x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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22-1852179
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Name of each exchange on which registered
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Class A Common Stock, Par Value $0.01 Per Share
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Nasdaq Stock Market
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Page
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Consolidated Statements of Income
and Loss
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•
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Adverse changes or delays in U.S. government spending for programs we support, due to the failure to complete the budget and appropriations process in a timely manner, changing mission priorities, the implementation of cost reduction and efficiency initiatives by our customers, or federal budget constraints generally;
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•
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Failure to obtain option awards, task orders or funding under contracts;
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•
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Delays in the competitive bidding process caused by competitors' protest of contract awards received by us;
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•
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Renegotiation, modification or termination of our contracts, or failure to perform in conformity with contract terms or our expectations;
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•
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Failure to realize the full amount of our backlog, or adverse changes in the timing of receipt of revenues under contracts included in backlog;
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•
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Failure to successfully integrate acquired companies or businesses into our operations or to realize any accretive or synergistic effects from such acquisitions;
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•
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Adverse changes in business conditions that may cause our investments in recorded goodwill to become impaired;
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•
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Non-compliance with, or adverse changes in, complex U.S. government laws, procurement regulations or processes;
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•
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Increased exposure to risks associated with conducting business internationally;
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•
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Disruption of our business or damage to our reputation resulting from security breaches in customer systems, internal systems or service failures (including as a result of cyber or other security threats), or employee or subcontractor misconduct; and
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•
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Adverse results of U.S. government audits or other investigations of our government contracts.
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Item 1.
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Business
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Item 1A.
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Risk Factors
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•
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We are suspended or debarred from contracting with the U.S. government or a significant government agency;
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•
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Our reputation or relationship with government agencies is impaired; or
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•
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The government ceases to do business with us, or significantly decreases the amount of business it does with us.
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•
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Spending substantial cost and managerial time and effort to prepare bids and proposals for contracts that may not be awarded to us, which may result in reduced profitability;
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•
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Expending resources and making financial commitments (such as procuring leased premises) and bidding on programs in advance of the completion of their design, which may result in unforeseen difficulties in execution, cost overruns, or, in the case of unsuccessful competitions, the loss of committed costs.
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•
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Incurring expense and delays due to protests by our competitors or other challenges of contract awards made to us, including the risk that any such protest or challenge could result in the resubmission of bids on modified specifications, or in the termination, reduction or modification of the awarded contract, which may result in reduced profitability;
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•
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Continuing U.S. government prioritization of socio-economic policies and goals that result in set-aside funds to small businesses and disadvantaged businesses in the procurement of contracted services; and
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•
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Failing to accurately estimate the resources and cost structure that will be required to service any contract we are awarded.
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Year Ended
December 31,
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|||||||
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2015
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2014
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2013
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|||
Cost-reimbursable
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67.8
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%
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68.9
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%
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72.3
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%
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Fixed-price
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20.7
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%
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21.1
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%
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16.8
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%
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Time-and-materials
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11.5
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%
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10.0
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%
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10.9
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%
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Total
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100.0
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%
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100.0
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%
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100.0
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%
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•
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Under cost-reimbursable contracts, we are reimbursed for allowable costs and paid a fee, which may be fixed or performance-based. To the extent that the actual costs incurred in performing a cost-reimbursable contract are within the contract ceiling and allowable under the terms of the contract and applicable regulations, we are entitled to reimbursement of our costs, plus a profit. However, if our costs exceed the ceiling or are not allowable under the terms of the contract or applicable regulations, we may not be able to recover those costs. In particular, there is increasing focus by the U.S. government on the extent to which contractors are able to receive reimbursement for employee compensation.
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•
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Under fixed-price contracts, we perform specific tasks for a fixed price. Compared to cost-plus contracts, fixed-price contracts generally offer higher margin opportunities, but involve greater financial risk because we bear the impact of cost overruns, which could result in increased costs and expenses. Because we assume such risk, an increase in the percentage of fixed-price contracts in our contract mix, whether caused by a shift by the U.S. government toward a preference for fixed-price contracts or otherwise, could increase the risk that we suffer losses if we underestimate the level of effort required to perform the contractual obligations.
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•
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Under time-and-material contracts, we are reimbursed for labor at negotiated hourly billing rates and for certain expenses. We assume financial risk on time-and-material contracts because we assume the risk of performing those contracts at negotiated hourly rates.
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•
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Terminate existing contracts for convenience, as well as for default;
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•
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Reduce orders under, or otherwise modify, contracts or subcontracts;
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•
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Cancel multi-year contracts and related orders if funds for contract performance for any subsequent year become unavailable;
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•
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Decline to exercise an option to renew multi-year contracts or issue task orders in connection with multiple award contracts;
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•
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Suspend or debar us from doing business with the U.S. government or with a government agency;
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•
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Prohibit future procurement awards with a particular agency as a result of a finding of an organizational conflict of interest based upon prior related work performed for the agency that is deemed to give a contractor an unfair advantage over competing contractors;
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•
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Subject the award of contracts to protest by competitors, which may require the contracting federal agency or department to suspend our performance pending the outcome of the protest and may also result in a requirement to resubmit offers for the contract or in the termination, reduction or modification of the awarded contract;
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•
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Terminate our facility security clearances and thereby prevent us from receiving classified contracts;
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•
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Claim rights in products and systems produced by us; and
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•
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Control or prohibit the export of our products and services.
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•
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As a result of an acquisition, we may need to record write-downs from future impairments of intangible assets, which could reduce our future reported earnings;
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•
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We may have difficulty retaining an acquired company's key employees, customers or contracts (particularly, with respect to certain agencies, where awards were not made on a full and open basis);
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•
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We may have difficulty integrating acquired businesses, resulting in unforeseen difficulties, such as incompatible accounting, information management or other control systems; and
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•
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Acquisitions may disrupt our business or distract our management from other responsibilities.
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The Federal Acquisition Regulation, which comprehensively regulates the formation, administration and performance of U.S. government contracts;
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•
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The Truth in Negotiations Act, which requires certification and disclosure of all cost and pricing data in connection with contract negotiations;
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The Cost Accounting Standards and Cost Principles, which impose accounting requirements that govern our right to reimbursement under certain cost-based U.S. government contracts;
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•
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Laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the export of certain products, services and technical data;
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•
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U.S. export controls, which apply when we engage in international work; and
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•
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The Foreign Corrupt Practices Act.
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•
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lose revenue due to adverse customer reaction;
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•
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be required to provide additional services to a customer at no charge;
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•
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incur additional costs related to monitoring and increasing our cyber security;
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•
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lose revenue due to the deployment of internal staff for remediation efforts instead of customer assignments;
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•
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receive negative publicity, which could damage our reputation and adversely affect our ability to attract or retain
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•
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be unable to successfully market services that rely on the creation and maintenance of secure IT systems;
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•
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suffer claims for substantial damages, particularly as a result of any successful network or systems breach and exfiltration of customer information; or
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•
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incur significant costs complying with applicable federal or state laws, including laws governing protection of personal information.
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•
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Changes in or interpretations of foreign laws or policies that may adversely affect the performance of our services;
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•
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Political instability in foreign countries;
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•
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Conducting business in places where laws, business practices and customs are unfamiliar, unknown or inconsistent with U.S. requirements;
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•
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Customary business practices and other factors in foreign countries, including requirements to provide up-front performance bonds (guaranteed by a letter of credit from our lender), may involve uncertainties not associated with the business of contracting with the U.S. government, including potential difficulties in collecting receivables and fewer available remedies to the contractor in the event of contract disputes or contract terminations;
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•
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Imposition of limitations on or increase of withholding and other taxes on payments by foreign subsidiaries or joint ventures;
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•
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Currency fluctuations and devaluations and limitations on the conversion of foreign currencies into U.S. dollars; and
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•
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Compliance with a variety of international and U.S. laws, including the Foreign Corrupt Practices Act and U.S. export control regulations.
