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What changed in Booz Allen Hamilton Holding Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Booz Allen Hamilton Holding Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+374 added−372 removedSource: 10-K (2024-05-24) vs 10-K (2023-05-26)

Top changes in Booz Allen Hamilton Holding Corp's 2024 10-K

374 paragraphs added · 372 removed · 277 edited across 2 sections

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

94 edited+39 added−30 removed119 unchanged
Biggest changeBelow is a reconciliation of Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow to the most directly comparable financial measure calculated and presented in accordance with GAAP. 52 Table of Contents Fiscal Year Ended March 31, (Amounts in thousands, except share and per share data) 2023 2022 2021 (Unaudited) Revenue, Excluding Billable Expenses Revenue $9,258,911 $8,363,700 $7,858,938 Less: Billable expenses 2,808,857 2,474,163 2,325,888 Revenue, Excluding Billable Expenses $6,450,054 $5,889,537 $5,533,050 Adjusted Operating Income Operating Income $446,848 $685,181 $754,371 Acquisition and divestiture costs (a) 44,269 97,485 411 Financing transaction costs (b) 6,888 2,348 — COVID-19 supplemental employee benefits (c) — — 577 Significant acquisition amortization (d) 51,553 38,295 — Legal matter reserve (e) 350,000 — — Restructuring costs (f) — 4,164 — Adjusted Operating Income $899,558 $827,473 $755,359 EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue & Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses Net income attributable to common stockholders $271,791 $466,740 $608,958 Income tax expense 96,734 137,466 53,481 Interest and other, net (g) 78,899 81,138 91,932 Depreciation and amortization 165,484 145,747 84,315 EBITDA 612,908 831,091 838,686 Acquisition and divestiture costs (a) 44,269 97,485 411 Financing transaction costs (b) 6,888 2,348 — Legal matter reserve (e) 350,000 — — COVID-19 supplemental employee benefits (c) — — 577 Restructuring costs (f) — 4,164 — Adjusted EBITDA $1,014,065 $935,088 $839,674 Net income margin attributable to common stockholders 2.9% 5.6% 7.7% Adjusted EBITDA Margin on Revenue 11.0% 11.2% 10.7% Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses 15.7% 15.9% 15.2% 53 Table of Contents Fiscal Year Ended March 31, (Amounts in thousands, except share and per share data) 2023 2022 2021 (Unaudited) Adjusted Net Income Net income attributable to common stockholders $271,791 $466,740 $608,958 Acquisition and divestiture costs (a) 44,269 97,485 411 Financing transaction costs (b) 6,888 2,348 — COVID-19 supplemental employee benefits (c) — — 577 Significant acquisition amortization (d) 51,553 38,295 — Legal matter reserve (e) 350,000 — — Restructuring costs (f) — 4,164 — Gains associated with equity method investment activity (h) — (12,761) — Gains associated with divestitures or deconsolidation (i) (44,632) — — Research and development tax credits (j) — — (2,928) Release of income tax reserves (k) — — (29) Loss on debt extinguishment (l) — — 13,239 Remeasurement of deferred tax assets/liabilities (m) — — (76,767) Amortization or write-off of debt issuance costs and debt discount 6,554 3,340 2,402 Adjustments for tax effect (n) (81,389) (31,399) (4,324) Adjusted Net Income $605,034 $568,212 $541,539 Adjusted Diluted Earnings Per Share Weighted-average number of diluted shares outstanding 132,716,436 134,850,808 138,703,220 Diluted earnings per share $2.03 $3.44 $4.37 Adjusted Net Income Per Diluted Share (o) $4.56 $4.21 $3.90 Free Cash Flow Net cash provided by operating activities 602,822 736,526 718,684 Less: Purchases of property, equipment and software (76,130) (79,964) (87,210) Free Cash Flow $526,692 $656,562 $631,474 Operating cash flow conversion 222% 158% 118% Free cash flow conversion 87% 116% 117% (a) Represents costs associated with the acquisition efforts of the Company related to transactions for which the Company has entered into a letter of intent to acquire a controlling financial interest in the target entity, as well as the divestiture costs incurred in divesting a portion of our business.
Biggest changeBelow is a reconciliation of Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow to the most directly comparable financial measure calculated and presented in accordance with GAAP. 52 Table of Contents Fiscal Year Ended March 31, (Amounts in thousands, except share and per share data) 2024 2023 2022 (Unaudited) Revenue, Excluding Billable Expenses Revenue $ 10,661,896 $ 9,258,911 $ 8,363,700 Less: Billable expenses 3,281,776 2,808,857 2,474,163 Revenue, Excluding Billable Expenses * $ 7,380,120 $ 6,450,054 $ 5,889,537 Adjusted Operating Income Operating Income $ 1,013,403 $ 446,848 $ 685,181 Change in provision for claimed indirect costs (a) (18,345) — — Acquisition and divestiture costs (b) 7,580 44,269 97,485 Financing transaction costs (c) 820 6,888 2,348 Significant acquisition amortization (d) 53,897 51,553 38,295 DC tax assessment adjustment (e) (20,050) — — Legal matter reserve (f) 27,453 350,000 — Restructuring costs (g) — — 4,164 Adjusted Operating Income $ 1,064,758 $ 899,558 $ 827,473 EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue & Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses Net income attributable to common stockholders $ 605,706 $ 271,791 $ 466,740 Income tax expense 247,614 96,734 137,466 Interest and other, net (h) 160,083 78,899 81,138 Depreciation and amortization 164,203 165,484 145,747 EBITDA 1,177,606 612,908 831,091 Change in provision for claimed indirect costs (a) (18,345) — — Acquisition and divestiture costs (b) 7,580 44,269 97,485 Financing transaction costs (c) 820 6,888 2,348 DC tax assessment adjustment (e) (20,050) — — Legal matter reserve (f) 27,453 350,000 — Restructuring costs (g) — — 4,164 Adjusted EBITDA $ 1,175,064 $ 1,014,065 $ 935,088 Net income margin attributable to common stockholders 5.7 % 2.9 % 5.6 % Adjusted EBITDA Margin on Revenue 11.0 % 11.0 % 11.2 % Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses 15.9 % 15.7 % 15.9 % 53 Table of Contents Fiscal Year Ended March 31, (Amounts in thousands, except share and per share data) 2024 2023 2022 (Unaudited) Adjusted Net Income Net income attributable to common stockholders $ 605,706 $ 271,791 $ 466,740 Change in provision for claimed indirect costs (a) (18,345) — — Acquisition and divestiture costs (b) 7,580 44,269 97,485 Financing transaction costs (c) 820 6,888 2,348 Significant acquisition amortization (d) 53,897 51,553 38,295 DC tax assessment adjustment (e) (20,050) — — Legal matter reserve (f) 27,453 350,000 — Restructuring costs (g) — — 4,164 Valuation adjustments to cost method investments (i) 5,669 — — Gains associated with equity method investment activity (j) — — (12,761) Gains associated with divestitures or deconsolidation (k) — (44,632) — Amortization or write-off of debt issuance costs and debt discount 4,017 6,554 3,340 Adjustments for tax effect (l) 52,218 (81,389) (31,399) Adjusted Net Income $ 718,965 $ 605,034 $ 568,212 Adjusted Diluted Earnings Per Share Weighted-average number of diluted shares outstanding 130,815,903 132,716,436 134,850,808 Diluted earnings per share $ 4.59 $ 2.03 $ 3.44 Adjusted Net Income Per Diluted Share (m) $ 5.50 $ 4.56 $ 4.21 Free Cash Flow Net cash provided by operating activities $ 258,838 $ 602,822 $ 736,526 Less: Purchases of property, equipment and software (66,699) (76,130) (79,964) Free Cash Flow $ 192,139 $ 526,692 $ 656,562 Operating cash flow conversion 43 % 222 % 158 % Free cash flow conversion 27 % 87 % 116 % * Revenue, Excluding Billable Expenses includes $18.3 million of revenue resulting from the reduction to our provision for claimed indirect costs (see note (a) below), and $20.1 million of revenue resulting from the impact of the Company's unfavorable ruling from the District of Columbia Court of Appeals (see note (e) below).
Generally, our contract modifications do not include goods or services which are distinct, and therefore are accounted for as part of the original performance obligation(s) with any impact on transaction price or estimated costs at completion being recorded as through a cumulative catch-up adjustment to revenue.
Generally, our contract modifications do not include goods or services which are distinct, and therefore are accounted for as part of the original performance obligation(s) with any impact on transaction price or estimated costs at completion being recorded through a cumulative catch-up adjustment to revenue.
Factors and Trends Affecting Our Results of Operations Our results of operations have been, and we expect them to continue to be, affected by the following factors, which may cause our future results of operations to differ from our historical results of operations discussed under “—Results of Operations.” Business Environment and Key Trends in Our Markets We believe that the following trends and developments in the U.S. government services industry and our markets may influence our future results of operations: • uncertainty around the timing, extent, nature and effect of Congressional and other U.S. government actions to approve funding of the U.S. government, address budgetary constraints, including caps on the discretionary budget for defense and non-defense departments and agencies, as established by the Bipartisan Budget Control Act of 2011 (“BCA”) and subsequently adjusted by the American Taxpayer Relief Act of 2012, the Bipartisan Budget Act of 2013, the Bipartisan Budget Act of 2015, the Bipartisan Budget Act of 2018, and the Bipartisan Budget Act of 2019, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), and the Consolidated Appropriations Act of 2021, and address the ability of Congress to determine how to allocate the available budget authority and pass appropriations bills to fund both U.S. government departments and agencies that are, and those that are not, subject to the caps; • budget deficits and the growing U.S. national debt increasing pressure on the U.S. government to reduce federal spending across all federal agencies together with associated uncertainty about the size and timing of those reductions; 55 Table of Contents • cost-cutting and efficiency initiatives, current and future budget restrictions, continued implementation of Congressionally mandated automatic spending cuts, and other efforts to reduce U.S. government spending could cause clients to reduce or delay funding for orders for services or invest appropriated funds on a less consistent or rapid basis or not at all, particularly when considering long-term initiatives and in light of current uncertainty around Congressional efforts to craft a long-term agreement on the U.S. government's ability to incur indebtedness in excess of its current limits, and generally in the current political environment, there is a risk that clients will not issue task orders in sufficient volume to reach current contract ceilings, alter historical patterns of contract awards, including the typical increase in the award of task orders or completion of other contract actions by the U.S. government in the period before the end of the U.S. government's fiscal year on September 30, delay requests for new proposals and contract awards, rely on short-term extensions and funding of current contracts, or reduce staffing levels and hours of operation; • delays in the completion of future U.S. government’s budget processes, which have in the past and could in the future delay procurement of the products, services, and solutions we provide; • changes in the relative mix of overall U.S. government spending and areas of spending growth, with lower spending on homeland security, intelligence, defense-related programs as certain overseas operations end, and continued increased spending on cybersecurity, Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR), advanced analytics, technology integration, and healthcare, including as a result of the presidential and administration transition; • the extent, nature and effect of disease outbreaks, pandemics and widespread health epidemics, such as COVID-19, including the impact on federal budgets, current and pending procurements, supply chains, demand for services, deployment and productivity of our employees and the economic and societal impact of a pandemic, and the expected continued volatility in billable expenses; • increased inflationary pressure that could impact the cost of doing business and/or reduce customer buying power; • risks related to a possible recession and volatility or instability of the global financial system, including bank failures and the resulting impact on counterparties and business conditions generally; • legislative and regulatory changes to limitations on the amount of allowable executive compensation permitted under flexibly priced contracts following implementation of interim rules adopted by federal agencies pursuant to the Bipartisan Budget Act of 2013, which substantially further reduce the amount of allowable executive compensation under these contracts and extend these limitations to a larger segment of our executives and our entire contract base; • efforts by the U.S. government to address organizational conflicts of interest and related issues and the impact of those efforts on us and our competitors; • increased audit, review, investigation, and general scrutiny by U.S. government agencies of government contractors' performance under U.S. government contracts and compliance with the terms of those contracts and applicable laws; • the federal focus on refining the definition of “inherently governmental” work, including proposals to limit contractor access to sensitive or classified information and work assignments, which will continue to drive pockets of insourcing in various agencies, particularly in the intelligence market; • negative publicity and increased scrutiny of government contractors in general, including us, relating to U.S. government expenditures for contractor services and incidents involving the mishandling of sensitive or classified information; • U.S. government agencies awarding contracts on a technically acceptable/lowest cost basis, which could have a negative impact on our ability to win certain contracts; • increased competition from other government contractors and market entrants seeking to take advantage of certain of the trends identified above, and an industry trend towards consolidation, which may result in the emergence of companies that are better able to compete against us; • cost cutting and efficiency and effectiveness efforts by U.S. civilian agencies with a focus on increased use of performance measurement, “program integrity” efforts to reduce waste, fraud and abuse in entitlement programs, and renewed focus on improving procurement practices for and interagency use of IT services, including through the use of cloud based options and data center consolidation; • restrictions by the U.S. government on the ability of federal agencies to use lead system integrators, in response to cost, schedule, and performance problems with large defense acquisition programs where contractors were performing the lead system integrator role; 56 Table of Contents • increasingly complex requirements and enforcement and reporting landscapes of the Department of Defense and the U.S. intelligence community, including cybersecurity, managing federal health care cost growth, competition, and focus on reforming existing government regulation of various sectors of the economy, such as financial regulation and healthcare; and • increasing small business regulations across the Department of Defense and civilian agency clients continue to gain traction, agencies are required to meet high small business set aside targets, and large business prime contractors are required to subcontract in accordance with considerable small business participation goals necessary for contract award.
