Fiscal Year 2012 Annual Report
Missions that Matter
Inspired Thinking
Contents
Fiscal Year 2012 Financial Highlights | 1
Chairman’s Letter |
2
Missions that Matter: Inspired Thinking | 7
Booz Allen Hamilton Leadership | 36
Report of Independent Registered Public Accounting Firm | 37
Consolidated Financial Statements | 38
Notes to Consolidated Financial Statements | 43
Shareholder Information | (inside back cover)
Our Vision
Booz Allen Hamilton is committed to
being the absolute best management
and technology consulting firm, as
measured by our clients’ success,
the excellence of our people, and
our spirit of partnership.
Our Mission
Booz Allen Hamilton partners with
clients to solve their most important
and complex problems, making their
mission our mission, and delivering
results that endure.
Principal Locations
Huntsville, Alabama
Montgomery, Alabama
Sierra Vista, Arizona
Los Angeles, California
San Diego, California
San Francisco, California
Colorado Springs, Colorado
Denver, Colorado
District of Columbia
Pensacola, Florida
Sarasota, Florida
Tampa, Florida
Atlanta, Georgia
Honolulu, Hawaii
O’Fallon, Illinois
Indianapolis, Indiana
Leavenworth, Kansas
Radcliff, Kentucky
Aberdeen, Maryland
Annapolis Junction, Maryland
Lexington Park, Maryland
Linthicum, Maryland
Rockville, Maryland
Troy, Michigan
Kansas City, Missouri
Omaha, Nebraska
Red Bank, New Jersey
New York, New York
Rome, New York
Fayetteville, North Carolina
Cleveland, Ohio
Dayton, Ohio
Philadelphia, Pennsylvania
Charleston, South Carolina
Houston, Texas
San Antonio, Texas
Abu Dhabi, UAE
Alexandria, Virginia
Arlington, Virginia
Chantilly, Virginia
Charlottesville, Virginia
Falls Church, Virginia
Herndon, Virginia
Lorton, Virginia
McLean, Virginia
Norfolk, Virginia
Stafford, Virginia
Seattle, Washington
•
Principal Offices
•
Locations where
Booz Allen is serving
clients on long-term
engagements
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Fiscal Year 2012 Financial Highlights
(In thousands, except per share amounts)
Fiscal year ended March 31:
Revenue
Operating Income
Adjusted Operating Income (1)
EBITDA (1)
Adjusted EBITDA (1)
Net Income (Loss)
Adjusted Net Income (1)
Per Diluted Common Share
Net Income (Loss)
Adjusted Net Income (1)
2012
2011
2010
$««5,859,218
$««5,591,296
$««5,122,633
387,432
429,219
462,637
488,060
239,955
227,194
319,444
392,480
400,047
444,442
84,694
157,511
199,554
313,157
295,317
368,323
25,419
97,001
$««÷÷÷÷«1.70
$««÷÷÷÷«0.66
$««÷÷÷÷«0.22
$««÷«÷÷÷1.61
$««÷«÷÷÷1.24
$««÷÷÷÷«0.83
At March 31:
2012
2011
2010
Cash Provided by (Used in) Operating Activities
$««÷«360,046
$««÷«296,339
$««÷«270,484
Free Cash Flow (1)
Total Debt
Total Backlog
283,121
207,555
221,213
965,425
÷«994,328
1,568,632
10,804,304
÷«÷10,923,665
÷÷÷«9,012,923
(1) These measures are non-GAAP financial measures. Please see page 67 of this report for a reconciliation of these measures to GAAP and a discussion of why the
Company is presenting this information.
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Dear Colleagues and Shareholders:
In all walks of life, our most trusted colleagues and
friends have this in common: We can count on them.
No matter what the situation or challenge, they
will be there for us. Booz Allen Hamilton is trusted
in that way. You can count on us.
In fiscal 2012, Booz Allen delivered enduring results for our clients and solid earnings for
our investors. We provided rewarding professional opportunities for our employees and
much-needed support to our communities.
Every day, Booz Allen’s clients perform missions that matter: protecting our national interests
and shielding information systems and critical infrastructure from cyber attack, improving
healthcare, safeguarding our financial systems, optimizing energy resources, and transforming
transportation systems to make them safer and more efficient.
Even under the best of conditions, missions this complex and critical require astute strategy
and solid execution. Today’s unpredictable environment makes effectiveness and efficiency
even more important. The United States federal government is in a period of significant
uncertainty, characterized by funding challenges and budget cuts. And our commercial,
institutional, and not-for-profit clients are affected by changing industry dynamics and global
economic conditions.
Yet demand remains high for Booz Allen’s capabilities and expertise across our diverse portfolio
of clients. Today, we’re on the front line developing strategies that make organizations more
agile, capable, and efficient. We’re helping clients analyze big data to accelerate and improve
decision making. We’re developing the technologies and building the solutions to deliver more
and better services to citizens and customers.
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These endeavors again have enabled Booz Allen to succeed in a difficult business environment.
In fiscal 2012, we continued to grow revenue and improve margins, although at a slower rate
than we have enjoyed over the last decade.
• Revenue increased 4.8 percent to $5.86 billion
• Free cash flow increased to $283.1 million
• Net income increased to $240.0 million from $84.7 million
• Total backlog was $10.8 billion at March 31, 2012
• Adjusted EBITDA increased 9.8 percent to $488.1 million
In just our second year as a public company, our Board of Directors initiated a quarterly dividend
and paid a special dividend, each of which signals its confidence in our financial strength—and
demonstrates our commitment to create value for our current and future stockholders. We also
launched a successful employee stock purchase program that makes more employees owners
of our company.
Inspired Thinking
Every one of us at Booz Allen focuses on the most important performance indicator:
client success.
A large and growing percentage of our business directly impacts clients’ core missions, where
quality and performance truly count. Clients value the in-depth knowledge we bring to each
engagement and our commitment to make these missions our own. They also know that we’ll
“ A large and growing percentage of
our business directly impacts clients’
core missions, where quality and
performance truly count.”
—Ralph W. Shrader
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Facts and Figures
Fiscal 2012
• $5.86 billion in revenue
• $10.8 billion total backlog of sold work
• 90 percent of revenue derived from engagements for which Booz Allen was the prime contractor
• 25,000 employees approximately
• 100 percent of employees participated in internal training programs
• 76 percent of employees held government security clearances, of which 49 percent were Top Secret or higher
• 5,600 cyber certificates held by employees
• 69 percent of staff reported volunteering
ask tough questions, examine their assumptions, and help them make hard choices and take
bold action that drives sustainable results. That’s why we’re often asked to support such impor-
tant initiatives as reengineering the Federal Aviation Administration’s NextGen air transportation
system and analyzing and integrating enterprise systems used by the Department of Defense.
We’re also applying methodologies such as our Enterprise Effectiveness and Efficiency (E3)
framework to help government and business leaders do more with less through a combined
focus on mission refinement, operational efficiencies, and cost savings.
Clients depend on us to help them prepare for what’s next, and we do so by identifying major
trends before they happen and by building the capabilities we need to respond. For example,
more than a decade ago we saw cybersecurity as an evolving threat and invested heavily to
build scale, experience, and capabilities. Today, we are a market leader at a time of explosive
demand for these services. We are applying expertise gained from supporting the intelligence
community to provide network defense, advanced cyber analytics, and cloud analytics solutions
across the government, commercial, and international sectors. We followed the same path in
healthcare and financial services, where the robust capabilities we built are helping organiza-
tions harness and protect vast data sets and comply with new regulations.
Solutions like these require that Booz Allen be agile and flexible so we can put the right people
in the right places. Our collaborative culture empowers us to bring the best talent and best
value to bear to every assignment.
Quality Growth
In fiscal 2012, we reaffirmed our strategy to pursue quality growth—not growth for growth’s
sake—and to focus on markets and services in which Booz Allen is truly differentiated.
Last July, we launched a focused expansion strategy beyond the US federal government market
into commercial and international markets following the end of the non-compete agreement
with our spin-off company. In the commercial sector, we are focusing on what we believe is our
sweet spot, serving companies in the financial services, healthcare, and energy industries where
we see strong intersections between the public and private sectors. Internationally, we are
focused on the Middle East, where we see the greatest opportunities. To serve these markets,
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Capabilities
Strategy and Organization
• Human Capital, Learning, and Communications
• Organization Efficiency and Effectiveness
• Strategy and Change Management
Analytics
• Cloud Analytics
• Decision Analytics
• Mission Analytics
Technology
• Cyber Technology
• Strategic Technology and Innovation
• Systems Development
Engineering and Operations
• Enterprise Integration
• Engineering
• Acquisition, Program Management, and Logistics
we expanded our presence in New York City and in Abu Dhabi, where we will soon
open a larger office in the Etihad Towers.
We also made several key changes to our senior Leadership Team to better
meet market demand and lead our 25,000 people. With cybersecurity a top-of-
mind client concern and a Booz Allen strength, we elevated Mike McConnell to
the role of vice chairman, responsible for driving cyber capabilities across all our
markets. We named Karen Dahut leader of our growing analytics capabilities,
and Betty Thompson chief personnel officer. We also moved Rich Wilhelm to
lead our intelligence business and Pat Peck to drive our E3 initiative.
We tapped two of our executive vice presidents to head areas we believe have
strong growth potential: Mark Gerencser, one of our firm’s most experienced
and accomplished leaders, to lead our reentry into the commercial market; and
Mark Herman, a recognized thought leader, to oversee cloud-based services. We
have made significant investments in these and other high-growth areas to build
scale and capability. Our new Booz Allen Cyber Solutions Network™ services give
us a first-mover advantage in protecting client infrastructures and information, connecting our
clients with thousands of cyber experts, technologies, and solutions through a dynamic and
integrated network of cyber centers and laboratories.
As the year progressed, we also made several moves to free up funds to invest in growth
areas and to position the firm for success in our core markets. These included the necessary,
if difficult, actions to reduce the size of senior and middle management ranks. We created a
more nimble financial structure by removing costs from our infrastructure and overhead. We
fine-tuned our portfolio by divesting our state and local transportation business. And, to ensure
that all employees protect our institution and our clients’ trust, we devoted significant attention
to ethics and compliance.
These are the kinds of decisions good companies make in challenging times, and over time
these actions will make Booz Allen an even more successful, secure, and exciting place for
our people to grow and excel.
Fiscal Year 2012 Report
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Top photo: Booz Allen
serves financial services
institutions in New York
City from a new office that
overlooks Bryant Park.
Bottom photo: A new
office in the Etihad
Towers (buildings at left)
in Abu Dhabi gives
Booz Allen access to
clients throughout the
Middle East.
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Awards and Recognition
Booz Allen Hamilton’s high standing as a business, employer, and community supporter was recognized by dozens of
awards from major publications and organizations over the past year, including:
• “World’s Most Admired Companies”—Fortune magazine
• “100 Best Companies to Work For”—Fortune magazine
• “Best Firms to Work For”—Consulting Magazine
• “Working Mother 100 Best Companies”—Working Mother magazine
• “Best Places to Work in IT”—Computerworld magazine
• “Top 25 Technology Consulting Firms”—Vault.com
• “Top 100 Military-Friendly Employers”—G.I. Jobs magazine
• “Ten Best Corporations for Veteran-Owned Businesses”—National Veteran-Owned Business Association
• “Top 50 Companies for Diversity”—DiversityInc
• “Best Places to Work for LGBT Equality”—Human Rights Campaign
• “10 Best Companies Supporting the Arts in America”—Business Committee for the Arts
Future Focus
Booz Allen’s success at creating a workplace that challenges and satisfies our people was
recognized by Fortune, Working Mother, and Consulting magazines, and by other publications
and organizations, especially those supporting diversity goals and veterans opportunities (see
top of page).
We also backed employee- and firm-led initiatives that supported more than 600 local
and national charitable organizations over the past year through volunteerism, philanthropy,
pro bono work, and in-kind donations. Booz Allen’s long tradition of supporting the arts was
recognized last fall when the firm was named by the Business Committee for the Arts to its
2011 list of the “10 Best Companies Supporting the Arts in America.”
Booz Allen was recently named to Fortune magazine’s prestigious list of the “World’s Most
Admired Companies.” For me, this honor is a reflection of the strength, reputation, and
resilience that come from nearly a century in business. I firmly believe Booz Allen is an
exceptional company—in our agility in the marketplace, in the quality of our staff, and in our
deep commitment to excellence, integrity, and client success. Yet we won’t rest on our laurels.
We remain focused on the future and have both the perspective of history and openness to
change that enable us to seize new opportunities and deliver value, day after day, to our
clients, employees, communities, and investors.
Ralph W. Shrader, Ph.D.
Chairman, Chief Executive Officer, and President
June 19, 2012
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Missions that Matter: Inspired Thinking
Leaders in government and
business are managing high-priority
projects that are multidimensional
and increasingly complex. And
when results truly count, they’re
choosing Booz Allen Hamilton. Our
long-standing relationships with
federal agencies give us insight
into mission requirements—and
help us anticipate and navigate
change. Our deep expertise and
agile business model enable us
to deliver the knowledge and skills
clients value most—and compete
effectively in the marketplace.
And our reputation for excellence,
integrity, client service, and inspired
thinking makes us a valued and
trusted partner.
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Keeping information secure
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Keeping information secure An integrated approach enables
effective cybersecurity
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Department of Veterans Affairs
A new information security strategy protects veterans
health records from cyber attack
Sophisticated cyber threats challenge all organizations, but when hackers target healthcare systems, their
attacks can compromise sensitive patient data and disrupt the medical technology used to save lives.
This threat became reality at the Department of Veterans Affairs (VA). When two laptops and an external
hard drive were reported missing from the agency, a network that spans more than 1,500 facilities across
the country—and supports more than 400,000 end-users and over 700,000 devices—was instantly at
risk. When a subsequent cyber attack breached its network, the VA took immediate action to implement
robust cybersecurity solutions to safeguard the exposed personally identifiable data and health records
on approximately 26 million veterans and active duty military personnel.
To put additional safeguards in place, the VA further consolidated all its information technology assets
under the Assistant Secretary for Information and Technology, creating a new Office of Information Security
of more than 500 people. Booz Allen worked side by side with the VA to help stand up this state-of-the-art
information security organization. We helped develop strategic, tactical, and operational plans that would
address near-term security and compliance considerations and shape the direction of the VA’s security
program. We then partnered to insulate the network from future attacks, quickly adjusting our staffing
model to provide a near-real-time network forensics and response capability. Drawing on resources from
across the firm, we also helped deploy security tools to 340,000 laptops in a six-month period and created
an analytic capability that provides the VA with a common operating picture of the current security status
of its global facilities. To support the new organization, we helped execute an award-winning security
communications campaign to describe technical concepts to its security workforce and distribute more
general security messages to a diverse audience of end-users.
Team members clockwise
from upper left:
Ilene Yarnoff, principal;
Elaine Inn, lead associate;
Bill Hummel, senior
associate; Leslie Glaser,
lead associate; and Dan
Herlihy, senior associate,
helped the VA stand up a
state-of-the-art information
security organization.
The Office of Information Security has evolved into an agile organization that is now
meeting the VA’s ever-changing cybersecurity demands. Today, the VA has the complete
visibility it needs to engage its entire workforce in warding off security and privacy
threats, detect and respond to advanced persistent threats, and protect the key health
IT assets that provide critical medical services to veterans.
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Booz Allen cyber experts built
a dynamic model that has
yielded tremendous insight
into the way financial institutions
identify and manage threats
at a network level.
CyberM3 Model
New Cyber Capability Helps Commercial Enterprises
Manage Risk
Cyber terrorists pose a significant and growing threat to
the US and the global commercial ecosystem. And when
they strike, enterprises can lose not just revenues and
valuation, but also brand reputation, customer trust and
confidence, intellectual property, and much more. With so
much at stake, companies must secure key organizational
functions to reduce the number and cost of cyber
incidents, improve response times, and strategically align
their security programs to proactively manage cyber risks.
Today’s threats call for comprehensive, integrated
strategies that align with business risk management
objectives across the enterprise. To help companies
assess risks and enact effective strategies, Booz
Allen recently assembled a team of experienced cyber
experts—highly credentialed professionals with expertise
across the financial services, intelligence, and defense
industries. Their mission: apply their collective insights
and experiences to identify the root causes of cyber
vulnerability in the commercial sector and build a next-
generation maturity model that helps organizations more
quickly recognize and manage emerging conditions that
affect cyber operations.
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Booz Allen Hamilton
The team built a dynamic model, CyberM3, that helps
organizations measure, manage, and mature their
cybersecurity programs. The model encompasses
not only technology and analytics, but also business
process engineering and human capital development.
It also factors in the role that large, systemically critical
organizations play in commercial markets and the
economy. As a result, it has yielded tremendous insight
into the ways companies identify and manage threats
at a network level. The model has also yielded a new
approach that revolutionizes traditional perimeter-based
security by building on dynamic, tiered network structures.
CyberM3 is helping organizations transform their
cybersecurity programs from the ground up—and
implement key components across all three dimensions
of technology, people, and policy. Booz Allen is now
working to validate, refine, and polish the model,
testing it with multiple clients in financial services and
other markets to broaden its application and respond
effectively to the diverse needs of stakeholders.
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Booz Allen Cyber Solutions Network
A Dynamic Network Defends Critical IT Assets
Government and industry face increasingly sophisticated and
complex security threats to their networks, and protecting them
is vital to the nation’s economic stability and security. Launched
in 2012, Booz Allen Cyber Solutions Network™ capabilities
help clients defend critical IT assets by providing
real-time access to the cyber talent, knowledge, and
technology required to thwart attacks. We created
a dynamic environment that virtually connects
thousands of experts in advanced cyber analytics,
computer network defense, cyber product and
technology evaluation, and advanced cyber training.
Because we understand that it takes a network to
defend a network, our unique approach helps clients
tackle cybersecurity challenges that can be solved
only through cross-disciplinary collaboration.
Organizations can tap into the power of Booz Allen
Cyber Solutions Network resources—a virtually
linked constellation of nine centers and labs—from
anywhere with an Internet connection to access the
entire range of capabilities. As threats to a network
escalate, or when a breach has been detected, we
can scale these resources to meet the most urgent
client challenges, delivering the right people, the right
intelligence, and the right technologies.
The Booz Allen Cyber Solutions Network service also
promotes innovation, encourages collaboration, and advances
education and training. It gives Booz Allen experts a platform
to push the boundaries of cyber capabilities by sharing new
ideas and testing new technologies. It also offers a networked
learning environment and a virtual secure operations center
where cyber experts can advance their skills and learn about
new challenges.
Cyber experts at the McLean, Virginia, center focus on e-discovery, mobile response,
and cyber threat monitoring, modeling, and simulation.
Investor-Owned Utility
Nuclear Facilities Secure Vital Digital Assets
As US nuclear power plants upgrade from analog to digital
systems, they require new solutions that insulate them from
cyber attacks that can impact safety, security, economic vitality,
and quality of life across the vast regions they serve. Today,
the nation’s 94 active nuclear facilities face diverse challenges
as they work to meet rigorous new federal cybersecurity
requirements. Booz Allen is helping the industry achieve near-
term compliance and long-term cybersecurity with a commercial
nuclear energy team of experts who possess deep experience
across the spectrum of information technology, nuclear
engineering, and nuclear industry regulation.
In particular, our team is helping one investor-owned utility
implement multiple cybersecurity requirements before the
government-mandated December 31, 2012, deadline. The
team is examining all analog and digital components to
document how many systems there are; identifying the critical
digital assets and systems that have a direct impact on
safety, security, and emergency preparedness; and evaluating
and documenting the systems currently in place to secure
these components. To support future compliance, the team
has recommended and will help implement a new tool that
automates compliance management activities, captures and
records these activities, and makes the data easily accessible
for tests and audits.
Meeting these requirements will enable the utility to prepare for
the approved construction of new facilities—and continue its
30-year legacy of providing clean, economical, reliable, proven
nuclear power.
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Leading large-scale change
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Leading large-scale change Multidisciplined approach makes
transformation seamless and effective
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Federal Aviation Administration
A major transformation of the national airspace system is
improving safety, efficiency, and capacity—and taking air
transportation to new heights
Today’s US air traffic control system relies heavily on ground-based radar technology and voice
communications—aging technologies that can lead to safety and security risks, chronic delays, and the
economic and environmental consequences of higher fuel consumption. The Federal Aviation Administration
(FAA) is responding with the Next Generation Air Transportation System (NextGen). Built on the foundation
of an integrated network-centric architecture, it will empower operators and vehicles to exchange dynamic,
precise data and apply it to maximize safety, mobility, and sustainability.
Technology and systems engineering expertise are critical to a project of this magnitude, and success
depends on achieving an integrated system-of-systems that brings together advanced air traffic control and
avionics capabilities. Moreover, to meet higher air traffic volume and drive economic gains and environmental
efficiencies, it’s essential that policy, airspace design, and workforce competencies evolve on parallel paths.
As one of the administration’s primary systems engineering and integration partners for its 2020 Systems
Engineering and Research and Mission Analysis Contract, Booz Allen is working across the air transportation
industry to help integrate 21st-century technologies that will transform the US air traffic control system. We
are providing a broad range of integrated support services that also include investment and business case
analysis, requirements analysis, systems integration, training, and program/portfolio management.
Booz Allen teams are collaborating on many fronts to advance NextGen. We developed an approach to
technical, cost, benefit, and risk analysis that helps leaders understand the trade-offs between alternative
NextGen investments. The NextGen framework, which we worked with several other companies to create,
is helping the administration develop, analyze, and implement the new National Airspace System Enterprise
Team members clockwise
from upper left:
Kandis Porter, senior
consultant; Abdul Khandker,
associate; Brian Legan,
vice president; Chris Balcik,
principal; Jeffrey Freemyer,
lead associate; and Roberta
Leftwich, principal,
support a large engagement
with the Federal Aviation
Administration to engineer
the integrated network-
centric architecture that will
drive the Next Generation
Air Transportation System.