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•
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Fluctuations in revenues earned on fixed-price contracts and contracts with a performance-based fee structure;
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•
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Commencement, completion or termination of contracts during any particular quarter;
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•
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Timing of significant bid and proposal costs;
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•
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Variable purchasing patterns under government contracts, blanket purchase agreements and ID/IQ contracts;
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•
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Seasonal or quarterly fluctuations in our workdays and staff utilization rates;
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•
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Strategic decisions, such as acquisitions, divestitures, spin-offs and joint ventures; and
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•
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Changes in the volume of purchase requests from customers for equipment and materials.
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•
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The high vote nature of our Class B common stock;
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•
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The ability of the Board of Directors to issue preferred stock;
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•
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The inability of stockholders to take action by written consent; and
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•
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The advance notice requirements for director nominations or other proposals submitted by our stockholders.
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Item 1B.
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Unresolved SEC Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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2015
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High
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Low
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First Quarter
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$35.23
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$29.51
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Second Quarter
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$34.24
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$27.67
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Third Quarter
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$30.91
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$25.20
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Fourth Quarter
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$34.07
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$24.90
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2014
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High
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Low
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First Quarter
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$31.10
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$27.43
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Second Quarter
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$31.32
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$27.78
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Third Quarter
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$30.10
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$26.36
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Fourth Quarter
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$31.06
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$26.09
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Item 6.
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Selected Financial Data
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Item 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Year Ended
December 31, |
|||||||
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2015
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2014
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2013
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|||
Department of Defense and intelligence agencies
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90.7
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%
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92.2
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%
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95.6
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%
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Federal civilian agencies
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8.2
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%
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6.7
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%
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3.4
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%
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State agencies, international agencies and commercial entities
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1.1
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%
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1.1
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%
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1.0
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%
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Total
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100.0
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%
|
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100.0
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%
|
|
100.0
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%
|
|
Year Ended
December 31,
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|||||||
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2015
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|
2014
|
|
2013
|
|||
Cost-reimbursable
|
67.8
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%
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|
68.9
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%
|
|
72.3
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%
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Fixed-price
|
20.7
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%
|
|
21.1
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%
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|
16.8
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%
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Time-and-materials
|
11.5
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%
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10.0
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%
|
|
10.9
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%
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Total
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100.0
|
%
|
|
100.0
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%
|
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100.0
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%
|
|
Year Ended
December 31, |
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Year-to-Year Change
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|||||||||||||||||
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2015
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2014
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2015
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2014
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2014 to 2015
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|||||||||||
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Dollars
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Percentages
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Dollars
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Percent
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(dollars in thousands)
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|||||||||||||||||||
REVENUES
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$
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1,550,117
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|
$
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1,773,981
|
|
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100.0
|
%
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100.0
|
%
|
|
$
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(223,864
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)
|
|
(12.6
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)%
|
Cost of services
|
1,320,697
|
|
|
1,524,208
|
|
|
85.2
|
%
|
|
85.9
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%
|
|
(203,511
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)
|
|
(13.4
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)%
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|||
General and administrative expenses
|
144,534
|
|
|
154,957
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|
|
9.3
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%
|
|
8.8
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%
|
|
(10,423
|
)
|
|
(6.7
|
)%
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|||
OPERATING INCOME
|
84,886
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|
|
94,816
|
|
|
5.5
|
%
|
|
5.3
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%
|
|
(9,930
|
)
|
|
(10.5
|
)%
|
|||
Loss on extinguishment of debt
|
—
|
|
|
(10,074
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)
|
|
—
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%
|
|
0.6
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%
|
|
(10,074
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)
|
|
(100.0
|
)%
|
|||
Interest expense
|
(1,193
|
)
|
|
(5,802
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)
|
|
0.1
|
%
|
|
0.2
|
%
|
|
(4,609
|
)
|
|
(79.4
|
)%
|
|||
Interest income
|
160
|
|
|
394
|
|
|
—
|
%
|
|
—
|
%
|
|
(234
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)
|
|
(59.4
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)%
|
|||
Other income (expense), net
|
1,501
|
|
|
(233
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)
|
|
0.1
|
%
|
|
—
|
%
|
|
1,734
|
|
|
744.2
|
%
|
|||
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND EQUITY METHOD INVESTMENTS
|
85,354
|
|
|
79,101
|
|
|
5.5
|
%
|
|
4.5
|
%
|
|
6,253
|
|
|
7.9
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%
|
|||
Provision for income taxes
|
(34,366
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)
|
|
(31,525
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)
|
|
2.2
|
%
|
|
1.8
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%
|
|
2,841
|
|
|
9.0
|
%
|
|||
Equity in gains (losses) of unconsolidated subsidiaries
|
139
|
|
|
(282
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)
|
|
—
|
%
|
|
—
|
%
|
|
421
|
|
|
149.3
|
%
|
|||
NET INCOME
|
$
|
51,127
|
|
|
$
|
47,294
|
|
|
3.3
|
%
|
|
2.7
|
%
|
|
$
|
3,833
|
|
|
8.1
|
%
|
|
Year Ended
December 31, |
|
Year-to-Year Change
|
|||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2013 to 2014
|
|||||||||||
|
Dollars
|
|
Percentages
|
|
Dollars
|
|
Percent
|
|||||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
REVENUES
|
$
|
1,773,981
|
|
|
$
|
2,310,072
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
$
|
(536,091
|
)
|
|
(23.2
|
)%
|
Cost of services
|
1,524,208
|
|
|
1,995,630
|
|
|
85.9
|
%
|
|
86.4
|
%
|
|
(471,422
|
)
|
|
(23.6
|
)%
|
|||
General and administrative expenses
|
154,957
|
|
|
173,772
|
|
|
8.8
|
%
|
|
7.5
|
%
|
|
(18,815
|
)
|
|
(10.8
|
)%
|
|||
Goodwill impairment
|
—
|
|
|
118,427
|
|
|
—
|
%
|
|
5.1
|
%
|
|
(118,427
|
)
|
|
(100.0
|
)%
|
|||
OPERATING INCOME
|
94,816
|
|
|
22,243
|
|
|
5.3
|
%
|
|
1.0
|
%
|
|
72,573
|
|
|
326.3
|
%
|
|||
Loss on extinguishment of debt
|
(10,074
|
)
|
|
—
|
|
|
0.6
|
%
|
|
—
|
%
|
|
10,074
|
|
|
100.0
|
%
|
|||
Interest expense
|
(5,802
|
)
|
|
(16,266
|
)
|
|
0.2
|
%
|
|
0.7
|
%
|
|
(10,464
|
)
|
|
(64.3
|
)%
|
|||
Interest income
|
394
|
|
|
608
|
|
|
—
|
%
|
|
—
|
%
|
|
(214
|
)
|
|
(35.2
|
)%
|
|||
Other income (expense), net
|
(233
|
)
|
|
(32
|
)
|
|
—
|
%
|
|
—
|
%
|
|
201
|
|
|
628.1
|
%
|
|||
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND EQUITY METHOD INVESTMENTS
|
79,101
|
|
|
6,553
|
|
|
4.5
|
%
|
|
0.3
|
%
|
|
72,548
|
|
|
1,107.1
|
%
|
|||
Provision for income taxes
|
(31,525
|
)
|
|
(11,842
|
)
|
|
1.8
|
%
|
|
0.5
|
%
|
|
19,683
|
|
|
166.2
|
%
|
|||
Equity in losses of unconsolidated subsidiaries
|
(282
|
)
|
|
(860
|
)
|
|
—
|
%
|
|
—
|
%
|
|
(578
|
)
|
|
(67.2
|
)%
|
|||
NET INCOME (LOSS)
|
$
|
47,294
|
|
|
$
|
(6,149
|
)
|
|
2.7
|
%
|
|
0.2
|
%
|
|
$
|
53,443
|
|
|
869.1
|
%
|
|
|
Payments Due By Period
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than 5 Years
|
||||||||||
Operating lease obligations (1)
|
|
$
|
144,781
|
|
|
$
|
29,272
|
|
|
$
|
46,548
|
|
|
$
|
33,803
|
|
|
$
|
35,158
|
|
Other long-term liabilities (2)
|
|
11,978
|
|
|
1,287
|
|
|
2,141
|
|
|
3,365
|
|
|
5,185
|
|
|||||
Accrued defined benefit obligations (3)
|
|
1,133
|
|
|
124
|
|
|
240
|
|
|
226
|
|
|
543
|
|
|||||
Total
|
|
$
|
157,892
|
|
|
$
|
30,683
|
|
|
$
|
48,929
|
|
|
$
|
37,394
|
|
|
$
|
40,886
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(1) Excludes approximately $11.1 million of deferred rent liabilities. See Note 9 to our consolidated financial statements in Item 8 for additional information regarding operating leases.