Factors and Trends Affecting Our Results of Operations Our results of operations have been, and we expect them to continue to be, affected by the following factors, which may cause our future results of operations to differ from our historical results of operations discussed under “—Results of Operations.” Business Environment and Key Trends in Our Markets We believe that the following trends and developments in the U.S. government services industry and our markets may influence our future results of operations: • uncertainty around the timing, extent, nature and effect of Congressional and other U.S. government actions to approve funding of the U.S. government, address budgetary constraints, including caps on the discretionary budget for defense and non-defense departments and agencies, as established by the Bipartisan Budget Control Act of 2011 (“BCA”) and subsequently adjusted by the American Taxpayer Relief Act of 2012, the Bipartisan Budget Act of 2013, the Bipartisan Budget Act of 2015, the Bipartisan Budget Act of 2018, and the Bipartisan Budget Act of 2019, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), and the Consolidated Appropriations Act of 2021, and address the ability of Congress to determine how to allocate the available budget authority and pass appropriations bills to fund both U.S. government departments and agencies that are, and those that are not, subject to the caps; • budget deficits and the growing U.S. national debt increasing pressure on the U.S. government to reduce federal spending across all federal agencies together with associated uncertainty about the size and timing of those reductions; 55 Table of Contents • cost-cutting and efficiency initiatives, current and future budget restrictions, continued implementation of Congressionally mandated automatic spending cuts, and other efforts to reduce U.S. government spending could cause clients to reduce or delay funding for orders for services or invest appropriated funds on a less consistent or rapid basis or not at all, particularly when considering long-term initiatives and in light of current uncertainty around Congressional efforts to craft a long-term agreement on the U.S. government's ability to incur indebtedness in excess of its current limits, and generally in the current political environment, there is a risk that clients will not issue task orders in sufficient volume to reach current contract ceilings, alter historical patterns of contract awards, including the typical increase in the award of task orders or completion of other contract actions by the U.S. government in the period before the end of the U.S. government's fiscal year on September 30, delay requests for new proposals and contract awards, rely on short-term extensions and funding of current contracts, or reduce staffing levels and hours of operation; • delays in the completion of future U.S. government’s budget processes, which have in the past and could in the future delay procurement of the products, services, and solutions we provide; • changes in the relative mix of overall U.S. government spending and areas of spending growth, with lower spending on homeland security, intelligence, defense-related programs as certain overseas operations end, and continued increased spending on cybersecurity, Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR), advanced analytics, technology integration, and healthcare, including as a result of the presidential and administration transition; • the extent, nature and effect of disease outbreaks, pandemics and widespread health epidemics, such as COVID-19, including the impact on federal budgets, current and pending procurements, supply chains, demand for services, deployment and productivity of our employees and the economic and societal impact of a pandemic, and the expected continued volatility in billable expenses; • increased inflationary pressure that could impact the cost of doing business and/or reduce customer buying power; • risks related to a possible recession and volatility or instability of the global financial system, including bank failures and the resulting impact on counterparties and business conditions generally; • legislative and regulatory changes, or shifts in regulatory priorities as a result of U.S. administration transitions, including limitations on the amount of allowable executive compensation permitted under flexibly priced contracts following implementation of interim rules adopted by federal agencies pursuant to the Bipartisan Budget Act of 2013, which substantially further reduce the amount of allowable executive compensation under these contracts and extend these limitations to a larger segment of our executives and our entire contract base; • efforts by the U.S. government to address organizational conflicts of interest and related issues and the impact of those efforts on us and our competitors; • increased audit, review, investigation, and general scrutiny by U.S. government agencies of government contractors' performance under U.S. government contracts and compliance with the terms of those contracts and applicable laws; • the federal focus on refining the definition of “inherently governmental” work, including proposals to limit contractor access to sensitive or classified information and work assignments, which will continue to drive pockets of insourcing in various agencies, particularly in the intelligence market; • negative publicity and increased scrutiny of government contractors in general, including us, relating to U.S. government expenditures for contractor services and incidents involving the mishandling of sensitive or classified information; • U.S. government agencies awarding contracts on a technically acceptable/lowest cost basis, which could have a negative impact on our ability to win certain contracts; • increased competition from other government contractors and market entrants seeking to take advantage of certain of the trends identified above, and an industry trend towards consolidation, which may result in the emergence of companies that are better able to compete against us; • cost cutting and efficiency and effectiveness efforts by U.S. civilian agencies with a focus on increased use of performance measurement, “program integrity” efforts to reduce waste, fraud and abuse in entitlement programs, and renewed focus on improving procurement practices for and interagency use of IT services, including through the use of cloud based options and data center consolidation; • restrictions by the U.S. government on the ability of federal agencies to use lead system integrators, in response to cost, schedule, and performance problems with large defense acquisition programs where contractors were performing the lead system integrator role; 56 Table of Contents • increasingly complex requirements and enforcement and reporting landscapes of the Department of Defense and the U.S. intelligence community, including cybersecurity, managing federal health care cost growth, competition, and focus on reforming existing government regulation of various sectors of the economy, such as financial regulation and healthcare; and • increasing small business regulations across the Department of Defense and civilian agency clients continue to gain traction, agencies are required to meet high small business set aside targets, and large business prime contractors are required to subcontract in accordance with considerable small business participation goals necessary for contract award.
Any determination to pursue one or more of the above alternative uses for excess cash is subject to the discretion of our Board of Directors, and will depend upon various factors, including our results of operations, financial condition, liquidity requirements, restrictions that may be imposed by applicable law, our contracts, and our Credit Agreement, as amended, and other factors deemed relevant by our Board of Directors.
Any determination to pursue one or more of the above alternative uses for excess cash is subject to the discretion of our Board, and will depend upon various factors, including our results of operations, financial condition, liquidity requirements, restrictions that may be imposed by applicable law, our contracts, and our Credit Agreement, as amended, and other factors deemed relevant by our Board.
As our business is highly integrated and all of our components have similar economic characteristics, we conclude that we have one reporting unit at the consolidated entity level, which is the same as our single operating segment. We test goodwill for impairment using the quantitative method (primarily based on market capitalization).
As our business is highly integrated and all of our components have similar economic characteristics, we conclude that we have one reporting unit at the consolidated entity level, which is the same as our single operating segment. We test goodwill for impairment using the quantitative test (primarily based on market capitalization).
The applicable margin for the New Term Loan A and the New Revolving Loans ranges from 1.00% to 2.00% for Term SOFR loans and zero to 1.00% for base rate loans, in each case based on the lower of (i) the applicable rate per annum determined pursuant to a consolidated total net leverage ratio grid and (ii) the applicable rate per annum determined pursuant to a ratings grid.
The applicable margin for the Term Loan A and the Revolving Loans ranges from 1.00% to 2.00% for Term SOFR loans and zero to 1.00% for base rate loans, in each case based on the lower of (i) the applicable rate per annum determined pursuant to a consolidated total net leverage ratio grid and (ii) the applicable rate per annum determined pursuant to a ratings grid.
The Company's objectives in using cash flow hedges are to reduce volatility due to interest rate movements and to add stability to interest expense (see Note 11, “Derivatives,” in our consolidated financial statements).
The Company's objectives in using cash flow hedges are to reduce volatility due to interest rate movements and to add stability to interest expense (see Note 11, “Derivatives,” to the consolidated financial statements).
You should read this discussion in conjunction with our consolidated financial statements and the related notes contained elsewhere in this Annual Report, and Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended March 31, 2022, which provides additional information on comparisons of fiscal 2022 and 2021.
You should read this discussion in conjunction with our consolidated financial statements and the related notes contained elsewhere in this Annual Report, and Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended March 31, 2023, which provides additional information on comparisons of fiscal 2023 and 2022.
We anticipate that cash provided by operating activities, existing cash and cash equivalents, and borrowing capacity under our Revolving Credit Facility will be sufficient to meet our anticipated cash requirements for the next twelve months, which primarily include: • operating expenses, including salaries; • working capital requirements to fund both organic and inorganic growth of our business; • capital expenditures which primarily relate to the purchase of computer s, business systems, furniture and leasehold improvements to support our operations; • the on-going maintenance around all financial management systems; • commitments and other discretionary investments; • debt service requirements for borrowings under our Senior Credit Facility and interest payments for the Senior Notes; and • cash taxes to be paid.
We anticipate that cash provided by operating activities, existing cash and cash equivalents, and borrowing capacity under our Revolving Credit Facility will be sufficient to meet our anticipated cash requirements for the next twelve months, which primarily include: • operating expenses, including salaries; • working capital requirements to fund both organic and inorganic growth of our business; • capital expenditures which primarily relate to the purchase of computer s, business systems, furniture and leasehold improvements to support our operations; • the on-going maintenance around all financial management systems; • commitments and other discretionary investments; • debt service requirements for borrowings under our Senior Credit Facility and interest payments for the Senior Notes due 2028, Senior Notes due 2029 and Senior Notes due 2033; and • cash taxes to be paid.
The accompanying consolidated financial statements present the financial position of the Company as of March 31, 2023 and 2022 and the Company’s results of operations for fiscal 2023, fiscal 2022, and fiscal 2021. Certain amounts reported in the Company's prior year consolidated financial statements have been reclassified to conform to the current year presentation.
The accompanying consolidated financial statements present the financial position of the Company as of March 31, 2024 and 2023 and the Company’s results of operations for fiscal 2024, fiscal 2023, and fiscal 2022. Certain amounts reported in the Company's prior year consolidated financial statements have been reclassified to conform to the current year presentation.
We expect to recognize revenue from a substantial portion of funded backlog as of March 31, 2023 within the next twelve months. However, given the uncertainties discussed above, as well as the risks described in “Item 1A.
We expect to recognize revenue from a substantial portion of funded backlog as of March 31, 2024 within the next twelve months. However, given the uncertainties discussed above, as well as the risks described in “Item 1A.
Many of our contracts recognize revenue under a contract cost-based input method and require an Estimate-at-Completion (EAC) process, which management uses to review and monitor the progress towards the completion of our performance obligations.
Many of our contracts recognize revenue under a contract cost-based input method and require an Estimate-at-Completion (“EAC”) process, which management uses to review and monitor the progress towards the completion of our performance obligations.
Goodwill and Intangible Assets Impairment We test goodwill and trade name for impairment at least annually as of January 1 of each year and more frequently if interim indicators of impairment exist. We perform our impairment testing of goodwill at the reporting level.
Goodwill and Intangible Assets Impairment We test goodwill and the Company’s trade name for impairment at least annually as of January 1 of each year and more frequently if interim indicators of impairment exist. We perform our impairment testing of goodwill at the reporting unit level.
In addition, a number of our contracts may provide for performance-based payments, which allow us to bill and collect cash prior to completing the work. Accounts receivable is the principal component of our working capital and is generally driven by revenue growth with other short-term fluctuations related to the payment practices of our clients.
In addition, a number of our contracts may provide for performance-based payments, which allow us to bill and collect cash prior to completing the work. 66 Table of Contents Accounts receivable is the principal component of our working capital and is generally driven by revenue growth with other short-term fluctuations related to the payment practices of our clients.
The rate at which the New Term Loan A and the New Revolving Loans bear interest will be based either on Term SOFR (subject to a 0.10% adjustment and a floor of zero) for the applicable interest period or a base rate (equal to the highest of (i) the administrative agent’s prime corporate rate, (ii) the overnight federal funds rate plus 0.50% and (iii) three-month Term SOFR (subject to a 0.10% adjustment and a floor of zero) plus 1.00%), in each case plus an applicable margin, payable at the end of the applicable interest period and in any event at least quarterly.
The rate at which the Term Loan A and the Revolving Loans bear interest will be based either on Term Secured Overnight Financing Rate (“SOFR” subject to a 0.10% adjustment and a floor of zero) for the applicable interest period or a base rate (equal to the highest of (i) the administrative agent’s prime corporate rate, (ii) the overnight federal funds rate plus 0.50% and (iii) three-month Term SOFR (subject to a 0.10% adjustment and a floor of zero) plus 1.00%), in each case plus an applicable margin, payable at the end of the applicable interest period and in any event at least quarterly.
We support our federal government clients by helping them tackle their most complex and pressing challenges such as protecting soldiers in combat and supporting their families, advancing cyber capabilities, keeping our national infrastructure secure, enabling and enhancing digital services, transforming the healthcare system, and improving government efficiency to achieve better outcomes.
We support our federal government clients by helping them tackle their most complex and pressing challenges such as protecting soldiers in combat and supporting their families, advancing cyber capabilities, securing our national infrastructure, enabling and enhancing digital services, transforming the healthcare system, and improving government efficiency to achieve better outcomes.
(h) Represents (i) a gain in the second quarter of fiscal 2022 associated with the Company's previously held equity method investment in Tracepoint and (ii) a gain in the third quarter of fiscal 2022 associated with the divestiture of a controlling financial interest in SnapAttack.
(j) Represents (i) a gain in the second quarter of fiscal 2022 associated with the Company's previously held equity method investment in Tracepoint and (ii) a gain in the third quarter of fiscal 2022 associated with the divestiture of a controlling financial interest in SnapAttack.
As of March 31, 2023 and 2022, Booz Allen Hamilton was contingently liable under open standby letters of credit and bank guarantees issued by its banks in favor of third parties that totaled $6.1 million and $8.4 million, respectively. These letters of credit and bank guarantees primarily support insurance and bid and performance obligations.
As of March 31, 2024 and 2023, Booz Allen Hamilton was contingently liable under open standby letters of credit and bank guarantees issued by its banks in favor of third parties that totaled $4.4 million and $6.1 million, respectively. These letters of credit and bank guarantees primarily support insurance and bid and performance obligations.
The remainder is expected to be recognized thereafter. However, given the uncertainties discussed below, as well as the risks described in “Item 1A. Risk Factors”, we can give no assurance that we will be able to convert our backlog into revenue in any particular period, if at all.
The remainder is expected to be recognized thereafter. However, given the uncertainties discussed below, as well as the risks described in “Item 1A. Risk Factors,” we can give no assurance that we will be able to convert our backlog into revenue in any particular period, if at all.
We report internally on our backlog on a monthly basis and review backlog upon occurrence of certain events to determine if any adjustments are necessary. 59 Table of Contents We cannot predict with any certainty the portion of our backlog that we expect to recognize as revenue in any future period and we cannot guarantee that we will recognize any revenue from our backlog.
We report internally on our backlog on a monthly basis and review backlog upon occurrence of certain events to determine if any adjustments are necessary. We cannot predict with any certainty the portion of our backlog that we expect to recognize as revenue in any future period and we cannot guarantee that we will recognize any revenue from our backlog.
(i) Represents the gain recognized on the divestitures of the Company's MENA business in the second quarter of fiscal 2023, its MTS business in the third quarter of fiscal 2023, and the gain on the deconsolidation of an artificial intelligence software platform business in the third quarter of fiscal 2023.
(k) Represents the gain recognized on the divestitures of the Company's MENA business in the second quarter of fiscal 2023, its MTS business in the third quarter of fiscal 2023, and the gain on the deconsolidation of an artificial intelligence software platform business in the third quarter of fiscal 2023.
We test the trade name for impairment using the relief from royalty method that requires management to make significant amount of judgments and estimates in the valuation. We do not consider goodwill, trade name, or any other amortizable intangible assets at risk of impairment.
We test the trade name for impairment using the relief from royalty method that requires management to make a significant number of judgments and estimates in the valuation. We do not consider goodwill, trade name, or any other amortizable intangible assets at risk of impairment.
The remaining balance of the New Term Loan A will be payable upon maturity.
The remaining balance of Term Loan A will be payable upon maturity.
An adverse change in any of these factors could have a significant impact on the recoverability of other intangible assets. During the fiscal years ended March 31, 2023, March 31, 2022, and March 31, 2021, the Company did not record any impairment of goodwill and intangible assets.