Architecture. We are identifying cost-effective solutions for a redesigned air traffic
management infrastructure that will integrate future technologies, facilities, air traffic
control operations, policies, and a modern workforce. And we helped develop new
procedures to reduce flight times and ground delays.
Since the ownership of infrastructure assets spans government, industry, and state and
local entities, Booz Allen is applying a megacommunity SM approach to engage the multiple
agencies responsible for NextGen, airlines, business aviation operators, and general
aviation aircraft owners. They are working together to help realize NextGen’s early benefits.
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US Air Force 480th ISR Wing
Providing Warfighters Vital Intelligence and Support
The US Air Force is responsible for providing airborne
intelligence, surveillance, and reconnaissance assets
(e.g., U-2, Global Hawk, Predator, and Reaper) to
combatant commanders to meet joint/coalition
operations. To gather and disseminate this intelligence,
it employs a net-enabled information architecture to
integrate global sensor data of all types and turn it
into actionable intelligence. The Air Force relies on the
480th Intelligence, Surveillance, and Reconnaissance
Wing (480th ISR Wing) to deliver exploited intelligence
collected by those Air Force platforms.
In 2009, 480th ISR Wing leadership initiated a new
biannual event, Sentinel Focus, to observe real-time
intelligence support activity, identify mission-critical
issues, and apply lessons learned to improve intelligence,
surveillance, and reconnaissance. Booz Allen partnered
with the 480th ISR Wing to observe operation of the Air
Force Distributed Common Ground System, also known as
the Sentinel weapon system. Together, we examined its
most critical operational issues, made recommendations,
applied detailed analysis, and recommended changes to
improve Wing operations.
Booz Allen assembled and coordinated more than
100 observers in four countries and 15 intelligence
organizations. Stakeholders observed how analysts
at each site executed operations for joint/coalition
warfighting missions across multiple areas of interest.
Their insights led to key initiatives that are increasing
the Wing’s ability to meet rapidly growing ISR collection
and reporting requirements.
In just three years, Sentinel Focus has established
a strong culture of continuous improvement. It has
also assisted stakeholders in overcoming operational
challenges and provided leaders with a mechanism
to fully define and shape resources and operational
decisions on Sentinel weapon system employment,
tactics, and major investments.
Kurt Schueler, associate; Mike Tallent, senior associate; Carlos DelCastillo, associate;
and Dan McConnell, lead associate, support a new biannual event, Sentinel Focus,
that is helping the US Air Force 480th ISR Wing shape the future of its Sentinel
weapon system.
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Profile: Serge Duarte
Engaged Community Takes Back the Streets
Booz Allen professionals are well known for making client
missions their personal missions, and Lead Associate
Serge Duarte is no exception. He brings great passion to his
role as domain expert of the US Immigration and Customs
Enforcement Secure Communities program.
US Army Casualty and Mortuary Affairs
Giving Survivors the
Resources They Need
When soldiers make the ultimate sacrifice, surviving families
welcome outreach and support during their time of need to
secure the benefits, entitlements, and services set aside for
them. But as the conflicts in Iraq and Afghanistan stretched
available resources, the Army Casualty and Mortuary Affairs
Operations Center (CMAOC) realized it needed a new,
centralized capability to better provide rapid, easy access to
its casualty assistance officers—and a mechanism to measure
the incidence and quality of assistance provided.
To enhance communication with survivors, a team from Booz
Allen helped establish the Families First Casualty Call Center.
Its staff—former military health professionals trained in helping
with survivor issues—documented all processes related to
survivor benefits and the most common inquiries, and created
comprehensive standard operating procedures to provide
consistent levels of service. Next, the team surveyed more than
4,300 survivors to identify how to better serve them and helped
establish an extended national network of Army personnel to
provide long-term support.
From an early age, Duarte was exposed to the dangers and
menaces of gang activity in Central Los Angeles. While many
around him turned to theft, assault, and narcotics trafficking,
the early support he received in after-school programs set him
on a different path. He developed a lifelong personal mission to
help troubled youth avoid gangs. He has pursued this mission
relentlessly as a sergeant in the US Marine Corps, as a US
Immigration and Customs Enforcement special agent, and
currently as a Booz Allen professional.
Today, Duarte helps federal and local law enforcement agencies
use new technologies and capabilities to identify and arrest
criminal aliens—and to combat such criminal gang activities as
cross-border narcotics smuggling, cyber crime, and counterfeit
pharmaceuticals. He also serves as the volunteer commissioner
and chair of the County of San Diego North County Gang
Commission, formed in 2008 by two members of the county
Board of Supervisors. He is leading a multidimensional
approach that includes soliciting grants, forging relationships
with community programs and resources, and using social
media to distribute gang prevention materials.
“Everyone has the ability to affect the way our boys and girls
grow up,” he says, “and I’m proud that so many Booz Allen
colleagues are making a real difference by applying their
professional skills and values in the communities they serve.”
Today, the Army employs a survivor-centric model that leaves
no question unanswered: More than 90 percent of incoming
calls are answered within 60 seconds; requests are responded
to within 48 business hours; and more than 20,000 survivors
have accessed the CMAOC’s extensive network of case
management workers and benefit, support, and financial
coordinators. This transformational program has also proactively
reached more than 5,000 survivor beneficiaries to give them
retroactive entitlement payments.
Fiscal Year 2012 Report
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Empowering people to excel
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Empowering people to excel Innovative programs are shaping
the workforce of the future
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Women’s Agenda
Opening new pathways to career and personal success—
and fostering an inclusive work environment
Booz Allen is committed to engaging the absolute best talent to solve our clients’ toughest challenges,
and that means tapping the skills, expertise, and potential of all our people. Today, demand for knowledge
workers is on the rise, and women compose a greater share of the highly skilled and highly educated talent
pool than at any point in history. These factors make attracting and developing talented women a business
imperative—and a strategic driver that fuels the firm’s growth. In 2010, Booz Allen launched the Women’s
Agenda, a firmwide strategy to integrate and scale our existing efforts, enhance our support of women’s
professional development, and foster a more inclusive work environment in which both women and men can
reach great heights.
To promote advancement within Booz Allen, the Women’s Agenda introduced new programs to support
leadership skill-building and increase exposure. Invitational programs are designed to stretch highly
talented staff to take on assignments outside of their traditional roles to help improve their chances of
advancing and provide additional support for women leaders. Further, mentoring programs facilitate career
development conversations between staff and influential women leaders and women of color.
Externally, the Women’s Agenda created a more focused, deliberate plan to expand the firm’s outreach to
prestigious industry organizations. “These partnerships benefit Booz Allen’s many talented women with
increased visibility, enhancing their professional development as they speak on panels, take on leadership
opportunities, and are recognized with national awards,” says Betty Thompson, chief personnel officer and
Women’s Agenda co-lead. “These relationships also support these organizations as they serve the broader
community and increase the firm’s access to diverse candidates with highly specialized skill sets.”
Team members clockwise
from upper left:
Betty Thompson, chief
personnel officer; Lisa J. Bethel,
lead associate; Maria Darby,
senior vice president; Sonia
Checchia, lead associate;
Susan Penfield, senior vice
president; and Tammy
Summers, associate, are work-
ing to advance Booz Allen’s
Women’s Agenda. This firmwide
initiative is helping Booz Allen
attract new talent, enhance
diversity, and provide women
with mentoring and leadership
development opportunities
that enhance their careers.
“The Women’s Agenda is creating many new opportunities for women at Booz Allen,”
says Susan Penfield, senior vice president and agenda co-lead. “Today, women are
responsible for building and managing significant businesses across all markets
and capabilities, and their achievements are widely recognized.” The number and
percentage of women in our organization has also grown—as has their representation
at the officer and Leadership Team levels. Further, the success of the Women’s
Agenda has paved the way for the development of six additional diversity agendas.
Together, these initiatives are expanding the climate of inclusion across our firm—
and are boosting our reputation as an employer of choice.
Fiscal Year 2012 Report
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Transitioning Warrior Summits
Strengthening Local Support Networks for Veterans
Multiple deployments, combat injuries, and the challenges of
reintegration can have far-reaching effects for veterans, their
families, and communities. In the fall of 2011, as part of our
ongoing commitment to service members, Booz Allen launched
the first in a series of four daylong Transitioning Warrior Summits
in cities across the United States. Each pro bono summit was
held in partnership with a leading nonprofit organization and
brought together our health expertise with a community effort to
foster collaborative initiatives promoting military family quality
of life, including psychological health.
At each summit, local government leaders, businesses, and
nonprofit leaders gathered to explore how best to overcome the
obstacles faced by service members and their families as they
seek to access needed services. Participants further sought to
improve upon services already in place. Attendees envisioned
innovative partnerships; strengthened ties to local, regional,
and national resources; and built alliances across locations and
organizations. Summit leaders further identified concrete actions
to improve information systems, enhance virtual tools, find
veterans in need, and help navigate access to care.
Booz Allen will share successful approaches and models for
how communities can collaborate and combine their expertise
to help veterans and families achieve positive outcomes.
Profile: Angela Orebaugh
New Belting Program Boosts Skills and Recognition
“My new role as a Fellow is opening many doors at Booz
Allen—and in the broader cyber community,” she says. “I’m
building new cyber capabilities for mobile, social media, and
cyber physical systems. I’m also mentoring colleagues in many
cybersecurity areas and helping Booz Allen gain visibility as
a cyber leader with my speaking and publishing.”
Tackling the most complex challenges requires deep functional
knowledge, which is why Booz Allen attracts high-achieving
individuals with expertise in high-demand skill areas. To
encourage our staff’s ambitions, we created a new Functional
Skills Belting Program that supports staff in developing critical
skills in key disciplines—and helps them earn the recognition
they deserve. Earning a belt as a Specialist, Expert, or Fellow
is a significant career milestone that positions staff to take
on even more challenging and exciting assignments, mentor
high-potential colleagues, and gain greater visibility inside and
outside of Booz Allen.
In 2012, Senior Associate Angela Orebaugh earned
distinction as a Booz Allen Hamilton Fellow for her expertise
in cybersecurity. During her 10 years at Booz Allen, she has
supported high-visibility clients across the civil, defense,
and commercial sectors. As cybersecurity has evolved as a
discipline, Orebaugh applied her background in computer and
network security to cultivate functional expertise and lead
research and development in security architecture, security
automation, continuous monitoring, and other emerging cyber
fields. Orebaugh has authored six books on cybersecurity.
She also teaches in the Computer Forensics program at George
Mason University.
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Workforce Development
Learning Solutions Build High-Performance Organizations
Each day, government workers and military personnel
confront increasingly diverse and complex issues that
affect everything from national and economic security
to health and welfare. As new challenges arise, and as
new professionals enter the workforce, federal agencies
manage and improve their performance by providing
workers the specialized training and professional
development they need to maintain mission readiness.
Booz Allen develops and deploys comprehensive and
integrated workforce management and employee
development learning solutions that help clients optimize
their human capital. We identify the vectors that have the
greatest impact on organizational objectives and missions
and apply our functional expertise in learning analysis
and strategy, instructional design and development,
instructional implementation and sustainment, and
learning program management to deliver practical,
current, real-world training.
In each case, Booz Allen experts consider the learning
content required, the instructional methodologies
that will best engage professionals, and available
technologies that can deliver optimal reach and results.
For example, professionals who work in fast-paced,
dynamic environments respond well to immersive learning
programs that apply an appropriate mix of instructional
simulations, game-based learning,
interactive storytelling, exercises,
and serious board games in either a
live or virtual environment. We work
with clients to develop customized
programs that actively engage teams
in experiences that require problem
formulation, analysis, decision
making, and communication.
Rondell Shields, associate;
Jay Harless, lead associate;
Elizabeth Lawson, lead
associate; George Taggett,
senior associate; and
Nicole JeNaye, senior
consultant, apply their
eLearning expertise to help
federal agencies and the
military align training with
mission goals. eLearning
solutions require fewer
instructors and less time
in the classroom.
Booz Allen also helps clients develop and execute large-
scale, Web-based learning management systems that
deliver the benefits of distance learning and streamlined
administrative processes. For one government client, our
team drew on Booz Allen’s robust multimedia eLearning
capability to design innovative learning products and
formats that trained thousands of professionals around
the world with fewer instructors, at a lower cost, and
with less time in the classroom. These formats featured
a mix of classroom instruction, distance learning, and
other point-of-need learning approaches. The team
designed Web-based portals and other collaboration
tools (e.g., wikis, blogs, and social networking) to
facilitate further dialogue and collaboration between
learners before, during, and after training.
Fiscal Year 2012 Report
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Achieving more with less
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Achieving more with less New operating models stretch
budgets and enhance missions
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National Aeronautics and Space Administration
Rigorous cost analysis improves budgeting and
scheduling processes—and clears new space exploration
strategy for liftoff
At a time of shifting budget priorities, agencies must compete vigorously for future funding. And Congress
is demanding more rigor than ever around the programs agencies develop—and the budgets they submit.
NASA successfully met this challenge in 2011 when Congress agreed to fund its new Space Launch
System—a long-term investment that will provide an entirely new national capability while ensuring
continued US leadership in space.
Given the high visibility of this program as well as the companion Multiple Purpose Crew Vehicle and Ground
Operations programs, the Office of Management and Budget required NASA to provide an independent cost
assessment of its budget estimate early in the life cycle to ensure that it had based acquisition planning
on realistic and achievable cost and schedule estimates. This scenario-based analysis of the system’s
rocket, crew vehicle, and ground operations would also help the NASA administrator evaluate the various
architecture options and defend NASA’s recommendation. NASA selected Booz Allen for this project based
on our deep expertise in decision analytics, space systems, and engineering.
Under significant time constraints, Booz Allen assessed the bases of estimates for budgets, schedules,
reserve strategies, and risks to determine whether they were well documented, comprehensive, accurate,
credible, traceable, and executable. Our team of budget analysts, engineers, and systems integrators
determined that the point estimates were reasonable for the near-term horizon but questioned several
assumptions behind the long-term projections. Booz Allen’s assessment helped reveal that the programs
lacked sufficient reserves to cover the different scenarios, and that several technical risks could have
significant impacts on cost and schedule. The team also identified the need to perform quantitative risk/
sensitivity analyses.
Team members clockwise
from upper left:
Rodolfo Lavaque, associate;
Marguerite Morrell, principal;
Matthew Pitlyk, senior
consultant; Mike Smith, lead
associate; and Eric Druker,
lead associate, used their
deep expertise in decision
analytics, space systems,
and engineering to analyze
NASA’s budget for its new
Space Launch System.
Our experts made several recommendations to help improve the budgeting and
scheduling processes going forward. These included developing an integrated master
schedule across the project’s rocket, crew vehicle, and ground operations components,
while maintaining a rigorous distinction between them in budgets. Booz Allen adopted
a new structure for its report that made it easier for NASA, and ultimately Congress,
to evaluate each component. The outcome was so successful that Congress asked
NASA to adopt this structure in future budgets.
Fiscal Year 2012 Report
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Enterprise Effectiveness and Efficiency
Moving from Cost Cutting to True Mission Performance
Agency leaders face tremendous pressure to decrease
spending, improve transparency and accountability, and get the
most out of every mission dollar. This environment requires
them to clearly understand the many budgetary, organizational,
operational, technological, and cultural factors that drive
efficiency. It also demands they make tough choices and take
bold action to identify mission priorities, focus and optimize
To help policymakers and
agency leaders confront
the current economic
crisis, Booz Allen and the
Partnership for Public
Service examine lessons
learned from government
downsizing in “Making
Smart Cuts: Lessons from
the 1990s Budget Front.”
resources, weigh future investments to achieve long-term
savings, and ensure mission effectiveness.
Booz Allen developed its Enterprise Effectiveness and Efficiency
(E3) framework to help these leaders rapidly identify ways
to optimize their existing resources and efficiently maintain
mission-critical activities. Our approach helps clients target
the key drivers of an efficient and effective organization:
mission, operations, support, and readiness. Using Booz
Allen’s intelligent diagnostic and analytic tools, organizations
can define their current costs, prioritize areas to make smart
cuts, and create defendable budgets so they can transition to
streamlined ways of operating.
Recently, the Department of Homeland Security Science and
Technology Directorate required precisely such tools and
expertise in its efforts to strengthen internal controls over
unliquidated obligation balances. Booz Allen collaborated
with the directorate to quickly establish, standardize, and
institutionalize necessary financial and internal controls.
We helped it develop a verification and validation model
that identified and mitigated key challenges and financial
operational risks. In less than eight weeks, Booz Allen helped
the agency verify and validate 98 percent of its $1.1 billion
of unliquidated obligation balances, reduce backlogs by
75 percent, and recover more than $24 million to support
unfunded requests.
US Air Force
Budget Analysis Helps Air Force Measure and Reduce IT Costs
analyses, a separate manpower study, and an integrated
assessment of dependencies and risks. By identifying conflicts
and synergies among initiatives, and reallocating savings to the
proper program elements, Booz Allen’s analysis helped the US
Air Force make cost-savings decisions that will transform its
IT infrastructure.
Rising costs have made information technology a major focus
in the quest for efficiency and cost reduction, and federal
agencies are creating ambitious targets for upfront savings and
long-term performance. But IT environments can be fragmented
and complex; measuring current IT costs and developing
effective plans and accurate budgets can be challenging. Booz
Allen developed its RightIT ™ methodology to help organizations
reduce IT spending, retain valuable IT capabilities, and improve
enterprise-level performance. This comprehensive analytical
framework helps clients make informed decisions, comply
with agency mandates and documentation requirements, and
respond to agency budget requests.
During the 2012 budget planning cycle, the US Air Force took
proactive steps to reduce its IT budget by more than $1 billion
in future years, and its CIO identified eight initiatives to drive
IT efficiencies. Because these initiatives were complex and
interrelated, the CIO engaged Booz Allen to validate that the
plan could deliver the required efficiencies without significant
risk. Over a five-month period, a multidisciplinary team of
specialists completed seven stand-alone business case
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A new process will help reduce
IT costs, improve return
on investment, and
control operational risks
—all while effectively
supporting the missions
that intelligence
analysts perform.
US Central Command
Mission Engineering Helps Contain IT Costs
As the Department of Defense winds down two wars,
US Central Command (USCENTCOM) is reviewing its
current operational model and budgeting process to
build new strategies for achieving increased efficiency,
greater transparency, and lowered costs. Responding to
a directive by the Secretary of Defense, USCENTCOM is
evaluating its personnel needs and functional processes
and the enabling IT as potential sources of savings.
Reengineering information systems is a complex
challenge, however, since defense analysts rely on
interdependent systems to perform diverse functions
and tasks. Any proposed new strategies and business
processes must continue to support these mission
functions, adapt quickly and flexibly to a changing
environment, and demonstrate how these investments
help analysts produce intelligence.
In 2011, the client began a formal deep-dive analysis
to meet three goals: determine the current and new
mission sets that its enterprise architecture needs to
support, identify current capability gaps, and prioritize
and justify new investments. The client turned to
Experts in analytics, cyber
technologies, and strategic
technology and innovation are
helping our client reengineer its
IT systems to remove costs and
boost performance. Pictured
from left to right: Ronald Owens,
associate; Robert Furtado,
vice president; Melissa Soley,
principal; James Tallman,
associate; Eulysses Roldan,
associate; James Prossner,
associate; and Truth Yang,
lead associate.
Booz Allen to help fulfill this
important mission. Experts in
analytics, cyber technologies,
and strategic technology and
innovation applied the firm’s
Mission Engineering® service to
identify functional needs within each mission area, align
them with application-level programs, and visualize both
redundancies and gaps.
For the first time, the client will enter the budgeting
process with end-to-end IT services that package all the
people, processes, technology, and information needed to
support specific business/mission capabilities. Leaders
will understand who supports their IT requirements,
what IT does for them, and where they can create IT
efficiencies. Service managers will have the knowledge,
relationships, and control to respond quickly to new
demands. The new Service Definition process will also
reduce costs, improve return on investment, and control
operational risks—all while effectively supporting the
missions that intelligence analysts perform.
Fiscal Year 2012 Report
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Engineering from the ground up
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Engineering from the ground up Rapid prototypes and operational
support generate swift results
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US Army
New battlespace technology helps soldiers detect enemy
communications and locate improvised explosive devices
In Iraq and Afghanistan, US soldiers in reconnaissance patrols, forward operating bases, and combat
outposts confront life-threatening ambushes at any time. To meet this constantly evolving threat, the US
Army urgently needed new tactics and technologies to better understand the battlespace and maintain
tactical advantage. Booz Allen, in partnership with the US Army and a key subcontractor, helped design,
test, produce, field, and sustain the Wolfhound radio direction finder system. This versatile system
provides soldiers with critical information to detect enemy communications and trace the signal path
from command and control nodes. It helps protect soldiers from improvised explosive devices—and
often helps them locate the enemy directly. And unlike traditional equipment, it’s lightweight, handheld,
and easy to use.
This project involved significant hardware, software, and platform systems integration in which Booz Allen
applied its expertise in supply chain and logistics, training, engineering and science, cyber technologies,
acquisition and program management, and enterprise integration and purchasing. We developed and
tested the prototype, selected a manufacturing partner and managed the manufacturing process, and
developed a tool that tracked components and deliveries down to the part number to keep each biweekly
production delivery on track.