|
||||||||||||||||||||
(2) Includes approximately $11.1 million of deferred rent liabilities as well as gross unrecognized tax benefits of $0.5 million. See Note 9 to our consolidated financial statements in Item 8 for additional information regarding deferred rent liabilities. See Note 12 to our consolidated financial statements in Item 8 for additional information regarding gross unrecognized tax benefits.
|
||||||||||||||||||||
(3) Includes approximately $1.1 million of unfunded pension obligations related to nonqualified supplemental defined benefit pension plans for certain retired employees of an acquired company, which is included in the accrued retirement amount on our consolidated balance sheets. Excludes liabilities related to one non-qualified deferred compensation plan for certain highly compensated employees, which are included in the accrued retirement amount on our consolidated balance sheets. The funds deferred by the employees are invested and maintained in rabbi trusts, which are reflected in the employee supplemental savings plan assets on our consolidated balance sheets. These liabilities will be satisfied by assets held in rabbi trusts. See Note 11 to our consolidated financial statements in Item 8 for additional information regarding retirement plans.
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
Index to Consolidated Financial Statements
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets as of December 31, 2015 and 2014
|
|
Consolidated Statements of Income and Loss for the years ended December 31, 2015, 2014 and 2013
|
|
Consolidated Statements of Comprehensive Income and Loss for the years ended December 31, 2015, 2014 and 2013
|
|
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2015, 2014 and 2013
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013
|
|
Notes to Consolidated Financial Statements
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
41,314
|
|
|
$
|
23,781
|
|
Receivables—net
|
304,253
|
|
|
377,156
|
|
||
Prepaid expenses and other
|
23,605
|
|
|
18,207
|
|
||
Total Current Assets
|
369,172
|
|
|
419,144
|
|
||
Goodwill
|
919,591
|
|
|
851,640
|
|
||
Other intangible assets—net
|
154,176
|
|
|
155,250
|
|
||
Employee supplemental savings plan assets
|
27,557
|
|
|
31,741
|
|
||
Property and equipment—net
|
22,439
|
|
|
25,743
|
|
||
Investments
|
10,853
|
|
|
143
|
|
||
Other assets
|
2,636
|
|
|
3,741
|
|
||
TOTAL ASSETS
|
$
|
1,506,424
|
|
|
$
|
1,487,402
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
LIABILITIES
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
106,271
|
|
|
$
|
149,506
|
|
Accrued salaries and related expenses
|
60,940
|
|
|
57,409
|
|
||
Billings in excess of revenue earned
|
12,685
|
|
|
13,408
|
|
||
Deferred income taxes—current
|
—
|
|
|
3,330
|
|
||
Total Current Liabilities
|
179,896
|
|
|
223,653
|
|
||
Deferred income taxes—non-current
|
102,035
|
|
|
65,103
|
|
||
Accrued retirement
|
29,877
|
|
|
32,804
|
|
||
Other long-term liabilities
|
10,879
|
|
|
11,063
|
|
||
TOTAL LIABILITIES
|
322,687
|
|
|
332,623
|
|
||
COMMITMENTS AND CONTINGENCIES
|
|
|
|
||||
STOCKHOLDERS' EQUITY
|
|
|
|
||||
Common stock, Class A—$0.01 par value; 150,000,000 shares authorized; 24,731,584 and 24,423,514 shares issued at December 31, 2015 and 2014; 24,487,471 and 24,179,401 shares outstanding at December 31, 2015 and 2014
|
247
|
|
|
244
|
|
||
Common stock, Class B—$0.01 par value; 50,000,000 shares authorized; 13,191,845 and 13,192,845 shares issued and outstanding at December 31, 2015 and 2014
|
132
|
|
|
132
|
|
||
Additional paid-in capital
|
438,168
|
|
|
428,895
|
|
||
Treasury stock, 244,113 and 244,113 shares at cost at December 31, 2015 and 2014
|
(9,158
|
)
|
|
(9,158
|
)
|
||
Retained earnings
|
754,457
|
|
|
734,873
|
|
||
Accumulated other comprehensive loss
|
(109
|
)
|
|
(207
|
)
|
||
TOTAL STOCKHOLDERS' EQUITY
|
1,183,737
|
|
|
1,154,779
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
1,506,424
|
|
|
$
|
1,487,402
|
|
|
Year Ended
December 31, |
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
REVENUES
|
$
|
1,550,117
|
|
|
$
|
1,773,981
|
|
|
$
|
2,310,072
|
|
Cost of services
|
1,320,697
|
|
|
1,524,208
|
|
|
1,995,630
|
|
|||
General and administrative expenses
|
144,534
|
|
|
154,957
|
|
|
173,772
|
|
|||
Goodwill impairment
|
—
|
|
|
—
|
|
|
118,427
|
|
|||
OPERATING INCOME
|
84,886
|
|
|
94,816
|
|
|
22,243
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
(10,074
|
)
|
|
—
|
|
|||
Interest expense
|
(1,193
|
)
|
|
(5,802
|
)
|
|
(16,266
|
)
|
|||
Interest income
|
160
|
|
|
394
|
|
|
608
|
|
|||
Other income (expense), net
|
1,501
|
|
|
(233
|
)
|
|
(32
|
)
|
|||
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND EQUITY METHOD INVESTMENTS
|
85,354
|
|
|
79,101
|
|
|
6,553
|
|
|||
Provision for income taxes
|
(34,366
|
)
|
|
(31,525
|
)
|
|
(11,842
|
)
|
|||
Equity in gains (losses) of unconsolidated subsidiaries
|
139
|
|
|
(282
|
)
|
|
(860
|
)
|
|||
NET INCOME (LOSS)
|
$
|
51,127
|
|
|
$
|
47,294
|
|
|
$
|
(6,149
|
)
|
BASIC EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
||||||
Class A common stock
|
$
|
1.36
|
|
|
$
|
1.27
|
|
|
$
|
(0.17
|
)
|
Class B common stock
|
$
|
1.36
|
|
|
$
|
1.27
|
|
|
$
|
(0.17
|
)
|
DILUTED EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
||||||
Class A common stock
|
$
|
1.36
|
|
|
$
|
1.27
|
|
|
$
|
(0.17
|
)
|
Class B common stock
|
$
|
1.36
|
|
|
$
|
1.27
|
|
|
$
|
(0.17
|
)
|
|
Year Ended
December 31, |
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
NET INCOME (LOSS)
|
$
|
51,127
|
|
|
$
|
47,294
|
|
|
$
|
(6,149
|
)
|
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
||||||
Actuarial gain (loss) on defined benefit pension plans, net of tax
|
84
|
|
|
(64
|
)
|
|
36
|
|
|||