An adverse change in any of these factors could have a significant impact on the recoverability of other intangible assets. During the fiscal years ended March 31, 2024, 2023, and 2022, the Company did not record any impairment of goodwill or intangible assets.
Our approximately 31,900 employees work to solve hard problems by making clients' missions their own, combining decades of consulting and domain expertise with functional expertise in areas such as analytics, digital solutions, engineering, and cyber, all fostered by a culture of innovation that extends to all reaches of the Company.
Our approximately 34,200 employees work to solve hard problems by making clients' missions their own, combining decades of consulting and domain expertise with functional expertise in areas such as analytics, digital solutions, engineering, and cyber, all fostered by a culture of innovation that extends to all reaches of the Company.
For fiscal 2023, 2022, and 2021, the aggregate impact of adjustments in contract estimates was not material. 62 Table of Contents Remaining performance obligations represent the transaction price of exercised contracts for which work has not yet been performed, irrespective of whether funding has or has not been authorized and appropriated as of the date of exercise.
For fiscal 2024, 2023, and 2022, the aggregate impact of adjustments in contract estimates was not material. 62 Table of Contents Remaining performance obligations represent the transaction price of exercised contracts for which work has not yet been performed, regardless of whether funding has or has not been authorized and appropriated as of the date of exercise.
Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts. 58 Table of Contents • Unfunded Backlog.
Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts. • Unfunded Backlog.
Unfunded backlog represents the revenue value of orders (including optional orders) for services under existing contracts for which funding has not been appropriated or otherwise authorized. • Priced Options.
Unfunded backlog represents the revenue value of orders (including optional orders) for services under existing contracts for which funding has not been appropriated or otherwise authorized. 58 Table of Contents • Priced Options.
For fiscal 2023, 2022, and 2021, 95%, 94%, and 93%, respectively, of our revenue was generated by contracts and task orders for which we served as a prime contractor; 5%, 6%, and 7%, respectively, of our revenue was generated by contracts and task orders for which we served as a subcontractor; and 25%, 24%, and 25%, respectively, of our revenue was generated by services provided by our subcontractors.
For fiscal 2024, 2023, and 2022, 95%, 95%, and 94%, respectively, of our revenue was generated by contracts and task orders for which we served as a prime contractor; 5%, 5%, and 6%, respectively, of our revenue was generated by contracts and task orders for which we served as a subcontractor; and 25%, 25%, and 24%, respectively, of our revenue was generated by services provided by our subcontractors.
Department of Justice investigation disclosed in Note 20 to the consolidated financial statements in the Company’s annual report on Form 10-K, and restructuring costs.
Department of Justice investigation disclosed in Note 20, “Commitments and Contingencies,” to the consolidated financial statements in the Company’s annual report on Form 10-K, and restructuring costs.
(n) Reflects the tax effect of adjustments at an assumed effective tax rate of 26%, which approximates the blended federal and state tax rates, and consistently excludes the impact of other tax credits and incentive benefits realized. The tax effect of certain discrete items is calculated specifically and may vary from the general 26% rate.
(l) Reflects the tax effect of adjustments at an assumed effective tax rate of 26%, which a pproximates the blended federal and state tax rates, and consistently excludes the impact of other tax credits and incentive benefits realized. The tax effect of certain discrete items is calculated specifically and may vary from the general 26% rate.
Additions to funded backlog during fiscal 2023 and 2022 totaled $10.2 billion and $8.6 billion respectively, as a result of the conversion of unfunded backlog to funded backlog, the award of new contracts and tas k orders under which funding was appropriated, and the exercise and subsequent funding of priced options.
Additions to funded backlog during fiscal 2024 and 2023 totaled $10.9 billion and $10.2 billion respectively, as a result of the conversion of unfunded backlog to funded backlog, the award of new contracts and tas k orders under which funding was appropriated, and the exercise and subsequent funding of priced options.
Any number of contractors typically competes under multiple award IDIQ contract vehicles for task orders to provide particular services, and we earn revenue under these contract vehicles only to the extent that we are successful in the bidding process for task orders. No single task order under any IDIQ contract represented more than 3.0% of our revenue in fiscal 2023.
Any number of contractors typically competes under multiple award IDIQ contract vehicles for task orders to provide particular services, and we earn revenue under these contract vehicles only to the extent that we are successful in the bidding process for task orders. No single task order under any IDIQ contract represented more than 4.5% of our revenue in fiscal 2024.
Changes in contract type as a result of re-competes and new business could influence the percentage/mix in unanticipated ways.
Changes in contract type as a result of re-competes and new business could influence the percentage/mix in unanticipated ways. See “Item 1A.
While the largest impact will be to fiscal 2023 cash from operations, the impact would continue over the five year amortization period, but would decrease over the period and is expected to be immaterial in year six. Investing Cash Flow Net cash used in investing activities was $468.0 million in fiscal 2023 compared to $867.7 million in the prior year.
While the largest impact was to fiscal 2023 cash from operations, the impact will continue over the five year amortization period, but will decrease over the period and is expected to be immaterial in year six. Investing Cash Flow Net cash used in investing activities was $90.6 million in fiscal 2024 compared to $468.0 million in the prior year.
We prepare Adjusted Operating Income to eliminate the impact of items we do not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary, or non-recurring nature or because they result from an event of a similar nature. • “Adjusted EBITDA” represents net income attributable to common stockholders before income taxes, net interest and other expense and depreciation and amortization and before certain other items, including acquisition and divestiture costs, financing transaction costs, the reserve associated with the U.S.
We prepare Adjusted Operating Income to eliminate the impact of items we do not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary, or non-recurring nature or because they result from an event of a similar nature. • “Adjusted EBITDA” represents net income attributable to common stockholders before income taxes, net interest and other expense and depreciation and amortization and before certain other items, including the change in provision for claimed indirect costs, acquisition and divestiture costs, acquisition and divestiture costs, financing transaction costs, DC tax assessment adjustment, the reserve associated with the U.S.
No single definite contract accounted for more than 2.5% of our revenue in fiscal 2023. We generate revenue under our contracts and task orders through our provision of services as both a prime contractor and subcontractor, as well as from the provision of services by subcontractors under contracts and task orders for which we act as the prime contractor.
No single definite contract accounted for more than 0.7% of our revenue in fiscal 2024. We generate revenue under our contracts and task orders through our provision of services as both a prime contractor and subcontractor, as well as from the provision of services by subcontractors under contracts and task orders for which we act as the prime contractor.
To the extent that we are able to hire additional client staff and deploy them against funded backlog, we generally recognize increased revenue. Total backlog increased by 6.7% from March 31, 2022 to March 31, 2023 and increased by 21.7% from March 31, 2021 to March 31, 2022.
To the extent that we are able to hire additional client staff and deploy them against funded backlog, we generally recognize increased revenue. Total backlog increased by 8.4% from March 31, 2023 to March 31, 2024 and increased by 6.7% from March 31, 2022 to March 31, 2023.
In connection with Booz Allen Hamilton obtaining investment grade ratings from both Moody's and S&P, activities restricted by certain negative covenants are expected to be permitted subject to pro forma compliance with the financial covenant and no event of default having occurred and continuing.
In connection with Booz Allen Hamilton obtaining investment grade ratings from both Moody's and S&P, certain activities previously restricted by certain negative covenants are permitted subject to pro forma compliance with the financial covenants and no events of default having occurred or are continuing.
We seek to achieve that result through recruitment and management of capacity and compensation. As of March 31, 2023, 2022, and 2021, we employed approximately 31,900, 29,300, and 27,700 people, respectively, of which approximately 29,100, 26,300, and 24,800, respectively, were client staff. Contract Backlog We define backlog to include the following three components: • Funded Backlog.
We seek to achieve that result through recruitment and management of capacity and compensation. As of March 31, 2024, 2023, and 2022, we employed approximately 34,200, 31,900, and 29,300 people, respectively, of which approximately 31,200, 29,100, and 26,300, respectively, were client staff. Contract Backlog We define backlog to include the following three components: • Funded Backlog.
A significant amount of management judgment is required to determine if an event representing an impairment indicator has occurred during the year, including but not limited to: a decline in forecasted cash flows; a sustained, material decline in the stock price and market capitalization; a significant adverse change in the business climate or economy; or unanticipated competition.
A significant amount of management judgment is required to determine if an event representing an impairment indicator has occurred during the year for programs and contract assets, channel relationships, and other amortizable intangible assets, including but not limited to: a decline in forecasted cash flows; a sustained, material decline in the stock price and market capitalization; a significant adverse change in the business climate or economy; or unanticipated competition.
The Company prepares Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, and Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses to eliminate the impact of items it does not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary or non-recurring nature or because they result from an event of a similar nature. 51 Table of Contents • “Adjusted Net Income” represents net income attributable to common stockholders before: (i) acquisition and divestiture costs, (ii) financing transaction costs, (iii) supplemental employee benefits due to COVID-19, (iv) significant acquisition amortization, (v) the reserve associated with the U.S.
The Company prepares Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, and Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses to eliminate the impact of items it does not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary or non-recurring nature or because they result from an event of a similar nature. 51 Table of Contents • “Adjusted Net Income” represents net income attributable to common stockholders before: (i) the change in provision for claimed indirect costs, (ii) acquisition and divestiture costs, (iii) financing transaction costs, (iv) significant acquisition amortization, (v) DC tax assessment adjustment, (vi) the reserve associated with the U.S.
We use Revenue, Excluding Billable Expenses because it provides management useful information about the Company's operating performance by excluding the impact of costs that are not indicative of the level of productivity of our client staff headcount and our overall direct labor, which management believes provides useful information to our investors about our core operations. • “Adjusted Operating Income” represents operating income before acquisition and divestiture costs, financing transaction costs, supplemental employee benefits due to COVID-19, significant acquisition amortization, the reserve associated with the U.S.
We use Revenue, Excluding Billable Expenses because it provides management useful information about the Company's operating performance by excluding the impact of costs that are not indicative of the level of productivity of our client staff headcount and our overall direct labor, which management believes provides useful information to our investors about our core operations. • “Adjusted Operating Income” represents operating income before the change in provision for claimed indirect costs, acquisition and divestiture costs, financing transaction costs, significant acquisition amortization, DC tax assessment adjustment, the reserve associated with the U.S.
Department of Justice investigation disclosed in Note 20 to the consolidated statements, supplemental employee benefits due to COVID-19, and restructuring costs. “Adjusted EBITDA Margin on Revenue” is calculated as Adjusted EBITDA divided by revenue. “Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses” is calculated as Adjusted EBITDA divided by Revenue, Excluding Billable Expenses.
Department of Justice investigation disclosed in Note 20, “Commitments and Contingencies,” to the consolidated statements, and restructuring costs. “Adjusted EBITDA Margin on Revenue” is calculated as Adjusted EBITDA divided by revenue. “Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses” is calculated as Adjusted EBITDA divided by Revenue, Excluding Billable Expenses.
As of March 31, 2023 and March 31, 2022, the Company had $7.9 billion and $7.4 billion of remaining performance obligations, respectively, and we expect to recognize approximately 75% of the remaining performance obligations as of March 31, 2023 as revenue over the next 12 months, and approximately 85% over the next 24 months.
As of March 31, 2024 and March 31, 2023, the Company had $8.7 billion and $7.9 billion of remaining performance obligations, respectively, and we expect to recognize approximately 70% of the remaining performance obligations as of March 31, 2024 as revenue over the next 12 months, and approximately 80% over the next 24 months.
The table below presents the percentage of total revenue for each type of contract: Fiscal Year Ended March 31, 2023 2022 2021 Cost-reimbursable 53% 54% 56% Time-and-materials 25% 24% 25% Fixed-price 22% 22% 19% Contract Diversity and Revenue Mix We provide services to our clients through a large number of single award contracts, contract vehicles, and multiple award contract vehicles.
Risk Factors—Industry and Economic Risks.” The table below presents the percentage of total revenue for each type of contract for the respective periods shown: Fiscal Year Ended March 31, 2024 2023 2022 Cost-reimbursable 55% 53% 54% Time-and-materials 24% 25% 24% Fixed-price 21% 22% 22% Contract Diversity and Revenue Mix We provide services to our clients through a large number of single award contracts, contract vehicles, and multiple award contract vehicles.
Liquidity and Capital Resources As of March 31, 2023, our total liquidity was $1.4 billion, consisting of $404.9 million of cash and cash equivalents and $998.7 million available under the Revolving Credit Facility.
Liquidity and Capital Resources As of March 31, 2024, our total liquidity was $1.6 billion, consisting of $554.3 million of cash and cash equivalents and $998.7 million available under the Revolving Credit Facility.
We serve commercial clients across industries including financial services, health and life sciences, energy, and technology. Financial and Other Highlights During fiscal 2023, the Company generated year over year revenue growth and increased client staff headcount.
Drawing on deep understanding and leading positions in cybersecurity, we serve commercial clients across industries including financial services, health and life sciences, energy, and technology. Financial and Other Highlights During fiscal 2024, the Company generated year over year revenue growth and increased client staff headcount.
Unused New Revolving Commitments are subject to a quarterly fee ranging from 0.10% to 0.35% based on the lower of (i) the applicable fee rate per annum determined pursuant to a consolidated total net leverage ratio grid and (ii) the applicable fee rate per annum determined pursuant to a ratings grid.
Unused New Revolving Commitments are subject to a quarterly fee ranging from 0.10% to 0.35% based on the lower of (i) the applicable fee rate per annum determined pursuant to a consolidated total net leverage ratio grid and (ii) the applicable fee rate per annum determined pursuant to a ratings grid.Booz Allen Hamilton also has agreed to pay customary letter of credit and agency fees.
The revenue value of orders included in contract backlog that has not been recognized as revenue due to period of performance expirations has not exceeded approximately 5.1% of total backlog as of March 31, 2023 and any of the four preceding fiscal quarters.
The revenue value of orders included in contract backlog that has not been recognized as revenue due to period of performance expirations has not exceeded approximately 4.8% of total backlog as of March 31, 2024 or for any of the three preceding fiscal quarters.
Voluntary prepayments of the New Term Loan A and the New Revolving Loans are permitted at any time, in minimum principal amounts, without premium or penalty. 68 Table of Contents The New Term Loan A amortizes in consecutive quarterly installments in an amount equal to (i) on the last business day of each full fiscal quarter that begins after the Ninth Amendment Effective Date but on or before the two year anniversary of the Ninth Amendment Effective Date, 0.625% of the stated principal amount of the New Term Loan A and (ii) on the last business day of each full fiscal quarter that begins after the two year anniversary of the Ninth Amendment Effective Date but before the five year anniversary of the Ninth Amendment Effective Date, 1.25% of the stated principal amount of the New Term Loan A.
