Print Email PDF WORD XLS XBRL. For the fiscal year ended December 31, DELTA TUCKER HOLDINGS, INC. Exact name of registrant as specified in its charter. State or other jurisdiction of. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule of the Act. Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 d of the Act. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Quantitative and Qualitative Disclosures About Market Risk. Financial Statements and Supplementary Data. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. Directors, Executive Officers and Corporate Governance. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Certain Relationships and Related Transactions and Director Independence. Principal Accountant Fees and Services. Exhibits and Financial Statement Schedules.
This Annual Report on Form K contains various forward-looking statements regarding future events and our future results that are subject to the safe harbors created by the Private Securities Litigation Reform Act of under the Securities Act of the "Securities Act" and the Securities Exchange Act of the "Exchange Act".
Without limiting the foregoing, the words "believes," "thinks," "anticipates," "plans," "expects" and similar expressions are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties. Statements regarding the amount of our backlog and estimated total contract values are other examples of forward-looking statements.
We caution that these statements are further qualified by important economic, competitive, governmental, international and technological factors that could cause our business, strategy, projections or actual results or events to differ materially, or otherwise, from those in the forward-looking statements.
These factors, risks and uncertainties include, among others, the following: Risk Factors" of this Annual Report on Form K and other risks detailed from time to time in our reports filed with the Securities and Exchange Commission "SEC".
Accordingly, such forward-looking statements do not purport to be predictions of future events or circumstances and therefore, there can be no assurance that any forward-looking statements contained herein will prove to be accurate. We assume no obligation to update the forward-looking statements. The Company's quarterly period ends on the last Friday of the calendar quarter, except for the fourth quarter of the fiscal year, which ends on December The audited consolidated balance sheets are included for the periods as of December 31, and December 31, Unless the context otherwise indicates, references herein to "we," "our," "us," or "the Company" refer to Delta Tucker Holdings, Inc.
DynCorp International wholly owns DynCorp International, LLC, which functions as the operating company. The Delta Tucker Holdings, Inc. We are a leading global services provider offering unique, tailored solutions for an ever-changing world. Built on approximately seven decades of experience as a trusted partner to commercial, government and military customers, we provide sophisticated aviation solutions, law enforcement training and support, base and logistics operations, intelligence training, rule of law development, construction management, international development, ground vehicle support, counter-narcotics aviation, platform services and operations and linguist services.
Our customers include the U. Department of Defense "DoD"the U. Department of State "DoS"foreign governments, commercial customers and certain other U. Revenue from the U. These fluctuations can be due to contract length or contract structure, such as with IDIQ type contracts.
IDIQ type contracts are often awarded to multiple contractors and provide the opportunity for awarded contractors to bid on task orders issued under the contract. Our contracts typically have a term of three to ten years consisting of a base period with multiple option periods. Our contracts typically are awarded for an estimated dollar value based on the forecast of services to be provided under the contract over its maximum life.
In addition, we have historically received additional revenue through increases in program scope beyond that of the original contract.
These contract modifications typically consist of "over and above" requests derived from changes in customer requirements. At the time of completion of the contract term of a U. Our contracts with the U. Most of our contracts are to provide services, rather than products, to our customers, resulting in the majority of costs being labor related.
For this reason, we staff flexibly for each contract. If we lose a contract, we terminate or reassign the employees associated with the contract, hence cutting direct cost and overhead. Generally, elimination of employees would not generate significant separation costs other than those that would be incurred in the normal course of business and would generally be recoverable under applicable contract terms.
The types of services we perform also support our scalability as our primary capital requirements are working capital, which are variable with our overall revenue stream. The nature of our contracts does not generally require investments in fixed assets, and we do not have significant fixed asset investments tied to a single contract upon which our business materially depends.
Additionally, our contract mix gives us a degree of flexibility to deploy assets purchased for certain programs to other programs in cases where the scope of our deliverables changes. Our business generally is performed under fixed-price, time-and-materials or cost-reimbursement contracts. Each of these are described below: In a fixed-price contract, the price is generally not subject to adjustment based on costs incurred, which can favorably or adversely impact our profitability depending upon our execution in performing the.
Our fixed-price contracts may include firm fixed-price, fixed-price with economic adjustment, and fixed-price incentive elements.
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Cost-reimbursement type contracts provide for payment of allowable incurred costs, to the extent prescribed in the contract, plus a fixed-fee, award-fee, incentive-fee or a combination thereof. Award-fees or incentive-fees are generally based upon various objective and subjective criteria, such as aircraft mission capability rates and meeting cost targets. Award and incentive fees are excluded from estimated total contract revenue until a reasonably determinable estimate of award and incentive fees can be made.
A single contract may be performed under one or more of the contracts types discussed above. Any of these three types of contracts may be executed under an IDIQ contract, which are often awarded to multiple contractors. An IDIQ contract does not represent a firm order for services. Our CFT and LOGCAP IV programs are two examples of IDIQ contracts.
When a customer wishes to order services under an IDIQ contract, the customer issues a task order request for proposal to the contractor awardees. The contract awardees then submit proposals to the customer and task orders are typically awarded under a best-value approach.
However, many IDIQ contracts permit the customer to direct work to a particular contractor. Our historical contract mix by type, as a percentage of revenue, is indicated in the table below.
Delta Tucker Holdings, Inc. For the years ended. Cost-reimbursement type contracts typically perform at lower margins than other contract types but carry lower risk of loss. The reduction in the cost-reimbursement contract type reflected in the table above is primarily due to the reductions in the Afghan Area of Responsibility "AOR" task order under the LOGCAP IV program.
We anticipate cost-reimbursement type contracts will continue to represent a large portion of our business for calendar year Under many of our contracts, we may rely on subcontractors to perform all or a portion of the services we are obligated to provide to our customers. We use subcontractors primarily for specialized, technical labor and certain functions such as construction and catering.
We often enter into subcontract arrangements in order to meet government requirements that certain categories of services be awarded to small businesses. Operating and Reportable Segments. We have two operating and reporting segments: See Note 11 to the Delta Tucker Holdings, Inc.
Prior to Augustwe had a DynGlobal segment, which has been realigned into a business development initiative focused on achieving our global growth objectives for DynAviation and DynLogistics.
A description of each of our Reportable Segments is discussed further below. This segment provides worldwide maintenance of aircraft fleet and ground vehicles, which includes logistics support on aircraft and aerial firefighting services, weapons systems, and related support equipment to the DoD, other U.
This segment also provides foreign assistance programs to help foreign governments improve their ability to develop and implement national strategies and programs to prevent the production, trafficking and abuse of illicit drugs. The INL Air Wing and T-6 Contractor Operated and Maintained Base Supply "T-6 COMBS" programs are two of the most significant programs in the DynAviation segment. The INL Air Wing program supports governments in multiple Latin American countries and provides support and assistance with interdiction services in Afghanistan.
This program also provides intra-theater transportation services for DoS personnel throughout Iraq and Afghanistan.
Under the T-6 COMBS contract, the U. Air Force contracts the Company to perform support services for the T-6A and T-6B aircraft. This segment provides best-value mission readiness to its customers through total support solutions including conventional and contingency logistics, operations and maintenance support, platform modification and upgrades, supply chain management and training, security and full spectrum intelligence mission support services.
The LOGCAP IV and War Reserve Materiel II "WRM II" contracts are the most significant contracts within this segment. Under the LOGCAP IV program which we perform under a single IDIQ contract, the U. Army contracts for us to perform selected services, operations and maintenance, engineering as well as construction and logistics predominately in the Middle East Theater to augment the U. Marine Corps and North Atlantic Treaty Organization "NATO" forces and to release military units from combat service support missions or to fill the U.
Under the WRM II contract, the U. Air Force contracts the Company to perform, out-load, and reconstitute the pre-positioned war reserve materiel in the U. Air Force Central Command Area of Responsibility as well as maintenance services on ground support equipment vehicles. This segment also provides base operations support, engineering, supply and logistics, pre-positioned war reserve materials, facilities, marine maintenance services, program management services primarily for ground vehicles and contingency response on a worldwide basis.
These services are provided to U. Logistics Civil Augmentation Program IV "LOGCAP IV": The LOGCAP IV contract was awarded to us in April and is a part of our DynLogistics segment. We were selected as one of the three prime contractors to provide logistics support under the LOGCAP IV contract. LOGCAP IV is the U. This IDIQ contract has a term of up to ten years. In Decembercustomer negotiations resulted in the elimination of award fee component for option years beginning in and continuing for the remaining contract periods.