Translation adjustments, net of tax
|
14
|
|
|
(19
|
)
|
|
(15
|
)
|
|||
Total other comprehensive income (loss)
|
98
|
|
|
(83
|
)
|
|
21
|
|
|||
COMPREHENSIVE INCOME (LOSS)
|
$
|
51,225
|
|
|
$
|
47,211
|
|
|
$
|
(6,128
|
)
|
|
December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Common Stock, Class A
|
|
|
|
|
|
||||||
At beginning of year
|
$
|
244
|
|
|
$
|
242
|
|
|
$
|
241
|
|
Stock option exercises
|
3
|
|
|
2
|
|
|
1
|
|
|||
At end of year
|
247
|
|
|
244
|
|
|
242
|
|
|||
Common Stock, Class B
|
|
|
|
|
|
||||||
At beginning of year
|
132
|
|
|
132
|
|
|
132
|
|
|||
At end of year
|
132
|
|
|
132
|
|
|
132
|
|
|||
Additional Paid-In Capital
|
|
|
|
|
|
||||||
At beginning of year
|
428,895
|
|
|
423,787
|
|
|
417,917
|
|
|||
Stock option exercises
|
7,865
|
|
|
3,919
|
|
|
1,766
|
|
|||
Stock compensation expense
|
4,379
|
|
|
4,400
|
|
|
5,236
|
|
|||
Tax deficiency from the exercise of stock options
|
(2,971
|
)
|
|
(3,211
|
)
|
|
(2,332
|
)
|
|||
Contribution of Class A common stock to Employee Stock Ownership Plan
|
—
|
|
|
—
|
|
|
1,200
|
|
|||
At end of year
|
438,168
|
|
|
428,895
|
|
|
423,787
|
|
|||
Treasury Stock, at cost
|
|
|
|
|
|
||||||
At beginning of year
|
(9,158
|
)
|
|
(9,158
|
)
|
|
(9,158
|
)
|
|||
At end of year
|
(9,158
|
)
|
|
(9,158
|
)
|
|
(9,158
|
)
|
|||
Retained Earnings
|
|
|
|
|
|
||||||
At beginning of year
|
734,873
|
|
|
718,892
|
|
|
756,241
|
|
|||
Net income (loss)
|
51,127
|
|
|
47,294
|
|
|
(6,149
|
)
|
|||
Dividends
|
(31,543
|
)
|
|
(31,313
|
)
|
|
(31,200
|
)
|
|||
At end of year
|
754,457
|
|
|
734,873
|
|
|
718,892
|
|
|||
Accumulated Other Comprehensive Loss
|
|
|
|
|
|
||||||
At beginning of year
|
(207
|
)
|
|
(124
|
)
|
|
(145
|
)
|
|||
Actuarial gain (loss) on defined benefit pension plans, net of tax
|
84
|
|
|
(64
|
)
|
|
36
|
|
|||
Translation adjustments, net of tax
|
14
|
|
|
(19
|
)
|
|
(15
|
)
|
|||
At end of year
|
(109
|
)
|
|
(207
|
)
|
|
(124
|
)
|
|||
Total Stockholders' Equity
|
$
|
1,183,737
|
|
|
$
|
1,154,779
|
|
|
$
|
1,133,771
|
|
|
Year Ended
December 31, |
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
51,127
|
|
|
$
|
47,294
|
|
|
$
|
(6,149
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Deferred income taxes
|
30,553
|
|
|
18,668
|
|
|
(10,915
|
)
|
|||
Depreciation and amortization
|
30,276
|
|
|
30,446
|
|
|
30,504
|
|
|||
Stock-based compensation
|
4,379
|
|
|
4,400
|
|
|
5,236
|
|
|||
Gain on disposition of business
|
(1,692
|
)
|
|
—
|
|
|
—
|
|
|||
(Gain) loss on sale and retirement of property and equipment
|
(656
|
)
|
|
251
|
|
|
(402
|
)
|
|||
Equity in (gains) losses of unconsolidated subsidiaries
|
(139
|
)
|
|
282
|
|
|
860
|
|
|||
Excess tax benefits from the exercise of stock options
|
(73
|
)
|
|
(70
|
)
|
|
(53
|
)
|
|||
Loss on extinguishment of debt
|
—
|
|
|
10,074
|
|
|
—
|
|
|||
Goodwill impairment
|
—
|
|
|
—
|
|
|
118,427
|
|
|||
Change in assets and liabilities—net of effects from acquired businesses:
|
|
|
|
|
|
||||||
Receivables-net
|
82,727
|
|
|
102,076
|
|
|
91,583
|
|
|||
Prepaid expenses and other
|
(4,990
|
)
|
|
326
|
|
|
9,334
|
|
|||
Contractual inventory
|
—
|
|
|
3,963
|
|
|
30,800
|
|
|||
Employee supplemental savings plan asset
|
4,184
|
|
|
24
|
|
|
(4,413
|
)
|
|||
Accounts payable and accrued expenses
|
(44,103
|
)
|
|
(87,105
|
)
|
|
(89,935
|
)
|
|||
Accrued salaries and related expenses
|
2,703
|
|
|
(2,762
|
)
|
|
3,677
|
|
|||
Billings in excess of revenue earned
|
913
|
|
|
(750
|
)
|
|
(1,291
|
)
|
|||
Accrued retirement
|
(2,927
|
)
|
|
(761
|
)
|
|
4,175
|
|
|||
Other
|
1,601
|
|
|
569
|
|
|
6,841
|
|
|||
Net cash flow from operating activities
|
153,883
|
|
|
126,925
|
|
|
188,279
|
|
|||
|
|
|
|
|
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Acquisition of businesses-net of cash acquired
|
(101,556
|
)
|
|
(124,247
|
)
|
|
(11,382
|
)
|
|||
Purchases of property and equipment
|
(5,202
|
)
|
|
(4,083
|
)
|
|
(11,087
|
)
|
|||
Payments to acquire investments
|
(4,500
|
)
|
|
(159
|
)
|
|
(422
|
)
|
|||
Transaction costs for disposition of business
|
(1,174
|
)
|
|
—
|
|
|
—
|
|
|||
Investment in capitalized software for internal use
|
(1,025
|
)
|
|
(7,399
|
)
|
|
(2,536
|
)
|
|||
Proceeds from sale of property and equipment
|
696
|
|
|
—
|
|
|
402
|
|
|||
Proceeds from sale of investment
|
13
|
|
|
—
|
|
|
239
|
|
|||
Net cash flow from investing activities
|
(112,748
|
)
|
|
(135,888
|
)
|
|
(24,786
|
)
|
|||
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Borrowings under revolving credit facility
|
163,200
|
|
|
160,000
|
|
|
—
|
|
|||
Repayments under revolving credit facility
|
(163,200
|
)
|
|
(160,000
|
)
|
|
—
|
|
|||
Dividends paid
|
(31,543
|
)
|
|
(31,312
|
)
|
|
(31,208
|
)
|
|||
Proceeds from exercise of stock options
|
7,868
|
|
|
3,922
|
|
|
1,767
|
|
|||
Excess tax benefits from the exercise of stock options
|
73
|
|
|
70
|
|
|
53
|
|
|||
Repayment of senior unsecured notes
|
—
|
|
|
(207,250
|
)
|
|
—
|
|
|||
Debt issuance costs
|
—
|
|
|
(1,687
|
)
|
|
—
|
|
|||
Net cash flow from financing activities
|
(23,602
|
)
|
|
(236,257
|
)
|
|
(29,388
|
)
|
|||
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
17,533
|
|
|
(245,220
|
)
|
|
134,105
|
|
|||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
23,781
|
|
|
269,001
|
|
|
134,896
|
|
|||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
41,314
|
|
|
$
|
23,781
|
|
|
$
|
269,001
|
|
|
|
|
|
|
|
||||||
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
1,203
|
|
|
$
|
8,597
|
|
|
$
|
15,903
|
|
Noncash investing and financing activities:
|
|
|
|
|
|
||||||
Capital expenditures incurred but not yet paid
|
$
|
—
|
|
|
$
|
96
|
|
|
$
|
—
|
|
Employee Stock Ownership Plan contributions
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,287
|
|
1.