Term Loan A amortizes in consecutive quarterly installments in an amount equal to (i) on the last business day of each full fiscal quarter that begins after the Ninth Amendment Effective Date but on or before the two year anniversary of the Ninth Amendment Effective Date, 0.625% of the stated principal amount of Term Loan A and (ii) on the last business day of each full fiscal quarter that begins after the two year anniversary of the Ninth Amendment Effective Date but before the five year anniversary of the Ninth Amendment Effective Date, 1.25% of the stated principal amount of Term Loan A.
The increase in net cash used in financing activities was primarily due to the following: • A decrease in net proceeds associated with the Company’s debt refinancing transactions year over year: ◦ Fiscal 2023 - $414.8 million was received from the Company’s September 2022 debt refinancing, partially offset by a $379.3 million repayment ◦ Fiscal 2022 - $493.7 million was received from the issuance of the 4.000% Senior Notes due 2029; • An increase in dividends paid of $26.7 million as compared to the prior year, partially offset by; • A decrease in share repurchases of $195.0 million, • A decrease of $14.5 million in payments on the Company's Term Loans 67 Table of Contents Dividends and Share Repurchases The Company paid $1.76 in dividends per share to shareholders of record in fiscal 2023.
The decrease in net cash used over the prior year was primarily due to the following: • A decrease in net proceeds associated with the Company’s debt refinancing transactions year over year: ◦ Fiscal 2024 - $637.4 million was received from the issuance of the 5.95% Senior Notes due 2033 ◦ Fiscal 2023 - $414.8 million was received from the Company’s September 2022 debt refinancing, partially offset by a $379.3 million repayment • An increase in share repurchases of $180.3 million, • An increase in dividends paid of $17.7 million as compared to the prior year Dividends and Share Repurchases The Company paid $1.92 in dividends per share to shareholders of record in fiscal 2024.
General and Administrative Expenses General and administrative expenses increased to $1,532.9 million from $1,159.0 million, or a 32.3% increase, and increased as a percentage of revenue to 16.6% from 13.9%. For fiscal 2023, general and administrative expenses were impacted by a $350.0 million reserve associated with the U.S.
General and Administrative Expenses General and administrative expenses decreased 16.4% to $1,281.4 million, and decreased as a percentage of revenue to 12.0% from 16.6%. For fiscal 2023, general and administrative expenses were impacted by a $350.0 million reserve associated with the U.S.
(“EverWatch”) and the divestitures of our management consulting business serving the Middle East and North Africa (“MENA”) and our Managed Threat Services business (“MTS”) in fiscal 2023. See Note 5, “Acquisitions and Divestitures,” to the consolidated financial statements for further information .
(“EverWatch”) and the divestitures of our management consulting business serving the Middle East and North Africa (“MENA”) and our Managed Threat Services business (“MTS”) in fiscal 2023. See Note 5, “Acquisition and Divestitures,” to the consolidated financial statements for further information. (c) Reflects expenses associated with debt financing activities incurred during the second quarters of fiscal 2024 and 2023.
On May 26, 2023, the Company announced a regular quarterly cash dividend in the amount of $0.47 per share. The quarterly dividend is payable on June 30, 2023 to stockholders of record on June 15, 2023.
On May 24, 2024, the Company announced a regular quarterly cash dividend in the amount of $0.51 per share. The quarterly dividend is payable on June 28, 2024 to stockholders of record on June 13, 2024.
The total outstanding debt balance is recorded in the accompanying consolidated balance sheets net of unamortized discount and debt issuance costs of $17.2 million and $21.6 million as of March 31, 2023 and 2022, respectively.
Indebtedness Our debt totaled $3.4 billion and 2.8 billion as of March 31, 2024 and 2023, respectively. The total outstanding debt balance is recorded in the accompanying consolidated balance sheets net of unamortized discount and debt issuance costs of $26.3 million and $17.2 million, respectively, as of March 31, 2024 and 2023.
Department of Justice investigation disclosed in Note 20 to the consolidated financial statements in the Company’s annual report on Form 10-K, (vi) restructuring costs, (vii) gain associated with equity method investment activity, (viii) gain associated with divestitures or deconsolidation, (ix) research and development tax credits, (x) release of income tax reserves, (xi) loss on debt extinguishment, (xii) remeasurement of deferred tax assets/liabilities, and (xiii) amortization or write-off of debt issuance costs and debt discount, in each case net of the tax effect where appropriate calculated using an assumed effective tax rate.
Department of Justice investigation disclosed in Note 20, “Commitments and Contingencies,” to the consolidated financial statements in the Company’s annual report on Form 10-K, (vii) restructuring costs, (viii) valuation adjustments to cost method investments, (iv) gains associated with equity method investment activity, (x) gains associated with divestitures or deconsolidation, and (xi) amortization or write-off of debt issuance costs and debt discount, in each case net of the tax effect where appropriate calculated using an assumed effective tax rate.
Our capital expenditures for fiscal 2023 and 2022 were $76.1 million and $80.0 million, respectively. Commitments and Contingencies We are subject to a number of reviews, investigations, claims, lawsuits, and other uncertainties related to our business. For a discussion of these items, refer to Note 20, “Commitments and Contingencies,” to our consolidated financial statements. 70 Table of Contents
Commitments and Contingencies We are subject to a number of reviews, investigations, claims, lawsuits, and other uncertainties related to our business. For a discussion of these items, refer to Note 20, “Commitments and Contingencies,” to our consolidated financial statements.
In the opinion of management, we will be able to meet our liquidity and cash needs through a combination of cash flows from operating activities, available cash balances, and available borrowing under the Revolving Credit Facility.
In the opinion of management, we will be able to meet our liquidity and cash needs through a combination of cash flows from operating activities, available cash balances, and available borrowing under the Revolving Credit Facility. If these resources need to be augmented, additional cash requirements would likely be financed through the issuance of debt or equity securities.
As of March 31, 2023, Booz Allen Hamilton had interest rate swaps with an aggregate notional amount of $700.0 million (which includes $550.0 million of active and $150.0 million of forward-starting hedges). These instruments hedge the variability of cash outflows for interest payments on the New Term Loan A and the Revolving Credit Facility.
Borrowings under the Term Loan A, and if used, the Revolving Credit Facility, incur interest at a variable rate. As of March 31, 2024, Booz Allen Hamilton had interest rate swaps with an aggregate notional amount of $550.0 million. These instruments hedge the variability of cash outflows for interest payments on the Term Loan A and the Revolving Credit Facility.
In addition, we are required to meet certain financial covenants at each quarter end, namely Consolidated Net Total Leverage and Consolidated Net Interest Coverage Ratios. As of March 31, 2023, we were compliant with these covenants.
In addition, we are required to meet certain financial covenants at each quarter end, namely Consolidated Net Total Leverage and Consolidated Net Interest Coverage Ratios. As of March 31, 2024 and 2023, Booz Allen Hamilton was in compliance with all financial covenants associated with its debt and debt-like instruments.
If these resources need to be augmented, additional cash requirements would likely be financed through the issuance of debt or equity securities. 65 Table of Contents The following table presents selected financial information for the periods presented: Fiscal Year Ended March 31, 2023 2022 2021 (In thousands) Cash and cash equivalents $ 404,862 $ 695,910 $ 990,955 Total debt $ 2,812,145 $ 2,800,072 $ 2,356,596 Net cash provided by operating activities $ 602,822 $ 736,526 $ 718,684 Net cash used in investing activities $ (468,016) $ (867,725) $ (158,284) Net cash used in financing activities (425,854) (163,846) (311,346) Total (decrease) increase in cash and cash equivalents $ (291,048) $ (295,045) $ 249,054 From time to time we evaluate alternative uses for excess cash resources once our operating cash flow and required debt servicing needs have been met.
The following table presents selected financial information for the respective periods shown: Fiscal Year Ended March 31, 2024 2023 2022 (In thousands) Cash and cash equivalents $ 554,257 $ 404,862 $ 695,910 Total debt $ 3,411,816 $ 2,812,145 $ 2,800,072 Net cash provided by operating activities $ 258,838 $ 602,822 $ 736,526 Net cash used in investing activities $ (90,640) $ (468,016) $ (867,725) Net cash used in financing activities (18,803) (425,854) (163,846) Total increase (decrease) in cash and cash equivalents $ 149,395 $ (291,048) $ (295,045) 65 Table of Contents From time to time we evaluate alternative uses for excess cash resources once our operating cash flow and required debt servicing needs have been met.
Total backlog acquired from EverWatch Corp. was approximately $282 million as of March 31, 2023 Our total backlog consists of remaining performance obligations, certain orders under contracts for which the period of performance has expired, and unexercised option period and other unexercised optional orders.
Original backlog value at acquisition was $292 million. Our total backlog consists of remaining performance obligations, certain orders under contracts for which the period of performance has expired, and unexercised option period and other unexercised optional orders.
(o) Excludes adjustments of approximately $2.1 million, $3.1 million, and $3.5 million of net earnings for fiscal 2023, 2022, and 2021, respectively, associated with the application of the two-class method for computing diluted earnings per share.
See Note 13, “Income Taxes,” to the consolidated financial statements for further information. (m) Excludes adjustments of approximately $5.0 million, $2.1 million, and $3.1 million of net earnings for fiscal 2024, 2023, and 2022, respectively, associated with the application of the two-class method for computing diluted earnings per share.
The following table summarizes the value of our contract backlog at the respective dates presented: Fiscal Year Ended March 31, 2023 2022 2021 (In millions) Backlog: (1) Funded $ 4,619 $ 3,710 $ 3,510 Unfunded 9,519 9,925 6,086 Priced options 17,064 15,612 14,436 Total backlog $ 31,202 $ 29,247 $ 24,032 (1) Backlog presented as of March 31, 2023 includes backlog acquired from the Company's acquisition of EverWatch Corp. made during the fiscal year ended March 31, 2023.
The following table summarizes the value of our contract backlog as of the respective periods shown: Fiscal Year Ended March 31, 2024 2023 2022 (In millions) Backlog: (1) Funded $ 4,822 $ 4,619 $ 3,710 Unfunded 9,463 9,519 9,925 Priced options 19,533 17,064 15,612 Total backlog $ 33,818 $ 31,202 $ 29,247 (1) Backlog presented as of March 31, 2023 includes $282 million of backlog for EverWatch Corp., which was acquired during fiscal 2023.
In our recent experience, none of the following additional risks have had a material negative effect on our ability to realize revenue from our funded backlog: the unilateral right of the U.S. government to cancel multi-year contracts and related orders or to terminate existing contracts for convenience or default; in the case of unfunded backlog, the potential that funding will not be made available; and, in the case of priced options, the risk that our clients will not exercise their options.
In our recent experience, none of the following additional risks have had a material negative effect on our ability to realize revenue from our funded backlog: the unilateral right of the U.S. government to cancel multi-year contracts and related orders or to terminate existing contracts for convenience or default; in the case of unfunded backlog, the potential that funding will not be made available; and, in the case of priced options, the risk that our clients will not exercise their options. 59 Table of Contents In addition, contract backlog includes orders under contracts for which the period of performance has expired, and we may not recognize revenue on the funded backlog that includes such orders due to, among other reasons, the tardy submission of invoices by our subcontractors and the expiration of the relevant appropriated funding in accordance with a predetermined expiration date such as the end of the U.S. government's fiscal year.
Results of Operations The following table sets forth items from our consolidated statements of operations for the periods indicated: Fiscal Year Ended March 31, Fiscal 2023 Versus Fiscal 2022 Fiscal 2022 Versus Fiscal 2021 2023 2022 2021 (In thousands) Revenue $ 9,258,911 $ 8,363,700 $ 7,858,938 10.7 % 6.4 % Operating costs and expenses: Cost of revenue 4,304,810 3,899,622 3,657,530 10.4 % 6.6 % Billable expenses 2,808,857 2,474,163 2,325,888 13.5 % 6.4 % General and administrative expenses 1,532,912 1,158,987 1,036,834 32.3 % 11.8 % Depreciation and amortization 165,484 145,747 84,315 13.5 % 72.9 % Total operating costs and expenses 8,812,063 7,678,519 7,104,567 14.8 % 8.1 % Operating income 446,848 685,181 754,371 (34.8) % (9.2) % Interest expense (119,850) (92,352) (81,270) 29.8 % 13.6 % Other income (expense), net 40,951 11,214 (10,662) NM NM Income before income taxes 367,949 604,043 662,439 (39.1) % (8.8) % Income tax expense 96,734 137,466 53,481 (29.6) % 157.0 % Net income $ 271,215 $ 466,577 $ 608,958 (41.9) % (23.4) % Net loss attributable to non-controlling interest $ 576 $ 163 $ — NM NM Net income attributable to common stockholders $ 271,791 $ 466,740 $ 608,958 (41.8) % (23.4) % NM - Not meaningful Fiscal 2023 Compared to Fiscal 2022 Revenue Revenue increased to $9,258.9 million from $8,363.7 million, or a 10.7% increase, primarily driven by headcount growth, as well as higher staff utilization compared to the prior year period.
Results of Operations The following table presents items from our consolidated statements of operations for the respective periods shown: Fiscal Year Ended March 31, Fiscal 2024 Versus Fiscal 2023 Fiscal 2023 Versus Fiscal 2022 2024 2023 2022 (In thousands) Revenue $ 10,661,896 $ 9,258,911 $ 8,363,700 15.2 % 10.7 % Operating costs and expenses: Cost of revenue 4,921,071 4,304,810 3,899,622 14.3 % 10.4 % Billable expenses 3,281,776 2,808,857 2,474,163 16.8 % 13.5 % General and administrative expenses 1,281,443 1,532,912 1,158,987 (16.4) % 32.3 % Depreciation and amortization 164,203 165,484 145,747 (0.8) % 13.5 % Total operating costs and expenses 9,648,493 8,812,063 7,678,519 9.5 % 14.8 % Operating income 1,013,403 446,848 685,181 126.8 % (34.8) % Interest expense (172,901) (119,850) (92,352) 44.3 % 29.8 % Other income, net 12,818 40,951 11,214 (68.7) % NM Income before income taxes 853,320 367,949 604,043 131.9 % (39.1) % Income tax expense 247,614 96,734 137,466 156.0 % (29.6) % Net income $ 605,706 $ 271,215 $ 466,577 123.3 % (41.9) % Net loss attributable to non-controlling interest — 576 163 NM NM Net income attributable to common stockholders $ 605,706 $ 271,791 $ 466,740 122.9 % (41.8) % NM - Not meaningful Fiscal 2024 Compared to Fiscal 2023 Revenue Revenue increased 15.2% to $10,661.9 million, primarily driven by strong demand for our services and solutions and an increase in headcount to meet that demand.