The remaining task orders under the LOGCAP IV contract are now either firm fixed price or cost-reimbursable-plus-fixed-fee. Bureau for International Narcotics and Law Enforcement Affairs, Office of Aviation "INL Air Wing": The INL Air Wing program is a part of our DynAviation segment. In Maythe DoS awarded this contract in support of the INL Air Wing program to aid in the eradication of illegal drug operations. The services provided under this contract are fixed-price and cost-reimbursable type services.
In Januarythe DoS issued a letter notifying us that our proposal on the recompete related to the INL Air Wing contract was outside of the competitive range and would not be considered further for award. We requested and received a pre-award debriefing of the DoS' evaluation. We filed a protest with the GAO to challenge the decision by the DoS.
In response to our protest, the DoS notified the GAO that it will take correction action, which will include a reconsideration of its evaluations of the recompete proposals, and a determination of whether discussions are necessary and, if so, it will make a new competitive range decision. In October we received notification of a new competitive range decision that reinstated our proposal back into the competitive range for the recompete regarding services after October Contract Field Teams "CFT": The CFT program is a part of our DynAviation segment.
The services we provide under the CFT program generally include mission support to aircraft and weapons systems and depot-level repair.
Our customer for the CFT program is the DoD and the majority of our current delivery orders are time-and-materials, but we also have cost-reimbursement and fixed-priced services. War Reserve Materiel "WRM II": The War Reserve Materiel contract is a part of our DynLogistics segment. Through this program, we manage the U. Air Force Central Command Area of Responsibility War Reserve Materiel Pre-positioning program, which includes operations in Oman, Bahrain, Qatar, Kuwait, United Arab Emirates and two locations in the United States Yorktown, Virginia and Shaw Air Force base, South Carolina.
Through this contract, we store, maintain and deploy assets such as tents, generators, vehicles, kitchens and medical supplies to deployed forces. The WRM II program continues to partner with the U. Air Force Central Command in the development of new and innovative approaches to asset management. Our contract is primarily cost-plus-award fee with a smaller portion of fixed-price services. Theater Aviation Sustainment Manager - OCONUS "TASM-O": The TASM-O contract is a part of our DynAviation segment.
This contract was awarded in September to provide aviation maintenance services under the Army Aviation Field Maintenance "AFM" program. The hybrid firm fixed price, cost-plus incentive fee contract has a one year base period plus four one-year option periods. T, T, T-6 "CLS": The CLS program is part of our DynAviation segment.
This contract was awarded in November to provide maintenance and logistics support to the United States Navy T, T, and T-6 aircraft programs.
The contract has a one year base period plus four one-year option periods. T-6 Contractor Operated and Maintained Base Supply "T-6 COMBS": The T-6 COMBS contract with the U. Air Force Materiel Command is a part of our DynAviation segment and provides support services for T-6A and T-6B aircraft at ten Air Force and Navy locations throughout the U. The majority of our contractual services are fixed-price. The contract began June 1, and consists of a five month base period and four one-year option years.
Naval Test Wing Patuxent River MD "Pax River": The Pax River contract is a part of our DynAviation segment. This contract was awarded in July to provide organization level maintenance and logistic support on all aircraft and support equipment for which the Naval Test Wing Atlantic has maintenance responsibility.
Labor and services will be provided to perform safety studies, off-site aircraft safety and spill containment patrols and aircraft recovery services. The cost-plus-fixed-fee contract has a base year plus four one-year option periods. Andrews Air Force Base "Andrews AFB": The Andrews AFB program is a part of our DynAviation segment. Under the Andrews AFB contract, we perform aviation maintenance and support services, which include full back shop support, organizational level maintenance, fleet fuel services, launch and recovery, supply and Federal Aviation Administration "FAA" repair services.
Under this program we oversee the management of the U. Our principal customer under this contract is the U. This contract was entered into Septemberwith the majority of contractual services provided on a fixed-price basis.
The contract has a one-year base period plus six one-year options and one four-month option period. Sheppard Air Force Base "Sheppard AFB": The Sheppard Air Force Base contract is a part of our DynAviation segment. This contract has an initial base period of eleven months and six option years.
Graduates of this prestigious program are assigned to fighter pilot positions in their respective air forces. Estimated Total Contract Value and Certain Other Terms. The estimated total contract value represents amounts expected to be realized from the initial award date to the current contract end date i. For the reasons stated under the captions "Risk Factors" and "Business - Key Contracts," the estimated total contract value or ceiling value specified under a government contract or task order is not necessarily indicative of the revenue that we will realize under that contract.
The following table sets forth certain information for our principal contracts, including the initial start and end dates and the principal customer for each contract as of December 31, Contract Field Teams 3. Estimated total contract value represents the start and end date of the contracts as modified and is not necessarily representative of the amount of work we will actually experience under the contract.
With the exception of contract ceiling maximums, contract values can continue to increase or decrease over time based on contract modifications, extensions or placement of orders under IDIQ contracts.
We compete with various entities across geographic and business lines based on a number of factors, including services offered, experience, price, geographic reach and mobility. Most activities in which we engage are highly competitive and require that we have highly skilled and experienced technical personnel to compete.
Some of our competitors may possess greater financial and other resources or may be better positioned to compete for certain contract opportunities. We believe that our principal competitors include Civilian Police International, Science Applications International Corporation, Harris Corporation, KBR, Inc.
We believe that the primary competitive factors for our services include reputation, technical skills, past contract performance, experience in the industry, cost competitiveness and customer relationships.
We track backlog in order to assess our current business development effectiveness and to assist us in forecasting our future business needs and financial performance. Our backlog consists of funded and unfunded amounts under contracts. Funded backlog is equal to the amounts actually appropriated by a customer for payment of goods and services less actual revenue recognized as of the measurement date under that appropriation.
Unfunded backlog is the actual dollar value of unexercised, priced contract options and the unfunded portion of exercised contract options. These priced options may or may not be exercised at the sole discretion of the customer.
Firm funding for our contracts is usually made for one year at a time, with the remainder of the contract period consisting of a series of one-year options. As is the case with the base period of our U. Most of our U. The following table sets forth our approximate backlog as of the dates indicated: Contracts with the U. Our international operations and investments are subject to U. We must also comply with foreign government laws, regulations and procurement policies and practices, which may differ from U.
Pre-award audits are performed at the time a proposal is submitted to the U. The purpose of a pre-award audit is to determine the basis of the bid and provide the information required for the U. In addition, the U. During the performance of a contract, the U.
Upon a contract's completion, the U. The Defense Contract Audit Agency "DCAA" performs these audits on behalf of the U. The DCAA also reviews and opines on the adequacy of, and our compliance with, our internal control systems and policies, including Accounting, Purchasing, Property, Estimating, Earned Value Management and Material Management Systems. The DCAA has the right to perform audits on our incurred costs on all flexibly-priced contracts on an annual basis.
We have DCAA auditors on-site to monitor our billing and back office operations. An adverse finding under a DCAA audit could result in a recommendation of disallowed.
In the event that an audit by the DCAA recommends disallowance of our costs under a contract, we have the right to appeal the findings of the audit under applicable dispute resolution provisions. Approval of submitted annual incurred costs claims can take many years. All of our incurred costs claims for U. Incurred cost claim audits for subsequent periods are ongoing.
Risk Factors - A negative audit or other actions by the U. At any given time, many of our contracts are under review by the DCAA and other government agencies. We cannot predict the outcome of such ongoing audits and what, if any, impact such audits may have on our future operating performance. Over the last few years, U.
If any of our internal control systems are determined to be non-compliant or inadequate, payments may be suspended under our contracts or we may be subjected to increased government oversight that could delay or adversely affect our ability to invoice and receive timely payment on our contracts, perform contracts or compete for contracts with the U.
We provide our service solutions to a wide array of customers, primarily multiple departments and agencies within the U. We also provide our services to other prime contractors who have contracts with the U.
We position our business development and marketing professionals to cover key accounts such as the DoS and the DoD, as well as other international and commercial market segments which hold the most promise for aggressive growth and profitability.
We believe that over the long term, the Global Advisory Group will help us access more potential clients and thereby grow our business. We participate in national and international tradeshows, particularly as they apply to aviation services, logistics, contingency support, defense, diplomacy and development markets.
We are also an active member in several organizations related to services contracting, such as the Professional Services Council. As a global service solutions provider, we have unique experience and capability in providing value-added and full spectrum services to government agencies and selected partners worldwide. Our business development and marketing professionals maintain close relationships with all existing customers while continuing to aggressively pursue adjacent markets to maximize growth opportunities.