|
Description of the Business
|
2.
|
Summary of Significant Accounting
Policies
|
3.
|
Acquisitions
|
|
Knowledge Consulting Group, Inc.
|
||
Cash and cash equivalents
|
$
|
658
|
|
Receivables
|
6,532
|
|
|
Prepaid expenses and other
|
460
|
|
|
Goodwill
|
47,487
|
|
|
Other intangible assets
|
13,219
|
|
|
Property and equipment
|
1,419
|
|
|
Investments
|
15
|
|
|
Other assets
|
31
|
|
|
Accounts payable and accrued expenses
|
(1,269
|
)
|
|
Accrued salaries and related expenses
|
(336
|
)
|
|
Billings in excess of revenue earned
|
(2
|
)
|
|
Net assets acquired and liabilities assumed
|
$
|
68,214
|
|
|
Welkin Associates, Ltd.
|
||
Receivables
|
$
|
3,901
|
|
Prepaid expenses and other
|
141
|
|
|
Goodwill
|
24,436
|
|
|
Other intangible assets
|
6,350
|
|
|
Property and equipment
|
100
|
|
|
Accounts payable and accrued expenses
|
(436
|
)
|
|
Accrued salaries and related expenses
|
(492
|
)
|
|
Net assets acquired and liabilities assumed
|
$
|
34,000
|
|
|
7Delta Inc.
|
||
Cash and cash equivalents
|
$
|
1,408
|
|
Receivables
|
9,664
|
|
|
Prepaid expenses and other
|
175
|
|
|
Goodwill
|
69,967
|
|
|
Other intangible assets
|
7,762
|
|
|
Property and equipment
|
597
|
|
|
Other assets
|
39
|
|
|
Accounts payable and accrued expenses
|
(6,617
|
)
|
|
Accrued salaries and related expenses
|
(1,399
|
)
|
|
Billings in excess of revenue earned
|
(229
|
)
|
|
Net assets acquired and liabilities assumed
|
$
|
81,367
|
|
|
Allied Technology Group, Inc.
|
||
Cash and cash equivalents
|
$
|
712
|
|
Receivables
|
11,670
|
|
|
Prepaid expenses and other
|
1,432
|
|
|
Contractual inventory
|
1
|
|
|
Goodwill
|
28,806
|
|
|
Other intangible assets
|
7,071
|
|
|
Property and equipment
|
899
|
|
|
Other assets
|
111
|
|
|
Accounts payable and accrued expenses
|
(3,399
|
)
|
|
Accrued salaries and related expenses
|
(2,155
|
)
|
|
Billings in excess of revenue earned
|
(148
|
)
|
|
Net assets acquired and liabilities assumed
|
$
|
45,000
|
|
4.
|
Earnings (Loss) per Share
|
|
Year Ended
December 31, |
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Distributed earnings
|
$
|
31,543
|
|
|
$
|
31,313
|
|
|
$
|
31,200
|
|
Undistributed earnings (loss)
|
19,584
|
|
|
15,981
|
|
|
(37,349
|
)
|
|||
Net income (loss)
|
$
|
51,127
|
|
|
$
|
47,294
|
|
|
$
|
(6,149
|
)
|
|
|
|
|
|
|
||||||
Class A common stock:
|
|
|
|
|
|
||||||
Basic net income (loss) available to common stockholders
|
$
|
33,145
|
|
|
$
|
30,539
|
|
|
$
|
(3,963
|
)
|
Basic weighted average common shares outstanding
|
24,317
|
|
|
24,047
|
|
|
23,913
|
|
|||
Basic earnings (loss) per share
|
$
|
1.36
|
|
|
$
|
1.27
|
|
|
$
|
(0.17
|
)
|
|
|
|
|
|
|
||||||
Diluted net income (loss) available to common stockholders
|
$
|
33,197
|
|
|
$
|
30,571
|
|
|
$
|
(3,963
|
)
|
Effect of potential exercise of stock options
|
109
|
|
|
70
|
|
|
—
|
|
|||
Diluted weighted average common shares outstanding
|
24,426
|
|
|
24,117
|
|
|
23,913
|
|
|||
Diluted earnings (loss) per share
|
$
|
1.36
|
|
|
$
|
1.27
|
|
|
$
|
(0.17
|
)
|
|
|
|
|
|
|
||||||
Class B common stock:
|
|
|
|
|
|
||||||
Basic net income (loss) available to common stockholders
|
$
|
17,982
|
|
|
$
|
16,755
|
|
|
$
|
(2,186
|
)
|
Basic weighted average common shares outstanding
|
13,193
|
|
|
13,193
|
|
|
13,193
|
|
|||
Basic earnings (loss) per share
|
$
|
1.36
|
|
|
$
|
1.27
|
|
|
$
|
(0.17
|
)
|
|
|
|
|
|
|
||||||
Diluted net income (loss) available to common stockholders
|
$
|
17,930
|
|
|
$
|
16,723
|
|
|
$
|
(2,186
|
)
|
Effect of potential exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|||
Diluted weighted average common shares outstanding
|
13,193
|
|
|
13,193
|
|
|
13,193
|
|
|||
Diluted earnings (loss) per share
|
$
|
1.36
|
|
|
$
|
1.27
|
|
|
$
|
(0.17
|
)
|
5.
|
Receivables
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Billed receivables
|
$
|
233,735
|
|
|
$
|
319,065
|
|
Unbilled receivables:
|
|
|
|
||||
Amounts billable
|
47,900
|
|
|
50,393
|
|
||
Revenues recorded in excess of funding
|
19,213
|
|
|
13,082
|
|
||
Retainage
|
11,878
|
|
|
4,446
|
|
||
Allowance for doubtful accounts
|
(8,473
|
)
|
|
(9,830
|
)
|
||
Receivables-net
|
$
|
304,253
|
|
|
$
|
377,156
|
|
6.
|
Property and Equipment
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Furniture and equipment
|
$
|
44,718
|
|
|
$
|
43,659
|
|
Leasehold improvements
|
35,733
|
|
|
35,601
|
|
||
Property and equipment-gross
|
80,451
|
|
|
79,260
|
|
||
Accumulated depreciation and amortization
|
(58,012
|
)
|
|
(53,517
|
)
|
||
Property and equipment-net
|
$
|
22,439
|
|
|
$
|
25,743
|
|
7.