Over an eight-month period, Booz Allen fielded 385 units on time and without a single recall—and 18
percent under budget to save the Army $7.7 million. As the prime contractor, Booz Allen oversees ongoing
task management, development of technical documentation and training materials, system fielding,
Team members clockwise
from upper left:
Dave Ludwig, senior associate;
Vince Simpson, principal;
Dan Fitzpatrick, associate;
Brian Abbe, vice president;
George Lambrinos, associate;
and Vicky Veluz, associate,
are part of a team that
is providing full life-cycle
support for an innovative
new battlefield technology
that helps the US Army
gather field intelligence.
training activities in-theater and within the continental United States, and system
life-cycle support. Today, commanders at every level have touted the system as one
of the most critical programs in-theater. Wolfhound, now fully incorporated into newly
formed tactics, is helping squads, platoons, and base camps gather intelligence on
high-value targets. This reliable, cost-effective, life-saving device—rated as one of
the top-10 required systems in Operation Enduring Freedom—has also earned an
Army Greatest Invention of the Year award.
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Federal Bureau of Investigation
New Biometrics Unit Develops and Tests Advanced Tools
The Federal Bureau of Investigation is developing
new biometric technologies that promise to enhance
national security while ensuring compliance with
privacy laws, policies, and procedures. Its Science and
Technology Branch established the FBI Biometric Center
of Excellence (BCOE) to foster collaboration, improve
information sharing, and bring innovative biometric
solutions to life.
Booz Allen has supported the BCOE since its inception,
working closely with all major stakeholders to define,
stand up, and support the new organization. Our team of
experts in strategy and operations, biometric technology,
law enforcement, communications, and other disciplines
Bob Sogegian, vice
president; Manal McCarthy,
associate; Jenna O’Steen,
lead associate; Brandon
Calderwood, associate; and
Nader Kalifa, associate,
helped the FBI establish
the Biometric Center of
Excellence to develop new
biometric technologies
and capabilities that meet
evolving requirements.
performed research, analysis, and
interviews and synthesized the
results in foundational documents
that established the BCOE’s
vision, organizational position, and
service offerings. Our team is also
augmenting the BCOE’s technical
capabilities and working to advance
biometric technology development. With support from
Booz Allen and numerous other partners, BCOE is
exploring and advancing new and enhanced biometric
technologies and capabilities that meet evolving critical
law enforcement, intelligence, and civil requirements.
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US Centers for Disease Control and Prevention
Strategic Plan Targets Public Health Challenges in Uganda
implementation plans with strategies for sharing the
new direction and prioritizing the new goals, objectives,
and strategies.
With its new plan approved, CDC is now well positioned to
fulfill its mission to protect the health of Americans, enhance
the capacity of Ugandan public health systems, and protect
the health of the Ugandan people.
For the past two decades, the US Centers for Disease Control
and Prevention (CDC) has worked with the government of Uganda
to confront the unique public health challenges facing the
country, including HIV/AIDS, malaria, tuberculosis, and a variety
of non-communicable diseases. Moving forward, CDC-Uganda is
facing several uncertainties and constraints, such as funding for
the President’s Emergency Plan for AIDS Relief, the US economic
environment and its impact on federal budgets, and changing
health priorities. These and other factors made it important for
CDC-Uganda to develop a plan to focus its efforts on impacting
health in Uganda while effectively using resources. It asked Booz
Allen to collaborate on a new five-year strategic plan to secure
future funding, optimize its resources and expertise, and provide
focused support to the Uganda Ministry of Health.
For six weeks, a team of Booz Allen experts in global health,
strategy, organizational development, and communications
worked in Uganda to facilitate the planning process. The
team examined the client’s strengths, challenges, changing
environment, opportunities, and potential risks. It led a week-
long planning workshop that involved more than 200 CDC-
Uganda staff and helped turn their ideas into a final strategic
plan that outlined the mission, vision, goals, and objectives.
Additionally, Booz Allen developed communication and
Distributed Common Ground System-Army
Cloud-Based System Delivers Real-Time Intelligence
Asymmetric and unconventional warfare calls for a new
intelligence capability—one that gives US soldiers and their
allies advanced tools to rapidly track high-value individuals, plan
and clear travel routes, and perform related operations. These
capabilities in turn require a premier intelligence, surveillance,
and reconnaissance enterprise system that enables intelligence
information to flow seamlessly and securely to and from
soldiers on the front lines.
Booz Allen has supported the Army’s Intelligence and Information
Warfare Directorate (I2WD) and Distributed Common Ground
System-Army (DCGS-A) program for more than a decade. For
the last few years, a Booz Allen team has worked to develop
the DCGS-A Standard Cloud, the transformational advanced
analytical system of the future. This revolutionary cloud-based
system brings together data sets from different sources, so
analysts at every level can rapidly gather, process, and share
intelligence data to shape ongoing operations. Through a user-
friendly interface, the system delivers massive and elastic data
storage and processing capacity, with the power to query, sort,
and analyze hundreds of millions of textual intelligence products
in less than one second.
The team worked with Army intelligence analysts and information
specialists to develop the system’s initial requirements and
leveraged cloud architecture from an intelligence community
cloud computing effort. Booz Allen defined the infrastructure,
acquired the hardware, integrated commercial and custom-
developed software, produced test scenarios and training
materials, and facilitated deployment and support in-theater.
The team also performed data validation, functional testing,
regression testing, and performance testing to ensure quality.
The DCGS-A Standard Cloud is now accredited, deployed, and
fully operational in Afghanistan.
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Turning big data into insight
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Turning big data into insight Breakthrough technologies enhance
analytics to boost performance
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Mercy
Applying analytics to health records leads to new practices
that save lives and reduce costs
For more than 150 years, the healthcare system Mercy has pursued a mission to deliver compassionate
care and exceptional service. Hospital-acquired infections pose a direct threat to this mission—and to the
system’s bottom line. So when administrators grew concerned about mortality rates from sepsis, severe
sepsis, and septic shock in Mercy hospitals, they attacked the problem head-on.
As an early advocate of electronic medical records, Mercy had built large sets of patient, treatment,
and outcomes data. But as with many hospitals, it needed an effective methodology for analyzing this data
and converting it into useful knowledge and information. A team from Booz Allen provided the analytical,
clinical, administrative, and business expertise to identify “red flags” for sepsis and help implement new
processes to improve outcomes.
Booz Allen’s biomedical informaticists and advanced analytics experts helped develop an event-centric
ontology that could harness both structured data from patient charts and unstructured notes added by
medical personnel—and speed up the real-time discovery and analysis of electronic health records.
Booz Allen examined 27,000 anonymized patient health records that included thousands of data fields per
record. Our team then analyzed compliance with international standards of care for sepsis, severe sepsis,
and septic shock, and compared that compliance with patient outcomes. The data led to a new set of
clinical indicators that may identify high-risk patients, so caregivers can prioritize their care.
Analysis also revealed an opportunity to improve patient outcomes. When the data revealed a gap in
compliance with international standards, Mercy developed an educational campaign to promote best
Team members left to right:
Jeni Fan, associate;
Reechik Chatterjee,
lead associate; and
Yugal Sharma, lead
associate, developed an
innovative approach that
uses advanced analytics
to identify “red flags”
for sepsis.
practices associated with treating patients with sepsis.
This project will enable Mercy to reduce sepsis mortality, protect patients, reduce
overall health costs, and free up financial and staffing resources for other priorities.
It also substantiates a new advanced analytics methodology with the potential to
help other healthcare organizations improve patient care.
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National Institutes of Health
New Predictive Models
Inform the National
Children’s Study
Advances in data mining and
analytics empower health
organizations to undertake large-
scale studies, and the insights
they generate into health and
disease can improve the well-
being of children and help shape
policies and practices for years
to come. The National Institutes of Health (NIH) is undertaking
a public health study of unprecedented size and complexity—a
25-year National Children’s Study that will collect data on at
least 100,000 children from before birth to age 21. Booz Allen
has supported the study since 2003.
In 2009, the study’s director reached to Booz Allen to assist
in developing a data-driven, evidence-based approach to guide
planning, execution, and monitoring. Booz Allen analytics
experts developed innovative predictive models and used data
from a 2007 pre-study to examine key protocols for operations,
logistics, and communications. This rigorous modeling process
led to changes that will ultimately improve execution and
monitoring—and ensure a design to generate sufficient quality
data at the end of 21 years.
Such analytic models can be used to track a research study’s
progress and support data-driven decision making. Because
the models can make projections based on current status and
observed history, the research organization can explore future
scenarios to detect issues and take corrective actions. These
capabilities are essential to managing the execution of any
complex study.
Proactive Security Solution
Groundbreaking Tool Set Helps Protect Sensitive Data
Today, most government and commercial business activity
and intellectual capital development take place in cyberspace,
and our nation’s security and prosperity depend on our ability
to protect massive quantities of data from malicious threat
actors, including nation-states, organized crime, and terrorist
groups. These threat actors, called advanced persistent
threats (APT), have the resources to bypass all of today’s best
security practices and compromise these networks. These
threats can remain undetected for extended periods of time
(often years) and systematically steal intellectual capital,
Booz Allen is working
with the nation’s most
prestigious hospital systems
and leading commercial
healthcare organizations
to develop cyber solutions
that protect patient medical
records from cyber attack
and safeguard the integrity
of medical research data.
sensitive government or commercial data, and personal
identifying information.
With so much at stake, Booz Allen examined the current security
landscape and determined that no existing government or
commercial “off the shelf” security solution could proactively
detect malware for which no antivirus signature existed.
Applying our years of experience in the government and
commercial environments, we developed a new paradigm that
replaces passive monitoring of a network’s border devices with
a proactive hunting solution that analyzes system internals
for indicators of APT malware and other behavior. Booz Allen’s
Automated First Responder tool set uses statistical analysis to
identify uniquely configured systems and identify malware for
which there is no antivirus signature. We then can implement a
coordinated response that includes reimaging all compromised
machines while simultaneously changing all methods of network
access and closing off all points of reentry.
With Automated First Responder, our staff now has a tool set
to stay ahead of continually evolving adversaries. Our services
can identify network threats, triage them, and provide follow-on
security architecture and policy services that securely position
clients for the long term.
30
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US Government Client
Innovative Cloud Analytics
Solution Turns Knowledge
Into Action
A revolutionary cloud-based
system brings together data sets
from different sources,
so analysts at every
level can rapidly gather,
process, and share
intelligence data to
shape ongoing
operations.
Ray Hensberger, lead
associate; Paul Tamburello,
associate; Stephanie
Beben, associate; and
Josh Sullivan, principal, are
applying cloud analytics
to extract potentially
significant information
and patterns from
existing data to help the
client forecast potential
cyber attack events.
Our world is increasingly measured, instrumented,
monitored, and automated in ways that generate
incredible amounts of rich and complex data. This data-
driven environment creates new hurdles for improving
intelligence analysis, which depends on the ability to
draw insights and value from disparate data. As data
flows in, analysts need powerful capabilities to quickly
and precisely process large and often unstructured
cyber data sets to generate near-real-time results.
Booz Allen was called on to help improve mission
performance, reduce costs, and modernize national
intelligence systems. Applying its deep understanding of
the client’s mission, the team determined how best to
accommodate today’s large, complex data volumes—and
how to build in the flexibility to adapt to future needs.
Rather than using cloud technology for infrastructure,
the team focused on applying cloud analytics to extract
more value faster from massive data sets. Building on
the existing infrastructure, Booz Allen constructed a
private cloud that enables the client to leverage more
of its computing resources for advanced analytics. The
team then introduced a cloud analytics solution that
used advanced cyber predictive analytics and existing
data to forecast potential cyber attack events and
detected anomalies in normal background data to
extract potentially significant information and patterns.
The cloud analytics solution is now accessible throughout
the client organization, and analysts are relying on
data mining, machine learning, and other automated
analysis techniques to transform data into knowledge,
and knowledge into action. Features such as entity
classification, predictive models, pre-computation, and
aggressive indexing are also providing quicker insight—
including the ability to answer previously unanswerable
questions. As cloud analytics proves its value, other
organizations also are considering this model as they
respond to new White House mandates to strengthen
analytical capabilities.
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Creating sustainable futures
32
Booz Allen Hamilton
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Creating sustainable futures Strategies and technologies are
bringing green initiatives to life
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Energy Initiatives Task Force
Public-private partnerships are helping the US Army achieve
its long-term energy and sustainability goals
Rising energy security challenges, stringent energy efficiency standards, escalating fuel prices, and concerns
about greenhouse gas emissions have made renewable energy an important Department of Defense priority.
To chart an energy-secure future, US Army installation leaders established an aggressive target to draw
25 percent of power from renewable sources by 2025. Given the estimated multibillion-dollar investment
required to achieve this, the Army is unlocking the value of underused or undeveloped Army property by
pursuing public-private partnerships with industry to finance and build economically viable large-scale
renewable energy projects. These projects will optimize available renewable resources, reduce fossil fuel
consumption, and build energy resilience.
Creating a large nationwide renewable energy portfolio requires consistent, tested, and market-focused
methodologies. It also demands operational discipline; functional expertise in finance, policy, real estate,
and renewable energy; and the proven ability to engage diverse stakeholders and secure their support. Booz
Allen is helping the Army build this portfolio. The team began by engaging industry and Army stakeholders
and using their input to establish a strategy, processes, and policies. We developed a Renewable Screening
tool to analyze renewable resources, state regulations, and financial drivers. The team’s analysis has
generated a preliminary pipeline of project opportunities and is helping Army leaders choose the most
cost-effective, high-impact projects—and identify the optimal transaction structure for each one.
Booz Allen also recommended—and the Army has since implemented—an Energy Initiatives Task Force
to execute these projects. The task force serves as a single point of contact for collaboration with private
Team members clockwise
from upper left:
Catherine Crooks, lead
associate; William Pott, lead
associate; Theresa Olson,
principal; Robert Eidson,
lead associate; Aubris
Pfeiffer, lead associate;
and Charlie Snyder, senior
associate, have combined
their functional expertise in
finance, policy, real estate,
and renewable energy to
help the US Army build
public-private partnerships
that will advance its long-
term sustainable energy
strategy.
industry and oversees streamlined business practices that lead to viable, defined, and
well-supported projects. Booz Allen continues to support this task force by providing
full-spectrum capabilities—from identifying projects, to engaging communities, to
negotiating financial structures, to managing the closing process.
In less than 12 months, our team helped the Army identify a robust pipeline of energy
opportunities that will be the core of the Army’s promise to build one gigawatt of
renewable capacity in service of the 2025 goal. With our support, the Army is now
executing a successful private sector strategy and product portfolio, supported by
sophisticated tools and a communications strategy to ensure that key stakeholders
understand the program’s purpose and value.
Fiscal Year 2012 Report
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US Department of Transportation
Intelligent Transportation Solutions Improve Safety,
Mobility, and Sustainability
Transportation touches all our lives. It also drives the
nation’s economy. The US Department of Transportation
is pursuing a vision: intelligent transportation that
improves safety, enhances mobility,
and encourages environmentally
friendly driving. Booz Allen is
helping the department’s Research
and Innovative Technology
Administration define and test
a strategy that uses advanced
communications systems to provide
continuous real-time connectivity
between vehicles and the
infrastructure that supports them.
Booz Allen has a long history of supporting the nation’s
air, rail, and ground transportation systems, and our
investment in innovation, planning, and research
gives us a strong platform to address the nation’s
infrastructure challenges. As the only partner to work
across all three major intelligent transportation program
areas—operations, communications, and technical
support—our team is uniquely positioned to help
coordinate and synthesize the many initiatives required
to build tomorrow’s data-driven travel environment.
One important initiative explores what kinds of actionable
information will be exchanged through vehicle-to-vehicle
and vehicle-to-infrastructure connectivity to help conserve
Environmental Protection Agency
Paperless Solution
Brings Sustainability
To Rulemaking Process
From the air we breathe to the food we eat, federal
regulations help implement major legislation enacted
by Congress. Because this rulemaking affects
countless aspects of our daily life, government
agencies depend on active dialogue with citizens
and communities to help them collect relevant
information and identify unforeseen options
or consequences.
The Environmental Protection Agency (EPA) manages
and maintains an eRulemaking program that serves
nearly 300 federal agencies. A diverse team from Booz Allen
is working with the EPA to modernize and evolve the program
by simplifying and improving public access, increasing
understanding of and participation in the rulemaking process,
and making the process more efficient and cost-effective.
These objectives require an integrated solution spanning
information technology, analytics, and communications. Our
technology experts analyzed the existing IT infrastructure and
engineered a sustainable and cost-effective solution that will
require one-third less equipment and power consumption, in
part by migrating the backup system to the public cloud. Our
cybersecurity experts then evaluated how to apply security
measures to the new architecture.
To improve public access to information, we reconceived
the Regulations.gov website, adding a browse option to
34
Booz Allen Hamilton
Al Hering, lead associate; Wenyee Hsu, associate; Ben Bjorge, senior associate;
Lindsay Hunt, senior consultant; and Sannala Srinivas, associate, are using their
expertise in technology, analytics, and communications to help the EPA operate its
large-scale eRulemaking program. The team is helping promote public dialogue—
and address environmental concerns—by giving stakeholders easy, online access to
more than 5 million regulatory documents.
improve navigation and an interface that allows academic and
commercial researchers to extract and repurpose data from
the system. We also introduced best practices to help federal
agencies better manage the paperless system that stores
more than 5 million digital documents.
Faced with a reduced eRulemaking budget in 2011, Booz
Allen’s budget analysts examined the current cost model and
collaborated with the eRulemaking program to reduce costs
and sustain the mission. The team created baseline and
performance reports, which are now helping the eRulemaking
program move forward under its new budget parameters.
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Booz Allen is helping coordinate
and synthesize the many
initiatives required to
build tomorrow’s
data-driven travel
environment.
fuel, improve air
quality, and reduce
greenhouse gasses.
Booz Allen is helping
perform data analysis for
this research, considering the
most useful data sets, information,
and system operations to support
“green” driving choices. The team will also
help identify and assess technology-based
applications and strategies, determine societal benefits
and costs, and set the stage with transportation and
environmental stakeholders to gain support and leverage
their viewpoints and interests.
Booz Allen’s work in these areas will inform the
Department of Transportation as it moves the country
toward a national, multimodal surface transportation
system that reenvisions transportation safety and
mobility while advancing environmental sustainability.
Profile: Alfred Yee and the Dayton Office
Volunteers Meet the Eco-Rebuild Challenge
Booz Allen makes a sustainable impact on not-for-profit
organizations—and the communities they serve—by applying
the knowledge and interests of our people to help organizations
achieve their missions. We have supported Rebuilding Together
since 1995, participating in local events and working with
the national headquarters to help develop a strategic plan,
build an effective organizational structure, and strengthen the
organization’s fundraising ability. National Rebuilding Day has
since grown into one of the firm’s largest employee volunteer
programs. In fiscal year 2012, approximately 1,500 employees
and their friends and family members helped revitalize 50
homes for low-income homeowners nationwide with solutions
that support the Rebuilding Together national Green Housing
initiative. Booz Allen sponsored an Eco-Rebuild Challenge to
reward employee-led teams that implemented
resource-efficient repairs.
Lead Associate Alfred Yee (left, pictured
with Melissa Kamaka, lead associate) has
supported Rebuilding Together since joining
Booz Allen 15 years ago. Growing up in rural
West Virginia, he saw firsthand the economic
challenges many families faced and found ways
to help. He also does his part to protect our
planet for future generations. “With Rebuilding
Together, we all can make a difference in both
areas. Our team created separate recycling
bins for paper, cardboard, aluminum, and
glass and encouraged other sites in Dayton
to follow our lead,” he said. “We used our
Eco-Rebuild Challenge grant to purchase new
energy-efficient appliances for low-income
homeowners. Best of all, we did it together—
with 34 Booz Allen colleagues plus families
and friends lending a hand.”
Fiscal Year 2012 Report
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Booz Allen Hamilton Leadership
Board of Directors
Leadership Team
Ralph W. Shrader
Chairman, Chief Executive
Officer, and President
Ralph W. Shrader
Karen M. Dahut
Joan Lordi C. Amble
Francis J. Henry, Jr.
Peter Clare
The Carlyle Group
Ian Fujiyama
The Carlyle Group
Mark Gaumond
Allan M. Holt
The Carlyle Group
Arthur E. Johnson
Philip A. Odeen
Charles O. Rossotti
Samuel R. Strickland
Chief Financial Officer
Lloyd W. Howell, Jr.
Ronald T. Kadish
Gary D. Labovich
Joseph Logue
Joseph W. Mahaffee
John D. Mayer
John M. (Mike) McConnell*
Robert S. Osborne
Patrick F. Peck
Horacio D. Rozanski
Samuel R. Strickland
Elizabeth Thompson
Richard J. Wilhelm
* Vice Chairman
Clockwise from top left:
Ralph W. Shrader
Chairman,
Chief Executive Officer,
and President
Samuel R. Strickland
Chief Financial
Officer and Chief
Administrative Officer
Horacio D. Rozanski
Chief Operating Officer
Living Our Core Values
Booz Allen’s Core Values form the basis of everything we
do. The origins of Booz Allen’s commitment to culture and
ethics trace back to the 1930s, when Carl Hamilton wrote
the firm’s first formal code of ethics. By codifying our
commitment to integrity and values, he set the course
for the strong focus on culture and ethics that the firm
has today.
Booz Allen was one of the first organizations in the United
States to adopt a formal statement of its business ethics,
which translate into our 10 Core Values (listed right).
Our collaborative culture is defined by business integrity,
diversity and inclusion, and a strong spirit of service to
clients and community. Staff members are expected to
know and operate by all of the 10 Core Values.
36
Booz Allen Hamilton
CLienT serViCe
DiVersiTy
exCeLLenCe
enTrepreneursHip
TeAmwOrk
prOfessiOnALism
fAirness
inTegriTy
respeCT
TrusT
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Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Booz Allen Hamilton
Holding Corporation
We have audited the accompanying consolidated balance sheets
of Booz Allen Hamilton Holding Corporation as of March 31, 2012
and 2011, and 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, 2012.