The negative covenants include limitations on the following, in each case subject to certain exceptions: (i) indebtedness and liens; (ii) mergers, consolidations or amalgamations, liquidations, wind-ups or dissolutions, and disposition of all or substantially all assets; (iii) dispositions of property; (iv) restricted payments; (v) investments; (vi) transactions with affiliates; (vii) change in fiscal periods; (viii) negative pledges; (ix) restrictive agreements; (x) line of business; and (xi) speculative hedging.
The remaining negative covenants include limitations on activity related to the following, in each case subject to certain exceptions: (i) indebtedness and liens; (ii) mergers, consolidations or amalgamations, liquidations, wind-ups or dissolutions, (iii) restricted payments; (iv) line of business; and (v) speculative hedging.
Risk Factors.” 60 Table of Contents Critical Accounting Estimates and Policies Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with GAAP.
Any such change could materially impact our reported revenue, operating income, net income and basic and diluted earnings per common share. 60 Table of Contents Critical Accounting Estimates and Policies Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with GAAP.
We generally do not begin work on contracts until funding is appropriated by the client. Billing timetables and payment terms on our contracts vary based on a number of factors, including whether the contract type is cost-reimbursable, time-and-materials, or fixed-price.
Billing timetables and payment terms on our contracts vary based on a number of factors, including whether the contract type is cost-reimbursable, time-and-materials, or fixed-price. We generally bill and collect cash more frequently under cost-reimbursable and time-and-materials contracts, as we are authorized to bill as the costs are incurred or work is performed.
See Note 20, “Commitments and Contingencies,” to the consolidated financial statements for further information. 54 Table of Contents (f) Represents restructuring charges of $8.3 million incurred during the fourth quarter of fiscal 2022, net of approximately $4.2 million of revenue recognized on recoverable expenses, associated with severance costs of a restructuring plan to reduce certain executive administrative personnel costs.
(g) Represents restructuring charges of $8.3 million incurred during the fourth quarter of fiscal 2022, net of approximately $4.2 million of revenue recognized on recoverable expenses, associated with severance costs of a restructuring plan to reduce certain executive administrative personnel costs. (h) Reflects the combination of Interest expense and Other income, net from the consolidated statement of operations.
On August 24, 2020, Booz Allen Hamilton issued $700 million aggregate principal amount of its Senior Notes under an Indenture, dated as of August 24, 2020, among Booz Allen Hamilton, certain subsidiaries of Booz Allen Hamilton, as guarantors (the “Subsidiary Guarantors”), and Wilmington Trust, National Association as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of August 24, 2020, among Booz Allen Hamilton, the Subsidiary Guarantors and the Trustee.
On June 17, 2021, Booz Allen Hamilton issued $500.0 million aggregate principal amount of its 4.000% Senior Notes due July 1, 2029 (the “Senior Notes due 2029”) under an Indenture and First Supplement Indenture, both dated as of June 17, 2021, among Booz Allen Hamilton, certain subsidiaries of Booz Allen Hamilton, as guarantors (the “2029 Subsidiary Guarantors”), and Wilmington Trust, National Association, as trustee.
Beginning in fiscal 2023, the Tax Cuts and Jobs Act of 2017 eliminates the option to deduct research and development expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures over five years. This provision negatively impacted our fiscal 2023 cash from operations, but had an offsetting impact on the deferred tax asset.
Beginning in fiscal 2023, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures over five years for U.S. based research and development.
This increase was primarily due to an increase in salaries and salary-related benefits of $349.0 million, driven by increased headcount (including the impact of acquisitions) and annual base salary increases. Incentive and stock-based compensation also increased $35.6 million over the prior year.
Cost of Revenue Cost of revenue increased 14.3% to $4,921.1 million, and declined as a percentage of revenue to 46.2% from 46.5% . This increase was primarily due to an increase in salaries and salary-related benefits of $593.2 million, driven by increased headcount and annual base salary increases. Incentive and stock-based compensation also increased $10.9 million over the prior year.
As of March 31, 2023 and 2022, approximately $1.3 million and $1.0 million, respectively, of these instruments reduced our available borrowings under the Revolving Credit Facility. The remainder is guaranteed under a separate $7.5 million facility of which $2.7 million was available to the Company at March 31, 2023.
As of both March 31, 2024 and 2023, approximately $1.3 million of these instruments reduced our available borrowings under the Revolving Credit Facility.
Based on the information currently available, the Company is not able to reasonably estimate the expected long-term incremental legal costs or amounts that may be reimbursed associated with this investigation and these related matters. 50 Table of Contents Non-GAAP Measures We publicly disclose certain non-GAAP financial measurements, including Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses, Adjusted Net Income, and Adjusted Diluted Earnings Per Share, or Adjusted Diluted EPS, because management uses these measures for business planning purposes, including to manage our business against internal projected results of operations and measure our performance.
Margins in the prior year were impacted by a $350.0 million reserve associated with the Department of Justice’s investigation of the Company (see Note 20, “Commitments and Contingencies,” to the consolidated financial statements for further information), as compared to a $27.5 million reserve in the current year. 50 Table of Contents Non-GAAP Measures We publicly disclose certain non-GAAP financial measurements, including Revenue, Excluding Billable Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted EBITDA Margin on Revenue, Excluding Billable Expenses, Adjusted Net Income, and Adjusted Diluted Earnings Per Share, or Adjusted Diluted EPS, because management uses these measures for business planning purposes, including to manage our business against internal projected results of operations and measure our performance.
The following table summarizes the cash distributions recognized in the consolidated statement of cash flows: Fiscal Year Ended March 31, 2023 2022 2021 (In thousands) Recurring dividends (1) $ 235,726 $ 209,057 $ 181,066 (1) Amounts represent recurring dividends that were declared and paid for during each quarter of fiscal 2023, 2022, and 2021, respectively.
The following table summarizes the cash distributions recognized in the consolidated statement of cash flows for the respective periods shown: Fiscal Year Ended March 31, 2024 2023 2022 (In thousands) Recurring dividends (1) $ 253,413 $ 235,726 $ 209,057 (1) Amounts represent recurring dividends that were declared and paid for during each quarter of fiscal 2024, 2023, and 2022, respectively. 67 Table of Contents On December 12, 2011, the Board approved a share repurchase program, which was most recently increased by $525.0 million to $3,085.0 million on May 22, 2024.
In fiscal 2023, the Company completed the acquisition of EverWatch, as well as the divestitures of its MENA strategy consulting and MTS businesses. Financing Cash Flow Net cash used in financing activities was $425.9 million in fiscal 2023 compared to $163.8 million in the prior year.
The decrease in net cash used over the prior year was primarily due to the Company’s acquisition of Everwatch in fiscal 2023, partially offset by the divestitures of its MENA strategy consulting and MTS businesses in fiscal 2023, as well as increases in cost method investments made by the Company in the current year.
Other (Income) Expense, net Other (income) expense, net increased to a $41.0 million net other income from $11.2 million in the prior year period primarily due to the following: • A $31.2 million pre-tax gain recognized in the second quarter of fiscal 2023 associated with the divestiture of the Company's MENA business; • An increase of $9.6 million in interest income primarily due to an overall increase in interest rates; • A pre-tax gain of $8.9 million recognized in the third quarter of fiscal 2023 from the de-consolidation of a business; • A $4.6 million pre-tax gain recognized in the third quarter of fiscal 2023 associated with the divestiture of the Company's MTS business; • $3.4 million in fees related to the Company's debt refinancing in the second quarter of fiscal 2023; • A $5.7 million gain from the Company's remeasurement of its previously held equity method investment in Tracepoint in the second quarter of fiscal 2022, not present in the current year; and • A net gain of $7.1 million associated with the divestiture of a controlling financial interest in SnapAttack in the third quarter of fiscal 2022, not present in the current fiscal year.
Other Income, net Other income, net decreased to $12.8 million from $41.0 million in the prior year period primarily due to the following: • Pre-tax gains in fiscal 2023 associated with divestiture related activity that were not present in fiscal 2024, specifically, $31.2 million associated with the divestiture of the Company's MENA business, $4.6 million associated with the divestiture of the Company's MTS business, and $8.9 million recognized from the de-consolidation of a business; • An increase of $16.1 million in interest income primarily due to an overall increase in interest rates as well as a greater percentage of the average cash balances invested in interest bearing accounts; and • $5.7 million in non-recurring valuation adjustments to the Company’s cost method investments, primarily from the write-off of one of its investments.
We generally bill and collect cash more frequently under cost-reimbursable and time-and-materials contracts, as we are authorized to bill as the costs are incurred or work is performed. In contrast, we may be limited to bill certain fixed-price contracts only when specified milestones, including deliveries, are achieved.
In contrast, we may be limited to bill certain fixed-price contracts only when specified milestones, including deliveries, are achieved.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeF-8 Table of Contents BOOZ ALLEN HAMILTON HOLDING CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Amounts in thousands, except share data) Class A Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-Controlling Interest Total Stockholders’ Equity Shares Amount Shares Amount Balance at March 31, 2020 161,333,973 $ 1,613 (22,614,052) $ (898,095) $ 468,027 $ 1,330,812 $ (46,001) — $ 856,356 Issuance of common stock 1,112,183 11 — — 18,803 — — — 18,814 Stock options exercised 504,450 5 — — 11,742 — — — 11,747 Repurchase of common stock — — (4,090,525) (318,068) — — — — (318,068) Recognition of liability related to future restricted stock units vesting — — — — (456) — — — (456) Net income — — — — — 608,958 — — 608,958 Topic 326 adoption impact — — — — — (1,180) — — (1,180) Other comprehensive income, net of tax — — — — — — 16,230 — 16,230 Dividends paid of $1.30 per share of common stock — — — — — (181,066) — — (181,066) Stock-based compensation expense — — — — 59,841 — — — 59,841 Balance at March 31, 2021 162,950,606 $ 1,629 (26,704,577) $ (1,216,163) $ 557,957 $ 1,757,524 $ (29,771) — $ 1,071,176 Issuance of common stock 1,224,207 15 — — 22,155 — — — 22,170 Stock options exercised 197,732 2 — — 5,927 — — — 5,929 Repurchase of common stock — — (5,083,620) (419,291) — — — (419,291) Recognition of liability related to future restricted stock units vesting — — — — 1,213 — — — 1,213 Net income — — — — — 466,740 (163) 466,577 Other comprehensive income, net of tax — — — — — — 38,356 — 38,356 Dividends paid of $1.54 per share of common stock — — — — — (209,193) — — (209,193) Stock-based compensation expense — — — — 69,784 — — — 69,784 Contribution to non-controlling interest — — — — (814) — — 814 — Balance at March 31, 2022 164,372,545 $ 1,646 (31,788,197) $ (1,635,454) $ 656,222 $ 2,015,071 $ 8,585 $ 651 $ 1,046,721 Issuance of common stock 1,170,726 10 — — 24,653 — — — 24,663 Stock options exercised 329,061 3 — — 11,381 — — — 11,384 Repurchase of common stock — — (2,446,547) (224,451) — — — — (224,451) Net income — — — — — 271,791 — (576) 271,215 Other comprehensive income, net of tax — — — — — — 20,748 — 20,748 Dividends paid of $1.76 per share of common stock — — — — — (235,407) — — (235,407) Stock-based compensation expense — — — — 80,272 — — — 80,272 Contribution to non-controlling interest — — — — (3,068) — — 3,068 — De-Consolidation of non-controlling interest — — — — — — — (3,143) (3,143) Balance at March 31, 2023 165,872,332 $ 1,659 (34,234,744) $ (1,859,905) $ 769,460 $ 2,051,455 $ 29,333 $ — $ 992,002 The accompanying notes are an integral part of these Consolidated Financial Statements.
Biggest changeF-8 Table of Contents BOOZ ALLEN HAMILTON HOLDING CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Amounts in thousands, except share data) Class A Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-Controlling Interest Total Stockholders’ Equity Shares Amount Shares Amount Balance at March 31, 2021 162,950,606 $ 1,629 (26,704,577) $ (1,216,163) $ 557,957 $ 1,757,524 $ (29,771) $ — $ 1,071,176 Issuance of common stock 1,224,207 15 — — 22,155 — — — 22,170 Stock options exercised 197,732 2 — — 5,927 — — — 5,929 Repurchase of common stock — — (5,083,620) (419,291) — — — (419,291) Recognition of liability related to future restricted stock units vesting — — — — 1,213 — — — 1,213 Net income — — — — — 466,740 (163) 466,577 Other comprehensive income, net of tax — — — — — — 38,356 — 38,356 Dividends paid of $1.54 per share of common stock — — — — — (209,193) — — (209,193) Stock-based compensation expense — — — — 69,784 — — — 69,784 Contribution to non-controlling interest — — — — (814) — — 814 — Balance at March 31, 2022 164,372,545 $ 1,646 (31,788,197) $ (1,635,454) $ 656,222 $ 2,015,071 $ 8,585 $ 651 $ 1,046,721 Issuance of common stock 1,170,726 10 — — 24,653 — — — 24,663 Stock options exercised 329,061 3 — — 11,381 — — — 11,384 Repurchase of common stock — — (2,446,547) (224,451) — — — — (224,451) Net income — — — — — 271,791 — (576) 271,215 Other comprehensive income, net of tax — — — — — — 20,748 — 20,748 Dividends paid of $1.76 per share of common stock — — — — — (235,407) — — (235,407) Stock-based compensation expense — — — — 80,272 — — — 80,272 Contribution to non-controlling interest — — — — (3,068) — — 3,068 — De-Consolidation of non-controlling interest — — — — — — — (3,143) (3,143) Balance at March 31, 2023 165,872,332 $ 1,659 (34,234,744) $ (1,859,905) $ 769,460 $ 2,051,455 $ 29,333 $ — $ 992,002 Issuance of common stock 1,194,324 12 — — 28,653 — — — 28,665 Stock options exercised 335,612 3 — — 15,742 — — — 15,745 Repurchase of common stock — — (3,524,401) (417,641) — — — — (417,641) Net income — — — — — 605,706 — — 605,706 Other comprehensive income, net of tax — — — — — — (19,801) — (19,801) Dividends paid of $1.92 per share of common stock — — — — (253,096) — — (253,096) Stock-based compensation expense — — — — 94,982 — — — 94,982 Balance at March 31, 2024 167,402,268 $ 1,674 (37,759,145) $ (2,277,546) $ 908,837 $ 2,404,065 $ 9,532 $ — $ 1,046,562 The accompanying notes are an integral part of these Consolidated Financial Statements.
Furniture and equipment is depreciated over five to ten years, and computer equipment is depreciated over four 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.
Furniture and equipment is depreciated over five to ten years, and computer equipment is depreciated over four years. Leasehold improvements are amortized over the shorter of the useful life of the asset or lease term. Maintenance and repairs are charged to expense as incurred.