|
Goodwill and Other Intangible Assets
|
|
Goodwill Balance
|
||
Goodwill at December 31, 2013
|
$
|
752,867
|
|
Acquisitions
|
98,773
|
|
|
Goodwill at December 31, 2014
|
851,640
|
|
|
Acquisitions
|
71,922
|
|
|
Divestiture
|
(3,971
|
)
|
|
Goodwill at December 31, 2015
|
$
|
919,591
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
Other intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Contract and program intangible assets
|
$
|
281,682
|
|
|
$
|
140,163
|
|
|
$
|
141,519
|
|
|
$
|
266,272
|
|
|
$
|
126,619
|
|
|
$
|
139,653
|
|
Capitalized software cost for internal use
|
36,170
|
|
|
23,522
|
|
|
12,648
|
|
|
35,036
|
|
|
19,500
|
|
|
15,536
|
|
||||||
Other
|
58
|
|
|
49
|
|
|
9
|
|
|
115
|
|
|
54
|
|
|
61
|
|
||||||
Total other intangible assets-net
|
$
|
317,910
|
|
|
$
|
163,734
|
|
|
$
|
154,176
|
|
|
$
|
301,423
|
|
|
$
|
146,173
|
|
|
$
|
155,250
|
|
Year ending:
|
|
||
December 31, 2016
|
$
|
21,484
|
|
December 31, 2017
|
$
|
20,018
|
|
December 31, 2018
|
$
|
18,314
|
|
December 31, 2019
|
$
|
15,836
|
|
December 31, 2020
|
$
|
12,614
|
|
8.
|
Debt
|
9.
|
Commitments and Contingencies
|
|
|
Total
|
||
Year ending:
|
|
|
||
December 31, 2016
|
|
$
|
30,202
|
|
December 31, 2017
|
|
25,643
|
|
|
December 31, 2018
|
|
22,740
|
|
|
December 31, 2019
|
|
21,560
|
|
|
December 31, 2020
|
|
15,501
|
|
|
Thereafter
|
|
40,255
|
|
|
Total
|
|
$
|
155,901
|
|
10.
|
Stockholders' Equity and Stock-Based Compensation
|
|
Year Ended
December 31, |
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Volatility
|
26.16
|
%
|
|
28.96
|
%
|
|
31.92
|
%
|
Expected life of options
|
3 years
|
|
|
3 years
|
|
|
3 years
|
|
Risk-free interest rate
|
1.15
|
%
|
|
0.96
|
%
|
|
0.56
|
%
|
Dividend yield
|
3.00
|
%
|
|
3.00
|
%
|
|
3.00
|
%
|
|
Number of Shares
|
|
Weighted Average Exercise Price
|
|
Aggregate Intrinsic Value
(in thousands) |
|||||
Stock options at December 31, 2012
|
3,421,196
|
|
|
$
|
38.61
|
|
|
$
|
626
|
|
Granted
|
957,525
|
|
|
$
|
27.42
|
|
|
|
||
Exercised
|
(79,567
|
)
|
|
$
|
22.75
|
|
|
$
|
400
|
|
Cancelled and expired
|
(899,034
|
)
|
|
$
|
39.84
|
|
|
|
||
Stock options at December 31, 2013
|
3,400,120
|
|
|
$
|
35.51
|
|
|
$
|
4,488
|
|
Granted
|
946,576
|
|
|
$
|
29.12
|
|
|
|
||
Exercised
|
(158,371
|
)
|
|
$
|
24.78
|
|
|
$
|
754
|
|
Cancelled and expired
|
(797,293
|
)
|
|
$
|
41.75
|
|
|
|
||
Stock options at December 31, 2014
|
3,391,032
|
|
|
$
|
32.76
|
|
|
$
|
4,722
|
|
Granted
|
237,853
|
|
|
$
|
30.87
|
|
|
|
||
Exercised
|
(284,320
|
)
|
|
$
|
27.51
|
|
|
$
|
1,348
|
|
Cancelled and expired
|
(849,255
|
)
|
|
$
|
39.56
|
|
|
|
||
Stock options at December 31, 2015
|
2,495,310
|
|
|
$
|
30.86
|
|
|
$
|
3,583
|
|
|
Number of Shares
|
|
Weighted Average Fair Value
|
|||
Non-vested stock options at December 31, 2014
|
1,673,528
|
|
|
$
|
4.83
|
|
Granted
|
237,853
|
|
|
$
|
4.59
|
|
Vested
|
(726,750
|
)
|
|
$
|
4.89
|
|
Cancelled
|
(193,341
|
)
|
|
$
|
4.79
|
|
Non-vested stock options at December 31, 2015
|
991,290
|
|
|
$
|
4.74
|
|
|
Number of Shares
|
|
Weighted Average Remaining Contractual Life
|
|
Weighted Average Exercise Price
|
|
Aggregate Intrinsic Value
(in thousands) |
|||||
Stock options exercisable
|
1,504,020
|
|
|
2 years
|
|
$
|
32.01
|
|
|
$
|
2,236
|
|
Stock options expected to vest
|
894,966
|
|
|
4 years
|
|
$
|
29.08
|
|
|
$
|
1,242
|
|
Stock options exercisable and expected to vest
|
2,398,986
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
Weighted Average Fair Value
|
|||
Non-vested restricted stock at December 31, 2013
|
21,000
|
|
|
$
|
27.65
|
|
Granted
|
21,000
|
|
|
$
|
30.61
|
|
Vested
|
(21,000
|
)
|
|
$
|
27.65
|
|
Non-vested restricted stock at December 31, 2014
|
21,000
|
|
|
$
|
30.61
|
|
Granted
|
21,000
|
|
|
$
|
28.98
|
|
Vested
|
(21,000
|
)
|
|
$
|
30.61
|
|
Non-vested restricted stock at December 31, 2015
|
21,000
|
|
|
$
|
28.98
|
|
|
Number of Units
|
|
Weighted Average Fair Value
|
|||
Non-vested restricted stock units at December 31, 2014
|
—
|
|
|
$
|
—
|
|
Granted
|
105,900
|
|
|
$
|
30.85
|
|
Forfeited
|
(12,450
|
)
|
|
$
|
30.92
|
|
Non-vested restricted stock units at December 31, 2015
|
93,450
|
|
|
$
|
30.84
|
|
11.
|
Retirement Plans
|
12.