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of Booz Allen Hamilton Holding Corporation at March 31, 2012
and 2011, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended
March 31, 2012, in conformity with U.S. generally accepted
accounting principles.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States),
Booz Allen Hamilton Holding Corporation’s internal control over
financial reporting as of March 31, 2012, based on criteria
established in Internal Control–Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated May 30, 2012 expressed an
unqualified opinion thereon.
Ernst & Young LLP
McLean, Virginia
May 30, 2012
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Consolidated Balance Sheets
(Amounts in thousands, except share and per share data)
March 31,
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net of allowance
Prepaid expenses
Income taxes receivable
Other current assets
Total current assets
Property and equipment, net
Deferred income taxes
Intangible assets, net
Goodwill
Other long-term assets
Total assets
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt
Accounts payable and other accrued expenses
Accrued compensation and benefits
Deferred income taxes
Other current liabilities
Total current liabilities
Long-term debt, net of current portion
Income tax reserve
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 19)
Stockholders’ equity:
2012
2011
$÷«484,368
1,077,315
32,090
46,794
17,096
1,657,663
191,079
7,790
223,834
1,188,004
46,421
$÷«192,631
1,111,004
33,497
–
23,311
1,360,443
173,430
41,409
240,238
1,163,549
44,954
$3,314,791
$3,024,023
$÷÷«42,500
443,951
357,872
59,493
10,630
914,446
922,925
55,282
236,953
$÷÷«30,000
406,310
396,996
21,231
11,598
866,135
964,328
90,474
195,836
2,129,606
2,116,773
Common stock, Class A – $0.01 par value – authorized, 600,000,000 shares; issued, 128,726,324 shares at March 31,
2012 and 122,784,835 shares at March 31, 2011; outstanding, 128,392,549 shares at March 31, 2012 and 122,784,835
shares at March 31, 2011
1,287
1,227
Non-voting common stock, Class B – $0.01 par value – authorized, 16,000,000 shares; issued and outstanding,
2,487,125 shares at March 31, 2012 and 3,053,130 shares at March 31, 2011
Restricted common stock, Class C – $0.01 par value – authorized, 5,000,000 shares; issued and outstanding,
1,533,020 shares at March 31, 2012 and 2,028,270 shares at March 31, 2011
Special voting common stock, Class E – $0.003 par value – authorized, 25,000,000 shares; issued and outstanding,
10,140,067 shares at March 31, 2012 and 12,348,860 shares at March 31, 2011
Treasury stock, at cost – 333,775 shares at March 31, 2012 and 0 shares at March 31, 2011
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total stockholders’ equity
Total liabilities and stockholders’ equity
The accompanying notes are an integral part of these Consolidated Financial Statements.
25
15
30
(5,377)
898,541
299,379
(8,715)
1,185,185
31
20
37
–
840,058
71,330
(5,453)
907,250
$3,314,791
$3,024,023
38 Booz Allen Hamilton Holding Corporation
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Consolidated Statements of Operations
(Amounts in thousands, except per share data)
Fiscal Year Ended March 31,
Revenue
Operating costs and expenses:
Cost of revenue
Billable expenses
General and administrative expenses
Depreciation and amortization
Restructuring charge
Total operating costs and expenses
Operating income
Interest expense
Other, net
Income before income taxes
Income tax expense
Net income
Earnings per common share (Note 3):
Basic
Diluted
Dividends declared per share
The accompanying notes are an integral part of these Consolidated Financial Statements.
2012
2011
2010
$5,859,218
$5,591,296
$5,122,633
2,934,378
1,542,822
903,721
75,205
15,660
2,836,955
1,473,266
881,028
80,603
–
2,654,143
1,361,229
811,944
95,763
–
5,471,786
5,271,852
4,923,079
387,432
(48,078)
4,520
343,874
103,919
319,444
(131,892)
(59,488)
128,064
43,370
199,554
(150,734)
174
48,994
23,575
$÷«239,955
$÷÷«84,694
$÷÷«25,419
$÷÷÷÷«1.83
$÷÷÷÷«0.74
$÷÷÷÷«0.24
$÷÷÷÷«1.70
$÷÷÷÷«0.66
$÷÷÷÷«0.22
$÷÷÷÷«0.09
$÷÷÷÷÷÷÷–
$÷÷÷÷«5.73
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Consolidated Statements of Comprehensive Income
(Amounts in thousands)
Fiscal Year Ended March 31,
Net income
Actuarial loss related to employee benefits, net of taxes (Note 14)
Comprehensive income
The accompanying notes are an integral part of these Consolidated Financial Statements.
2012
2011
2010
$239,955
(3,262)
$236,693
$84,694
(1,635)
$83,059
$25,419
(4,516)
$20,903
40 Booz Allen Hamilton Holding Corporation
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Consolidated Statements of Cash Flows
(Amounts in thousands)
Fiscal Year Ended March 31,
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of state and local transportation business
Transaction costs on sale of state and local transportation business
Depreciation and amortization
Amortization of debt issuance costs
Amortization of original issuance discount on debt
Non-cash expense of debt repayments
Excess tax benefits from the exercise of stock options
Stock-based compensation expense
Loss on disposition of property and equipment
Deferred income taxes
Changes in assets and liabilities:
Accounts receivable, net
Income taxes receivable / payable
Prepaid expenses
Other current assets
Other long-term assets
Accrued compensation and benefits
Accounts payable and accrued expenses
Accrued interest
Income tax reserve
Other current liabilities
Postretirement obligations
Other long-term liabilities
Net cash provided by operating activities
Cash flows from investing activities
Purchases of property and equipment
Escrow payments
Proceeds from sale of state and local transportation business
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from issuance of common stock
Cash dividends paid
Repayment of debt
Net proceeds from debt
Payment of deferred payment obligation
Excess tax benefits from the exercise of stock options
Stock option exercises
Repurchases of common stock
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents – beginning of period
Cash and cash equivalents – end of period
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest
Income taxes
The accompanying notes are an integral part of these Consolidated Financial Statements.
2012
2011
2010
$239,955
$÷÷÷84,694
$÷«25,419
(4,082)
(5,432)
75,205
4,783
1,097
–
(16,461)
31,263
376
74,785
25,275
(31,832)
1,407
6,215
(6,250)
(35,287)
40,822
(11,801)
(35,192)
(2,373)
6,966
607
–
–
80,603
6,925
2,640
43,177
(15,974)
48,678
41
42,763
(92,693)
2,907
(951)
(12,941)
(6,833)
9,804
52,214
8,451
(10,163)
612
5,898
46,487
360,046
296,339
(76,925)
–
23,332
(53,593)
8,757
(11,906)
(30,000)
–
–
16,461
7,349
(5,377)
(14,716)
291,737
192,631
(88,784)
1,384
–
(87,400)
251,135
–
(1,637,850)
1,041,808
–
15,974
4,790
–
(324,143)
(115,204)
307,835
–
–
95,763
5,700
2,505
–
(1,915)
71,897
–
19,837
(92,386)
(14,429)
150
15,672
(3,742)
33,760
110,265
(10,633)
2,483
(8,190)
6,139
12,189
270,484
(49,271)
38,280
–
(10,991)
–
(612,401)
(16,100)
330,692
(78,000)
1,915
1,334
–
(372,560)
(113,067)
420,902
$484,368
$÷÷192,631
$«307,835
$÷53,993
$÷÷109,895
$«126,744
$÷89,314
$«÷÷÷«7,715
$÷÷«5,474
Fiscal Year 2012 Report
41
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(Amounts in thousands,
except share data)
Balance at
March 31, 2009
Issuance of
common stock
Stock options exercised
1,586,960
19,070
Consolidated Statements of Stockholders’ Equity
Class A
Common Stock
Class B Non-Voting
Common Stock
Class C Restricted
Common Stock
Class E Special Voting
Common Stock
Treasury Stock
Shares
Amount
Shares Amount
Shares Amount
Shares Amount
Shares
Amount
(Accumu-
lated
Deficit)
Retained
Earnings
Accumu-
lated Other
Compre-
hensive
Income
(Loss)
Additional
Paid-In
Capital
Total
Stock-
holders’
Equity
101,316,870
1,013
2,350,200
24
2,028,270
20 14,802,880
44
– 1,097,327 (38,783)
698
1,060,343
–
16
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– (1,457,000)
–
(4)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
102,922,900
1,029
2,350,200
24
2,028,270
20 13,345,880
40
16,189,830
4,375,035
161
44
–
(702,930)
–
–
–
–
–
(7)
–
–
–
–
–
–
–
702,930
–
–
–
–
–
–
–
7
–
–
–
–
–
–
–
–
–
–
–
–
–
702,930
– (1,699,950)
2
(5)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
122,784,835
1,227
3,053,130
31
2,028,270
20 12,348,860
37
–
(7)
–
–
1,080,245
3,799,989
–
1,061,255
–
–
–
–
–
–
–
11
38
–
11
–
–
–
–
–
–
–
–
–
–
(566,005)
–
–
–
–
–
–
–
–
–
–
(6)
–
–
–
–
–
–
–
–
–
–
(495,250)
–
–
–
–
–
–
–
–
–
– (2,208,793)
–
(5)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– (333,775)
(5,377)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,322
(34,408)
–
–
–
–
25,419
–
–
–
–
–
1,334
(34,408)
25,419
–
–
(4,516)
(4,516)
71,897
(612,401)
1,915
–
–
–
20,903
71,897
(612,401)
1,915
–
–
–
525,652 (13,364)
(3,818)
509,583
250,972
11,727
15,974
–
(12,945)
–
–
–
–
–
–
84,694
–
–
–
–
–
–
251,135
11,766
15,974
–
(12,945)
84,694
–
–
(1,635)
(1,635)
83,059
48,678
–
–
48,678
840,058
71,330
(5,453)
907,250
8,749
7,315
16,461
–
–
(5,305)
–
–
–
–
–
–
– 239,955
–
–
–
–
– (11,906)
31,263
–
–
–
–
–
–
–
–
(3,262)
–
–
–
8,760
7,346
16,461
–
(5,377)
(5,305)
239,955
(3,262)
236,693
(11,906)
31,263
Recognition of liability
related to future stock
option exercises
(Note 17)
Net income
Actuarial loss related
to employee benefits,
net of taxes
Comprehensive income
Stock-based compen-
sation expense
Dividends paid
(Notes 1 and 17)
Excess tax benefits
from the exercise
of stock options
Balance at
March 31, 2010
Issuance of
common stock
Stock options exercised
Excess tax benefits
from the exercise of
stock options
Share exchange
Recognition of liability
related to future stock
option exercises
(Note 17)
Net income
Actuarial loss related
to employee benefits,
net of taxes
Comprehensive income
Stock-based compen-
sation expense
Balance at
March 31, 2011
Issuance of
common stock
Stock options exercised
Excess tax benefits
from the exercise
of stock options
Share exchange
Repurchase of
common stock
Recognition of liability
related to future stock
option exercises
(Note 17)
Net income
Actuarial loss related
to employee benefits,
net of taxes
Comprehensive income
Dividends paid (Note 16)
Stock-based compen-
sation expense
Balance at
March 31, 2012
128,726,324 $1,287
2,487,125
$25
1,533,020
$15 10,140,067
$30 (333,775) $(5,377)
$898,541 $299,379 $(8,715) $1,185,185
The accompanying notes are an integral part of these Consolidated Financial Statements.
42 Booz Allen Hamilton Holding Corporation
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Notes to Consolidated Financial Statements
(Amounts in thousands, except share and per share data or unless otherwise noted)
March 31, 2012
1. Overview
Our B u sine s s
Booz Allen Hamilton Holding Corporation, including its wholly
owned subsidiaries, or Holding or the Company, is an affiliate of
The Carlyle Group, or Carlyle, and was incorporated in Delaware
in May 2008. The Company provides management and technology
consulting services primarily to the U.S. government and its
agencies in the defense, intelligence, and civil markets. The
Company offers clients functional knowledge spanning strategy
and organization, analytics, technology, and operations, which it
combines with specialized expertise in clients’ mission and
domain areas to help solve critical problems. The Company
reports operating results and financial data in one operating
segment. The Company is headquartered in McLean, Virginia,
with approximately 25,000 employees as of March 31, 2012.
re f inancing Tr an sacTiOn
On February 3, 2011, the Company completed a refinancing
transaction, or Refinancing Transaction, which included
amendments of the Senior Secured Credit Agreement, or Senior
Secured Agreement, by the Second Amended and Restated Credit
Agreement, or Senior Secured Agreement, as amended, to allow
for new term loan facilities with $1.0 billion of principal and a
$30.0 million increase to the Company’s revolving credit facility.
In connection with the Refinancing Transaction, the Company
used $268.9 million of cash on hand to repay the remaining
$222.1 million of indebtedness outstanding under the mezzanine
credit facility, $21.5 million on the existing senior secured loan
facilities, or Senior Credit Facilities, and related prepayment
penalties of $6.7 million. Refer to Notes 11 and 12 for further
discussion of the Refinancing Transaction.
iniTial PuB lic Of f e ring
Effective November 20, 2010, the Company consummated its
initial public offering whereby the Company sold 14,000,000
shares of Class A Common Stock for $17.00 per share. Effective
December 20, 2010, the Company settled the underwriters’ over-
allotment option and sold an additional 2,100,000 shares of
Class A Common Stock for $17.00 per share. The net proceeds
of the initial public offering and over-allotment of $250.2 million,
after deducting underwriting discounts and other fees, were used
to repay outstanding debt of $242.9 million under the Company’s
mezzanine credit facility and related prepayment penalties
of $7.3 million. All expenses associated with the initial public
offering have been netted against the proceeds within
stockholders’ equity.
recaPiTaliz aTiOn Tr an sacTiOn and re Pricing
On December 11, 2009, the Company consummated a
recapitalization transaction, or Recapitalization Transaction, which
included amendments of the Senior Secured Agreement to
include a new term loan, or Tranche C Loans, with $350.0 million
of principal, and the mezzanine credit agreement, or Mezzanine
Credit Agreement, primarily to allow for the recapitalization and
payment of a special dividend. This special dividend was declared
by the Company’s Board of Directors on December 7, 2009, to be
paid to holders of record as of December 8, 2009. Net proceeds
from Tranche C Loans of $341.3 million less transaction costs of
$13.2 million, along with cash on hand of $321.9 million, were
used to fund a partial payment of the Company’s deferred
payment obligation, or DPO, in the amount of $100.4 million, and
a dividend payment of $4.642 per share, or $497.5 million, which
was paid on all issued and outstanding shares of Holding’s
Class A Common Stock, Class B Non-Voting Common Stock, and
Class C Restricted Common Stock. As required by the Officers’
Rollover Stock Plan, or Rollover Plan, and the Equity Incentive
Plan, or EIP, the exercise price per share of each outstanding
option was reduced. Because the reduction in per share value
exceeded the exercise price for certain of the options granted
under the Rollover Plan, the exercise price for those options was
reduced to the $0.01 par value of the shares issuable on
exercise, and the holders became entitled to receive a cash
payment equal to the excess of the reduction in per share value
over the reduction in exercise price to the par value. The
difference between the one cent exercise price and the reduced
value for shares not yet exercised of $54.4 million will be accrued
by the Company as the options vest and will be paid in cash upon
exercise of the options. As of March 31, 2012 and 2011, the
Company reported $27.7 million and $31.4 million in other long-
term liabilities, respectively, and $8.9 million and $9.0 million in
accrued compensation and benefits, respectively, in the
accompanying consolidated balance sheets for the portion of
stock-based compensation recognized, which is reflective of the
options vested with an exercise price of one cent. Transaction
fees incurred in connection with the Recapitalization Transaction
were approximately $22.4 million, of which approximately
$15.8 million were deferred financing costs and are amortized
over the lives of the loans. Refer to Note 10 for further discussion
of the DPO, Note 11 for further discussion of the amended credit
agreements, Note 12 for further discussion of the accounting for
deferred financing costs, and Note 17 for further discussion of the
December 2009 dividend and associated future cash payments
as related to stock options.
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Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies
Basis of Pre se ntation
The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, and
have been prepared in accordance with accounting principles
generally accepted in the United States, or GAAP. All intercompany
balances and transactions have been eliminated in consolidation.
The Company’s fiscal year ends on March 31 and unless
otherwise noted, references to fiscal year or fiscal are for fiscal
years ended March 31. The accompanying consolidated financial
statements present the financial position of the Company as of
March 31, 2012 and 2011 and the Company’s results of
operations for fiscal 2012, fiscal 2011, and fiscal 2010.
Certain prior year amounts have been reclassified to conform to
the current year presentation.
Use of e stimate s
The preparation of financial statements in conformity with
U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts
of revenue and expenses during the reporting periods. Areas of
the financial statements where estimates may have the most
significant effect include allowance for doubtful accounts,
contractual and regulatory reserves, lives of tangible and intangible
assets, impairment of long-lived assets, accrued liabilities,
revenue recognition, bonus and other incentive compensation,
stock-based compensation, realization of deferred tax assets,
provisions for income taxes, and postretirement obligations.
Actual results experienced by the Company may differ materially
from management’s estimates.
re ve n Ue recognition
Substantially all of the Company’s revenue is derived from
services and solutions provided to the U.S. government and its
agencies, primarily by the Company’s consulting staff and, to a
lesser extent, subcontractors. The Company generates its
revenue from the following types of contractual arrangements:
cost-reimbursable-plus-fee contracts, time-and-materials
contracts, and fixed-price contracts.
Revenue on cost-reimbursable plus fee contracts is recognized
as services are performed, generally based on the allowable
costs incurred during the period plus any recognizable earned fee.
The Company considers fixed fees under cost-reimbursable-plus-
fee contracts to be earned in proportion to the allowable costs
incurred in performance of the contract. For cost-reimbursable-
plus-fee contracts that include performance-based fee incentives,
which are principally award fee arrangements, the Company
recognizes income when such fees are probable and estimable.
Estimates of the total fee to be earned are made based on
contract provisions, prior experience with similar contracts or
clients, and management’s monitoring of the performance on
such contracts. Contract costs, including indirect expenses, are
subject to audit by the Defense Contract Audit Agency, or DCAA,
and, accordingly, are subject to possible cost disallowances.
Revenue for time-and-materials contracts is recognized as
services are performed, generally on the basis of contract
allowable labor hours worked multiplied by the contract-defined
billing rates, plus allowable direct costs and indirect cost burdens
associated with materials used and other direct expenses
incurred in connection with the performance of the contract.
Revenue on fixed-price contracts is recognized using percentage-
of-completion based on actual costs incurred relative to total
estimated costs for the contract. These estimated costs are
updated during the term of the contract, and may result in
revision by the Company of recognized revenue and estimated
costs in the period in which they are identified. Profits on fixed-
price contracts result from the difference between incurred
costs and revenue earned.
Contract accounting requires significant judgment relative to
assessing risks, estimating contract revenue and costs, and
making assumptions for schedule and technical issues. Due to
the size and nature of many of the Company’s contracts,
developing total revenue and cost at completion requires the use
of estimates. Contract costs include direct labor and billable
expenses, an allocation of allowable indirect costs, and warranty
obligations. Billable expenses is comprised of subcontracting
costs and other “out of pocket” costs that often include, but are
not limited to, travel-related costs and telecommunications
charges. The Company recognizes revenue and billable expenses
from these transactions on a gross basis. Assumptions regarding
the length of time to complete the contract also include expected
increases in wages and prices for materials. Estimates of total
contract revenue and costs are monitored during the term of the
contract and are subject to revision as the contract progresses.
Anticipated losses on contracts are recognized in the period they
are deemed probable and can be reasonably estimated.
44 Booz Allen Hamilton Holding Corporation
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Notes to Consolidated Financial Statements
The Company’s contracts may include the delivery of a
combination of one or more of the Company’s service offerings.
In these situations, the Company determines whether such
arrangements with multiple elements should be treated as
separate units of accounting based on how the elements are bid
or negotiated, whether the customer can accept separate
elements of the arrangement, and the relationship between
the pricing on the elements individually and combined.
Cash and Cash EquivalE nts
Cash and cash equivalents include cash on hand and highly
liquid investments having an original maturity of three months or
less. The Company’s investments consist primarily of institutional
money market funds. The Company maintains its cash and cash
equivalents in bank accounts that, at times, exceed the federally
insured limits. The Company has not experienced any losses in
such accounts.
valuation of aCCounts RECE ivab lE
The Company maintains allowances for doubtful accounts
against certain billed receivables based upon the latest
information regarding whether invoices are ultimately collectible.
Assessing the collectability of customer receivables requires
management judgment. The Company determines its allowance
for doubtful accounts by specifically analyzing individual accounts
receivable, historical bad debts, customer credit-worthiness,
current economic conditions, and accounts receivable aging
trends. Valuation reserves are periodically re-evaluated and
adjusted as more information about the ultimate collectability
of accounts receivable becomes available. Upon determination
that a receivable is uncollectible, the receivable balance and
any associated reserve are written off.
ConCE ntR ation s of CRE dit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash equivalents
and accounts receivable. The Company’s cash equivalents are
generally invested in U.S. government insured money market
funds and Treasury bills, which minimizes the credit risk. The
Company believes that credit risk, with respect to accounts
receivable, is limited as the receivables are primarily with the
U.S. government.
PRoPE Rt y and EquiPmE nt
Property and equipment are recorded at cost, and the balances
are presented net of depreciation. The cost of software purchased
or internally developed is capitalized. Depreciation is calculated
using the straight-line method over the estimated useful lives of
the assets. Furniture and equipment is depreciated over five to
ten years, computer equipment is depreciated over four years,
and software purchased or developed for internal use is
depreciated over one to three years. Leasehold improvements are
amortized over the shorter of the useful life of the asset or the
lease term. Maintenance and repairs are charged to expense as
incurred. Rent expense is recorded on a straight-line basis over
the life of the respective lease. The difference between the cash
payment and rent expense is recorded as deferred rent in other
long-term liabilities in the consolidated balance sheets. The
Company receives incentives for tenant improvements on certain
of its leases. The cash expended on such improvements is
recorded as property and equipment and amortized over the life
of the associated asset, or lease term, whichever is shorter.