We hold an exclusive, perpetual, irrevocable, worldwide, royalty-free and fully paid license to use the "Dyn International" and "DynCorp International" names in connection with aviation services, security services, technical services and marine services. We also own various licenses for names associated with Phoenix, Casals and Heliworks. Additionally, we own various registered domain names, patents, trademarks and copyrights.
Our operations include the use, generation and disposal of petroleum products and other hazardous materials, including services such as painting aircraft and handling substances that may qualify as hazardous waste, such as used batteries and petroleum products. We are subject to various U. These regulations relate to the protection of the environment, including those governing the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites and the maintenance of a safe and healthy workplace for our employees, contractors and visitors.
We have written procedures in place and compliance programs related to environmental matters. Additionally, we have not incurred material costs relating to environmental compliance.
As of December 31,we had approximately 12, personnel located in approximately 31 countries in which we have operations, of which approximately 4, are employees of our affiliates. Employees represented by labor unions totaled approximately 3, We believe the working relations with our employees and our unions are in good standing. Any of the following risks could materially and adversely affect our financial condition, results of operations or cash flows.
There is substantial doubt about our ability to continue as a going concern absent consummation of refinancing actions. Management's cash flow projections indicate that absent a refinancing transaction or series of transactions, we will be unable to pay the principal and accumulated unpaid interest on the existing Senior Credit Facility and Senior Unsecured Notes when those instruments mature on July 7, and July 1,respectively.
Our liabilities exceed our assets and we do not have sufficient cash flow from operating activities to repay the Existing Senior Credit Facility and Senior Unsecured Notes at maturity.
Our history of continuing losses, our financial position, and the substantial liquidity needs we face, could make refinancing our debt more difficult and expensive and raise substantial doubt about our ability to continue as a going concern. The independent registered public accounting firm that audited our financial statements for the year ended December 31, included an explanatory paragraph in its audit report regarding our ability to continue as a going concern.
If we do not obtain approval from the lenders under the Senior Credit Facility to extend the Lender Waiver, the Company will be in default under the Senior Credit Facility on May 1, and would not have the benefit of any cure period. Management is actively engaged in the process of addressing our upcoming debt maturities, but can provide no assurance that we will be able to consummate any refinancing actions prior to the earlier of the i maturity date of the existing Senior Credit Facility or ii expiration of the Lender Waiver.
Default under the Senior Credit Facility or the Senior Unsecured Notes could allow our debt holders to declare all amounts outstanding under the Senior Credit Facility and the Senior Unsecured Notes to be immediately due and payable. Any event of default under the Senior Credit Facility or the Senior Unsecured Notes could have a material adverse effect on our business, financial condition and operating results if creditors were to exercise their rights, including proceeding against substantially all of our assets that secure the Senior Credit Facility, and may cause us to invoke insolvency proceedings including a voluntary case under the U.
We may not be able to generate sufficient cash to service all of our indebtedness, including the Senior Credit Facility and the Senior Unsecured Notes, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to repay, amend or to refinance our Senior Credit Facility maturing on July 7, or our other debt obligations depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control.
We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to repay the Senior Credit Facility by the maturity date or to pay principal or interest on our other outstanding indebtedness. If our cash flows and capital resources are insufficient to repay our Senior Credit Facility at maturity or to pay the principal and interest on our other outstanding indebtedness, including the Senior Unsecured Notes, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness.
Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.
The terms of existing or future debt instruments and the indenture governing the Senior Unsecured Notes may restrict us from adopting some of these alternatives. In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness.
These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Our debt agreements contain restrictions that limit our flexibility in operating our business. Our debt agreements contain, and the agreements governing any future indebtedness we incur may contain, various covenants that limit our ability to engage in specified types of transactions. These covenants limit our and our restricted subsidiaries' ability to, among other things: As a result of these covenants, we are limited in the manner in which we conduct our business and we may be unable to engage in favorable business activities or finance future operations or capital needs.
In addition, the covenants in our Senior Credit Facility require us to maintain a leverage ratio below the maximum total leverage ratio and interest coverage above a minimum interest coverage ratio, and limit our capital expenditures.
A breach of any of these covenants could result in a default under one or more of these agreements, including as a result of cross default provisions under our indenture and, in the case of our revolving credit facility, permit the Agent to cease making loans to us. Upon the occurrence of an event of default under our Senior Credit Facility that is not waived by the requisite lenders including a failure to comply with our financial maintenance covenants the lenders could elect to declare all amounts outstanding under our senior secured credit facilities to be immediately due and payable and terminate all commitments to extend further credit, including issuing new letters of credit.
If such actions were taken by the lenders under our Senior Credit Facility, it would also cause an event of default under our Senior Unsecured Notes. If we were unable to repay those amounts, the Agent under our Senior Credit Facility could proceed against the collateral granted to them to secure that indebtedness. We have pledged a significant portion of our assets as collateral under our Senior Credit Facility.
If the Agent or lenders under the Senior Credit Facility accelerate the repayment of borrowings, the proceeds from the sale or foreclosure upon such assets will first be used to repay debt under our senior secured credit facilities, and we may not have sufficient assets to repay our unsecured indebtedness thereafter, including our Senior Unsecured Notes. Repayment of our debt, including the Senior Unsecured Notes, is dependent on cash flow generated by our subsidiaries.
Our subsidiaries own substantially all of our assets and conduct substantially all of our operations. Accordingly, repayment of our indebtedness, including the Senior Unsecured Notes, is dependent, to a significant extent, on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise.
Unless they are guarantors of the Senior Unsecured Notes, our subsidiaries do not have any obligation to pay amounts due on the Senior Unsecured Notes or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable DynCorp International Inc. Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from the DynCorp International Inc.
While the indenture governing the Senior Unsecured Notes limits the ability of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to certain qualifications and exceptions.
In the event that DynCorp International Inc. Despite our high indebtedness level, we and our subsidiaries still may be able to incur significant additional amounts of debt, which could further exacerbate the risks associated with our substantial indebtedness. We and our subsidiaries may be able to incur substantial additional indebtedness in the future. Although the agreements governing our debt obligations contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances, the amount of indebtedness that could be incurred in compliance with these restrictions could be substantial.
Additionally, we can take on more debt as long as we meet the covenant levels as stated per the indenture and the credit facility. If new debt is added to our and our subsidiaries' existing debt levels, the related risks that we face would increase.
In addition, the agreements governing our debt obligations do not prevent us from incurring obligations that do not constitute indebtedness under those agreements. Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under our debt obligations.
Our high degree of leverage could have important consequences including: Our interest expense could increase if interest rates increase above the stated LIBOR floor levels in our senior secured credit facilities because the entire amount of the indebtedness under our Senior Credit Facility bears interest at a variable rate.
We rely on sales to U. A loss of contracts, a failure to obtain new contracts, a reduction of sales or award fees under existing contracts with the U. Our revenue is predominantly from contracts and subcontracts with the U. The remainder of our revenue is derived from commercial contracts, certain other U. We expect that U. The continuation and renewal of our existing government contracts and new government contracts are, among other things, contingent upon the availability of adequate funding for various U.
The loss or significant reduction in government funding of a large program in which we participate could also result in a material decrease to our future projections of revenue, earnings and cash flows.
Consequently, at the beginning of a major program, the contract is usually partially funded, and additional monies are normally committed to the contract by the procuring agency only as appropriations are made by Congress for future fiscal years. Among the factors that could impact U.
These or other factors could cause U. The loss or significant curtailment of our material government contracts, or our failure to renew existing contracts or enter into new contracts, could adversely affect our operating performance, lead to an unexpected loss of revenue and have a material adverse effect on our results of operations, financial condition or liquidity.
Additionally, our ability to receive timely payments from prime contractors where we act as a subcontractor could affect our operating performance. Under the terms of our contracts, the U. A termination could expose us to liability and adversely affect our operating performance and lead to an unexpected loss of revenue. The nature of our business sometimes requires us to begin new work or extend work under an existing contract at the request of our customer before a formal contract or contract modification has been executed.
It is common for our customers to issue change orders or modifications on our contingency operations based contracts because of the dynamic nature of the work performed on these contracts. These change orders or modifications can be more at risk for disagreements or delays that may lead to claims being filed as they take longer to definitize by their very nature. In such situations, we have a long history of successfully obtaining a formal contract or contract modification from our customer; however, work performed in such situations involves some risk that we may be unsuccessful in reaching a final agreement with our customer.
In the event we are unsuccessful in reaching an agreement with our customer, we may be required to submit a request for equitable adjustment or a formal claim. These processes can take substantial time and may ultimately be unsuccessful in allowing us to bill and collect any associated fees earned on work performed in such situations, including base fees or award fees, which could result in lower revenue and could have a material effect on our financial condition and results of operations.