The New Term Loan A amortizes in consecutive quarterly installments in an amount equal to (i) on the last business day of each full fiscal quarter that begins after the Ninth Amendment Effective Date but on or before the two year anniversary of the Ninth Amendment Effective Date, 0.625% of the stated principal amount of the New Term Loan A and (ii) on the last business day of each full fiscal quarter that begins after the two year anniversary of the Ninth Amendment Effective Date but before the five year anniversary of the Ninth Amendment Effective Date, 1.25% of the stated principal amount of the New Term Loan A.
Term Loan A amortizes in consecutive quarterly installments in an amount equal to (i) on the last business day of each full fiscal quarter that begins after the Ninth Amendment Effective Date but on or before the two year anniversary of the Ninth Amendment Effective Date, 0.625% of the stated principal amount of Term Loan A and (ii) on the last business day of each full fiscal quarter that begins after the two year anniversary of the Ninth Amendment Effective Date but before the five year anniversary of the Ninth Amendment Effective Date, 1.25% of the stated principal amount of Term Loan A.
The amount of the annual incentive payment is determined based on performance targets established by the Board of Directors and a portion of the bonus may be paid in the form of equity (including stock and other awards under the EIP). Such equity awards vest over a three-year period subject to the employee’s continued service to the Company.
The amount of the annual incentive payment is determined based on performance targets established by the Board and a portion of the bonus may be paid in the form of equity (including stock and other awards under the EIP). Such equity awards vest over a three-year period subject to the employee’s continued service to the Company.
EverWatch On October 14, 2022, the Company completed the acquisition of EverWatch Corp. (“EverWatch”), a leading provider of advanced solutions to the defense and intelligence communities for approximately $445.1 million, net of post-closing adjustments and also incurred transaction costs as part of the acquisition. The acquisition was funded with cash on hand.
Acquisition and Divestitures Acquisition On October 14, 2022, the Company completed the acquisition of EverWatch Corp. (“EverWatch”), a leading provider of advanced solutions to the defense and intelligence communities for approximately $445.1 million, net of post-closing adjustments and also incurred transaction costs as part of the acquisition. The acquisition was funded with cash on hand.
The applicable margin for the New Term Loan A and the New Revolving Loans ranges from 1.00% to 2.00% for Term SOFR loans and zero to 1.00% for base rate loans, in each case based on the lower of (i) the applicable rate per annum determined pursuant to a consolidated total net leverage ratio grid and (ii) the applicable rate per annum determined pursuant to a ratings grid.
The applicable margin for Term Loan A and the Revolving Loans ranges from 1.00% to 2.00% for Term SOFR loans and zero to 1.00% for base rate loans, in each case based on the lower of (i) the applicable rate per annum determined pursuant to a consolidated total net leverage ratio grid and (ii) the applicable rate per annum determined pursuant to a ratings grid.
We inspected communications with the DCAA or DCMA including prior audit reports and final resolutions. We also engaged our government contracting specialists to assist in identifying trends and recent experience in DCAA audits to evaluate the data the Company used to estimate the provision for claimed indirect costs.
We inspected communications with the DCAA or DCMA including current and prior audit reports and final resolutions. We also engaged our government contracting specialists to assist in identifying trends and recent experience in DCAA audits to evaluate the data the Company used to estimate the provision for claimed indirect costs.
The long-term income tax receivable primarily represents the amended U.S. federal return refund claims for research and development tax credits and the carryback claim for the fiscal 2021 net operating loss which is classified as other long-term assets on the consolidated balance sheet.
The long-term income tax receivable represents the amended U.S. federal return refund claims for research and development tax credits and the carryback claim for the fiscal 2021 net operating loss which is classified as other long-term assets on the consolidated balance sheet.
In connection with the investigation, the DOJ has requested information from the Company relating to certain elements of the Company’s cost accounting and indirect cost charging practices with the U.S. government.
In connection with the investigation, the DOJ requested information from the Company relating to certain elements of the Company’s cost accounting and indirect cost charging practices with the U.S. government.
During the fiscal years ended March 31, 2023, 2022, and 2021, the Company did not record any impairment of goodwill. Long-Lived Assets The Company reviews its long-lived assets, including property and equipment, amortizable intangible assets, and right-of-use (“ROU”) assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable.
During the fiscal years ended March 31, 2024, 2023, and 2022, the Company did not record any impairment of goodwill. Long-Lived Assets The Company reviews its long-lived assets, including property and equipment, amortizable intangible assets, and right-of-use (“ROU”) assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable.
As a result of this transaction, the Company has determined that it is not the primary beneficiary of the VIE and thus de-recognized the assets, liabilities and non-controlling interest of this business. The Company recorded the fair value of its retained equity investment of $7.6 million which is accounted for under the measurement alternative.
As a result of this transaction, the Company determined that it is not the primary beneficiary of the VIE and thus de-recognized the assets, liabilities and non-controlling interest of this business. The Company recorded the fair value of its retained equity investment of $7.6 million which was accounted for under the measurement alternative.
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 any excess of the carrying amount over the fair value of the asset. During the fiscal years ended March 31, 2023, 2022, and 2021, the Company did not record any material impairment charges.
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 any excess of the carrying amount over the fair value of the asset. During the fiscal years ended March 31, 2024, 2023, and 2022, the Company did not record any material impairment charges.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2023, in conformity with U.S. generally accepted accounting principles.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2024, in conformity with U.S. generally accepted accounting principles.
The Company uses the relief from royalty method to estimate the fair value. The fair value of the asset is the present value of the license fees avoided by owning the asset, or the royalty savings. During the fiscal years ended March 31, 2023, 2022, and 2021, the Company did not record any impairment of intangible assets.
The Company uses the relief from royalty method to estimate the fair value. The fair value of the asset is the present value of the license fees avoided by owning the asset, or the royalty savings. During the fiscal years ended March 31, 2024, 2023, and 2022, the Company did not record any impairment of intangible assets.
Financial Statements and Supplementary Data INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID#00042) F- 2 Consolidated Balance Sheets as of March 31, 2023 and 2022 F- 5 Consolidated Statements of Operations for the Fiscal Years Ended March 31, 2023, 2022 and 2021 F- 6 Consolidated Statements of Comprehensive Income for the Fiscal Years Ended March 31, 2023, 2022 and 2021 F- 7 Consolidated Statements of Cash Flows for the Fiscal Years Ended March 31, 2023, 2022 and 2021 F- 8 Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended March 31, 2023, 2022 and 2021 F- 9 Notes to Consolidated Financial Statements F- 10 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Booz Allen Hamilton Holding Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Booz Allen Hamilton Holding Corporation (the Company) as of March 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income , stockholders' equity and cash flows for each of the three years in the period ended March 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID#00042) F- 2 Consolidated Balance Sheets as of March 31, 2024 and 2023 F- 5 Consolidated Statements of Operations for the Fiscal Years Ended March 31, 2024 , 2023 and 2022 F- 6 Consolidated Statements of Comprehensive Income for the Fiscal Years Ended March 31, 2024, 2023 and 2022 F- 7 Consolidated Statements of Cash Flows for the Fiscal Years Ended March 31, 2024 , 2023 and 2022 F- 8 Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended March 31, 2024 , 2023 and 2022 F- 9 Notes to Consolidated Financial Statements F- 10 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Booz Allen Hamilton Holding Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Booz Allen Hamilton Holding Corporation (the Company) as of March 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income , stockholders' equity and cash flows for each of the three years in the period ended March 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).
Securities and Exchange Commission, or SEC. All intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements and notes of the Company include its subsidiaries and other entities over which the Company has a controlling financial interest or where the Company is a primary beneficiary.
Securities and Exchange Commission (the “SEC”). All intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements and notes of the Company include its subsidiaries and other entities over which the Company has a controlling financial interest or where the Company is a primary beneficiary.
Operating lease balances are included in operating lease ROU assets, operating lease liabilities, and operating lease liabilities, net of current portion in our consolidated balance sheet. Cash payments arising from operating leases are classified within operating activities in the consolidated statement of cash flows. As of March 31, 2023, the Company had no finance leases.
Operating lease balances are included in operating lease ROU assets, operating lease liabilities, and operating lease liabilities, net of current portion in our consolidated balance sheet. Cash payments arising from operating leases are classified within operating activities in the consolidated statement of cash flows. As of March 31, 2024, the Company had no finance leases.
As of January 1, 2023, the Company performed its annual impairment test of goodwill by comparing the fair value of the Company (based on market capitalization) to the carrying value of the Company's net equity, and concluded that the fair value of the reporting unit was significantly greater than the carrying amount.
As of January 1, 2024, the Company performed its annual impairment test of goodwill by comparing the fair value of the Company (based on market capitalization) to the carrying value of the Company's net equity, and concluded that the fair value of the reporting unit was significantly greater than the carrying amount.
These unobservable inputs reflect the Company's own judgment about which assumptions market participants would use in pricing an asset on a non-recurring basis. The intangible assets will be amortized over the estimated useful life of 14 years.
These unobservable inputs reflect the Company's own judgment about which assumptions market participants would use in pricing an asset on a non-recurring basis. The intangible assets will be amortized over the estimated useful life of fourteen years.
The Company recognized a liability of $326.7 million for estimated adjustments to claimed indirect costs based on its historical DCAA audit results, including the final resolution of such audits with the Defense Contract Management Agency (DCMA) (the provision for claimed indirect costs).
The Company recognized a liability of $363.7 million for estimated adjustments to claimed indirect costs based on its historical DCAA audit results, including the final resolution of such audits with the Defense Contract Management Agency (DCMA) (the provision for claimed indirect costs).
To test the provision for claimed indirect costs, we performed audit procedures that included, among others, testing the clerical accuracy of the estimates and the completeness and accuracy of the data utilized in determining the provision, and performing analytic procedures over incremental reserves recorded in the current year.
To test the provision for claimed indirect costs, we performed audit procedures that included, among others, testing the clerical accuracy of the estimates and the completeness and accuracy of the data utilized in determining the provision, and performing analytical procedures over incremental reserves recorded for the current year.
If the estimate of contract profitability indicates an anticipated loss on a contract, the Company recognizes the total loss at the time it is identified. For fiscal 2023, 2022 and 2021, the aggregate impact of adjustments in contract estimates was not material.
If the estimate of contract profitability indicates an anticipated loss on a contract, the Company recognizes the total loss at the time it is identified. For fiscal 2024, 2023 and 2022, the aggregate impact of adjustments in contract estimates was not material.
This amount is classified as prepaid expenses and other current assets on the consolidated balance sheet. Current income tax payable represents current liabilities associated with the Company’s current tax returns that the Company intends to file in fiscal 2024. This amount is classified as other current liabilities on the consolidated balance sheet.
This amount is classified as prepaid expenses and other current assets on the consolidated balance sheet. Current income tax payable represents current liabilities associated with the Company’s current tax returns that the Company intends to file in fiscal 2025. This amount is classified as other current liabilities on the consolidated balance sheet.
Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries that are majority-owned or otherwise controlled by the Company and have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, and the rules and regulations of the U.S.
Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries that are majority-owned or otherwise controlled by the Company and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), and the rules and regulations of the U.S.
The following table shows the changes in accumulated other comprehensive loss, net of tax: Fiscal Year Ended March 31, 2023 Post-retirement plans Derivatives designated as cash flow hedges Total Beginning of year $ 8,811 $ (226) $ 8,585 Other comprehensive income before reclassifications (1) 10,644 11,021 21,665 Amounts reclassified from accumulated other comprehensive income (5) (912) (917) Net current-period other comprehensive income 10,639 10,109 20,748 End of year $ 19,450 $ 9,883 $ 29,333 (1) Changes in other comprehensive income before reclassification for post-retirement plans and derivatives designated as cash flow hedges are recorded net of tax benefit of $3.8 million and $3.9 million, respectively, for the fiscal year ended March 31, 2023.
Fiscal Year Ended March 31, 2023 Post-retirement plans Derivatives designated as cash flow hedges Total Beginning of year $ 8,811 $ (226) $ 8,585 Other comprehensive income before reclassifications (2) 10,644 11,021 21,665 Amounts reclassified from accumulated other comprehensive income (5) (912) (917) Net current-period other comprehensive income 10,639 10,109 20,748 End of year $ 19,450 $ 9,883 $ 29,333 (2) Changes in other comprehensive income (loss) before reclassification for post-retirement plans and derivatives designated as cash flow hedges are recorded net of tax benefit of $3.8 million and $3.9 million, respectively, for the fiscal year ended March 31, 2023.
The Senior Notes due 2028 are Booz Allen Hamilton’s senior unsecured obligations and rank equally in right of payment with all of Booz Allen Hamilton’s existing and future senior indebtedness and rank senior in right of payment to any of Booz Allen Hamilton’s future subordinated indebtedness.
The Senior Notes due 2028 are Booz Allen Hamilton’s senior unsecured obligations and rank equally in right of payment with all of Booz Allen Hamilton’s and the 2028 Subsidiary Guarantors’ existing and future senior indebtedness and rank senior in right of payment to any of Booz Allen Hamilton’s future subordinated indebtedness.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 26, 2023 expressed an unqualified opinion thereon.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 24, 2024 expressed an unqualified opinion thereon.
The remaining balance of the New Term Loan A will be payable upon maturity.
The remaining balance of Term Loan A will be payable upon maturity.
F-34 Table of Contents Fiscal Year Ended March 31, 2022 Post-retirement plans Derivatives designated as cash flow hedges Total Beginning of year $ (1,562) $ (28,209) $ (29,771) Other comprehensive income before reclassifications (2) 10,294 15,032 25,326 Amounts reclassified from accumulated other comprehensive income 79 12,951 13,030 Net current-period other comprehensive income 10,373 27,983 38,356 End of year $ 8,811 $ (226) $ 8,585 (2) Changes in other comprehensive income before reclassification for post-retirement plans and derivatives designated as cash flow hedges are recorded net of tax benefit of $3.6 million and $5.3 million, respectively, for the fiscal year ended March 31, 2022.
Fiscal Year Ended March 31, 2022 Post-retirement plans Derivatives designated as cash flow hedges Total Beginning of year $ (1,562) $ (28,209) $ (29,771) Other comprehensive income before reclassifications (3) 10,294 15,032 25,326 Amounts reclassified from accumulated other comprehensive income 79 12,951 13,030 Net current-period other comprehensive income 10,373 27,983 38,356 End of year $ 8,811 $ (226) $ 8,585 (3) Changes in other comprehensive income (loss) before reclassification for post-retirement plans and derivatives designated as cash flow hedges are recorded net of tax benefit of $3.6 million and $5.3 million, respectively, for the fiscal year ended March 31, 2022.