Incentives for tenant improvements are recorded as deferred rent
in other long-term liabilities in the consolidated balance sheets,
and are amortized on a straight line basis over the lease term.
Goodwill
Goodwill is the amount by which the cost of acquired net assets
in a business acquisition exceeds the fair value of net identifiable
assets on the date of purchase. The Company assesses goodwill
for impairment on at least an annual basis on January 1, and
whenever events or changes in circumstances indicate that the
carrying value of the asset may not be recoverable. The Company
operates as a single operating segment and as a single reporting
unit for the purpose of evaluating goodwill. During the fiscal years
ended March 31, 2012 2011 and 2010, the Company did not
record any goodwill impairment. Further, the Company does not
consider any of the goodwill at risk of impairment.
intanGib lE as sE ts
Intangible assets consist of trade name, contract backlog, and
favorable lease terms. The trade name is not amortized, but is
tested annually for impairment. Contract backlog is amortized
over the expected backlog life based on projected future cash
flows of approximately five to nine years. Favorable lease
terms are amortized over the remaining contractual terms of
approximately five years.
lonG - livE d as sE ts
The Company reviews its long-lived assets, including property and
equipment and intangible assets, for impairment whenever events
or changes in circumstances indicate that the carrying amounts
of the assets may not be fully recoverable. If the total of the
expected undiscounted future net cash flows is less than the
carrying amount of the asset, a loss is recognized for any excess
of the carrying amount over the fair value of the asset. There were
no impairment charges for fiscal 2012 or 2011.
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Notes to Consolidated Financial Statements
Income Ta xe s
share - Base d payme nTs
The Company provides for income taxes as a “C” corporation
on income earned from operations. The Company is subject to
federal, state, and foreign taxation in various jurisdictions.
Deferred tax assets and liabilities are recorded to recognize
the expected future tax benefits or costs of events that have
been, or will be, reported in different years for financial statement
purposes than for tax purposes. Deferred tax assets and
liabilities are computed based on the difference between the
financial statement carrying amount and tax basis of assets and
liabilities using enacted tax rates and laws for the years in which
these items are expected to reverse. If management determines
that some portion or all of a deferred tax asset is not “more likely
than not” to be realized, a valuation allowance is recorded as a
component of the income tax provision to reduce the deferred tax
asset to an appropriate level in that period. In determining the
need for a valuation allowance, management considers all positive
and negative evidence, including historical earnings, projected
future taxable income, future reversals of existing taxable
temporary differences, taxable income in prior carryback periods,
and prudent, feasible tax-planning strategies.
The Company periodically assesses its tax positions for all
periods open to examination by tax authorities based on the
latest available information. Where it is not more likely that not
that the Company’s tax position will be sustained, the Company
records its best estimate of the resulting tax liability and interest
in the consolidated financial statements. These uncertain tax
positions are recorded as a component of income tax expense.
As uncertain tax positions in periods open to examination are
closed out, or as the assessment of the position is changed, the
resulting change is reflected in the recorded liability and income
tax expense. Penalties and interest recognized related to the
reserves for uncertain tax positions are recorded as a component
of income tax expense.
compre he n sIve Income
Comprehensive income is the change in equity of a business
enterprise during a period from transactions and other events
and circumstances from nonowner sources. Comprehensive
income is presented in the consolidated statements of
comprehensive income. Accumulated other comprehensive losses
as of March 31, 2012 and 2011 consisted of unrealized losses
on the Company’s defined and postretirement benefit plans.
Share-based payments to employees are recognized in the
consolidated statements of operations based on their grant
date fair values with the expense recognized over the vesting
period. Share-based payments to employees are subject to
graded vesting schedules and are recognized in the consolidated
statements of operations based on their grant date fair values
with the expense recognized on an accelerated basis. The
Company uses the Black-Scholes option-pricing model to
determine the fair value of its awards at the time of the grant.
de f Ine d B e ne f IT pl an and oThe r posTre TIre me nT
B e ne f ITs
The Company recognizes the underfunded status of pension and
other postretirement benefit plans on the consolidated balance
sheets. Gains and losses, prior service costs and credits, and any
remaining transition amounts that have not yet been recognized
through net periodic benefit cost are recognized in accumulated
other comprehensive income, net of tax effects, and will continue
to be amortized as a component of net periodic cost. The
measurement date, the date at which the benefit obligations and
plan assets are measured, is the Company’s fiscal year end.
se lf - f unde d me dIcal pl an s
The Company maintains self-funded medical insurance. Self-
funded plans include a health maintenance organization, preferred
provider organization, point of service, qualified point of service,
and traditional choice. Further, self-funded plans also include
prescription drug and dental benefits. The Company records an
incurred but unpaid claim liability in the accrued compensation
and benefits line of the consolidated balance sheets for self-
funded plans based on an actuarial valuation. Data that drives
this estimate is primarily based on claims and enrollment data
provided by a third party valuation firm for medical and pharmacy
related costs.
de f e rre d compe n saTIon pl an
The Company accounts for its deferred compensation plan in
accordance with the terms of the underlying plan agreement. To
the extent the terms of the contract attribute all or a portion of
the expected future benefit to an individual year of the employee’s
service, the cost of the benefits are recognized in that year.
Therefore, the Company estimates the cost of future benefits that
are expected to be paid and expenses the present value of those
costs in the year as services are provided.
46 Booz Allen Hamilton Holding Corporation
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Notes to Consolidated Financial Statements
Fair Value Me asure Me nts
The fair value of the Company’s cash and cash equivalents, trade
accounts receivable and accounts payable, approximates its
carrying value at March 31, 2012 and 2011 because of the short-
term nature of these amounts. The fair value of the Company’s
debt instruments approximates its carrying value at March 31,
2012 and 2011. The fair value of debt is determined based on
interest rates available for debt with terms and maturities similar
to the Company’s existing debt arrangements.
rece nt accounting Pronounce Me nts
whether it is necessary to perform the two-step goodwill
impairment test described in Topic 350. The guidance is effective
for interim and annual goodwill impairment tests performed for
fiscal years beginning after December 15, 2011, with early
adoption permitted. The Company elected early adoption effective
as of our measurement date, January 1, 2012. Based on our
qualitative assessment at January 1, 2012, we believe that it was
not more likely than not that the fair value of our reporting unit
was less than the carrying amount. Accordingly, the Company
concluded a two-step impairment test is not necessary.
During the fiscal year ended March 31, 2012, the Company
adopted the following accounting pronouncements, none of which
had a material impact on the Company’s consolidated financial
statements:
Other recent accounting pronouncements issued by the FASB
during fiscal 2012 and through the filing date did not and are not
believed by management to have a material impact on the
Company’s present or future consolidated financial statements.
In June 2011, the Financial Accounting Standards Board, or FASB,
issued Accounting Standards Update 2011-05, Presentation of
Comprehensive Income, which amends the presentation options
in Accounting Standards Codification Topic 220, Comprehensive
Income. This guidance requires companies to present the
components of net income and other comprehensive income
either as one continuous statement or as two consecutive
statements. It eliminates the option to present components of
other comprehensive income as part of the statement of changes
in stockholders’ equity. The guidance does not change the items
which must be reported in other comprehensive income, how
such items are measured, or when they must be reclassified to
net income. The guidance is effective for interim and annual
periods beginning after December 15, 2011, with early adoption
permitted. As this guidance impacts presentation only, it has
had no effect on the Company’s financial condition, results of
operations, or cash flows. The Company elected early adoption
effective June 30, 2011 using the two-statement approach.
In September 2011, the FASB issued Accounting Standards
Update 2011-08, Testing Goodwill for Impairment, which amends
Topic 350, Intangibles – Goodwill and Other. This guidance
permits an entity to first assess qualitative factors to determine
whether it is more likely than not that the fair value of a reporting
unit is less than its carrying amount as a basis for determining
3. Earnings Per Share
The Company computes basic and diluted earnings per share
amounts based on net income for the periods presented. The
Company uses the weighted average number of common shares
outstanding during the period to calculate basic earnings per
share, or EPS. Diluted EPS is computed similar to basic EPS,
except the weighted average number of shares outstanding is
increased to include the dilutive effect of outstanding common
stock options and other stock-based awards.
The Company currently has outstanding shares of Class A
Common Stock, Class B Non-Voting Common Stock, Class C
Restricted Common Stock, and Class E Special Voting Common
Stock. Class E Special Voting Common Stock shares are not
included in the calculation of EPS as these shares represent
voting rights only and are not entitled to participate in dividends
or other distributions. Unvested Class A Restricted Common
Stock and unvested Class C Restricted Common Stock holders
are entitled to participate in dividends or other distributions.
These unvested shares participated in the payment of the
Company’s dividend declared and paid in the fourth quarter of
fiscal 2012, and as such, EPS is calculated using the two-class
method, whereby earnings are reduced by the dividends declared
and paid to the restricted shareholders.
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Notes to Consolidated Financial Statements
A reconciliation of the income used to compute basic and diluted EPS for the periods presented are as follows:
Fiscal Year Ended March 31,
Earnings for basic computations
Weighted-average Class A Common Stock outstanding
Weighted-average Class B Non-Voting Common Stock outstanding
Weighted-average Class C Restricted Common Stock outstanding
Total weighted-average common shares outstanding for basic computations
Earnings for diluted computations
Dilutive stock options and restricted stock
2012
2011
2010
$238,761
125,894,644
2,791,917
1,459,128
130,145,689
$238,761
10,666,323
$84,694
109,511,290
2,939,387
2,028,270
114,478,947
$84,694
12,969,753
$25,419
102,099,180
2,350,200
2,028,270
106,477,650
$25,419
9,750,730
Average number of common shares outstanding for diluted computations
140,812,012
127,448,700
116,228,380
Earnings per common share:
Basic
Diluted
$÷÷÷1.83
$÷÷0.74
$÷÷0.24
$÷÷÷1.70
$÷÷0.66
$÷÷0.22
4. Restructuring Charge
5. Goodwill and Intangible Assets
In the fourth quarter of fiscal 2012, the Company finalized a cost
restructuring plan to reduce certain personnel and infrastructure
costs. This plan was implemented in response to continued
budget constraints and uncertainty in the industry and to provide
funds to increase resources dedicated to growth areas across the
Company’s markets. As part of this cost restructuring plan, the
Company reduced overall headcount by approximately 2%, with a
higher percentage of reductions in the senior ranks. The Company
incurred an associated restructuring charge of $15.7 million
pretax in the three months ended March 31, 2012 relating to the
one-time termination benefits. The entire amount of this charge
will result in future cash expenditures.
The following table details the activity and balance of the
restructuring liability for the year ended March 31, 2012:
Balance as of April 1, 2011
Restructuring costs
Cash payments
Balance as of March 31, 2012
Amounts contained in balance sheet
Accrued compensation and benefits
Total
Restructuring Charge
–
$15,660
(4,518)
$11,142
$11,142
$11,142
Goodwill
As of March 31, 2012 and 2011, goodwill was $1,188.0 million
and $1,163.5 million, respectively. The increase in the carrying
amount of goodwill is primarily attributable to the increase in
the deferred payment obligation as a result of the release of
approximately $35.0 million of reserves for uncertain tax
positions, offset by a $10.7 million reduction to goodwill related to
the sale of the Company’s state and local transportation business.
On December 31, 2011, the Company adopted new Goodwill
impairment guidance whereby the Company performed a
qualitative assessment of whether the fair value of the reporting
unit was less than the carrying value of equity. In making this
assessment the Company considered all relevant events and
circumstances. These include, but are not limited to
macroeconomic conditions, industry, and market considerations
and the reporting unit’s overall financial performance. Based on
the qualitative assessment at January 1, 2012, the Company
believes that it was not likely (i.e., a likelihood of more than 50
percent) that the fair value of the reporting unit was less than the
carrying amount. During the fiscal years ended March 31, 2012,
2011 and 2010, the Company did not record any goodwill
impairment. Further, the Company does not consider any of the
goodwill at risk of impairment.
The accrued amounts related to the restructuring charge will be
paid through fiscal 2013.
The Company evaluated whether some portion of the restructuring
charge incurred above is recoverable under our cost-reimbursable
contracts, which resulted in additional revenue of $4.5 million
recognized in the fourth quarter of fiscal 2012.
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Notes to Consolidated Financial Statements
IntangIb le as se ts
Intangible assets consisted of the following:
Amortizable intangible assets:
Contract backlog
Favorable leases
Total
Unamortizable intangible assets:
Trade name
Total
gross Carrying Value
accumulated
amortization
net Carrying Value
Gross Carrying Value
as of March 31, 2012
As of March 31,2011
Accumulated
Amortization
Net Carrying Value
$160,615
2,800
$127,265
2,516
$÷33,350
284
$160,800
2,800
$111,330
2,232
$÷49,470
568
$163,415
$129,781
$÷33,634
$163,600
$113,562
$÷50,038
$190,200
$÷÷÷÷÷«–
$190,200
$190,200
$÷÷÷÷÷«–
$190,200
$353,615
$129,781
$223,834
$353,800
$113,562
$240,238
The Company performed an annual impairment test of the trade
name as of January 1, 2012 and 2011, noting no impairment.
7. Property and Equipment, Net
The components of property and equipment, net were as follows:
Amortization expense for fiscal 2012, fiscal 2011, and fiscal
2010, was $16.4 million, $28.6 million, and $40.6 million,
respectively. There were no intangible assets prior to the Merger
Transaction. The following table summarizes the estimated annual
amortization expense for future periods indicated below:
March 31,
Furniture and equipment
Computer equipment
Software
Leasehold improvements
For the Fiscal Year Ending March 31,
2013
2014
2015
2016
2017
Thereafter
$12,509
8,450
4,225
4,225
4,225
–
$33,634
6. Accounts Receivable, Net
Accounts receivable, net consisted of the following:
March 31,
Current:
Accounts receivable—billed
Accounts receivable—unbilled
Allowance for doubtful accounts
Accounts receivable, net
Long-term:
2012
2011
$÷«436,314
641,800
(799)
$÷«466,688
645,664
(1,348)
1,077,315
1,111,004
2012
2011
$«131,461
49,602
33,248
144,528
358,839
(167,760)
$«111,513
58,163
28,583
113,266
311,525
(138,095)
Total
Less: Accumulated depreciation and amortization
Property and equipment, net
$«191,079
$«173,430
Property and equipment, net, includes $13.2 million and
$14.7 million of internally developed software, net of depreciation
as of March 31, 2012 and 2011, respectively. Depreciation and
amortization expense relating to property and equipment for
fiscal 2012, fiscal 2011, and fiscal 2010 was $58.8 million,
$52.0 million, and $55.2 million, respectively. During fiscal
2012, the Company reduced the gross cost and accumulated
depreciation and amortization by $35.7 million for zero net book
value assets deemed no longer in service.
8. Accounts Payable and Other Accrued Expenses
Accounts payable and other accrued expenses consisted of the
following:
Unbilled receivables related to retainage and
holdbacks
24,163
17,075
Total accounts receivable, net
$1,101,478
$1,128,079
March 31,
Vendor payables
Accrued expenses
Other
2012
2011
$288,377
154,640
934
$279,801
123,863
2,646
The Company recognized a provision for doubtful accounts
(including certain unbilled reserves) of $2.7 million, $230,000,
and $1.4 million for fiscal 2012, fiscal 2011, and fiscal 2010,
respectively. Long-term unbilled receivables related to retainage,
holdbacks, and long-term rate settlements to be billed at contract
closeout are included in non-current assets as accounts
receivable in the accompanying consolidated balance sheets.
Total accounts payable and other accrued
expenses
$443,951
$406,310
Accrued expenses consisted primarily of the Company’s reserve
related to potential cost disallowance in conjunction with
government audits. Refer to Note 19 for further discussion of
this reserve.
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Notes to Consolidated Financial Statements
9. Accrued Compensation and Benefits
Accrued compensation and benefits consisted of the following:
A reconciliation of the principal balance of the DPO to the amount
recorded in the consolidated balance sheets for the periods
presented are as follows:
March 31,
Bonus
Retirement
Vacation
Other
2012
2011
March 31,
$÷83,464
86,723
143,154
44,531
$136,503
93,826
133,643
33,024
Deferred payment obligation
Indemnified pre-acquisition uncertain
tax positions
Accrued interest
Amount recorded in the consolidated
balance sheets
2012
2011
$«80,000
$«80,000
(17,543)
681
(52,743)
10,904
$«63,138
$«38,161
Total accrued compensation and benefits
$357,872
$396,996
10. Deferred Payment Obligation
In connection with the Merger Transaction, on July 31, 2008
the Company established a DPO of $158.0 million, payable
by 8.5 years after the Closing Date, less any settled claims.
Pursuant to the Merger Agreement, $78.0 million of the
$158.0 million DPO was required to be paid in full to the selling
shareholders. On December 11, 2009, in connection with the
Recapitalization Transaction, $100.4 million was paid to the
selling shareholders, of which $78.0 million was the repayment
of that portion of the DPO, with approximately $22.4 million
representing accrued interest.
The remaining $80.0 million is available to indemnify the
Company for certain pre-acquisition tax contingencies, related
interest and penalties, and other matters pursuant to the Merger
Agreement. Any amounts remaining after the settlement of claims
will be paid out to the selling shareholders. As of March 31, 2012
and 2011, the Company has recorded $55.3 million and
$90.5 million, respectively, for pre-acquisition uncertain tax
positions, of which approximately $17.5 million and $52.7 million,
respectively, may be indemnified under the remaining available
DPO. During fiscal 2012, the Company favorably settled
$35.0 million of its pre-acquisition uncertain tax positions,
thereby reducing the estimated amount to be indemnified under
the remaining available DPO and increasing the DPO amount to be
paid to the selling shareholders. Accordingly, the $63.1 million
and $38.2 million DPO balance recorded as of March 31, 2012
and 2011, respectively, within other long-term liabilities in the
accompanying consolidated balance sheets, represents the
residual balance estimated to be paid to the selling shareholders
based on consideration of contingent tax claims, accrued interest
and other matters. Interest is accrued at a rate of 5% per six-
month period on the unpaid DPO balance, net of any settled
claims or payments, which was $80.0 million as of March 31,
2012 and 2011.
On February 29, 2012, the Company paid $19.4 million of accrued
interest to the selling shareholders.
11. Debt
Debt consisted of the following:
March 31,
2012
2011
Interest
Rate
Outstanding
Balance
Interest
Rate
Outstanding
Balance
Senior secured credit agreement
Tranche A Loans
Tranche B Loans
2.49%
3.75%
$472,870
492,555
2.81%
4.00%
$497,185
497,143
Total
Current portion of long-term debt
965,425
(42,500)
994,328
(30,000)
Long-term debt, net of
current portion
$922,925
$964,328
The Company maintains a Senior Secured Agreement, as
amended, with a syndicate of lenders. In connection with the
Refinancing Transaction, the Senior Secured Agreement was
amended and restated effective February 3, 2011 to amend the
term loan facilities and increase the Company’s revolving credit
facility. The Senior Secured Agreement, as amended, provides
for $1.0 billion in term loans ($500.0 million of Tranche A Loans
and $500.0 million of Tranche B Loans) and a $275.0 million
revolving credit facility. The loans under the Senior Secured
Agreement, as amended, are secured by substantially all of the
Company’s assets.
The Senior Secured Agreement, as amended, requires quarterly
principal payments of 1.25% of the stated principal amount of
the Tranche A Loans, with annual incremental increases to
1.875%, 2.50%, 3.125%, and 16.25%, prior to the Tranche A
Loans maturity date of February 3, 2016, and 0.25% of the
stated principal amount of the Tranche B Loans, with the
remaining balance payable on the Tranche B Loans maturity date
of August 3, 2017. Both these stated principal repayment
schedules are reflected in the table below. The revolving credit
facility matures on July 31, 2014, at which time any outstanding
principal balance is due in full.
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Notes to Consolidated Financial Statements
The following table summarizes required future debt principal repayments:
Payments Due By March 31,
Tranche A Loans
Tranche B Loans
Total
Total
475,000
495,000
2013
37,500
5,000
2014
50,000
5,000
2015
62,500
5,000
2016
325,000
5,000
2017
–
5,000
Thereafter
–
470,000
$970,000
$42,500
$55,000
$67,500
$330,000
$5,000
$470,000
At the Company’s option, the interest rate on borrowings under
the Senior Credit Facilities may be based on the Eurocurrency
rate or the alternate base rate, or ABR, plus, in each case, an
applicable margin, subject to the Eurocurrency rate and ABR
being no lower than 1.00% or 2.00%, respectively, in the case of
Tranche B Loans. Subject to a leveraged based pricing grid, the
applicable margins on Tranche A Loans range from 2.00% to
2.75% with respect to Eurocurrency loans, or 1.00% to 1.75% with
respect to ABR loans. The applicable margins on Tranche B Loans
will be 3.00% with respect to Eurocurrency loans, or 4.00% with
respect to ABR loans, stepping down, in each case to 2.75% and
3.75%, respectively, when the total leverage ratio is less than or
equal to 1.75 to 1.00. The revolving credit facility margin and
commitment fee are subject to the leveraged based pricing grid,
set forth in the Senior Secured Agreement.
On March 6, 2012, for the Tranche A Loans, the Company entered
into a 1-month LIBOR to lock in the all-in rate at 2.49%, which
consists of the 2.25% margin plus 0.24%. On February 3, 2012,
for the Tranche B Loans, the Company entered into a 6-month
LIBOR to lock in the all-in rate of 4.00%, which consists of the
1.00% floor plus the 3.00% margin. The Tranche B margin was
reduced to 2.75% upon the submission of our December 31,
2011 financial statements to our lenders on February 13, 2012.