|
Income Taxes
|
|
Year Ended
December 31, |
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Domestic
|
$
|
85,665
|
|
|
$
|
79,238
|
|
|
$
|
6,768
|
|
Foreign
|
(311
|
)
|
|
(137
|
)
|
|
(215
|
)
|
|||
Income from operations before income taxes and equity method investments
|
$
|
85,354
|
|
|
$
|
79,101
|
|
|
$
|
6,553
|
|
|
Year Ended
December 31, |
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Current provision:
|
|
|
|
|
|
||||||
Federal
|
$
|
2,714
|
|
|
$
|
10,375
|
|
|
$
|
18,702
|
|
State
|
1,247
|
|
|
2,499
|
|
|
4,011
|
|
|||
Foreign
|
77
|
|
|
160
|
|
|
86
|
|
|||
|
4,038
|
|
|
13,034
|
|
|
22,799
|
|
|||
Deferred provision (benefit):
|
|
|
|
|
|
||||||
Federal
|
27,817
|
|
|
17,739
|
|
|
(6,557
|
)
|
|||
State
|
5,825
|
|
|
4,477
|
|
|
(1,858
|
)
|
|||
|
33,642
|
|
|
22,216
|
|
|
(8,415
|
)
|
|||
Non-current provision (benefit) resulting from allocating tax benefits directly to additional paid in capital and changes in liabilities:
|
|
|
|
|
|
||||||
Federal
|
(2,568
|
)
|
|
(2,755
|
)
|
|
(2,009
|
)
|
|||
State
|
(746
|
)
|
|
(970
|
)
|
|
(522
|
)
|
|||
Foreign
|
—
|
|
|
—
|
|
|
(11
|
)
|
|||
|
(3,314
|
)
|
|
(3,725
|
)
|
|
(2,542
|
)
|
|||
Provision for income taxes
|
$
|
34,366
|
|
|
$
|
31,525
|
|
|
$
|
11,842
|
|
|
Year Ended
December 31, |
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Statutory U.S. Federal tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Increase (decrease) in tax rate resulting from:
|
|
|
|
|
|
|||
State taxes—net of Federal benefit
|
4.8
|
%
|
|
5.0
|
%
|
|
18.6
|
%
|
Excess executive compensation
|
0.5
|
%
|
|
1.3
|
%
|
|
16.7
|
%
|
Section 199 deductions
|
(0.4
|
)%
|
|
(0.6
|
)%
|
|
(6.5
|
)%
|
Deferred compensation (ESSP)
|
0.2
|
%
|
|
(0.7
|
)%
|
|
(24.6
|
)%
|
Goodwill impairment
|
—
|
%
|
|
—
|
%
|
|
200.1
|
%
|
Tax basis deduction of investment
|
—
|
%
|
|
—
|
%
|
|
(15.3
|
)%
|
Provisions of American Taxpayer Relief Act of 2012
|
—
|
%
|
|
—
|
%
|
|
(10.3
|
)%
|
Acquisition working capital settlement
|
—
|
%
|
|
—
|
%
|
|
(5.0
|
)%
|
Other, net
|
0.1
|
%
|
|
—
|
%
|
|
(0.7
|
)%
|
Effective tax rate
|
40.2
|
%
|
|
40.0
|
%
|
|
208.0
|
%
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Gross deferred tax liabilities:
|
|
|
|
||||
Goodwill and other assets
|
$
|
111,156
|
|
|
$
|
86,242
|
|
Unbilled receivables
|
19,154
|
|
|
14,549
|
|
||
Property and equipment
|
4,554
|
|
|
3,931
|
|
||
Total
|
134,864
|
|
|
104,722
|
|
||
|
|
|
|
||||
Gross deferred tax assets:
|
|
|
|
||||
Retirement and other liabilities
|
(29,000
|
)
|
|
(31,851
|
)
|
||
Allowance for potential contract losses and other contract reserves
|
(3,429
|
)
|
|
(3,911
|
)
|
||
Federal and state operating loss carryforwards
|
(400
|
)
|
|
(441
|
)
|
||
Total
|
(32,829
|
)
|
|
(36,203
|
)
|
||
Net deferred tax liabilities
|
$
|
102,035
|
|
|
$
|
68,519
|
|
|
December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Gross unrecognized tax benefits at beginning of year
|
$
|
785
|
|
|
$
|
1,207
|
|
|
$
|
1,376
|
|
Lapse in statute of limitations
|
(266
|
)
|
|
(575
|
)
|
|
(307
|
)
|
|||
Increases in tax positions for prior years
|
—
|
|
|
80
|
|
|
95
|
|
|||
Decreases in tax positions for prior years
|
—
|
|
|
(13
|
)
|
|
(26
|
)
|
|||
Increases in tax positions for current year
|
—
|
|
|
86
|
|
|
69
|
|
|||
Gross unrecognized tax benefits at end of year
|
$
|
519
|
|
|
$
|
785
|
|
|
$
|
1,207
|
|
13.
|
Business Segment and Geographic Area Information
|
14.
|
Divestiture of ManTech Cyber Solutions International and Investment in CounterTack Inc.
|
15.
|
Quarterly Financial Information (Unaudited)
|
|
2015
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Revenues
|
$
|
370,330
|
|
|
$
|
384,378
|
|
|
$
|
393,008
|
|
|
$
|
402,401
|
|
Operating income
|
$
|
19,846
|
|
|
$
|
21,112
|
|
|
$
|
21,120
|
|
|
$
|
22,808
|
|
Income from operations before income taxes and equity method investments
|
$
|
19,497
|
|
|
$
|
20,879
|
|
|
$
|
22,353
|
|
|
$
|
22,625
|
|
Net income
|
$
|
11,758
|
|
|
$
|
12,450
|
|
|
$
|
13,028
|
|
|
$
|
13,891
|
|
|
|
|
|
|
|
|
|
||||||||
Class A common stock:
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares outstanding
|
24,206
|
|
|
24,325
|
|
|
24,341
|
|
|
24,393
|
|
||||
Basic earnings per share
|
$
|
0.31
|
|
|
$
|
0.33
|
|
|
$
|
0.35
|
|
|
$
|
0.37
|
|
Diluted weighted average common shares outstanding
|
24,359
|
|
|
24,426
|
|
|
24,406
|
|
|
24,513
|
|
||||
Diluted earnings per share
|
$
|
0.31
|
|
|
$
|
0.33
|
|
|
$
|
0.35
|
|
|
$
|
0.37
|
|
Class B common stock:
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares outstanding
|
13,193
|
|
|
13,193
|
|
|
13,193
|
|
|
13,193
|
|
||||
Basic earnings per share
|
$
|
0.31
|
|
|
$
|
0.33
|
|
|
$
|
0.35
|
|
|
$
|
0.37
|
|
Diluted weighted average common shares outstanding
|
13,193
|
|
|
13,193
|
|
|
13,193
|
|
|
13,193
|
|
||||
Diluted earnings per share
|
$
|
0.31
|
|
|
$
|
0.33
|
|
|
$
|
0.35
|
|
|
$
|
0.37
|
|
|
|
||||||||||||||
|
2014
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Revenues
|
$
|
452,033
|
|
|
$
|
463,381
|
|
|
$
|
447,200
|
|
|
$
|
411,367
|
|
Operating income
|
$
|
20,042
|
|
|
$
|
24,070
|
|
|
$
|
26,732
|
|
|
$
|
23,972
|
|
Income from operations before income taxes and equity method investments
|
$
|
16,059
|
|
|
$
|
12,929
|
|
|
$
|
26,492
|
|
|
$
|
23,621
|
|
Net income
|
$
|
9,634
|
|
|
$
|
7,708
|
|
|
$
|
15,487
|
|
|
$
|
14,465
|
|
|
|
|
|
|
|
|
|
||||||||
Class A common stock:
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares outstanding
|
23,988
|
|
|
24,023
|
|
|
24,061
|
|
|
24,115
|
|
||||
Basic earnings per share
|
$
|
0.26
|
|
|
$
|
0.21
|
|
|
$
|
0.42
|
|
|
$
|
0.39
|
|
Diluted weighted average common shares outstanding
|
24,057
|
|
|
24,092
|
|
|
24,126
|
|
|
24,191
|
|
||||
Diluted earnings per share
|
$
|
0.26
|
|
|
$
|
0.21
|
|
|
$
|
0.41
|
|
|
$
|
0.39
|
|
Class B common stock:
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares outstanding
|
13,193
|
|
|
13,193
|
|
|
13,193
|
|
|
13,193
|
|
||||
Basic earnings per share
|
$
|
0.26
|
|
|
$
|
0.21
|
|
|
$
|
0.42
|
|
|
$
|
0.39
|
|
Diluted weighted average common shares outstanding
|
13,193
|
|
|
13,193
|
|
|
13,193
|
|
|
13,193
|
|
||||
Diluted earnings per share
|
$
|
0.26
|
|
|
$
|
0.21
|
|
|
$
|
0.41
|
|
|
$
|
0.39
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
•
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that our receipts and expenditures are being made only in accordance with authorizations of management or our Board of Directors; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material adverse effect on our financial statements.