The awards will vest based on the applicable vesting period for the specific award subject to the employees' continued employment with the Company. The Board of Directors also granted Class A Restricted Common Stock to members of the Board of Directors during fiscal 2023. These awards generally vest over one year.
The awards will vest based on the applicable vesting period for the specific award subject to the employees' continued employment with the Company. The Board also granted Class A Restricted Common Stock to members of the Board during fiscal 2024. These awards generally vest over one year.
Government Contracting Matters - Provision for Claimed Indirect Costs For each of the fiscal years 2023, 2022, and 2021, approximately 97% of the Company’s revenue was generated from contracts where the end user was an agency or department of the U.S. government, including contracts where the Company performed either as a prime contractor or subcontractor, and regardless of the geographic location in which the work was performed.
Government Contracting Matters - Provision for Claimed Indirect Costs For each of the fiscal years 2024, 2023, and 2022, approximately 98%, 97%, and 97%, respectively, of the Company’s revenue was generated from contracts where the end user was an agency or department of the U.S. government, including contracts where the Company performed either as a prime contractor or subcontractor, and regardless of the geographic location in which the work was performed.
These reserves involve considerable judgment and estimation and are evaluated by management based on the best information available including changes in tax laws and other information.
These reserves involve considerable judgment a nd estimation and are evaluated by management based on the best information available including changes in tax laws and other information.
The Company recorded a partial valuation allowance against those federal, state and foreign net operating losses it believes will expire prior to utilization. Uncertain Tax Positions The Company maintains reserves for uncertain tax positions related to unrecognized income tax benefits.
The Company recorded a partial val uation allowance against those federal, state and foreign net operating losses it believes will expire prior to utilization. Uncertain Tax Positions The Company maintains reserves for uncertain tax positions related to unrecognized income tax benefits.
Over the next 12 months, the Company estimates that $11.3 million will be reclassified as a decrease to interest expense. Cash flows associated with periodic settlements of interest rate swaps will be classified as operating activities in the consolidated statement of cash flows. The Company is subject to counterparty risk in connection with its interest rate swap derivative contracts.
Over the next 12 months, the Company estimates that $8.7 million will be reclassified as a decrease to interest expense. Cash flows associated with periodic settlements of interest rate swaps will be classified as operating activities in the consolidated statement of cash flows. The Company is subject to counterparty risk in connection with its interest rate swap derivative contracts.
The state net operating loss of $6.3 million is primarily attributable to losses in jurisdictions in which the Company does not file a consolidated return. The foreign net operating loss of $6.1 million is primarily attributable to operations in jurisdictions where the Company has not historically been profitable.
The state net operating loss of $3.1 million is primarily attributable to losses in jurisdictions in which the Company does not file a consolidated return. The foreign net operating loss of $4.9 million is primarily attributable to operations in jurisdictions where the Company has not historically been profitable.
As of March 31, 2023 and 2022, $3.0 million and $3.1 million, respectively, of the reserve is reflected as a reduction to deferred taxes and the remaining balance is recorded as a component of other long-term liabilities in the consolidated balance sheet.
As of March 31, 2024 and 2023, $1.4 million and $3.0 million, respectively, of the reserve is reflected as a reduction to deferred taxes and the remaining balance is recorded as a component of other long-term liabilities in the consolidated balance sheet.
As of March 31, 2023 and 2022, the Company had recorded liabilities of approximately $326.7 million and $290.4 million, respectively, for estimated adjustments to claimed indirect costs based on its historical DCAA audit results, including the final resolution of such audits with the Defense Contract Management Agency, for claimed indirect costs incurred subsequent to fiscal 2011, and for contracts not yet closed that are subject to audit and final resolution.
As of March 31, 2024 and 2023, the Company had recorded liabilities of approximately $363.7 million and $326.7 million, respectively, for estimated adjustments to claimed indirect costs based on its historical DCAA audit results, including the final resolution of such audits with the Defense Contract Management Agency, for claimed indirect costs incurred subsequent to fiscal 2011, and for contracts not yet closed that are subject to audit and final resolution.
Significant changes in management’s estimate could have a material effect on the Company’s results of operations. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s determination of its provision for claimed indirect costs.
Significant changes in management’s estimate could have a material effect on the Company’s results of operations. F-3 Table of Contents How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s determination of its provision for claimed indirect costs.
For interest rate swaps designated as cash flow hedges, the changes in the fair value of derivatives is recorded in Accumulated Other Comprehensive Income (Loss), or AOCI, net of taxes, and is subsequently reclassified into interest expense, net in the period that the hedged forecasted interest payments are made on the Company's variable-rate debt.
For interest rate swaps designated as cash flow hedges, the changes in the fair value of derivatives is recorded in Accumulated Other Comprehensive Income (“AOCI”), net of taxes, and is subsequently reclassified into interest expense, net in the period that the hedged forecasted interest payments are made on the Company's variable-rate debt.
In addition, at any time on or prior to July 1, 2024, Booz Allen Hamilton may redeem up to 40.00% of the Senior Notes due 2029 with an amount equal to the net cash proceeds of certain equity offerings at a redemption price equal to 104.00%, plus accrued and unpaid interest, if any, to (but not including) the redemption date, provided, however, that at least 50.00% of the original aggregate principal amount of the Senior Notes due 2029 must remain outstanding after each such redemption; and provided, further, that such redemption shall occur within 180 days after the date on which any such equity offering is consummated.
In addition, at any time on or prior to July 1, 2024, Booz Allen Hamilton may redeem up to 40.00% of the original aggregate principal amount of the Senior Notes due 2029 with an amount equal to the net cash proceeds of certain equity offerings at a redemption price equal to 104.00% of the principal amount of the Senior Notes due 2029, plus accrued and unpaid interest, if any, to (but not including) the redemption date, provided that at least 50.00% of the original aggregate principal amount of the Senior Notes due 2029 remains outstanding after each such redemption; and provided, further, that such redemption occurs within 180 days after the date on which any such equity offering is consummated.
As of March 31, 2023 and 2022, there were 7.7 million and 8.6 million shares, respectively, available for future grant under the EIP. Stock Options Stock options under the EIP are granted at the discretion of the Board of Directors or its Compensation, Culture and People Committee and expire ten years from the grant date.
As of March 31, 2024 and 2023, there were 6.0 million and 7.7 million shares, respectively, available for future grant under the EIP. Stock Options Stock options under the EIP are granted at the discretion of the Board of Directors or its Compensation, Culture and People Committee and expire ten years from the grant date.
Included in the total reserve for uncertain tax positions are accrued penalties and interest of approximately $5.8 million, $2.9 million and $1.2 million at March 31, 2023, 2022, and 2021, respectively. The Company is subject to taxation in the United States and various state and foreign jurisdictions.
Included in the total reserve for uncertain tax positions are accrued penalties and interest of approximately $13.2 million, $5.8 million and $2.9 million at March 31, 2024, 2023, and 2022, respectively. The Company is subject to taxation in the United States and various state and foreign jurisdictions.
Benefit for credit losses recognized were $(2.0) million, $(1.5) million, and $(2.6) million for fiscal 2023, 2022, and 2021, respectively. 4. Earnings Per Share The Company computes basic and diluted earnings per share amounts based on net income attributable to common stockholders for the periods presented.
Benefit for credit losses recognized were $(0.3) million, $(2.0) million, and $(1.5) million for fiscal 2024, 2023, and 2022, respectively. 4. Earnings Per Share The Company computes basic and diluted earnings per share amounts based on net income attributable to common stockholders for the periods presented.
The Company performed an annual impairment test of the trade name as of January 1, 2023 and 2022, and did not identify any impairment. Amortization expense for fiscal 2023, 2022, and 2021 was $94.3 million, $76.2 million, and $19.3 million, respectively.
The Company performed an annual impairment test of the trade name as of January 1, 2024 and 2023, and did not identify any impairment. Amortization expense for fiscal 2024, 2023, and 2022 was $93.3 million, $94.3 million, and $76.2 million, respectively.
Since learning of the investigation, the Company has engaged a law firm experienced in these matters to represent the Company in connection with this matter and respond to the government's requests.
After learning of the investigation, the Company engaged a law firm experienced in these matters to represent the Company in connection with this matter and respond to the government's requests.
The effect of derivative instruments on the accompanying consolidated financial statements is as follows: Derivatives in Cash Flow Hedging Relationships Location of Gain or Loss Recognized in Income on Derivatives Amount of Gain (Loss) Recognized in AOCI on Derivatives Amount of Gain (Loss) Reclassified from AOCI into Income (1) Fiscal year ended March 31, Fiscal year ended March 31, 2023 2022 2021 2023 2022 2021 Interest rate swaps Interest expense $ 14,919 $ 20,352 $ (2,071) $ 1,237 $ (17,535) $ (20,558) (1) The reclassifications from accumulated other comprehensive gain (loss) to net income was reduced by taxes of $0.3 million, $4.6 million and $5.4 million, respectively, for fiscal 2023, 2022 and 2021.
The effect of derivative instruments on the accompanying consolidated financial statements is as follows: Derivatives in Cash Flow Hedging Relationships Location of Gain or Loss Recognized in Income on Derivatives Amount of Gain Recognized in AOCI on Derivatives Amount of Gain (Loss) Reclassified from AOCI into Income (1) Fiscal year ended March 31, Fiscal year ended March 31, 2024 2023 2022 2024 2023 2022 Interest rate swaps Interest expense $ 11,794 $ 14,919 $ 20,352 $ 14,932 $ 1,237 $ (17,535) (1) The reclassifications from accumulated other comprehensive gain (loss) to net income was reduced by taxes of $4.0 million, $0.3 million and $4.6 million, respectively, for fiscal 2024, 2023 and 2022.
Accumulated other comprehensive loss as of March 31, 2023 and 2022 consisted of net unrealized losses on the Company’s defined and postretirement benefit plans and unrealized gains or losses on interest rate swaps designated as cash flow hedges.
Accumulated other comprehensive income as of March 31, 2024 and 2023 consisted of net unrealized gains or losses on the Company’s defined and postretirement benefit plans and unrealized gains or losses on interest rate swaps designated as cash flow hedges.
These letters of credit and bank guarantees primarily support insurance and bid and performance obligations. At March 31, 2023 and 2022, approximately $1.3 million and $1.0 million of these instruments reduce the available borrowings under the Revolving Credit Facility.
These letters of credit and bank guarantees primarily support insurance and bid and performance obligations. At both March 31, 2024 and 2023, approximately $1.3 million of these instruments reduce the available borrowings under the Revolving Credit Facility.
As of March 31, 2023 and 2022, the Company had available federal, state, and foreign net operating loss (“NOL carryforwards”) of $13.7 million and $44.1 million, respectively, that may be applied against future taxable income. The federal net operating loss of $1.3 million is primarily attributable to an acquisition and will begin to expire in fiscal 2037.
As of March 31, 2024 and 2023, the Company had available federal, state, and foreign net operating loss (“NOL carryforwards”) of $9.2 million and $13.7 million, respectively, that may be applied against future taxable income. The federal net operating loss of $1.2 million is primarily attributable to an acquisition and will begin to expire in fiscal 2037.
As of March 31, 2023, the Company's tax years ended March 31, 2016 and forward are open and subject to examination by the federal tax authorities. The other jurisdictions' currently open or under examination are not considered to be material.
As of March 31, 2024, the Company's tax years ended March 31, 2016 and forward are open and subject to examination by the federal tax authorities. The other jurisdictions currently open or under examination are not considered to be material.
The fair value of the Senior Notes due 2029 and the Senior Notes due 2028 are determined using quoted prices or other market information obtained from recent trading activity in the high-yield bond market (Level 2 inputs).
The fair value of the Senior Notes are determined using quoted prices or other market information obtained from recent trading activity in the high-yield bond market (Level 2 inputs).
The Company reserves for uncertain tax positions related to unrecognized income tax benefits where it is not more likely than not that the Company’s tax position will be sustained. As of March 31, 2023, the Company has recorded $91.1 million of reserves for uncertain tax positions that, if recognized, would affect the effective income tax rate.
The Company reserves for uncertain tax positions related to unrecognized income tax benefits where it is not more likely than not that the Company’s tax position will be sustained. As of March 31, 2024, the Company has recorded $104.2 million of reserves for uncertain tax positions that, if recognized, would affect the effective income tax rate.
As of March 31, 2023, a 25 basis point increase in interest rates would increase the fair value of our interest rate swaps by approximately $1.6 million and a 25 basis point decrease in interest rates would decrease the fair value of our interest rate swaps by approximately $1.6 million .
As of March 31, 2024, a 25 basis point increase in interest rates would increase the fair value of our interest rate swaps by approximately $1.4 million and a 25 basis point decrease in interest rates would decrease the fair value of our interest rate swaps by approximately $1.4 million .
Booz Allen Hamilton may redeem some or all of the Senior Notes due 2028 at any time prior to September 1, 2023, at a price equal to 100.00% of the principal amount of the Senior Notes due 2028 redeemed, plus accrued and unpaid interest, if any, to (but not including) the redemption date, plus an applicable “make-whole premium.” Booz Allen Hamilton may redeem the Senior Notes due 2028 at its option, in whole at any time or in part from time to time, upon certain required notice, (i) on and after September 1, 2023, at a price equal to 101.938% of the principal amount of the Senior Notes due 2028, (ii) on or after September 1, 2024, at a price equal to 100.969% of the principal amount of the Senior Notes due 2028, and (iii) on September 1, 2025 and thereafter, at a price equal to 100.00% of the principal amount of the Senior Notes due 2028, in each case, plus accrued and unpaid interest, if any, to (but not including) the applicable redemption date.
Booz Allen Hamilton has the ability to redeem the Senior Notes due 2028 at its option, in whole at any time or in part from time to time, upon certain required notice, (i) on and after September 1, 2023, at a price equal to 101.938% of the principal amount of the Senior Notes due 2028 redeemed, (ii) on or after September 1, 2024, at a price equal to 100.969% of the principal amount of the Senior Notes due 2028 redeemed, and (iii) on September 1, 2025 and thereafter, at a price equal to 100.00% of the principal amount of the Senior Notes due 2028 redeemed, in each case, plus accrued and unpaid interest, if any, to (but not including) the applicable redemption date.
Fiscal Year Ended March 31, Changes in plan assets 2023 2022 2021 Fair value of plan assets, beginning of the year $ — $ — $ — Employer contributions 3,931 5,018 4,519 Benefits paid (3,931) (5,018) (4,519) Fair value of plan assets, end of the year $ — $ — $ — As of March 31, 2023 and 2022, the unfunded status of the Officer Medical Plan was $105.6 million and $113.5 million, respectively, which is included in other long-term liabilities in the accompanying consolidated balance sheets.