The Company’s leverage ratio qualified for a lower margin effective
on the date of lender packet submission to our lenders. As a
result, the all-in rate was reduced to 3.75% effective February 13,
2012. Depending on market conditions, Tranche A Loans and
Tranche B Loans will reprice under the most appropriate LIBOR
term. Currently, the Tranche B Loans do not have a variable rate
as the floor has not been exceeded.
During fiscal 2012, interest payments of $14.4 million and
$20.2 million were made for Tranche A Loans and Tranche B
Loans, respectively. During fiscal 2011, interest payments of
$3.9 million, $37.0 million, $19.1 million, $49.9 million, and
$46,000 were made for Tranche A Loans, Tranche B Loans,
Tranche C Loans, the Mezzanine Term Loan, and the revolving
credit facility, respectively. As of March 31, 2012 and 2011, no
amounts were outstanding on the revolving credit facility.
In addition to the Refinancing Transaction, the Company made
optional repayments on the Senior Credit Facilities and the
mezzanine credit facility during fiscal 2011. In accordance with
the terms of the Mezzanine Credit Agreement, the Company
also paid prepayment penalties of 3.00% of the respective
principal repayment amounts. In addition, the Company wrote-off
ratable portions of debt issuance costs, or DIC, and original
issue discount, or OID, associated with each repayment on
the Senior Credit Facilities and the mezzanine credit facility.
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Notes to Consolidated Financial Statements
These amounts were reflected in other, net in the accompanying consolidated statements of operations. The refinancing transaction and
optional repayments on the Senior Credit Facilities and the mezzanine credit facility, and the associated prepayment penalties and
write-off of DIC and OID during fiscal 2011 were as follows:
Date
February 3, 2011
December 21, 2010*
November 26, 2010*
August 2, 2010
Term Facility
Tranches A, B, and C Loans
Mezzanine
Mezzanine
Mezzanine
Mezzanine
Principal
Payment
$1,021,463
222,076
32,494
210,430
85,000
Prepayment
Penalties
$÷÷÷÷«–
6,662
975
6,313
2,550
Write-Off
of DIC
$11,374
8,287
1,229
8,022
3,359
Write-Off
of OID
$÷6,432
1,768
262
1,712
732
Total
Expense
$17,806
16,717
2,466
16,047
6,641
$1,571,463
$16,500
$32,271
$10,906
$59,677
* The December 21, 2010 and November 26, 2010 repayments and prepayment penalties were paid with net proceeds from the sale of shares of the Company’s Class A Common Stock.
The total outstanding debt balance is recorded in the accompanying consolidated balance sheets, net of unamortized discount of
$4.6 million and $5.7 million as of March 31, 2012 and 2011, respectively.
The Senior Secured Agreement, as amended, requires the maintenance of certain financial and non-financial covenants. As of March 31,
2012, the Company was in compliance with all of its covenants.
12. Deferred Financing Costs
A reconciliation of the beginning and ending amount of DIC for the
periods presented are as follows:
March 31,
Beginning of year
Amortization
Write-off related to optional debt repayments
Additional DIC related to February 2011
Refinancing Transaction
End of year
2012
2011
$20,973
(4,783)
–
$«52,042
(6,990)
(32,271)
–
8,192
$16,190
$«20,973
Costs incurred in connection with the February 2011 Refinancing
Transaction were $12.5 million, of which $8.2 million was recorded
as other long-term assets and will be amortized and reflected in
interest expense in the consolidated statements of operations
over the lives of the loans. Amortization of these costs will be
accelerated to the extent that any prepayment is made on the
Senior Credit Facilities. The remaining amount of $4.3 million,
which was not deferred, was recorded as general and administrative
expenses in the consolidated statements of operations.
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Notes to Consolidated Financial Statements
Absent any prepayment accelerations of DIC or the effect of changes in interest rates, the following table summarizes the estimated
annual amortization expense of DIC using the effective interest rate method, as a component of interest expense, for the future periods
indicated below:
Total
8,022
5,003
3,165
2013
2,504
879
1,356
2014
2,327
903
1,356
2015
2,077
929
453
2016
1,114
960
–
2017
–
987
–
$16,190
$4,739
$4,586
$3,459
$2,074
$987
Thereafter
–
345
–
$345
DIC Amortization Expense
Payments Due By March 31,
Tranche A Loans
Tranche B Loans
Revolver
Total
13. Income Taxes
The components of income tax expense were as follows:
Fiscal Year Ended March 31,
2012
2011
2010
Current
U.S. Federal
State and local
Total current
Deferred
U.S. Federal
State and local
Total deferred
Total
$÷11,893
17,241
$«(4,880)
5,487
$÷2,664
1,074
29,134
607
3,738
71,683
3,102
40,290
2,473
18,004
1,833
74,785
42,763
19,837
$103,919
$43,370
$23,575
Significant components of the Company’s net deferred income tax
(liability) asset were as follows:
March 31,
2012
2011
Deferred income tax assets:
Accrued expenses
Stock-based compensation
Pension and postretirement insurance
Property and equipment
Net operating loss carryforwards
Capital loss carryforward
AMT
Deferred rent and tenant allowance
Other
Total gross deferred income taxes
Less: Valuation allowance
$÷61,651
57,286
26,799
5,305
1,407
36,335
–
19,529
9,985
218,297
(36,335)
$÷53,675
56,114
22,785
31,982
57,124
42,379
8,353
18,101
12,440
302,953
(42,379)
A reconciliation between income tax computed at the U.S. federal
statutory income tax rate to income tax expense from operations
are as follows:
Fiscal Year Ended March 31,
2012
2011
2010
Deferred income tax liabilities:
Unbilled receivables
Intangible assets
Debt issuance costs
Other
138,510
87,923
4,881
2,351
138,667
94,789
6,926
–
Total net deferred income tax assets
181,962
260,574
Income tax expense computed at
U.S. statutory rate (35%)
Increases (reductions)
resulting from:
Changes in uncertain tax
positions
State income taxes, net of the
federal tax benefit
Meals and entertainment
Release of Valuation Allowance
Gain on sale of state and local
transportation business
Other
Income tax expense from
operations
$120,356
$«44,822
$17,148
Total deferred tax liabilities
233,665
240,382
Net deferred income tax (liability) asset
$«(51,703)
$÷20,192
(32,528)
(10,142)
–
13,431
2,177
(5,211)
3,772
1,922
6,039
2,684
–
–
(33)
2,913
2,552
–
–
962
$103,919
$«43,370
$23,575
Deferred tax balances reflect the impact of temporary differences
between the carrying amount of assets and liabilities and their tax
basis and are stated at the tax rates expected to be in effect
when taxes are actually paid or recovered. A valuation allowance
is provided against deferred tax assets when it is more likely than
not that some or all of the deferred tax asset will not be realized.
In determining if the Company’s deferred tax assets are
realizable, management considers all positive and negative
evidence, including the history of generating book earnings, future
reversals of existing taxable temporary differences, projected
future taxable income, as well as any tax planning strategies.
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Notes to Consolidated Financial Statements
The Company recognized a valuation allowance of $36.3 million
and $42.4 million as of March 31, 2012 and 2011, respectively,
against the deferred tax asset associated with the capital loss
carryforward, of equal amounts for the respective periods. The
capital loss carryforward is scheduled to expire on March 31,
2013, at which time the associated valuation allowance is
expected to be released. For all other deferred tax assets, the
Company believes it is more likely than not that the results of
future operations will generate sufficient taxable income to realize
these deferred tax assets.
At March 31, 2011, the Company had approximately $148.8 million
of net operating loss, or NOL, carryforwards. As of March 31, 2012,
the Company has fully utilized its NOL carryforward as it relates to
the U.S. Federal tax benefit. A remaining $2.2 million of State
NOL carryforward remains as of March 31, 2012, which consists
of the California NOL carryforward that the Company anticipates
utilizing by March 31, 2013. The Company believes that it is more
likely than not that the company will generate sufficient taxable
income to fully realize the tax benefit of our State NOL carryforwards
when the statute expires in 2028.
Unce r tain ta x Position s
The Company maintains reserves for uncertain tax positions
related to tax benefits recognized in prior years. These reserves
involve considerable judgment and estimation and are evaluated
by management based on the best information available including
changes in tax regulations and other information. As of March 31,
2012 and 2011, the Company has recorded $55.3 million and
$90.5 million, respectively, of reserves for uncertain tax positions,
of which approximately $17.5 million and $52.7 million, respectively,
may be indemnified under the remaining available DPO.
Included in the balance of reserves for uncertain tax positions
at March 31, 2012 and 2011 are potential tax benefits of
$55.0 million and $77.3 million, respectively, that, if recognized,
would impact the effective tax rate. A reconciliation of the
beginning and ending amount of potential tax benefits for the
periods presented are as follows:
March 31,
Beginning of year
Federal benefit from change in reserve
Settlements with taxing authorities
Lapse of statute of limitations
End of year
2012
2011
$«77,304
1,036
(14,399)
(9,046)
$85,982
–
(129)
(8,549)
$«54,895
$77,304
For the fiscal year ended March 31, 2012, the Company’s
reserves for uncertain tax positions decreased primarily as a
result of a $24.0 million release of reserves for uncertain tax
positions and related interest and penalties, due to the
settlement of the Company’s Internal Revenue Service, or IRS,
audit for fiscal years 2004, 2005, and 2006, and an $11.0 million
release of federal income tax reserves and related interest and
penalties due to a lapse in the statute of limitations for the tax
year ended March 31, 2008.
The Company recognized accrued interest and penalties related
to the reserves for uncertain tax positions in the income tax
provision. Included in the total reserve for uncertain tax positions
are accrued penalties and interest of approximately $387,000
and $13.2 million at March 31, 2012 and 2011, respectively.
The Company settled its IRS audit for fiscal years 2004, 2005,
and 2006 during the second quarter of fiscal 2012. The IRS
adjusted the Company’s research credit claims for the audit
years. The adjustments did not result in a material change to the
Company’s financial position. Due to the federal audit settlement,
the Company released approximately $24.0 million of reserves
for uncertain tax positions. The Company is also subject to taxes
imposed by various taxing authorities including state and foreign
jurisdictions. Tax years 2009 forward that remain open and
subject to examination related to state and foreign jurisdictions
are not considered to be material or will be indemnified under
the merger agreement. Additionally, due to statute of limitations
expirations and potential audit settlements, it is reasonably
possible that $32.9 million of the reserves recorded on
previously recognized tax benefits may be effectively settled
by March 31, 2013.
14. Employee Benefit Plans
De f ine D contrib Ution Pl an
The Company sponsors the Employees’ Capital Accumulation
Plan, or ECAP, which is a qualified defined contribution plan
that covers eligible U.S. and international employees. ECAP
provides for distributions, subject to certain vesting provisions,
to participants by reason of retirement, death, disability, or
termination of employment. Total expense under ECAP for
fiscal 2012, fiscal 2011, and fiscal 2010 was $235.4 million,
$228.6 million, and $210.3 million, respectively, and the
Company-paid contributions were $242.5 million, $223.7 million,
and $196.3 million, respectively.
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Notes to Consolidated Financial Statements
De f ine D B e ne f it Pl an anD Othe r POstre tire me nt
B e ne f it Pl an s
The Company maintains and administers a defined benefit
retirement plan and a postretirement medical plan for current,
retired, and resigned officers.
The Company established a non-qualified defined benefit plan for
all Officers in May 1995, or Retired Officers’ Bonus Plan, which
pays a lump-sum amount of $10,000 per year of service as an
Officer, provided the Officer meets retirement vesting requirements.
The Company also provides a fixed annual allowance after
retirement to cover financial counseling and other expenses. The
Retired Officers’ Bonus Plan is not salary related, but rather is
based primarily on years of service.
In addition, the Company provides postretirement healthcare
benefits to former Officers under a medical indemnity insurance
plan, with premiums paid by the Company. This plan is referred
to as the Officer Medical Plan.
The Company recognizes a liability for the defined benefit plans’
underfunded status, measures the defined benefit plans’
obligations that determine its funded status as of the end of the
fiscal year, and recognizes as a component of accumulated other
comprehensive income the changes in the defined benefit plans’
funded status that are not recognized as components of net
periodic benefit cost.
The components of net postretirement medical expense for the
Officer Medical Plan were as follows:
Fiscal Year Ended March 31,
2012
2011
2010
Service cost
Interest cost
Total postretirement medical
expense
$3,912
2,987
$3,363
2,569
$2,682
2,269
$6,899
$5,932
$4,951
The weighted-average discount rate used to determine the year-
end benefit obligations were as follows:
Fiscal Year Ended March 31,
Officer Medical Plan
Retired Officers’ Bonus Plan
2012
5.00%
5.00%
2011
5.75%
5.75%
2010
5.75%
5.75%
Assumed healthcare cost trend rates for the Officer Medical Plan
at March 31, 2012 and 2011 were as follows:
Pre-65 initial rate
Healthcare cost trend rate assumed for next year
Rate to which the cost trend rate is assumed to decline
(the ultimate trend rate)
Year that the rate reaches the ultimate trend rate
2012
8.0%
5.0%
2019
2011
7.5%
5.0%
2018
Assumed healthcare cost trend rates have a significant effect on
the amounts reported for the healthcare plans. A one-percentage-
point change in assumed healthcare cost trend rates calculated
as of March 31, 2012 would have the following effects:
Effect on total of service and interest cost
Effect on postretirement benefit obligation
1% Increase
1% Decrease
1,182,883
10,087,560
(961,289)
(8,192,956)
Total pension expense, consisting of service and interest,
associated with the Retired Officers’ Bonus Plan was $868,000,
$864,000, and $800,000 for fiscal 2012, fiscal 2011, and fiscal
2010, respectively. Benefits paid associated with the Retired
Officers’ Bonus Plan were $1.2 million, $647,000, and $300,000
for fiscal 2012, fiscal 2011, and fiscal 2010, respectively. The
end-of-period benefit obligation of $4.6 million and $5.2 million
as of March 31, 2012 and 2011, respectively, is included in
postretirement obligations within other long-term liabilities in the
accompanying consolidated balance sheets.
Accumulated other comprehensive loss as of March 31, 2012,
includes unrecognized net actuarial loss of $5.5 million, net of
taxes of $2.2 million, that have not yet been recognized in net
periodic pension cost for the Retired Officers’ Bonus Plan and
the Officer Medical Plan. Accumulated other comprehensive loss
as of March 31, 2011, includes unrecognized net actuarial loss
of $2.7 million, net of taxes of $1.1 million, that have not yet
been recognized in net periodic pension cost for the Retired
Officers’ Bonus Plan and the Officer Medical Plan.
The amounts in accumulated other comprehensive income
expected to be recognized as components of net periodic cost in
fiscal 2013 are $1.5 million of net loss, $0 of net prior service
cost (credit), and $0 of net transition (asset) obligation.
The changes in the benefit obligation, plan assets, and funded
status of the Officer Medical Plan were as follows:
Fiscal Year Ended March 31,
2012
2011
2010
Benefit obligation,
beginning of the year
Service cost
Interest cost
Actuarial loss
Benefits paid
Benefit obligation,
end of the year
Changes in plan assets
Fair value of plan assets,
beginning of the year
Employer contributions
Benefits paid
Fair value of plan assets,
end of the year
$52,753
3,912
2,987
5,666
(1,733)
$45,455
3,363
2,569
3,053
(1,687)
$35,577
2,682
2,270
6,673
(1,747)
$63,585
$52,753
$45,455
$÷÷÷÷«–
1,733
(1,733)
$÷÷÷÷«–
1,687
(1,687)
$÷÷÷÷«–
1,747
(1,747)
$÷÷÷÷«–
$÷÷÷÷«–
$÷÷÷÷«–
Fiscal Year 2012 Report
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Notes to Consolidated Financial Statements
As of March 31, 2012 and 2011, the unfunded status of the
Officer Medical Plan was $63.9 million and $52.8 million,
respectively.
The postretirement benefit liability for the Officer Medical Plan
is included in other long-term liabilities in the accompanying
consolidated balance sheets.
F unde d Statu S For de F ine d B e ne F it Pl an S
Generally, annual contributions are made at such times and in
amounts as required by law and may, from time to time, exceed
minimum funding requirements. The Retired Officers’ Bonus Plan
is an unfunded plan and contributions are made as benefits are
paid, for all periods presented. As of March 31, 2012 and 2011,
there were no plan assets for the Retired Officers’ Bonus Plan
and therefore, the accumulated liability of $4.6 million and
$5.2 million, respectively, is unfunded. The liability will be
distributed in a lump-sum payment as each Officer retires.
The expected future medical benefit payments and contributions
are as follows:
For the Fiscal Year Ending March 31,
Officer Medical Plan Benefits
2013
2014
2015
2016
2017
2018–2022
$÷1,947
2,160
2,467
2,757
3,098
23,422
15. Other Long-Term Liabilities
Other long-term liabilities consisted of the following:
March 31,
2012
2011
Deferred rent
Deferred compensation
Stock-based compensation
Deferred payment obligation
Postretirement obligation
Other
$÷49,716
22,440
27,721
63,138
68,225
5,713
$÷45,878
22,408
31,392
38,161
57,997
–
Total other long-term liabilities
$236,953
$195,836
In fiscal 2012 and 2011, the Company recorded a stock-based
compensation liability of $36.7 million and $40.4 million,
respectively, including $8.9 million and $9.0 million, respectively,
expected to be paid within one year, related to the reduction in
stock option exercise price associated with the December 2009
dividend. Options vested and not yet exercised that would have
had an exercise price below zero as a result of the dividend were
reduced to one cent, with the remaining reduction to be paid in
cash upon exercise of the options. Refer to Note 17 for further
discussion of the December 2009 dividend.
The Company maintains a deferred compensation plan, or EPP,
established in January 2009, for the benefit of certain employees.
The EPP allows eligible participants to defer all or a portion of
their annual performance bonus, reduced by amounts withheld for
the payment of taxes or other deductions required by law. The
Company makes no contributions to the EPP, but maintains
participant accounts for deferred amounts and interest earned.
The amounts deferred into the EPP will earn interest at a rate of
return indexed to the results of the Company’s growth as defined
by the EPP. In each subsequent year, interest will be compounded
on the total deferred balance. Employees must leave the money in
the EPP until 2014. The deferred balance generally will be paid
within 180 days of the final determination of the interest to be
accrued for 2014, upon retirement, or termination. As of
March 31, 2012 and 2011, the Company’s liability associated
with the EPP was $22.4 million.
16. Stockholders’ Equity
Stock SPlit
On September 21, 2010, the Company’s Board of Directors
approved an amended and restated certificate of incorporation
that was filed on November 8, 2010, thereby effecting a ten-for-
one stock split of all the outstanding shares of Class A Common
Stock, Class B Non-Voting Common Stock, Class C Restricted
Common Stock, and Class E Special Voting Common Stock. Par
value for Class A Common Stock, Class B Non-Voting Common
Stock, and Class C Restricted Common Stock remained at
$0.01 par value per share. Par value for Class E Special Voting
Stock was split ten-for-one to become $0.003 per share. All
issued and outstanding common stock and stock options and
per share amounts of the Company contained in the financial
statements have been retroactively adjusted to reflect this stock
split for all periods presented.
The amended and restated certificate of incorporation also
eliminated the Class D Merger Rolling Common Stock and the
Class F Non-Voting Restricted Common Stock.
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Notes to Consolidated Financial Statements
Common StoCk
E mployE E StoCk purChaSE progr am
Holders of Class A Common Stock, Class C Restricted Common
Stock, and Class E Special Voting Common Stock are entitled to
one vote for each share as a holder. The holders of the Voting
Common Stock shall vote together as a single class. The holders
of Class B Non-Voting Common Stock have no voting rights.
When shares of Class B Non-Voting Common Stock or Class C
Restricted Common Stock are sold on the open market, they
become Class A Common Stock shares. During fiscal 2012,
566,005 and 495,250 shares of Class B Non-Voting Common
Stock and Class C Restricted Common stock, respectively, were
sold and converted to Class A Common Stock shares.
Class C Restricted Common Stock is restricted in that a holder’s
shares vest as set forth in the Rollover Plan. Refer to Note 17 for
further discussion of the Rollover Plan.
Class E Special Voting Common Stock represents the voting
rights that accompany the new options program. The new options
program has a fixed vesting and exercise schedule to comply with
IRS section 409(a). Upon exercise, the option will convert to
Class A Common Stock, and the corresponding Class E Special
Voting Common Stock will be repurchased by the Company and
retired. Refer to Note 17 for further discussion of the new
options program.
Each share of common stock, except for Class E Special Voting
Common Stock, is entitled to participate equally, when and if
declared by the Board of Directors from time to time, such
dividends and other distributions in cash, stock, or property from
the Company’s assets or funds become legally available for such
purposes subject to any dividend preferences that may be
attributable to preferred stock that may be authorized. The
Company’s ability to pay dividends to shareholders is limited
as a practical matter by restrictions in the credit agreements
governing the Senior Credit Facilities.
The authorized and unissued Class A Common Stock shares are
available for future issuance upon share option exercises, without
additional stockholder approval.
In connection with the Company’s initial public offering in
November 2010, the Company established a tax qualified
Employee Stock Purchase Plan, or ESPP, which is designed to
enable eligible employees to periodically purchase shares
of the Company’s Class A Common Stock up to an aggregate
of 10,000,000 shares at a five percent discount from the fair
market value of the Company’s common stock. The ESPP provides
for quarterly offering periods, the first of which commenced on
April 1, 2011. For the year ended March 31, 2012, 543,903
Class A Common Stock shares were purchased by employees
under the ESPP.
SharE rE purChaSE progr am
On December 12, 2011, the Board of Directors approved a
$30.0 million share repurchase program, to be funded from
cash on hand. A special committee of the Board of Directors was
appointed to evaluate market conditions and other relevant
factors and initiate repurchases under the program from time to
time. The share repurchase program may be suspended, modified
or discontinued at any time at the Company’s discretion without
prior notice. As of March 31, 2012 no shares have been
repurchased under the program.