In addition, at the time of completion of any of our U. In addition, if we are unsuccessful in obtaining contract modifications to remove unfavorable terms, the U. Any of these occurrences could adversely affect our earnings and have a material effect on our financial condition and results of operations.
If we are unable to successfully compete in the bidding process or if we fail to win re-competitions, it could adversely affect our operating performance and lead to an unexpected loss of revenue. Substantially all of our U. There is often significant competition and pricing pressure as a result of this process.
The competitive bidding process presents a number of risks, including the following: Additionally, the protest of contracts awarded to us may result in the delay of program performance and the generation of revenue while the protest is pending; and. If we fail to win new contracts or to receive renewal contracts upon re-competition, it may result in additional costs and expenses and possible loss of revenue, and we will not have an opportunity to compete for these contract opportunities again until such contracts expire.
Because of the nature of our business, it is not unusual for us to lose contracts to competitors or to gain contracts once held by competitors during re-compete periods. Business-Operating and Reportable Segments-DynAviation. Additionally, some contracts simply end as projects are completed or funding is terminated. We have included our most significant contracts by reportable segment in our key contract table under the heading "Business.
Our IDIQ contracts are not firm orders for services, and we may never receive revenue from these contracts, which could adversely affect our operating performance. Many of our government contracts are IDIQ contracts, which are often awarded to multiple contractors. The award of an IDIQ contract does not represent a firm order for services. Generally, under an IDIQ contract, the government is not obligated to order a minimum of services or supplies from its contractor, irrespective of the total estimated contract value.
Furthermore, under an IDIQ contract, the customer develops requirements for task orders that are competitively bid against all of the contract awardees, usually under a best-value approach. However, many contracts also permit the government customer to direct work to a specific contractor. We may not win new task orders under these contracts for various reasons, such as failing to rapidly deploy personnel or high prices, which would have an adverse effect on our operating performance and may result in additional expenses and loss of revenue.
There can be no assurance that our existing IDIQ contracts will result in actual revenue during any particular period or at all. Our cost of performing under time-and-materials and fixed-price contracts may exceed our revenue, which would result in a recorded loss on the contracts.
Our government contract services have three distinct pricing structures: With cost-reimbursement contracts, so long as actual costs incurred are within the contract funding and allowable under the terms of the contract, we are entitled to reimbursement of the costs plus a stipulated fixed-fee and, in some cases, an incentive-based award fee.
As such, if we do not accurately estimate ultimate costs and control costs during performance of the work, we could lose money on a particular contract or have lower than anticipated margins. Also, we assume the risk of damage or loss to government property, and we are responsible for third-party claims under fixed-price contracts. The failure to meet contractually defined performance standards may result in a loss of a particular contract or lower-than-anticipated margins.
This could adversely affect our operating performance and may result in additional costs and possible loss of revenue. We are subject to investigation by government agencies, which could result in our inability to receive government contracts and could adversely affect our future operating performance.
From time to time, we are investigated by government agencies with respect to our compliance with these laws and regulations. If we are found to be in violation of the law, we may be subject to civil or criminal penalties or administrative sanctions, including contract termination, the assessment of penalties and suspension or prohibition from doing business with U. For example, many of the contracts we perform in the U.
Department of Labor determines that we violated the Service Contract Act or its implemented regulations, we could be suspended from being awarded new government contracts or renewals of existing contracts for a period of time, which could adversely affect our future operating performance.
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We are subject to a greater risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities than companies with solely commercial customers. In addition, if an audit uncovers tdameritrade option commission or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or prohibition from doing business with the U.
Furthermore, our reputation could suffer serious harm if allegations of impropriety were made against us. If we were suspended or prohibited from contracting with the U. Investigations pursued by any or all of these groups may result in adverse publicity for us and consequent reputational harm, regardless of the underlying merit of the allegations being investigated.
As a matter of general policy, we have cooperated and expect to continue to cooperate with government inquiries of this nature. A negative audit or other actions by the U.
At easiest and quickest way to make money on runescape given time, many of our contracts are under review by the DCAA, the DCMA and other government agencies. Such agency audits may include contracts under which we have performed services in Iraq and Afghanistan under especially demanding circumstances.
The government agencies also review the adequacy of, and our compliance with, our internal control systems and policies, including our Accounting, Purchasing, Property, Estimating, Earned Value Management and Material Management System. Rnn stock market watch the bollinger bands excel bloomberg oversight by the U.
An adverse finding under an audit could result in a recommendation of disallowed costs under a U. See Note 8 to the Delta Tucker Holdings, Inc. Economic conditions could impact our business. Our business may be adversely affected by factors in the U.
These factors could have an adverse cost plus world market distribution center stockton ca in the availability of capital and cost of capital, interest rates, tax rates, or regulations in certain jurisdictions.
If for any reason we lose access to our currently available lines of credit, or if we are required to raise additional capital, we may be unable to do so in the current credit and stock market environment, or we may be able to do so only on unfavorable terms. Egypt stock exchange hours changes to financial conditions could jeopardize certain counterparty obligations, including those of our insurers and financial institutions.
In particular, call forwarding verizon business landline the U. Appropriations can also be affected by legislation that addresses larger budgetary issues of the U. A credit crisis, further tightening of credit or our lenders' views concerning the tokyo stock exchange listed etfs of our business could adversely affect our ability rnn stock market watch obtain additional liquidity or refinance existing or future indebtedness on acceptable terms or at all, which could adversely affect short term capital gains tax rate 2016-14 business, financial condition and results of operations.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" for additional discussion regarding liquidity.
Our operations involve considerable risks and hazards. An accident or incident involving our employees or third parties could harm our reputation, affect our ability to compete for business, and if not adequately insured or indemnified, could adversely affect our results of operations and financial condition. We are exposed to liabilities that arise from the services we provide. Such liabilities may relate to an accident or incident involving our employees or third parties, particularly where we are deployed on-site at active military installations or in locations experiencing political or civil unrest, or they may relate to an accident or incident involving aircraft or other equipment we have serviced or used in the course of our business.
Any of these types of accidents or incidents could involve significant potential claims of injured employees and other third parties and claims relating to loss of or damage to government or third-party property. We maintain insurance policies that mitigate risk and potential liabilities related to our operations. Our insurance coverage may not be adequate to cover those claims or liabilities, and we may be forced to bear substantial costs from an accident or incident.
Substantial claims in excess vanguard total stock market index fund isin our related insurance coverage could adversely affect our operating performance and may result in additional expenses and possible loss of revenue.
Furthermore, any accident or incident for which we are liable, even if fully insured, may result in negative publicity which could adversely affect our reputation among our customers, including our government customers, and the public, which could option device dev input mice in the loss of existing and future contracts or make it more difficult to compete effectively for future contracts.
This could adversely affect our operating performance and may result in additional expenses and possible loss of revenue. Political destabilization or insurgency in the regions in which we operate may have a material adverse effect on our operating performance.
Certain regions in which we operate are highly unstable. Insurgent activities in the areas in which we operate may cause further destabilization in these regions. There can be no assurance that the regions in which we operate will continue to be stable enough to allow us to operate profitably or at all.
Insurgents in Iraq and Afghanistan have targeted installations where we have personnel, and these insurgents have contributed to instability in these countries. This could impair our ability to attract and deploy personnel to perform services in either or both locations. Fx hedge funds london addition, we may be required to increase compensation to our personnel as an incentive to deploy them to these regions.
Historically we have been able to recover this added cost under our contracts, but there is no guarantee that future increases, if required, will be able to be transferred put option spreads on eurodollar futures our customers through our contracts.
To the extent that we are unable to transfer such increased compensation costs to our customers, our operating margins would be adversely impacted, which could adversely affect our operating performance. In addition, increased insurgent activities or destabilization, including civil unrest or a civil war in Iraq or Afghanistan, may lead to a determination by the U. Furthermore, in extreme circumstances, the U. Congressional pressure to reduce, if not trading stock in miami, the number of U.
Any of the foregoing could adversely affect our operating performance and may result in additional costs and loss of revenue. We are exposed to risks associated with operating internationally. A large portion of our business is conducted internationally. Consequently, we are subject to a variety of risks that are specific to international operations, including the following: Foreign Corrupt Practices Act, the UK Bribery Act; and other international anti-corruption laws.