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Equity Compensation Plan Information
|
||||||||||
Plan Category
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
|
|
Weighted-average exercise price of outstanding options, warrants and rights
(b)
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
|
||||
Equity compensation plans approved by security holders
|
|
2,495,310
|
|
|
$
|
30.86
|
|
|
5,059,953
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
2,495,310
|
|
|
$
|
30.86
|
|
|
5,059,953
|
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits, Financial Statement Schedule
|
DESCRIPTION
|
PAGE
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets as of December 31, 2015 and 2014
|
|
Consolidated Statements of Income and Loss for the years ended December 31, 2015, 2014 and 2013
|
|
Consolidated Statements of Comprehensive Income and Loss for the years ended December 31, 2015, 2014 and 2013
|
|
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2015, 2014 and 2013
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013
|
|
Notes to Consolidated Financial Statements
|
SCHEDULE
NO.
|
|
DESCRIPTION
|
PAGE
|
Schedule II
|
|
Valuation and Qualifying Accounts for the years ended December 31, 2015, 2014 and 2013
|
|
|
MANTECH INTERNATIONAL CORPORATION
|
|
|
|
By:
|
/s/ GEORGE J. PEDERSEN
|
Name:
|
George J. Pedersen
|
Title:
|
Chairman of the Board of Directors
and Chief Executive Officer
(Principal Executive Officer)
|
Date:
|
February 19, 2016
|
Name and Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
GEORGE J. PEDERSEN
|
|
Chairman of the Board of Directors
|
|
February 19, 2016
|
George J. Pedersen
|
|
and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/
KEVIN M. PHILLIPS
|
|
Executive VP and Chief Financial Officer
|
|
February 19, 2016
|
Kevin M. Phillips
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/
JUDITH L. BJORNAAS
|
|
Deputy Chief Financial Officer
|
|
February 19, 2016
|
Judith L. Bjornaas
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/
RICHARD L. ARMITAGE
|
|
Director
|
|
February 19, 2016
|
Richard L. Armitage
|
|
|
|
|
|
|
|
|
|
/s/
MARY K. BUSH
|
|
Director
|
|
February 19, 2016
|
Mary K. Bush
|
|
|
|
|
|
|
|
|
|
/s/
BARRY G. CAMPBELL
|
|
Director
|
|
February 19, 2016
|
Barry G. Campbell
|
|
|
|
|
|
|
|
|
|
/
s
/
WALTER R. FATZINGER, JR.
|
|
Director
|
|
February 19, 2016
|
Walter R. Fatzinger, Jr.
|
|
|
|
|
|
|
|
|
|
/s/
RICHARD J. KERR
|
|
Director
|
|
February 19, 2016
|
Richard J. Kerr
|
|
|
|
|
|
|
|
|
|
/s/
KENNETH A. MINIHAN
|
|
Director
|
|
February 19, 2016
|
Kenneth A. Minihan
|
|
|
|
|
|
|
|
|
|
/s/
STEPHEN W. PORTER
|
|
Director
|
|
February 19, 2016
|
Stephen W. Porter
|
|
|
|
|
|
|
|
|
|
Doubtful Accounts
|
||||||||||||||||
|
Balance at Beginning of Period
|
|
Charged to Costs and Expenses
|
|
Deductions
|
|
Other*
|
|
Balance at End of Period
|
|||||||
2013
|
$
|
9,449
|
|
|
—
|
|
|
—
|
|
|
587
|
|
|
$
|
10,036
|
|
2014
|
$
|
10,036
|
|
|
—
|
|
|
(165
|
)
|
|
(41
|
)
|
|
$
|
9,830
|
|
2015
|
$
|
9,830
|
|
|
—
|
|
|
(552
|
)
|
|
(805
|
)
|
|
$
|
8,473
|
|
*
|
Other represents doubtful account reserves released or recorded as part of net revenues for estimated customer disallowances.
|
Deferred Tax Asset Valuation
|
||||||||||||||||
|
Balance at Beginning of Period
|
|
Charged to Costs and Expenses
|
|
Deductions
|
|
Other
|
|
Balance at End of Period
|
|||||||
2013
|
$
|
—
|
|
|
191
|
|
|
—
|
|
|
—
|
|
|
$
|
191
|
|
2014
|
$
|
191
|
|
|
—
|
|
|
(127
|
)
|
|
—
|
|
|
$
|
64
|
|
2015
|
$
|
64
|
|
|
—
|
|
|
—
|
|
|
(64
|
)
|
|
$
|
—
|
|
(a)
|
The acquisition by any Person of beneficial ownership (as defined in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended) of fifty percent (50%) or more of the outstanding voting power of the Company’s stock; provided, however, that the following acquisitions shall not constitute a Change in Control for purposes of this subparagraph (a): (i) any acquisition by the Company or any of its Subsidiaries; (ii) an acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Subsidiaries; (iii) acquisitions pursuant to a transaction that complies with clauses (i) or (ii) of subparagraph (c) below, or (iv) any acquisition of voting power resulting solely from the Triggering Event.
|
(b)
|
Individuals who at the beginning of any two year period constitute the Board (the “
Incumbent Board
”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a director of the Company during such two-year period and whose election, or whose nomination for election by the Company’s stockholders, to the Board was either (i) approved by a vote of at least a majority of the directors then comprising the Incumbent Board or (ii) recommended by a nominating committee comprised entirely of directors who are then Incumbent Board members, shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended), other actual or threatened solicitation of proxies or consents or an actual or threatened tender offer; or
|
(c)
|
Consummation of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “
Business Combination
”), in each case unless following such Business Combination, all or substantially all of the Persons who were the Beneficial Owners, respectively, of the Company’s outstanding shares and outstanding voting securities immediately prior to such Business Combination own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the Company or, as the case may be, of the entity resulting from the Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or the entity resulting from the Business Combination or all or substantially all of the Company’s assets either directly or through one or more Subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the outstanding voting securities (provided, however, that for purposes of this clause (i) any shares of common stock or voting securities of such resulting entity received by such Beneficial Owners in such Business Combination other than as the result of such Beneficial Owners’ ownership of the Company’s outstanding shares or outstanding voting securities immediately prior to such Business Combination shall not be considered to be owned by such Beneficial Owners for the purposes of calculating their percentage of ownership of the outstanding common stock and voting power of the resulting entity); and (ii) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from the Business Combination) beneficially owns, directly or indirectly, fifty percent (50%) or more of the combined voting power of the then outstanding voting securities of such entity resulting from the Business Combination unless such Person owned fifty percent (50%) or more of the Company’s outstanding shares or outstanding voting securities immediately prior to the Business Combination.
|
(d)
|
Approval by the Company’s stockholders of a complete liquidation or dissolution of the Company.
|
SECTION 5.
|
Payment upon Change in Control or Qualifying Termination after a Triggering Event
|
ManTech International Corporation
|
|
|
/s/ George J. Pedersen
|
George J. Pedersen
|
Chairman of the Board and Chief Executive Officer
|
|
/s/ Executive
|
[Name of Executive]
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of ManTech International Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
By:
|
/s/ George J. Pedersen
|
Name:
|
George J. Pedersen
|
Title:
|
Chairman of the Board of Directors
and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of ManTech International Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
By:
|
/s/ Kevin M. Phillips
|
Name:
|
Kevin M. Phillips
|
Title:
|
Chief Financial Officer
|
|
|
By:
|
/s/ George J. Pedersen
|
Name:
|
George J. Pedersen
|
Title:
|
Chairman of the Board of Directors
and Chief Executive Officer
|
|
|
By:
|
/s/ Kevin M. Phillips
|
Name:
|
Kevin M. Phillips
|
Title:
|
Chief Financial Officer
|