|
|
|
903
|
|
|
$
|
125.42
|
|
|
$
|
56,627
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
679
|
|
|
|
126.11
|
|
|
|
42,814
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at July 31, 2008
|
|
|
224
|
**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officers Rollover Stock Plan New Options
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Eligible:
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted at August 1, 2008
|
|
|
7,285,420
|
|
|
$
|
10.00
|
|
|
$
|
61,032
|
|
Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at March 31, 2009
|
|
|
7,285,420
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
2,428,470
|
|
|
|
4.27
|
*
|
|
|
10,370
|
*
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at March 31, 2010
|
|
|
4,856,950
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
2,428,470
|
|
|
|
4.27
|
|
|
|
10,370
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at September 30, 2010
|
|
|
2,428,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Retirement Eligible:
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted at August 1, 2008
|
|
|
7,517,500
|
|
|
$
|
10.00
|
|
|
$
|
62,553
|
|
Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at March 31, 2009
|
|
|
7,517,500
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at March 31, 2010
|
|
|
7,517,500
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at September 30, 2010
|
|
|
7,517,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-42
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
Weighted
|
|
|
Intrinsic
|
|
|
|
Number of
|
|
|
Average
|
|
|
Value on
|
|
|
|
Options
|
|
|
Fair Value
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Equity Incentive Plan Options
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at August 1, 2008
|
|
|
11,900,000
|
|
|
$
|
10.00
|
|
|
$
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at March 31, 2009
|
|
|
11,900,000
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
2,030,000
|
|
|
$
|
7.70
|
*
|
|
$
|
|
|
Vested
|
|
|
2,368,890
|
|
|
|
4.27
|
*
|
|
|
|
|
Forfeited
|
|
|
735,070
|
|
|
|
4.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at March 31, 2010
|
|
|
10,826,040
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
1,750,000
|
|
|
$
|
12.92
|
|
|
$
|
|
|
Vested
|
|
|
2,642,170
|
|
|
|
4.54
|
|
|
|
|
|
Forfeited
|
|
|
84,020
|
|
|
|
4.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|