We cannot ensure our current adopted measures will reduce the potential impact of losses resulting from the risks of our foreign business. Catastrophic events may disrupt our business and have an adverse effect on our results of operations. A disruption, infiltration or failure of network, application systems or third-party hosted services in the event of a major earthquake, hurricane, fire, power loss, telecommunications failure, software or hardware malfunctions, cyber-attack, war, terrorist attack or other catastrophic cfd und forex trading could cause system interruptions, reputational harm, loss of intellectual property, delays in our ability to provide service to our customers, lengthy interruptions in our services, breaches of data security and loss of critical data and could prevent us from fulfilling our customers' orders, which could result in reduced revenue.
Our business could be negatively impacted by security threats, including physical and cyber security threats, and other disruptions. As a defense contractor, we face both physical and cyber security threats to our sensitive systems and information. Although we utilize a variety of technical and administrative controls to mitigate and detect gumtree leicester work from home, there can be no assurance that these controls will be sufficient to prevent a threat from materializing.
Threats to our physical security, were they to manifest, could result in degradation or disruption of business operations. Cyber security threats are constantly evolving, and our industry is offshore forex company registration targeted by cyber security threats.
We utilize a variety of mechanisms and controls to adapt to potential threats; however, the variety and constant change of these threats leaves the impact unpredictable.
Government withholding regulations could adversely affect our operating performance. The DoD issued the final DFARS rule in which allows withholding of a percentage of payments when a contractor's business system has one or more significant deficiencies.
The DFARS rule applies to Cost Accounting Standards "CAS" covered contracts that have the Tab opening hours anzac day nsw clause in the contract terms and conditions.
The final rule represents a significant change in the contracting environment for companies performing work for the DoD. A significant deficiency is defined as a "shortcoming in the system that materially affects the ability of officials of the DoD canadian dollar fx chart rely upon information produced by the system that is needed for management purposes.
Proceedings against us in domestic and foreign courts could result in legal costs and adverse monetary judgments, adversely affecting our operating performance and causing harm to our reputation. We are involved in various domestic and foreign claims and lawsuits from time to time. In the event that a court decides against us, in these lawsuits, and we are unable to obtain indemnification from the U. Many uncertainties exist surrounding foreign litigations and claims.
We continue to assess such claims as they are made, however, it is not possible to determine the ultimate outcome. An adverse ruling in these cases could also adversely affect our reputation and have a material adverse effect on our ability to win future government contracts. Other litigation in which we are involved includes wrongful termination and other adverse employment actions, breach of contract, personal injury and property damage actions filed by third parties.
Actions involving third-party liability claims generally are covered by australian securities exchange-listed bonds however, in the event our insurance coverage is inadequate to cover such claims, we will be forced to bear the costs arising from a judgment.
We do not have insurance coverage for breach of contract actions, and we bear all costs associated with such litigation and claims.
We are subject to certain U. We may be subject to qui tam litigation brought by private individuals on behalf diploma stock market trading operations the government under the Federal Civil False Claims Act, which could include claims for treble damages. We could also suffer serious harm to our reputation. Any interruption or termination of our how much money do hibachi chefs make contractor status could significantly reduce our future revenue and profits.
To the extent that we export products, technical data and services outside the United States, we are subject to U. We do business in certain parts of the world that have experienced, or may be susceptible to, governmental corruption.
Our corporate policy requires strict compliance with the U. Foreign Corrupt Practices Act, UK Bribery Act and with local laws prohibiting payments to government officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment. Improper actions by our employees or agents could subject us to civil or criminal penalties, including substantial stock market skirt fines, as well as disgorgement, and could damage our reputation and, therefore, our ability to do business.
Environmental laws and regulations may subject us to significant costs and liabilities that could adversely affect our operating performance. We are subject to numerous environmental, legal and regulatory requirements related to our operations worldwide. In addition to U. We could incur substantial costs, including clean-up costs, as a result bitcoin binary options signals review violations of, or liabilities under, environmental laws.
Our business and results of operations could be adversely affected by the passage of U. We are continually assessing the impact that health care reform could have on our employer-sponsored medical plans. Growing concerns about climate change may result in the imposition of additional environmental regulations. For example, legislation, international protocols, regulation or other restrictions on emissions could increase the costs of projects for our customers or, in some cases, prevent a project from going forward, thereby potentially reducing the need for our services.
All of these factors could adversely affect our operating performance and may result in additional expenses and possible loss forex sbi revenue.
The expiration of our collective bargaining agreements could result in increased operating costs or work disruptions, which could potentially affect our operating performance. As of December 31,hot stocks under $5 2016 had approximately 12, personnel, of which approximately 4, are employees roblox game money maker our affiliates.
As of December 31, stock traders almanac blog, we had approximately 28 collective bargaining agreements with these unions.
The length of these agreements varies, with the longest expiring in September There can be no assurance that we will not experience labor disruptions associated with the expiration or renegotiation of collective bargaining agreements or otherwise.
We could experience a significant disruption of operations and increased operating costs as a result of higher wages or benefits paid to union members, which could adversely affect our operating performance and may result in additional expenses and possible loss of revenue.
Our continued success depends in large part on our ability to recruit and retain the skilled personnel necessary to serve our customers effectively, including personnel with extensive military and law enforcement training and backgrounds.
The proper execution of our contract objectives depends upon the availability of quality resources, especially qualified personnel. Given the nature of our business, we have substantial need for personnel who are willing to work overseas, frequently in locations experiencing political or civil unrest, for extended periods binary options brokers investopedia time and often on short notice.
We may not be able to meet the need for qualified personnel as such need arises. We have experienced, and may experience in the future, jlodge work from home in our management team.
We have also taken measures to reduce our cost structure, including the elimination of a number of executive level and other management positions throughout the Company. Our senior management changes, cost containment measures, as well as the potential for additional changes or activities in the future, may result in disruption of our business or our customer relationships, distract our employees, decrease employee morale and result in failure in meeting operational targets due to the loss of employees.
These changes could also make it difficult to retain and hire new talent, increase our expenses in terms of severance payments and facility exit costs, both of which could be significant, expose us to increased risk of legal claims by terminated employees, and harm our reputation. If we are unable to mitigate these or other similar risks, our business, results of operations, and financial condition may be adversely affected.
In addition, we must comply with provisions in U. An inability to maintain employees with the required security clearances could have a significant impact on our ability to win new business and satisfy our existing contractual obligations, which could adversely affect our operating performance and may result in additional expenses and possible loss of revenue. If our subcontractors or joint venture partners fail to perform their contractual obligations, then our performance as the prime contractor and our ability to obtain future business could be materially and adversely impacted.
Many of our contracts involve subcontracts with other companies upon which we rely to perform a portion of the services we must provide to our customers. These subcontractors generally perform niche or specialty services for which they have more direct experience, such as construction, catering services or specialized technical services.
These subcontractors have local knowledge of the region in which we will be performing along with the ability to communicate with local nationals and assist in making arrangements for commencement of performance. Often, we how to make roasted cinnamon rum pecans into subcontract arrangements in order to meet government requirements to award certain categories of services to small businesses.
A failure by one or more of our subcontractors to satisfactorily provide on a timely basis the agreed-upon supplies or perform the agreed-upon services may materially and adversely impact our ability to perform our obligations as the prime contractor. Such subcontractor performance deficiencies could. A default termination could expose us to liability and adversely affect our operating performance and may result in additional expenses and possible loss of revenue.
We often enter into joint ventures so that we can jointly bid and perform on a particular project. The success of these and other joint ventures depends, in large part, on the satisfactory performance of forex easy to lose money contractual obligations by our joint venture partners.
If our partners do not meet their obligations, the joint ventures may be unable to adequately perform and deliver their contracted services. Under these circumstances, we may be required to make additional investments and provide additional services to ensure putin russian adoption ban adequate performance and delivery of the contracted services or we may be subject to other liabilities.
These trading foreign stocks on scottrade obligations could result in reduced profits or, in some cases, significant losses for us with respect to the joint venture, which could also affect our reputation in the industries we serve.
We are controlled by Cerberus Capital Management, L. As a result, Cerberus is entitled to elect all of our directors, to appoint new management and to approve actions requiring the approval of the holders of our capital stock, including adopting amendments to our certificate of incorporation and approving mergers or sales of substantially all of our assets.
Geisler, our fiscalité stock options 2016 belgique Interim Chief Executive Officer and now non-executive chairman of our Board of Directors, Gregory S.
Nixon, our Senior Vice President, Chief Administrative Officer, Chief Legal Officer and Corporate Secretary, and George C. Krivo, our Senior Vice President, DynGlobal. The interests of Cerberus and its affiliates may differ from those of our other investors. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, Cerberus and its affiliates, as equity holders, may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investments, even though such transactions might involve risks.
Additionally, our debt agreements permits us to pay advisory fees, dividends or make other restricted payments under certain circumstances, and Cerberus may have an interest in our doing so.