DiviDE nD
On February 1, 2012, the Company’s Board of Directors
authorized and declared a cash dividend in the amount of $0.09
per share. On February 29, 2012, the Company paid dividends to
stockholders of record at the close of business on February 13,
2012 in the amount of $11.9 million.
17. Stock-Based Compensation
The following table summarizes stock-based compensation
expense recognized in the consolidated statements of operations:
Fiscal Year Ended March 31,
2012
2011
2010
Cost of revenue
General and administrative
expenses
Total
$÷8,862
$14,073
$23,652
22,073
34,605
48,245
$30,935
$48,678
$71,897
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Notes to Consolidated Financial Statements
As of March 31, 2012 and 2011, there was $26.6 million and $40.6 million, respectively, of total unrecognized compensation cost
related to unvested stock compensation agreements. The unrecognized compensation cost as of March 31, 2012 is expected to be
fully amortized over the next 5.25 years. Absent the effect of accelerating stock compensation cost for any departures of employees
who may continue to vest in their equity awards, the following tables summarizes the estimated annual compensation cost for the
future periods indicated below (excludes any future awards):
Officers’ Rollover Stock Plan
Equity Incentive Plan
Class A Restricted Common Stock
Total
3,919
18,441
4,255
2013
3,282
10,037
2,836
2014
637
4,982
1,201
2015
–
2,343
218
2016
–
895
–
2017
–
174
–
Total
$26,615
$16,155
$6,820
$2,561
$895
$174
Thereafter
–
10
–
$10
Total Unrecognized Compensation Cost
Of f ice rs’ rOllOve r stOck Pl an
The Rollover Plan was adopted as a mechanism to enable the
exchange by the Officers of the Company’s U.S. government
consulting business who were required to exchange (and those
commercial officers who elected to exchange subject to an
aggregate limit) a portion of their previous equity interests in
the Predecessor for equity interests in the Company. Among the
equity interests that were eligible for exchange were common
stock and stock rights, both vested and unvested.
The stock rights that were unvested, but would have vested in
2008, were exchanged for 2,028,270 shares of new Class C
Restricted Common Stock, or Class C Restricted Stock, issued by
the Company at an estimated fair value of $10.00 at August 1,
2008. The aggregate grant date fair value of the Class C
Restricted Stock issued for $20.3 million is being recorded as
expense over the vesting period. Total compensation expense
recorded in conjunction with this Class C Restricted Stock for
fiscal 2012, fiscal 2011, and fiscal 2010 was $1.1 million,
$3.9 million, and $7.1 million, respectively. As of March 31, 2012
and 2011, unrecognized compensation cost related to the non-
vested Class C Restricted Stock was $371,000 and $1.4 million,
respectively, and is expected to be recognized over 1.25 and
2.25 years, respectively. For the fiscal years ended March 31,
2012 and 2011, 1,755,870 and 988,980 cumulative shares of
Class C Restricted Stock vested, respectively. At March 31, 2012
and 2011, 3,971,730 shares of Class C Restricted Stock were
authorized but unissued under the Plan. Notwithstanding the
foregoing, Class C Restricted Stock was intended to be issued
only in connection with the exchange process described above.
In addition to the conversion of the stock rights that would
have vested in 2008 to Class C Restricted Stock, new options,
or New Options, were issued in exchange for old stock rights
held by the Predecessor’s U.S. government consulting partners
that were issued under the stock rights plan that existed for
the Predecessor’s Officers prior to the closing of the Merger
Transaction. The New Options were granted based on the
retirement eligibility of the Officer. For the purposes of the New
Options, there are two categories of Officers — retirement eligible
and non-retirement eligible. New Options granted to retirement
eligible Officers vest in equal annual installments on June 30,
2009, 2010, and 2011.
The following table summarizes the exercise schedule for
Officers who were deemed retirement eligible. Exercise schedules
are based on original vesting dates applicable to the stock rights
surrendered:
As of June 30,
2009
2010
2011
2012
2013
2014
Percentage of New Options to be Exercised
Retirement Eligible:
Original vesting date of
June 30, 2009
Original vesting date of
June 30, 2010
Original vesting date of
June 30, 2011
60%
–
–
20%
50%
–
20%
20%
20%
–
20%
20%
–
10%
30%
–
–
30%
Those individuals who were considered retirement eligible also
were given the opportunity to make a one-time election to be
treated as non-retirement eligible. The determination of retirement
eligibility was made as of a fixed period of time and cannot be
changed at a future date.
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Notes to Consolidated Financial Statements
New Options granted to Officers who were categorized as non-
retirement eligible vested 50% on June 30, 2011, and will vest
25% on June 30, 2012 and 2013.
The following table summarizes the exercise schedule for Officers
who were deemed non-retirement eligible. Exercise schedules are
based on original vesting dates applicable to the stock rights
surrendered:
As of June 30,
2011
2012
2013
2014
2015
Percentage of New Options to be Exercised
Non-Retirement Eligible:
Original vesting date of
June 30, 2011
Original vesting date of
June 30, 2012
Original vesting date of
June 30, 2013
20%
–
–
20%
25%
–
20%
25%
33%
20%
25%
33%
20%
25%
34%
If a holder’s employment with the Company were to terminate
without cause, by reason of disability, or Company approved
termination, these shares will continue to vest as if the holder
continued to be employed as a retirement eligible or non-
retirement eligible employee, as the case may be. In the event
that a holder’s employment is terminated due to death, any
unvested New Options shall immediately vest in full. In the event
of a holder’s termination of employment due to death, disability,
or a Company approved termination, the Company may, in its sole
discretion, convert all or a portion of unexercised New Options
into the right to receive upon vesting and exercise, in lieu of
Company common stock, a cash payment pursuant to a prescribed
formula. The aggregate grant date fair value of the New Options
issued of $127.1 million is being recorded as compensation
expense over the vesting period. Total compensation expense
recorded in conjunction with the New Options for the fiscal 2012,
fiscal 2011, and fiscal 2010, was $11.2 million, $27.3 million,
and $42.2 million, respectively. The total fair value of New
Options vested during fiscal 2012 and 2011 was $10.4 million
and $10.4 million, respectively. As of March 31, 2012 and 2011,
unrecognized compensation cost related to the non-vested New
Options was $3.5 million and $14.7 million, respectively, which is
expected to be recognized over 1.25 and 2.25 years, respectively.
As permitted under the terms of the Rollover Plan, the
Compensation Committee, as Administrator of the Rollover Plan,
authorized on June 3, 2011 the payment of withholding taxes
not to exceed the minimum statutory withholding amount arising
in connection with the exercise of Rollover Options through the
surrender of shares of Class A common stock, issuable upon
the exercise of such Rollover Options. The Company extended
this offer to the holders of the Rollover Options to provide for
an additional alternative to either paying the minimum required
withholding tax arising in connection with the exercise of the
Rollover Options from each holder’s existing personal funds or
from the proceeds of the open market sale of a portion of the
shares issuable upon the exercise of the Rollover Options. The
surrender program was limited to the Rollover Options that were
required to be exercised between June 30, 2011 and
September 15, 2011 and, for those holders who elected to
participate, the trade date was August 12, 2011 for the exercise
of the Rollover Options. As a result of this transaction, the
Company repurchased 333,775 shares at $16.11 and recorded
them as treasury shares at a cost of $5.4 million.
Equit y incE ntivE Pl an
The EIP was created in connection with the Merger Transaction
for employees and directors of Holding. The Company created a
pool of options, or EIP Options, to draw upon for future grants
that would be governed by the EIP. All options under the EIP are
exercisable, upon vesting, for shares of common stock of Holding.
The grants of options under the EIP were as follows:
Date of Grant
May 7, 2009
January 27, 2010
February 15, 2010
April 28, 2010
August 17, 2010
November 16, 2010
March 1, 2011
April 1, 2011
July 1, 2011
August 10, 2011
November 8, 2011
February 23, 2012
Number of
Options Granted
Estimated
Fair Value of
Common Stock
at Time of Grant
1,420,000
470,000
140,000
1,700,000
50,000
260,000
430,000
1,280,000
60,000
140,000
190,000
345,000
$11.81
11.49
11.49
12.80
16.85
17.00
18.50
18.29
19.08
16.07
16.30
18.34
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Notes to Consolidated Financial Statements
Stock options are granted at the discretion of the Board of
Directors or its Compensation Committee and expire ten years
from the date of the grant. Options generally vest over a five-
year period based upon required service and performance
conditions. Starting on February 1, 2012, the Board of Directors
or its Compensation Committee updated vesting conditions for
stock options, whereby stock options only vest upon a required
service condition. The Company calculates the pool of additional
paid-in capital associated with excess tax benefits using the
“simplified method.”
The aggregate grant date fair value of the EIP Options issued
during fiscal 2012, fiscal 2011, and fiscal 2010, was
$18.5 million, $15.3 million, and $10.6 million, respectively,
and is being recorded as expense over the vesting period. Total
compensation expense recorded in conjunction with options
outstanding under the EIP for fiscal 2012, fiscal 2011, and fiscal
2010, was $12.7 million, $17.4 million, and $22.4 million,
respectively. The total fair value of EIP Options vested during
fiscal 2012 and 2011 was $10.7 million and $12.7 million,
respectively. As of March 31, 2012 and 2011, unrecognized
compensation cost related to the non-vested EIP Options was
$18.4 million and $24.5 million, respectively, and is expected to
be recognized over 5.25 and 5.25 years, respectively. As of
March 31, 2012 and 2011, there were 11,616,000 and
12,865,310 options, respectively, available for future grant
under the EIP.
Adop tion of Ann uAl ince ntive pl An
On October 1, 2010, the Board of Directors adopted a new
compensation plan in connection with the initial public offering to
more appropriately align the Company’s compensation programs
with those of similarly situated companies. The amount of the
annual incentive payment will be 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). If the Board of Directors
elects to make payments in equity, the value of the overall award
will be increased by 20%, related to the portion paid in equity.
Equity awards will vest based on the passage of time, subject to
the officer’s continued employment by the Company. The portion
to be paid in the form of equity will be recognized in the
accompanying consolidated statements of operations based on
grant date fair value over the vesting period of three years. The
portion to be paid in cash is accrued ratably during the fiscal year
in which the employees provide service and paid out during the
first quarter of the subsequent fiscal year.
Gr Ants of cl As s A re stricte d common stock
On April 1, 2011, the Compensation Committee of the Board
of Directors granted 20,231 shares of Class A Restricted
Stock to certain Board members for their continued service to
the Company. These shares vest in equal installments on
September 30, 2011 and March 31, 2012, and were issued with
an aggregate grant date fair value of $370,000. On November 9,
2011, the Compensation Committee of the Board of Directors
granted 1,242 shares of Class A Restricted Stock to a new
Board member for his service to the Company. These shares
shall vest on March 31, 2012, and were issued with an aggregate
fair value of $20,000. Total compensation expense recorded in
conjunction with these grants for the fiscal year ended March 31,
2012 was $390,000.
On July 1, 2011, the Compensation Committee of the Board of
Directors granted 514,869 shares of Class A Restricted Stock in
conjunction with the new Annual Incentive Plan adopted on
October 1, 2010. The amount of the annual incentive payment
was determined based on performance targets established by
the Compensation Committee and a portion of the bonus was
paid in the form of Class A Restricted Stock. Equity awards will
vest based on the passage of time, subject to the officer’s
continued employment by the Company. The portion to be paid
in the form of equity will be recognized in the accompanying
consolidated statements of operations based on grant date fair
value over the vesting period of three years and the aggregate
value was estimated at $9.8 million based on the stock price of
$19.08 on the grant date. Total compensation expense recorded
in conjunction with this grant for the fiscal year ended March 31,
2012 was $5.6 million. Future compensation cost related to
this award not yet recognized in consolidated statements of
operations was $4.3 million and is expected to be recognized
over the next 2.25 years.
me thodoloGy
The Company uses the Black-Scholes option-pricing model to
determine the estimated fair value for stock-based awards. The
fair value of the Company stock on the date of the New Option
grant was determined based on the fair value of the Merger
Transaction involving Booz Allen Hamilton, Inc. and the Company
that occurred on July 31, 2008. For all grants of options through
the initial public offering, the fair value of the Company’s stock
was determined by an independent valuation specialist. For all
grants of options subsequent to the initial public offering, the fair
value of the Company’s stock was based on the Company’s
closing price on the New York Stock Exchange.
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Notes to Consolidated Financial Statements
On February 1, 2012, the Company’s Board of Directors authorized
and declared a cash dividend in the amount of $0.09 per share.
Therefore, an annualized dividend yield of approximately 2% was
used in the Black-Scholes option-pricing model for all grants
issued after February 1, 2012. Prior to this, the Company did not
issue dividends and a dividend yield of zero was used in the
Black-Scholes option-pricing model. Implied volatility is calculated
as of each grant date based on our historical volatility along with
an assessment of a peer group for future option grants. Other
than the expected life of the option, volatility is the most sensitive
input to our option grants. To be consistent with all other implied
calculations, the same peer group used to calculate other implied
metrics is also used to calculate implied volatility.
The risk-free interest rate is determined by reference to the
U.S. Treasury yield curve rates with the remaining term equal to
the expected life assumed at the date of grant. The average
expected life was estimated based on internal qualitative and
quantitative factors. Forfeitures were estimated based on the
Company’s historical analysis of Officer attrition levels and actual
forfeiture rates by grant date.
The weighted average assumptions used in the Black-Scholes
option-pricing model for stock option awards were as follows:
Through Fiscal Year Ended March 31,
Dividend yield
Expected volatility
Risk-free interest rate
Expected life (in years)
Weighted-average grant date fair value
2012
0.28%
36.8%
2.35%
7.00
7.56
2011
0.00%
39.8%
3.07%
7.00
6.23
2010
0.00%
40.7%
2.90%
7.04
5.51
DiviDe nDs
On December 7, 2009, the Company’s Board of Directors
approved a dividend of $4.642 per share paid to holders of
record as of December 8, 2009 of Class A Common Stock,
Class B Non-Voting Common Stock, and Class C Restricted
Common Stock. This dividend totaled $497.5 million. As required
by the Rollover Plan and the EIP, and in accordance with
applicable tax laws and regulatory guidance, the exercise price
per share of each outstanding New Option and EIP Option was
reduced in an amount equal to the value of the dividend. The
Company evaluated the reduction of the exercise price associated
with the dividend issuance. Both the Rollover and EIP plans
contained mandatory antidilution provisions requiring modification
of the options in the event of an equity restructuring, such as the
dividends declared in July and December 2009. In addition, the
structure of the modifications, as a reduction in the exercise price
of options, did not result in an increase to the fair value of the
awards. As a result of these factors, the Company did not record
incremental compensation expense associated with the
modifications of the options as a result of the July and December
2009 dividends. Options vested and not yet exercised that would
have had an exercise price below zero as a result of the dividend
were reduced to one cent. The difference between the one cent
exercise price and the reduced value for shares not yet exercised
of approximately $54.4 million will be accrued by the Company as
the options vest and will be paid in cash upon exercise of the
options, subject to the continued vesting of the options. As of
March 31, 2012 and 2011, the Company reported $27.7 million
and $31.4 million, respectively, in other long-term liabilities and
$8.9 million and $9.0 million, respectively, in accrued
compensation and benefits in the consolidated balance sheets
based on the proportion of the potential payment of $54.4 million
which is represented by vested options for which stock-based
compensation expense has been recorded. The Company paid
$9.0 million to option holders in fiscal 2012 to settle the New
Options exercised during the fiscal year, which is included in stock
option exercises in cash flows from financing activities in the
consolidated statements of cash flows.
On July 27, 2009, the Company’s Board of Directors approved a
dividend of $1.087 per share paid to holders of record as of
July 29, 2009 of the Company’s Class A Common Stock, Class B
Non-Voting Common Stock, and Class C Restricted Common
Stock. This dividend totaled $114.9 million. In accordance with
the Officers’ Rollover Stock Plan, the exercise price per share of
each outstanding option, including New Options and EIP options,
was reduced in compliance with applicable tax laws and regulatory
guidance. Additionally, the Company evaluated the reduction of
the exercise price associated with the dividend issuance. As a
result, the Company did not record any additional incremental
compensation expense associated with the dividend and
corresponding decrease in the exercise and fair value of all
outstanding options.
On February 1, 2012, the Company’s Board of Directors
authorized and declared a cash dividend in the amount of
$0.09 per share. The dividend was paid in cash on February 29,
2012 to stockholders of record at the close of business on
February 13, 2012.
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Notes to Consolidated Financial Statements
The following table summarizes stock option activity for the
periods presented:
The following table summarizes unvested stock options for the
periods presented:
Officers’ Rollover Stock Plan New Options
Retirement Eligible:
Options outstanding at March 31, 2011
Granted
Forfeited
Expired
Exercised
Number of
Options
Weighted
Average
Exercise Price
4,128,410
–
–
–
1,457,082
$÷0.01*
–
–
–
0.01*
Officers’ Rollover Stock Plan
New Options
Retirement Eligible:
Unvested at March 31, 2011
Granted
Vested
Forfeited
Number of
Options
Weighted
Average Fair
Value
Aggregate
Intrinsic Value
on Grant Date
2,428,480
–
2,428,480
–
$21.46
–
4.27*
–
$52,115
–
10,369*
–
Options outstanding at March 31, 2012
2,671,328
$÷0.01*
Unvested at March 31, 2012
–
–
Non-Retirement Eligible:
Options outstanding at March 31, 2011
Granted
Forfeited
Expired
Exercised
7,517,500
–
–
–
751,750
$÷0.01*
–
–
–
0.01*
Non-Retirement Eligible:
Unvested at March 31, 2011
Granted
Vested
Forfeited
7,517,500
–
3,758,750
–
$10.00
–
4.27*
–
$62,553
–
16,050*
–
Unvested at March 31, 2012
3,758,750
$12.37
$46,504
Options outstanding at March 31, 2012
6,765,750
$÷0.01*
Equity Incentive Plan Options
Options outstanding at March 31, 2011
Granted
Forfeited
Expired
Exercised
11,775,725
2,445,000
1,284,072
3,980
1,591,391
$÷6.39
18.07
7.74
11.50
4.62
Equity Incentive Plan Options
Unvested at March 31, 2011
Granted
Vested
Forfeited
9,569,730
2,445,000
2,913,805
1,284,072
$÷6.76
18.07
6.44
7.74
$÷÷÷÷«–
–
–
–
Unvested at March 31, 2012
7,816,853
$10.26
Options outstanding at March 31, 2012
11,341,282
$÷9.00
* Reflects adjustment for $4.642 dividend issued December 11, 2009, and $1.087 dividend issued
July 27, 2009.
* Reflects adjustments for $4.642 dividend issued December 11, 2009 and $1.087 dividend
issued July 27, 2009.
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Notes to Consolidated Financial Statements
The following table summarizes stock options outstanding at March 31, 2012:
Range of Exercise Prices
Officers’ Rollover Stock Plan
$0.01
Equity Incentive Plan
$4.27–$20.00
Stock Options
Outstanding
Weighted Average
Exercise Price
Weighted
Average Remaining
Contractual Life
(In years)
Stock Options
Exercisable
Weighted Average
Exercise Price
Weighted
Average Remaining
Contractual Life
(In years)
9,437,078
11,341,282
$0.01*
$9.00
1.07
5,678,319
7.49
3,533,659
$0.01
$6.21
0.56
6.98
* Reflects adjustment for $4.642 dividend issued December 11, 2009, and $1.087 dividend issued July 27, 2009.
The grant date aggregate intrinsic value for New Options outstanding and New Options exercisable at March 31, 2012 was $40.3 million
and $2.4 million, respectively.
18. Related-Party Transactions
Pursuant to an Agreement and Plan of Merger, dated as of
May 15, 2008, and subsequently amended, The Carlyle Group
indirectly acquired all of the issued and outstanding stock of the
Company. From time to time, and in the ordinary course of business:
(1) other Carlyle portfolio companies engage the Company as a
subcontractor or service provider, and (2) the Company engages
other Carlyle portfolio companies as subcontractors or service
providers. Revenue and cost associated with these related parties
for fiscal 2012 were $1.5 million and $1.4 million, respectively.
Revenue and cost associated with these related parties for fiscal
2011 were $6.3 million and $5.3 million, respectively. Revenue
and cost associated with these related party transactions for
fiscal 2010 were $15.1 million and $13.5 million, respectively.
On July 31, 2008, the Company entered into a management
agreement, or Management Agreement, with TC Group V US, L.L.C.,
or TC Group, a company affiliated with Carlyle. In accordance with
the Management Agreement, TC Group provides the Company with
advisory, consulting and other services and the Company pays
TC Group an aggregate annual fee of $1.0 million plus expenses.
In addition, the Company made a one-time payment to TC Group
of $20.0 million for investment banking, financial advisory and
other services provided to the Company in connection with the
Acquisition. For fiscal 2012, fiscal 2011, and fiscal 2010, the
Company incurred $1.0 million per year in advisory fees.
Effective July 31, 2008, the Company entered into a transition
services agreement, or TSA, and a collaboration agreement, or
CA, with Booz & Company Inc., or Booz & Co. The TSA required
the Company and Booz & Co. to provide to each other certain
support services for up to 15 months following July 31, 2008.
Revenue and expenses were recognized as incurred.
The CA requires the Company and Booz & Co. to provide to
each other the services of personnel that were either staffed on
existing contracts as of July 31, 2008, or contemplated to be
staffed in proposals submitted prior to but accepted after such
date. The CA will remain in effect until the termination or
expiration of the applicable contracts. Revenue and expenses
are recognized as incurred.