Fiscal Year Ended March 31, Changes in plan assets 2024 2023 2022 Fair value of plan assets, beginning of the year $ — $ — $ — Employer contributions 5,927 3,931 5,018 Benefits paid (5,927) (3,931) (5,018) Fair value of plan assets, end of the year $ — $ — $ — As of March 31, 2024 and 2023, the unfunded status of the Officer Medical Plan was $127.0 million and $105.6 million, respectively, which is included in other long-term liabilities in the accompanying consolidated balance sheets.
F-2 Table of Contents Revenue recognition related to the cost-based input method Description of the Matter As described in Notes 2 and 3 to the consolidated financial statements, the Company generally recognizes revenue over time as services are provided, as most of its contracts involve a continuous transfer of control to the customer.
F-2 Table of Contents Revenue recognition based on certain contracts using a cost input measure of progress Description of the Matter As described in Notes 2 and 3 to the consolidated financial statements, the Company generally recognizes revenue over time as services are provided, as most of its contracts involve a continuous transfer of control to the customer.
In connection with Booz Allen Hamilton obtaining investment grade ratings from both Moody's and S&P, activities restricted by certain negative covenants are expected to be permitted subject to pro forma compliance with the financial covenant and no event of default having occurred and continuing.
In connection with Booz Allen Hamilton obtaining investment grade ratings from both Moody's and S&P, certain activities previously restricted by certain negative covenants are permitted subject to pro forma compliance with the financial covenants and no events of default having occurred or are continuing.
The weighted-average discount rate used to determine the year-end benefit obligation for the Officer Medical Plan were 4.90%, 3.75% and 3.40% for fiscal 2023, 2022, and 2021, respectively.
The weighted-average discount rate used to determine the year-end benefit obligation for the Officer Medical Plan were 5.20%, 4.90% and 3.75% for fiscal 2024, 2023, and 2022, respectively.
A hypothetical interest rate increase of 25 basis points would have increased interest expense related to the term facilities under our Senior Credit Facility by approximately $5.2 million in fiscal 2023 and $4.8 million in fiscal 2022, and likewise decreased our income and cash flows.
A hypothetical interest rate increase of 25 basis points would have increased interest expense related to the term facilities under our Senior Credit Facility by approximately $2.6 million in fiscal 2024 and $2.7 million in fiscal 2023, and likewise decreased our income and cash flows.
The share repurchase program may be suspended, modified or discontinued at any time at the Company’s discretion without prior notice. During fiscal 2023, the Company purchased 2.1 million shares of Class A Common Stock in a series of open market transactions for $196.2 million.
The share repurchase program may be suspended, modified or discontinued at any time at the Company’s discretion without prior notice. During fiscal 2024, the Company purchased 3.2 million shares of Class A Common Stock in a series of open market transactions for $372.8 million.
The Company uses the weighted average number of shares of common stock outstanding during the period to calculate basic earnings per share, or EPS. Diluted EPS adjusts the weighted average number of shares outstanding 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.
The Company uses the weighted average number of shares of common stock outstanding during the period to calculate basic earnings per share (“EPS”). Diluted EPS adjusts the weighted average number of shares outstanding to include the dilutive effect of outstanding common stock options and other stock-based awards.
During fiscal 2023 and 2022, the Company reduced the gross cost and accumulated depreciation and amortization by $24.7 million and $55.0 million, respectively, for zero net book value assets deemed no longer in service. 8.
During fiscal 2024 and 2023, the Company reduced the gross cost and accumulated depreciation and amortization by $36.3 million and $24.7 million, respectively, for zero net book value assets deemed no longer in service. 8.
The Company provides an annual matching contribution of up to 6% of eligible annual compensation. Total expense recognized under ECAP for fiscal 2023, 2022, and 2021 was $190.5 million, $176.8 million, and $166.3 million, respectively, and the Company-paid contributions were $185.7 million, $171.6 million, and $163.0 million, respectively.
The Company provides an annual matching contribution of up to 6% of eligible annual compensation. Total expense recognized under ECAP for fiscal 2024, 2023, and 2022 was $218.4 million, $190.5 million, and $176.8 million, respectively, and the Company-paid contributions were $213.3 million, $185.7 million, and $171.6 million, respectively.
As a result of these transactions, the Company repurchase d 0.3 million shares a nd recorded them as treasury shares at a total cost of $28.2 million in fiscal 2023.
As a result of these transactions, the Company repurchase d 0.3 million shares a nd recorded them as treasury shares at a total cost of $42.3 million in fiscal 2024.
F-39 Table of Contents 20. Commitments and Contingencies Letters of Credit and Third-Party Guarantees As of March 31, 2023 and 2022, the Company was contingently liable under open standby letters of credit and bank guarantees issued by our banks in favor of third parties that totaled $6.1 million and $8.4 million, respectively.
Commitments and Contingencies Letters of Credit and Third-Party Guarantees As of March 31, 2024 and 2023, the Company was contingently liable under open standby letters of credit and bank guarantees issued by our banks in favor of third parties that totaled $4.4 million and $6.1 million, respectively.
Compensation expense for performance-based awards is estimated at each reporting date using management's expectation of the probable achievement of the specified performance criteria of each tranche during the respective performance periods: Fiscal Year Ended March 31, 2023 2022 2021 Equity Incentive Plan Options $ 2,550 $ 1,793 $ 2,625 Restricted Stock and Other Awards 77,722 67,991 57,219 Total $ 80,272 $ 69,784 $ 59,844 As of March 31, 2023 and 2022, there was $50.9 million and $48.9 million, respectively, of total unrecognized compensation cost related to unvested stock-based compensation agreements.
Compensation expense for performance-based awards is estimated at each reporting date using management's expectation of the probable achievement of the specified performance criteria of each tranche during the respective performance periods: Fiscal Year Ended March 31, 2024 2023 2022 Equity Incentive Plan Options $ 1,319 $ 2,550 $ 1,793 Restricted Stock and Other Awards 93,663 77,722 67,991 Total $ 94,982 $ 80,272 $ 69,784 As of March 31, 2024 and 2023, there was $62.3 million and $50.9 million, respectively, of total unrecognized compensation cost related to unvested stock-based compensation agreements.
We expect to recognize approximately 75% of the remaining performance obligations as of March 31, 2023 as revenue over the next 12 months, and approximately 85% over the next 24 months. The remainder is expected to be recognized thereafter.
We expect to recognize approximately 70% of the remaining performance obligations as of March 31, 2024 as revenue over the next 12 months, and approximately 80% over the next 24 months. The remainder is expected to be recognized thereafter.
F-35 Table of Contents Dividends The following table summarizes the cash distributions recognized in the consolidated statement of cash flows: Fiscal Year Ended March 31, 2023 2022 2021 Recurring dividends (1) $ 235,726 $ 209,057 $ 181,066 (1) Amounts represent recurring quarterly dividends that were declared and paid for during each quarter of fiscal 2023, 2022, and 2021. 17.
Dividends The following table summarizes the cash distributions recognized in the consolidated statement of cash flows: Fiscal Year Ended March 31, 2024 2023 2022 Recurring dividends (1) $ 253,413 $ 235,726 $ 209,057 (1) Amounts represent recurring quarterly dividends that were declared and paid for during each quarter of fiscal 2024, 2023, and 2022. 17.
The aggregate fair value of all awards issued during fiscal 2023 was $102.1 million and will be recognized in the accompanying consolidated statements of operations over the applicable vesting period of the awards. The total fair value of restricted stock shares vested during fiscal 2023 and 2022 was $70.2 million and $59.6 million, respectively.
The aggregate fair value of all awards issued during fiscal 2024 was $97.2 million and will be recognized in the accompanying consolidated statements of operations over the applicable vesting period of the awards. The total fair value of restricted stock shares vested during fiscal 2024 and 2023 was $86.2 million and $70.2 million, respectively.
F-6 Table of Contents BOOZ ALLEN HAMILTON HOLDING CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Fiscal Year Ended March 31, 2023 2022 2021 (Amounts in thousands) Net income $ 271,215 $ 466,577 $ 608,958 Other comprehensive income, net of tax: Change in unrealized gain on derivatives designated as cash flow hedges 10,109 27,983 13,665 Change in postretirement plan costs 10,639 10,373 2,565 Total other comprehensive income, net of tax 20,748 38,356 16,230 Comprehensive income 291,963 504,933 625,188 Comprehensive loss attributable to non-controlling interest 576 163 — Comprehensive income attributable to common stockholders $ 292,539 $ 505,096 $ 625,188 The accompanying notes are an integral part of these Consolidated Financial Statements.
F-6 Table of Contents BOOZ ALLEN HAMILTON HOLDING CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Fiscal Year Ended March 31, 2024 2023 2022 (Amounts in thousands) Net income $ 605,706 $ 271,215 $ 466,577 Other comprehensive income, net of tax: Change in unrealized (loss) gain on derivatives designated as cash flow hedges (2,327) 10,109 27,983 Change in postretirement plan costs (17,474) 10,639 10,373 Total other comprehensive (loss) income, net of tax (19,801) 20,748 38,356 Comprehensive income 585,905 291,963 504,933 Comprehensive loss attributable to non-controlling interest — 576 163 Comprehensive income attributable to common stockholders $ 585,905 $ 292,539 $ 505,096 The accompanying notes are an integral part of these Consolidated Financial Statements.
Stock-based Compensation The following table summarizes stock-based compensation expense recognized in the consolidated statements of operations: Fiscal Year Ended March 31, 2023 2022 2021 Cost of revenue $ 43,378 $ 36,836 $ 27,682 General and administrative expenses 36,894 32,948 32,162 Total $ 80,272 $ 69,784 $ 59,844 The following table summarizes the total stock-based compensation expense recognized in the consolidated statements of operations by the following types of equity awards, including stock options, time-based and performance-based restricted stock awards.
Stock-based Compensation The following table summarizes stock-based compensation expense recognized in the consolidated statements of operations: Fiscal Year Ended March 31, 2024 2023 2022 Cost of revenue $ 43,995 $ 43,378 $ 36,836 General and administrative expenses 50,987 36,894 32,948 Total $ 94,982 $ 80,272 $ 69,784 The following table summarizes the total stock-based compensation expense recognized in the consolidated statements of operations by the following types of equity awards, including stock options, time-based and performance-based restricted stock awards.
F-9 Table of Contents BOOZ ALLEN HAMILTON HOLDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in tables in thousands, except share and per share data or unless otherwise noted) March 31, 2023 1.
F-37 Table of Contents BOOZ ALLEN HAMILTON HOLDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in tables in thousands, except share and per share data or unless otherwise noted) 20.
F-25 Table of Contents Senior Notes On June 17, 2021, Booz Allen Hamilton issued $500.0 million aggregate principal amount of its 4.000% Senior Notes due July 1, 2029 (the “Senior Notes due 2029”) under an Indenture, dated as of June 17, 2021, among Booz Allen Hamilton, certain subsidiaries of Booz Allen Hamilton, as guarantors, and Wilmington Trust, National Association, as trustee (in such capacity, the “2029 Trustee”), as supplemented by the First Supplemental Indenture, dated as of June 17, 2021, among Booz Allen Hamilton, the 2029 Subsidiary Guarantors and the 2029 Trustee.
On June 17, 2021, Booz Allen Hamilton issued $500.0 million aggregate principal amount of its 4.000% Senior Notes due July 1, 2029 (the “Senior Notes due 2029”) under an Indenture and First Supplemental Indenture, both dated as of June 17, 2021, among Booz Allen Hamilton, certain subsidiaries of Booz Allen Hamilton, as guarantors (the “2029 Subsidiary Guarantors”), and Wilmington Trust, National Association, as trustee.
Business Segment Information The Company reports operating results and financial data in one operating and reportable segment. The Company manages its business as a single profit center in order to promote collaboration, provide comprehensive functional service offerings across its entire client base, and provide incentives to employees based on the success of the organization as a whole.
The Company manages its business as a single profit center in order to promote collaboration, provide comprehensive functional service offerings across its entire client base, and provide incentives to employees based on the success of the organization as a whole.
During fiscal 2019, we established a Rabbi trust to provide for the payment of benefits under our non-qualified deferred compensation plan. As of March 31, 2023, fund assets totaled $20.1 million which include mutual fund investments that are subject to fluctuations in market prices and interest rates.
We maintain a Rabbi trust to provide for the payment of benefits under our non-qualified deferred compensation plan. As of March 31, 2024, fund assets totaled $29.0 million which include mutual fund investments that are subject to fluctuations in market prices and interest rates.
As of March 31, 2023, 2022, and 2021, the Company has recorded $552.3 million, $79.9 million, and $62.9 million, respectively, of reserves for uncertain tax positions which includes potential tax benefits of $91.1 million, $78.5 million, and $62.7 million, respectively, that, when recognized, impact the effective tax rate.
As of March 31, 2024, 2023, and 2022, the Company has recorded $115.4 million, $552.3 million, and $79.9 million, respectively, of reserves for uncertain tax positions which include potential tax benefits of $104.2 million, $91.1 million, and $78.5 million, respectively, that, when recognized, impact the effective tax rate.
The unrecognized compensation cost as of March 31, 2023 is expected to be fully amortized over the next 4.6 years.
The unrecognized compensation cost as of March 31, 2024 is expected to be fully amortized over the next five years.
The ESPP provides for quarterly offering periods. For the year ended March 31, 2023, 0.3 million shares of Class A Common Stock were purchased by employees under the ESPP. Since the program's inception, 3.5 million shares have been purchased by employees of the total 10.0 million shares available. 18.
For the year ended March 31, 2024, 0.2 million shares of Class A Common Stock were purchased by employees under the ESPP. Since the program's inception, 3.7 million shares have been purchased by employees of the total 10.0 million shares available. 18.
Programs and contract assets, channel relationships, and other amortizable intangible assets are generally amortized on an accelerated basis over periods ranging from 2 years to 14 years, and those related to software are generally amortized on a straight line basis over periods ranging from 1 year to 10 years.
Programs and contract assets, channel relationships, and other amortizable intangible assets are generally amortized on an accelerated basis over periods ranging from two to fourteen years, and those related to software are generally amortized on a straight line basis over periods ranging from one to ten years.
Employee Benefit Plans Defined Contribution Plan The Company sponsors the Employees’ Capital Accumulation Plan, or ECAP, which is a qualified defined contribution plan that covers eligible U.S. and certain international employees. ECAP provides for distributions to participants by reason of retirement, death, disability, or termination of employment.
The remaining $10.5 million of settlements with taxing authorities was previously paid. 14. Employee Benefit Plans Defined Contribution Plan The Company sponsors the Employees’ Capital Accumulation Plan (the “ECAP”), which is a qualified defined contribution plan that covers eligible U.S. and certain international employees. ECAP provides for distributions to participants by reason of retirement, death, disability, or termination of employment.

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