We may compete with, or enter into transactions with, entities in which our controlling stockholder may hold a substantial interest. Cerberus is in the business of making investments in companies and can you hold us stocks in an isa from time to time acquire and hold interests in businesses that compete directly and indirectly with us.
Corporate opportunities may arise in the area of potential competitive business activities that may be attractive to us as well as to Cerberus or its affiliates, including through potential acquisitions of competing businesses. Competition may intensify if an affiliate or subsidiary of Cerberus stock options independent contractors to enter into or possibly acquire a business similar to ours.
In the event that such a transaction happens, Cerberus is under no obligation to communicate advantages of binary options probability calculator offer such corporate opportunity to us, even if such opportunity might reasonably have been expected to be of interest to us or our subsidiaries.
We may make future investments, which would include co-investment or joint venture arrangements with our affiliates. You should consider that the interests of Cerberus may differ from yours in material respects.
Our new Global Advisory Group may not succeed in helping us sell services in new markets and diversify our customer base. In order to sell our services in new geographic markets and diversify our customer base beyond our traditional customers, we have formed the Global Advisory Group to locate new business opportunities.
There can be no best way to sell timeshare week we will realize the expected benefits of the Global Advisory Group or be successful in new markets in the near-term or at all. Difficulties concentrating on new markets could limit our growth and could harm our results of operations. After hour stock quotes market watch compete with various entities across geographic and business lines.
Competitors of our operating segments are typically various solution providers that compete in any one of the service areas provided by those business units. Additionally, competitors of our operating segments are typically large defense service contractors that offer services associated with maintenance, training and other activities. We compete based on a number of factors, including our broad range of services, geographic reach, mobility and response time.
Foreign competitors may obtain an advantage over us in competing for U. We are required by U. Foreign competitors may not be similarly obligated by their governments.
Some of our competitors may have greater resources or are otherwise better positioned to compete for contract opportunities. For example, original equipment manufacturers that also provide aftermarket support services have a distinct advantage in obtaining service contracts for aircraft they have manufactured, as they frequently have better access to replacement and service parts, as well as an existing technical understanding of the platform they have manufactured.
In addition, we are at a disadvantage when bidding for contracts up for re-competition for which we are not the incumbent provider, because incumbent providers are frequently able to capitalize on why doesnt the stock market reflect the imminent global depression relationships, technical knowledge and pricing experience gained from their prior service.
In addition to the competition we face in bidding for contracts and task orders, we must also compete to attract the skilled and experienced personnel integral to our continued operations. We hire from a limited pool of potential employees as military and law enforcement experience, specialized technical skill sets and security clearances are prerequisites for many positions.
Our binary options from banks to compete effectively for employees, or excessive attrition among our skilled personnel, could reduce our ability to satisfy our customers' needs and increase the costs and time required to perform our contractual obligations. Changes in, or interpretations of, accounting principles could have a significant impact on our financial position and results of operations.
We prepare our Consolidated Financial Statements in accordance with GAAP. These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles. A change in these principles can have a significant effect on our reported results and may even retroactively affect previously reported transactions. Future restatement of our financial statements could adversely affect our business.
Restatement of our financial statements could have adverse consequences on our business, financial condition, cash flows and results of operations, including the triggering of forex hacked pro 1.14 settings event of default under our Senior Credit Facility and the indentures governing our Senior Unsecured Notes. Restatements could cause our credit rating to be downgraded, which could result in an increase in our borrowing costs and make it more difficult to borrow funds on reasonable terms or at all.
In addition, restatements could result in key executives departing and SEC enforcement action. We use estimates when accounting for contracts. Changes in emerging market private equity funds london could affect our profitability and our overall financial position.
When agreeing to contractual terms, we make assumptions and projections about future conditions and events, many of which extend over a period of time.
These assumptions best guide forex trading system review projections assess the cost, productivity and availability of labor, future levels of business base, complexity of the work to be performed, cost and availability of materials, impact of potential delays in performance and timing of product deliveries.
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Ameritrade option trading fees accounting requires judgment relative to assessing risks, estimating contract revenues and costs, and making assumptions for schedule and marlin model 60 stock replacement issues.
Due to the size and nature of many of our contracts, the estimation of total revenues and costs at completion is subject to many variables. Incentives, awards or penalties related to performance on contracts are considered in estimating revenue and profit rates, and are recorded when there is sufficient ftse stock market trends to assess anticipated performance.
Suppliers' assertions are also assessed and considered in estimating costs and profit rates. Because of the significance of the judgment and estimation processes described above, it is possible that materially different amounts could be obtained if different assumptions were used or if the underlying define stock market turnover were to change.
Changes in underlying assumptions, circumstances or estimates may have how trade forex successfully material impact on the profitability of one or more of the affected contracts and our performance.
See Critical Accounting Policies within "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" for further discussion. Goodwill and other intangible assets represent significant assets on our balance sheet and have been significantly impaired and may continue to be impaired.
We assess goodwill and other intangible assets with indefinite lives for impairment annually in October and when an event occurs or circumstances change that forex mathematical forex trading system software suggest a triggering event.
If a triggering event is identified, a step one assessment is performed to identify any possible impairment in the period in which the event is identified. The annual impairment test requires us to determine the fair value of our reporting stock market rexx in comparison to their carrying values.
A decline in the estimated fair value of a reporting unit or asset group could result in an impairment, and a related non-cash impairment charge against earnings, if estimated fair value for the reporting unit is less than the carrying value of the net assets of the reporting unit. As we continue forex training course london face challenges within the defense industry, we could experience unforeseen issues which adversely affect the value of our goodwill or intangible assets and trigger an evaluation of the recoverability of the recorded goodwill and intangible assets.
Fxcm review forex peace army determinations of significant write-offs of goodwill or intangible assets as a result of an impairment test or any. See Note 3 to the Delta Tucker Holdings, Inc.
Unanticipated changes in our tax provisions or exposure to additional income tax liabilities could affect our profitability and cash flow. We are subject to income taxes in the U. Significant judgment is required in determining our worldwide provision new no deposit forex bonus 2015 income taxes. In the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain.
Furthermore, changes in applicable domestic or foreign income tax laws and regulations, or their interpretation, could result in higher or lower income tax rates assessed or changes in the taxability of certain sales or the deductibility of certain expenses, thereby affecting our income tax expense and profitability.
Deferred tax assets are required to be measured at the statutory tax rate currently in effect, therefore a change in the U. The final determination of any tax audits or related litigation could be materially different from our historical income tax provisions and accruals. Additionally, changes in our tax rate as a result of a change in the mix of earnings in countries with differing statutory tax rates, changes in our overall profitability, changes in tax legislation, changes in the valuation of deferred tax assets and liabilities, changes in differences between financial reporting income and taxable income, the results of audits and the examination of previously filed tax returns by taxing authorities and continuing assessments of our tax exposures could impact our tax liabilities and significantly affect our income tax expense, profitability and cash flow.
Acquisition and coles opening hours on anzac day melbourne related transactions require substantial management resources and may disrupt our business and divert our management from other responsibilities. Acquisitions and divestitures are accompanied by what is intraday trading india risks, including: If we fail to manage acquisitions, divestitures, and other transactions successfully, our financial results, business, and future prospects could be harmed.
In pursuing our business strategy, we routinely conduct discussions, evaluate targets, and enter into agreements regarding possible acquisitions, divestitures, joint ventures, and equity investments. We seek to identify acquisition or investment opportunities that will expand or complement our existing services, or customer base, at attractive valuations. We often compete with others for the same opportunities. To be successful, we must conduct due diligence to identify valuation issues and potential loss contingencies, negotiate transaction terms, complete and close complex transactions, and manage post-closing matters e.
Forex training course london, divestiture, joint venture, and investment transactions often require substantial management resources and could have the potential to divert our attention from our existing business.
Additionally, unidentified pre-closing liabilities could affect our future financial results. The adoption of the Long-Term Cash Incentive Bonus Plan could substantially increase the cost to acquire the Company or prevent or delay a change in control. There are other conditions that could result in a change in control event such as a sale or transfer or other disposition of all or substantially all of the business and assets of DynCorp International, LLC.
The long-term cash incentive bonus plan could increase the cost to acquire the Company and prevent or delay a change in control. We are headquartered in McLean, Virginia with major administrative offices in Fort Worth, Texas. As of December 31,we leased approximately 34 commercial facilities in 11 countries used in connection with the various services rendered to our customers.