Included in the accompanying consolidated balance sheets and
statements of operations are support services between the
Company and Booz & Co. under terms of the TSA and CA, as well
as occupancy charges based on license agreements, as
summarized below:
As of March 31, 2012:
Accounts receivable
Accounts payable
As of March 31, 2011:
Accounts receivable
Accounts payable
For the fiscal year ended March 31, 2012:
Revenue
Expenses
For the fiscal year ended March 31, 2011:
Revenue
Expenses
For the fiscal year ended March 31, 2010:
Revenue
Expenses
$÷«149
$÷÷«65
$÷«187
$÷÷«91
$÷÷÷«–
$÷÷÷«–
$1,438
$1,936
$3,712
$2,889
An additional $4.6 million is owed to Booz & Co. as of March 31,
2012 for payment of foreign tax credits as a result of the
Germany and France audit closings.
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Notes to Consolidated Financial Statements
19. Commitments and Contingencies
Le ase s
The Company leases office space under noncancelable operating
leases that expire at various dates through 2022. The terms for
the facility leases generally provide for rental payments on a
graduated scale, which are recognized on a straight-line basis
over the terms of the leases, including reasonably assured
renewal periods, from the time the Company controls the leased
property. Lease incentives are recorded as a deferred credit and
recognized as a reduction to rent expense on a straight-line basis
over the lease term. Rent expense was approximately $113.9 million,
net of $5.7 million of sublease income, $118.4 million, net of
$5.8 million of sublease income, and $109.5 million, net of
$7.1 million of sublease income, for fiscal 2012, fiscal 2011, and
fiscal 2010, respectively.
Future minimum operating lease payments for noncancelable
operating leases and future minimum noncancelable sublease
rentals are summarized as follows:
For the Fiscal Year Ending March 31,
Operating
Lease Payments
Operating
Sublease Income
2013
2014
2015
2016
2017
Thereafter
$÷82,426
76,895
65,300
49,654
25,094
51,542
$350,911
$÷«708
536
43
44
19
–
$1,350
Rent expense is included in occupancy costs, a component
of general and administrative expenses, as shown on the
consolidated statements of operations, and includes rent,
sublease income from third parties, real estate taxes, utilities,
parking, security, repairs and maintenance, and storage costs.
As a result of the Merger Transaction, the Company assigned a
total of nine leases to Booz & Co. The facilities are located in
New York, New York; Troy, Michigan; Florham Park, New Jersey;
Parsippany, New Jersey; Houston, Texas; Chicago, Illinois;
Cleveland, Ohio; Dallas, Texas; and London, England. Except for
the Houston, Cleveland, and Dallas leases, which expired, the
Company remains liable under the terms of the original leases
should Booz & Co. default on its obligations. There were no
events of default under these leases as of March 31, 2012 and
March 31, 2011. The maximum potential amount of undiscounted
future payments is $35.9 million at March 31, 2012, and the
leases expire at different dates between February 2013 and
March 2017.
Gove rnme nt Contr aCtinG mat te rs
For fiscal 2012, fiscal 2011, and fiscal 2010, approximately 98%,
97%, and 98%, respectively, of the Company’s revenue was
generated from contracts with U.S. government agencies or other
U.S. government contractors. Contracts with the U.S. government
are subject to extensive legal and regulatory requirements and,
from time to time and in the ordinary course of business, agencies
of the U.S. government investigate whether the Company’s
operations are conducted in accordance with these requirements
and the terms of the relevant contracts by using investigative
techniques as subpoenas or civil investigative demands.
U.S. government investigations of the Company, whether related
to the Company’s U.S. government contracts or conducted for
other reasons, could result in administrative, civil, or criminal
liabilities, including repayments, fines, or penalties being imposed
upon the Company, or could lead to suspension or debarment
from future U.S. government contracting. Management believes it
has adequately reserved for any losses that may be experienced
from any investigation of which it is aware. The Defense Contract
Management Agency Administrative Contracting Officer has
negotiated annual final indirect cost rates through fiscal year 2006.
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Notes to Consolidated Financial Statements
Audits of subsequent years may result in cost reductions and/or
penalties. Management believes it has adequately reserved for
any losses that may be experienced from any such reductions
and/or penalties. As of March 31, 2012 and 2011, the Company
has recorded a liability of approximately $127.2 million and
$100.2 million, respectively, for its current best estimate of net
amounts to be refunded to customers for potential adjustments
from such audits or reviews of contract costs incurred subsequent
to fiscal year 2006.
Litigation
The Company is involved in legal proceedings and investigations
arising in the ordinary course of business, including those relating
to employment matters, relationships with clients and contractors,
intellectual property disputes, and other business matters. These
legal proceedings seek various remedies, including claims for
monetary damages in varying amounts that currently range up to
$40 million or have a reasonably estimated outcome within that
range or are unspecified as to amount. Although the outcome of
any such matter is inherently uncertain and may be materially
adverse, based on current information, management does not
expect any of the currently ongoing audits, reviews, investigations,
or litigation to have a material adverse effect on the financial
condition and results of operations. As of March 31, 2012 and
2011, there are no amounts accrued in the consolidated financial
statements related to these proceedings.
Six former officers and stockholders of the Predecessor who had
departed the firm prior to the Acquisition have filed a total of nine
suits, with original filing dates ranging from July 3, 2008 through
December 15, 2009 (three of which were amended on July 2,
2010 and then further amended into one consolidated complaint
on September 7, 2010) against the Company and certain of the
Company’s current and former directors and officers. Each of the
suits arises out of the Acquisition and alleges that the former
stockholders are entitled to certain payments that they would
have received if they had held their stock at the time of the
Acquisition. Some of the suits also allege that the acquisition
price paid to stockholders was insufficient. The various suits
assert claims for breach of contract, tortious interference with
contract, breach of fiduciary duty, civil Racketeer Influenced and
Corrupt Organizations Act, or RICO, violations, violations of the
Employee Retirement Income Security Act, and/or securities and
common law fraud. Two of these suits have been dismissed with
all appeals exhausted. Five of the remaining suits are pending in
the United States District Court for the Southern District of New
York, the sixth is pending in New York state court and the seventh
is pending in the United States District Court for the Southern
District of California. As of March 31, 2012 and 2011, the
aggregate alleged damages sought in the seven remaining suits
was approximately $348.7 million ($291.5 million of which is
sought to be trebled pursuant to RICO), plus punitive damages,
costs, and fees. Although the outcome of any of these cases is
inherently uncertain and may be materially adverse, based on
current information, we do not expect them to have a material
adverse effect on our financial condition and results of operations.
20. 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.
Although certain information regarding served markets and
functional capabilities is discussed for purposes of promoting an
understanding of the Company’s complex business, the Company
manages its business and allocates resources at the
consolidated level of a single operating segment.
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Notes to Consolidated Financial Statements
21. Unaudited Quarterly Financial Data
Revenue
Operating income
Income before income taxes
Net income
Earnings per common share:
Basic (1)
Diluted (1)
2012 Quarters
First
Second
Third
Fourth
$1,446,836
98,122
85,386
51,136
$1,429,044
93,665
85,522
75,332
$1,442,718
98,188
86,391
62,860
$1,540,620
97,457
86,575
50,627
$÷÷÷÷«0.40
$÷÷÷÷«0.37
$÷÷÷÷«0.58
$÷÷÷÷«0.53
$÷÷÷÷«0.48
$÷÷÷÷«0.44
$÷÷÷÷«0.38
$÷÷÷÷«0.36
Out of period adjustments – During the fourth quarter, the Company recorded an adjustment to revenue associated with the
recovery of allowable state income tax expense that in the aggregate increased revenue and operating income by approximately
$10.1 million ($6.1 million net of taxes), which should have been allocated to the prior quarters of fiscal 2012 in which the expense
was incurred. This operating income figure does not take into account a partially offsetting effect related to incentive compensation
expense. The amount of the adjustment allocable to each prior quarter is not material to any of those prior quarters’ financial
statements, and the aggregate adjustment is not material to the fourth quarter, therefore the Company recorded the correction
of this error in the fourth quarter of fiscal 2012.
Revenue
Operating income
Income before income taxes
Net income
Earnings per common share:
Basic (1)
Diluted (1)
2011 Quarters
First
Second
Third
Fourth
$1,341,929
88,745
48,085
28,169
$1,367,214
71,909
26,276
14,817
$1,389,176
75,131
21,943
23,638
$1,492,977
83,659
31,760
18,070
$÷÷÷÷«0.26
$÷÷÷÷«0.23
$÷÷÷÷«0.14
$÷÷÷÷«0.12
$÷÷÷÷«0.20
$÷÷÷÷«0.18
$÷÷÷÷«0.14
$÷÷÷÷«0.13
(1) Earnings per share are computed independently for each of the quarters presented and therefore may not sum to the total for the fiscal year.
22. Supplemental Financial Information
23. Subsequent Events
The following schedule summarizes valuation and qualifying
accounts for the periods presented:
Fiscal Year Ended March 31,
2012
2011
2010
Allowance for doubtful accounts:
Beginning balance
Provision for doubtful accounts
Charges against allowance
$÷1,348
1,502
(2,051)
$÷2,127
230
(1,009)
$÷1,648
1,371
(892)
Ending balance
$÷÷«799
$÷1,348
$÷2,127
Tax valuation allowance:
Beginning balance
Purchase accounting
adjustments
Sale of capital assets
$42,379
$42,379
$10,056
–
(6,044)
–
–
32,323
–
Ending balance
$36,335
$42,379
$42,379
On May 29, 2012, the Company’s Board of Directors authorized
and declared a regular quarterly cash dividend in the amount
of $0.09 per share. In addition, the Board declared a special
cash dividend of $1.50 per share. Both the quarterly and special
dividend are payable on June 29, 2012 to shareholders of record
on June 11, 2012. The Compensation Committee, as the
Administrator of the Officers’ Rollover Stock Plan and the
Amended and Restated Equity Incentive Plan, made a
determination to adjust the outstanding options under each plan
by reducing the exercise price of the Rollover Options by the
amount of the special dividend and by granting the holders of EIP
options a dividend equivalent equal to the special dividend and
payable on June 29, 2012 or the vesting of the EIP option,
whichever is later.
On May 29, 2012, the Company’s Board of Directors also
authorized the payment of the accrued interest on the DPO as of
July 31, 2012. We expect approximately $3.4 million will be paid
on that date.
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Non-GAAP Measures
We publically disclose certain non-GAAP financial measurements,
including Adjusted Operating Income, Adjusted EBITDA, Adjusted
Net Income, and Adjusted Diluted Earnings Per Share, or 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. We view Adjusted Operating Income, Adjusted
EBITDA, Adjusted Net Income, and Adjusted Diluted EPS as
measures of our core operating business, which exclude the
impact of the items detailed below, as these items are generally
not operational in nature. These non-GAAP measures also provide
another basis for comparing period to period results by excluding
potential differences caused by non-operational and unusual or
non-recurring items. We also utilize and discuss Free Cash Flow,
because management uses this measure for business planning
purposes, measuring the cash generating ability of the operating
business, and measuring liquidity generally. We present these
supplemental measures because we believe that these measures
provide investors with important supplemental information with
which to evaluate our performance, long term earnings potential,
or liquidity, as applicable, and to enable them to assess our
performance on the same basis as management. These
supplemental performance measurements may vary from and
may not be comparable to similarly titled measures by other
companies in our industry. Adjusted Operating Income, Adjusted
EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Free
Cash Flow are not recognized measurements under accounting
principles generally accepted in the United States, or GAAP, and
when analyzing our performance or liquidity, as applicable,
investors should (i) evaluate each adjustment in our reconciliation
of operating and net income to Adjusted Operating Income,
Adjusted EBITDA and Adjusted Net Income, and cash flows to
Free Cash Flows, and the explanatory footnotes regarding those
adjustments, each as defined under GAAP, (ii) use Adjusted
Operating Income, Adjusted EBITDA, Adjusted Net Income, and
Adjusted Diluted EPS in addition to, and not as an alternative to,
operating income, net income or diluted EPS, as a measure of
operating results, and (iii) use Free Cash Flows in addition to,
and not as an alternative to, net cash generated from operating
activities as a measure of liquidity, each as defined under GAAP.
We have defined the aforementioned non-GAAP measures
as follows:
• “Adjusted Operating Income” represents operating income
before (i) certain stock option-based and other equity-based
compensation expenses, (ii) adjustments related to the
amortization of intangible assets, and (iii) any extraordinary,
unusual, or non-recurring items. 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 before income taxes,
net interest and other expense, and depreciation and amortization
and before certain other items, including: (i) certain stock
option-based and other equity-based compensation expenses,
(ii) transaction costs, fees, losses, and expenses, including fees
associated with debt prepayments, and (iii) any extraordinary,
unusual, or non-recurring items. We prepare Adjusted EBITDA 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 Net Income” represents net income before: (i) certain
stock option-based and other equity-based compensation
expenses, (ii) transaction costs, fees, losses, and expenses,
including fees associated with debt prepayments, (iii) adjustments
related to the amortization of intangible assets, (iv) amortization
or write-off of debt issuance costs and write-off of original
issue discount, and (v) any extraordinary, unusual, or non-
recurring items, in each case net of the tax effect calculated
using an assumed effective tax rate. We prepare Adjusted Net
Income to eliminate the impact of items, net of tax, 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 Diluted EPS” represents diluted EPS calculated using
Adjusted Net Income as opposed to net income.
• “Free Cash Flow” represents the net cash generated from
operating activities less the impact of purchases of property
and equipment.
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Fiscal Year 2012 Report
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Non-GAAP Measures
(Amounts in thousands, except share and per share data)
Fiscal Year Ended March 31,
Adjusted Operating Income
Operating Income
Certain stock-based compensation expense (a)
Purchase accounting adjustments (b)
Amortization of intangible assets (c)
Net restructuring charge (i)
Transaction expenses (d)
Adjusted Operating Income
EBITDA & Adjusted EBITDA
Net income
Income tax expense
Interest and other, net
Depreciation and amortization
EBITDA
Certain stock-based compensation expense (a)
Net restructuring charge (i)
Transaction expenses (d)
Purchase accounting adjustments (b)
Adjusted EBITDA
Adjusted Net Income
Net income
Certain stock-based compensation expense (a)
Net restructuring charge (i)
Transaction expenses (e)
Purchase accounting adjustments (b)
Amortization of intangible assets (c)
Amortization or write-off of debt issuance costs and write-off of original issue discount
Net gain on sale of state and local transportation business (f)
Release of income tax reserves (g)
Adjustments for tax effect (h)
2012
2011
$387,432
14,241
–
16,364
11,182
–
$319,444
39,947
–
28,641
–
4,448
(Unaudited)
2010
$199,554
68,517
1,074
40,597
–
3,415
$429,219
$392,480
$313,157
$239,955
103,919
43,558
75,205
462,637
14,241
11,182
–
–
$÷84,694
43,370
191,380
80,603
400,047
39,947
–
4,448
–
$÷25,419
23,575
150,560
95,763
295,317
68,517
–
3,415
1,074
$488,060
$444,442
$368,323
$239,955
14,241
11,182
–
–
16,364
4,783
(5,681)
(35,022)
(18,628)
$÷84,694
39,947
–
20,948
–
28,641
50,102
–
(10,966)
(55,855)
$÷25,419
68,517
–
3,415
1,074
40,597
5,700
–
–
(47,721)
Adjusted Net Income
$227,194
$157,511
$÷97,001
Adjusted Diluted Earnings Per Share
Weighted-average number of diluted shares outstanding
Adjusted Net Income Per Diluted Share
Free Cash Flow
Net cash provided by operating activities
Less: Purchases of property and equipment
Free Cash Flow
140,812,012
127,448,700
116,228,380
$÷÷÷1.61
$÷÷÷1.24
$÷÷÷0.83
$360,046
(76,925)
$296,339
(88,784)
$270,484
(49,271)
$283,121
$207,555
$221,213
(a) Reflects stock-based compensation expense for options for Class A Common Stock and restricted shares, in each case, issued in connection with the acquisition of our Company by The Carlyle Group under
the Officers’ Rollover Stock Plan. Also reflects stock-based compensation expense for Equity Incentive Plan Class A Common Stock options issued in connection with the acquisition under the Equity Incentive
Plan.
(b) Reflects adjustments resulting from the application of purchase accounting in connection with the acquisition not otherwise included in depreciation and amortization.
(c) Reflects amortization of intangible assets resulting from the acquisition.
(d) Fiscal 2011 reflects debt refinancing costs incurred in connection with the Refinancing Transaction and certain external administrative and other expenses incurred in connection with the initial public
offering. Fiscal 2010 reflects costs related to the modification of our credit facilities, the establishment of the Tranche C term loan facility under our senior secured credit facilities and the related payment of
special dividends.
(e) Fiscal 2011 reflects debt refinancing costs and prepayment fees incurred in connection with the Refinancing Transaction as well as certain external administrative and other expenses incurred in connection
with the initial public offering. Fiscal 2010 reflects costs related to the modification of our credit facilities, the establishment of the Tranche C term loan facility under our senior secured credit facilities and
the related payment of special dividends.
(f) Fiscal 2012 reflects the gain on sale of our state and local transportation business, net of the associated tax benefit of $1.6 million.
(g) Reflects the release of income tax reserves.
(h) Reflects tax effect of adjustments at an assumed marginal tax rate of 40%.
(i) Reflects restructuring charges of approximately $15.7 million incurred during the three months ended March 31, 2012, net of approximately $4.5 million of revenue recognized on recoverable expenses,
associated with the cost restructuring plan to reduce certain personnel and infrastructure costs.
68 Booz Allen Hamilton Holding Corporation
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Shareholder Information
Company News
Information about Booz Allen Hamilton Holding Corporation and
our operating company Booz Allen Hamilton, including archived
news releases and SEC filings, is available from the company’s
website at www.boozallen.com. Booz Allen’s quarterly earnings
conference calls and other significant investor events are posted
when they occur.
Inquiries from securities analysts, portfolio managers, and other
representatives of institutional investors about Booz Allen should
be directed to:
Curt Riggle
Director of Investor Relations
Phone: 703-377-5332
E-mail: Riggle_Curt@bah.com
Transfer Agent and Registrar
Computershare
480 Washington Boulevard
Jersey City, NJ 07310-1900
Phone: 877-296-3711
www.bnymellon.com/shareowner/equityaccess
Computershare maintains the records for our registered
shareholders and can help you with a variety of shareholder-
related services at no charge, including:
• Change of name or address
• Consolidation of accounts
• Duplicate mailings
• Lost stock certificates
• Transfer of stock to another person
• Additional administrative services
You can also access your investor statements online
24 hours a day, seven days a week at www.bnymellon.com/
shareowner/equityaccess.
Independent Registered Public Accounting Firm
Ernst & Young LLP
McLean, VA
Share Price Information
Booz Allen Hamilton Holding Corporation common stock is listed
on the New York Stock Exchange (NYSE) under ticker symbol BAH.
The weighted average number of diluted shares outstanding for the
fiscal year ended March 31, 2012, was 140,812,012. Share price
information can be found at www.boozallen.com/investors.
Management’s Certifications
The certifications of our Chief Executive Officer and Chief
Financial Officer required by Section 302 of the Sarbanes-Oxley
Act of 2002 have been filed with the Securities and Exchange
Commission as exhibits to our Annual Report on Form 10-K.
In addition, our Chief Executive Officer provided to the New York
Stock Exchange the annual Section 303A CEO certification
regarding our compliance with the New York Stock Exchange’s
corporate governance listing standards.
Acknowledgements
Design: BCN Communications; Editorial Content: Rob Squire
Photography: Page 3: © John Madere; Page 5: (top) Fotolia; Page 5: (bottom) Courtesy of Etihad Towers; Page 8: (top left portrait) © Natasha Naomi;
Page 8: (top right and bottom row portraits) © James Schnepf; Page 8: (center) Joerg Habermeir/Bigstock.com; Page 10: Songquan Deng/123rf.com; Page 11: (top)
© James Schnepf; Page 11: (bottom) Fotolia; Page 12: (portraits) © James Schnepf; Page 12: (center) MarchCattle/Gigstock.com; Page 14: © James Schnepf;
Page 15: (top) © James Schnepf; Page 15: (bottom) Wellford Tiller/Shutterstock.com; Page 16: (portraits) © James Schnepf; Page 16: (center) Thinkstock;
Page 18: (top) © Tony Gatlin/Strictly Art Photography; Page 18: (bottom) © James Schnepf; Page 19: © James Schnepf; Page 20: (portraits) © James Schnepf;
Page 20: (center) © John Frassanito & Associates; Page 22: (bottom) Fotolia; Page 23: © James Schnepf; Page 24: (portraits) © James Schnepf; Page 24: (center)
Courtesy of Department of Defense; Page 26: © James Schnepf; Page 27: (top) Yahia Loukkal/Fotolia; Page 27: (bottom) Fotolia; Page 28: (top) Fotolia;
Page 28 (portraits) © James Schnepf; Page 30: (top) iStockphoto; Page 30: (bottom) Sean Pavone Photo/Fotolia; Page 31: © James Schnepf; Page 32: (portraits)
© James Schnepf; Page 32: (center) Courtesy of Department of Defense; Page 34: (top) Courtesy of Department of Transportation; Page 34: (bottom) © James Schnepf;
Page 35: (top) iStockphoto/Deitschel; Page 35: (bottom) © James Schnepf; Page 36: (top two portraits) © John Madere; Page 36: (bottom portrait) © James Schnepf.
Use of Department of Defense images does not imply or constitute DoD endorsement of this organization or its products or services.
Printing: Classic Color
© 2012 Booz Allen Hamilton Inc.
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In keeping with Booz Allen’s commitment to
sustainability, our Fiscal Year 2012 Annual
Report is printed on FSC®-certified paper
containing at least 10% postconsumer waste.
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8283 Greensboro Drive
McLean, Virginia 22102
www.boozallen.com
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