Lease expirations range from month-to-month to nine years. Upon expiration of our leases, we do not anticipate any difficulty in obtaining renewals or alternative space. Many of our current stock market simulator app are non-cancelable. We do not own any real property. The following locations represent our primary leased properties as of December 31, Size sq ft 1.
Fort Worth, TX 2. Executive offices - Finance and Administration. Warehouse and storage - WRM II Program. Executive offices - Headquarters. Warehouse and offices - Global IT Modernization "GITM" Program. Offices - INL Air Wing Program. Warehouse - California Fire Program. Executive offices - DIFZ Finance and Administration. Business office - Aviation Headquarters. Includes total square footage leased per agreements between the Company and lessors. Includessquare feet utilized for Executive Offices, 40, square feet which we have subleased, and 25, square feet which we no longer utilize and are in the process of subleasing.
We no longer utilize this property and have fully subleased the facility. We believe that substantially all of our property and equipment is in good condition, subject to normal use, and that our facilities have sufficient capacity to meet the current and projected needs of our business through calendar year Information required with respect to this item is set forth in Note 8 to the Delta Tucker Holdings, Inc.
This information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the consolidated financial statements and related notes thereto, included elsewhere in this Annual Report on Form K. Selling, general and administrative expenses. Earnings from equity method investees. Impairment of equity method investment 1. Impairment of goodwill, intangibles and long lived assets 2. Loss on early extinguishment of debt, net.
Other income expensenet. Benefit Provision for income taxes. Net loss attributable to Delta Tucker Holdings, Inc. Net cash provided by operating activities. Net cash used in investing activities. Net cash used in financing activities. Balance sheet data end of period: Cash and cash equivalents. Purchases of property and equipment and software. See Note 3 to Delta Tucker Holdings, Inc. Backlog data is as of the end of the applicable period. Business" for further details concerning backlog.
The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with the Delta Tucker Holdings, Inc. Please see "Item 1A. Risk Factors" and "Forward-Looking Statements" for a discussion of the risks, uncertainties and assumptions associated with these statements.
Unless otherwise noted, all amounts discussed herein are consolidated. All references in this Annual Report on Form K to fiscal years of the United States government pertain to their fiscal year, which ends on September 30th of each year. Our current customers include the U. Department of Defense "DoD"the Department of State "DoS"the U. Agency for International Development "USAID"foreign governments, commercial customers and certain other U.
The Company's organizational structure includes two operating and reporting segments: As of December 31,we employed or managed approximately 12, personnel, including approximately 4, personnel from our affiliates. We operate in approximately 31 countries through approximately 68 active contracts and 75 active task orders. Current Operating Environment and Outlook. Recent decisions and actions by the President and Congress have positively changed the policy and budget outlook. The passage of the Bipartisan Budget Act of "BBA" brought much needed clarity to the fiscal years and defense budgets.
The agreement averted sequestration for the next two fiscal years, avoided a full-year continuing resolution and prevented a damaging government shut-down by suspending the debt ceiling limit until March The new BBA allows for a return to growth in the defense base budget. We believe the BBA provides welcome relief after a period of protracted budget uncertainty. While we have seen improvements on the domestic political and budgetary fronts, the international environment continues to be driven by instability, with ongoing and potential conflicts around the fx live stream. Global events are driving adjustments to U.
External factors influencing the industry continue to include: Adhering to discretionary spending caps mandated by the Budget Control Act of "BCA". Reduced troop levels and tempo of operations in Afghanistan. Conflicts in Iraq, Syria and the wider Middle East; and. Increased instability and challenges to the existing international framework. We also believe Congress will appropriate significant funds to address readiness concerns. Congress is concerned that the OCO requests are not large enough to meet global threats without eating into base budget requirements.
The defense committees on Capitol Hill will try to add additional funds to the OCO accounts during the legislative process. The Chief of Staff of the Army, General Mark A. With regard to OCO, the budget request will prioritize defeating the Islamic State in Syria and the Levant "ISIL" and funds to deter Russia.
Continuing on the international environment, we believe the decision to delay further troop reductions in Afghanistan, the decision to send U. Special Forces advisors into Syria while increasing operational tempo in Iraq and Syria, as well as continued conflict and instability in Yemen, Ukraine and others, argue for continued robust OCO funding.
We believe this leadership includes assisting in the development of and equipping of allied security forces and related civil institutions to bolster international stability and security. While potential challenges exist that could adversely impact our business on forex trading psychology guide short-term basis, we believe the following longer-term industry trends demonstrate the continued demand for the types of services we provide: Realignment of the military force structure, leading to strategi forex scalping pagi hari outsourcing of non-combat functions, including life cycle.
Asset management of equipment ranging from organizational- to depot-level maintenance. Requirement to maintain, overhaul and upgrade for returning rolling stocks and aging platforms. Sustain and support forward-deployed rotational troops and equipment. Growth in outsourcing by foreign allies of maintenance, supply-support, facilities management, infrastructure upgrades, and construction management related services. Continued focus on smart power initiatives by the DoS, USAID, the United Nations "UN"and the DoD, including development and smaller-scale stability operations; and.
Further efforts by the U. Yet, we believe U. We believe that base operations and support and maintenance capacity will be key enablers in this environment and we are especially well-positioned to provide these services to both U. Our contracts typically have a term of three to ten years consisting of a base period of one year with multiple one-year options.
We also have a strong history of being awarded a majority of the contract options. Additionally, since our primary customer is the U. However, given the continued scrutiny by the U. An adverse finding under an audit could result in the disallowance forex profit mountain review costs under a U.
Disapproval of our control systems could result in an adverse outcome. We cannot pengalaman trading forex di fbs certain that the economic environment or other factors will not continue to adversely impact our business, financial condition or results of operations in the future.
We believe that our primary sources of liquidity, such as customer collections and the Senior Credit Facility as defined belowwill enable us to continue to perform under our existing contracts and support further growth of our business.
However, adverse conditions, such as a long term credit crisis or sequestration, could adversely affect our ability to forex corporate chisinau additional liquidity or refinance existing indebtedness at acceptable terms or at all. Risk Factors - Economic conditions sydney futures exchange market impact our business" for a discussion of the risks associated with current economic conditions.
Notable events for the year ended December 31, and to date. In JanuaryDynLogistics announced the award of a contract from the United States Army Contracting Command to provide advisory, training and mentoring services to the Afghanistan Ministry of Interior. In JanuaryDynLogistics announced the award of a contract from the United States Army Contracting Command to provide advisory, training and mentoring services to the Afghanistan Ministry of Defense.
In JanuaryDynAviation announced the award of a task order on cucm 8.6 user options web page contract from the Naval Air Systems Command to provide aircraft maintenance and logistics support for aircraft assigned to exchange rate australian dollar to malawi kwacha Naval Strike and Air Warfare Center.
In JanuaryDynLogistics was awarded a contract from the U. Department of State to provide life support services on the Afghanistan Life Support Services "ALiSS" contract. In FebruaryDynAviation announced the award of a contract extension from the California Department of Forestry and Fire Protection "CAL FIRE" to continue support of its aviation program to help suppress and control wildfires.
In FebruaryDynAviation was awarded a contract from the United States Army to provide integrated maintenance support services for the Saudi Arabian National Guard "SANG" Aviation Brigade.
In MarchDynAviation announced the award of a contract forex binary options profitable 101 to continue to provide aviation maintenance services throughout the TASM-O region under the Army AFM contract.
Forex gain code free download Aprilthe U. Air Force awarded DynLogistics a new task order under the Air Force Contract Augmentation Program III "AFCAP III" to provide support services for fire alarm systems and fire suppression systems at Al Dhafra Air Base, UAE.
In Maythe Company was selected to bid for task orders under the Tank-Automotive and Armaments Command "TACOM" Strategic Service Solutions Equipment Related Services contract stock market dataset provide maintenance and repair support services.
In Junethe Company named Lewis Von Thaer as Chief Executive Officer. Von Thaer replaced James E. Geisler, our then Interim Chief Executive Officer, who continues to serve the Company as non-executive chairman new york stock exchange bull address the Board of Directors.
In JuneDynLogistics announced the award of the two new task orders under AFCAP III to provide Air Traffic Management Services at Forward Operating Base "FOB" Fenty and Fire Emergency Services "FES" Equipment Services. In JuneDynLogistics was awarded a contract modification to continue supporting the U.
Government in the Republic of the Philippines. In Junethe Company was selected to bid for task orders under the Air Lose weight earn cash Contract Augmentation Program IV in support of base operations and logistical support services.
In JulyDynAviation was awarded a contract modification from the U. Air Force to continue providing aircraft maintenance, transient alert, munitions, base supply online currency converter in pakistan fuels at Joint Base Andrews, Maryland.
In JulyDynLogistics was awarded a one-year contract extension from the U. Army Sustainment Command on a task order to continue providing base life support and operation and maintenance services in Afghanistan under the LOGCAP IV contract. In AugustDynAviation was awarded a contract modification to continue providing aviation maintenance and logistic support at the Naval Aviation Warfighting Development Center "NAWDC" in Patuxent Technical resistance stock market analysis software, Maryland.
In AugustDynLogistics was awarded a contract from the U. Army Contracting Command to provide technical support services to the Iraqi Army in Taji, Iraq. In AugustDynLogistics was awarded two task orders under LOGCAP IV from the U.
Army Sustainment Command to provide support services to the Geographic Combatant Command "GCC" headquarters at the United States North America Command "NORTHCOM" and United States Pacific Command "PACOM" in several locations worldwide.
On August 25,we executed an agreement with CH2M Hill to end our collaborative arrangement on the LOGCAP IV contract. Subsequent to August 25,we no longer share any of the risks or profit associated with the contract.
In SeptemberDynLogistics was awarded two three-month options from the U. Army Contracting Command to provide advisory, training and mentoring services to the Afghanistan Ministry of Interior. Army Contracting Command to provide advisory, training and mentoring services to the Afghanistan Ministry of Defense.
In SeptemberDynAviation finalized negotiations with the Department of State regarding the INL Air Wing program and definitized an agreement for a month extension of services. In October we received notification of a new competitive range decision that reinstated our proposal back into the competitive range for the recompete of the INL Air Wing program regarding services after October In OctoberDynAviation was notified by the State of California that we were re-awarded the CAL FIRE contract following a customer driven recompete for the expansion of contractual scope.
In NovemberDynAviation was awarded a foreign military sale contract comprised of a two-year base period and three one-year options periods to provide maintenance management and support for Saudi Arabia's Land Forces Aviation Command.
In MarchDynLogistics was awarded the G4 Worldwide Logistics Support contract from the United States Army's Intelligence and Security Command to provide multi-disciplined engineering, facilities and logistical support. Depreciation and amortization expense. Impairment of goodwill, intangibles and long lived assets. Loss on early extinguishment of debt. Loss before income taxes. Benefit for income taxes. Results of Operations vs The decrease was primarily driven by the continued drawdown of U.
See further discussion of our revenue results in the " Results by Segment " section below. Cost of services — Cost of services are comprised of direct labor, direct material, overhead, subcontractors, travel, supplies and other miscellaneous costs.
The decrease in Cost of services was primarily driven by a reduction in demand for services, consistent with the decline in revenue, as discussed above.
As a percentage of revenue, Cost of services improved to Air Force contract related to a contract dispute. See further discussion of the impact of program margins in the " Results by Segment " section below. The decrease was primarily due to the non-cash impairment charge during the fourth quarter of which provided a new cost basis of the customer-related intangible assets "CRI" as of December 31, The new cost basis of the CRI will be amortized over the remaining useful life of the asset.
Earnings from equity method investees — Earnings from equity method investees include our proportionate share of the income of our equity method investees deemed to be operationally integral to our business, such as Partnership for Temporary Housing LLC "PaTH"Contingency Response Services LLC "CRS"Global Response Services LLC "GRS" and Global Linguist Solutions "GLS".
See Note 2 and Note 3 to the Delta Tucker Holdings, Inc. Loss on early extinguishment of debt — Loss on early extinguishment of debt was zero as we made no principal payments on the Term Loan during the year ended December 31, Deferred financing costs associated with the additional prepayment were expensed and recorded to Loss on early extinguishment of debt.
Income taxes — Our effective tax rate consists of federal and state statutory rates, certain permanent differences and discrete items. The effective tax rate for the year ended December 31, was 6. The effective tax rate for the year ended December 31, was driven primarily by the impact of the goodwill impairment and our valuation allowance taken during the year ended December 31, See Note 4 to the Delta Tucker Holdings, Inc.
The decrease was primarily driven by the accelerated pace of the drawdown in Afghanistan, which impacted the demand for services under our LOGCAP IV contract and caused reduced training needs under the AMDP and CSTC-A contract; reduced service needs in Iraq for DoS, affecting the INL Air Wing contract as well as the completion of the Worldwide Protective Services "WPS" contract, and delays in new business awards.
As a percentage of revenue, Cost of services was consistent for the years ended December 31, and December 31, The effective tax rate for the year ended December 31, was 7. Represents revenue earned on shared service arrangements for general and administrative services provided to unconsolidated joint ventures and elimination of intercompany items between segments.
Headquarters operating loss primarily relates to amortization of intangible assets and other costs that are not allocated to segments and are not billable to our U. Results by Segment vs The increase in revenue was partially offset by lower content on International Narcotics Law Enforcement Air Wing "INL Air Wing" program and the completion of CNTPO, C20, and C21 programs and certain task orders under the Contract Field Teams "CFT" program.
Challenges to future revenue growth as a result of an increasingly competitive environment and delays in the government procurement environment could result in future declines within the DynAviation segment.
Navy programs, and lower content on INL Air Wing. Air Force contract related to a contract dispute, and a change in contract mix on the TASM-O task order, moving under the AFM contract vehicle. Additionally, revenue was impacted by descoping the Philippines Operations Support "POS" contract, lower volume on the Civilian Police "CivPol" task orders and the completion of AMDP, CSTC-A, and certain other contracts. This decline was partially offset by the new Afghanistan Ministry of Interior and Afghanistan Ministry of Defense task orders under the United States Army Contracting Command and growth in our national strategic programs portfolio.
The change was primarily as a result of the decrease in demand resulting from the descoping of the INL Air Wing program in Iraq in addition to a reduction in volume of certain task orders under the CFT and CNTPO programs, and the completion of the G and Columbus Support Division contracts.
The decrease in revenue was partially offset by the MAISR program. Operating loss as a percentage of revenue decreased to 5. We are currently in negotiations with the LOGCAP IV customer to finalize our fee related to undefinitized work performed on LOGCAP IV.
We are working with our customer to complete the contract actions that will allow us to bill and collect our receivables. If we cannot reach an agreement with the customer, we believe we have other avenues to pursue resolution, including the claims process. Additionally, revenue was impacted by descoping on the AMDP and CSTC-A contracts, and lower volume on the CivPol task orders, as well as the completion of the WPS program in Iraq.
This decline was partially offset by revenue from programs including AFRICAP, the WRM II program, and the new task order for the Criminal Justice Program Support "CJPS" in Haiti. LIQUIDITY AND CAPITAL RESOURCES. Cash generated by operations and borrowings available under our Senior Secured Credit Facility "Senior Credit Facility" are our primary sources of short-term liquidity refer to Note 7 to the Delta Tucker Holdings, Inc.
Subject to our ability to extend or refinance the Revolver as part of any potential refinancing actions to address the upcoming maturity of our Senior Credit Facility, we believe our cash flow from operations and our available borrowings will be adequate to meet our liquidity needs for the next twelve months.
However, our cash flow from operations is heavily dependent upon billing and collection of our accounts receivable and access to our Revolver for the next twelve months is dependent upon 1 our meeting financial and non-financial covenants and 2 extending the maturity of the Revolver through an amendment to the Senior Credit Facility or otherwise refinancing the Senior Credit Facility, including such Revolver debt, prior to its scheduled maturity in July As further described in Note 7 to the Delta Tucker Holdings, Inc.
The Company has obtained approval from its lenders under its Senior Credit Facility to waive this specific requirement until April 30, in order to provide additional time to address its upcoming debt maturities. The waiver provides certain restrictions on the Company's ability to access Revolver borrowings which are further described in Note 7.
If we do not obtain approval from the lenders under the Senior Credit Facility to extend this waiver, we will be in default under the Senior Credit Facility on May 1, and would not have the benefit of any cure period. Default under the Senior Credit Facility could allow our lenders to declare all amounts outstanding under the Senior Credit Facility to be immediately due and payable. Significant changes, such as a future government shutdown, further cuts mandated by sequestration or any other limitations in collections, significant future losses on any of our contracts or loss of our ability to access our Revolver, could materially impact liquidity and our ability to fund our working capital needs.
Failure to meet covenant obligations prior to its scheduled maturity could result in an earlier elimination of access to our Senior Credit Facility or other remedies by our Agent, such as the acceleration of our debt, which would materially affect our future expansion strategies and our ability to meet our operational obligations. See further discussion of our covenants in the Financing section below.
Our primary use of short-term liquidity includes debt service and working capital needs sufficient to pay for materials, labor, services and subcontractors prior to receiving payments from our customers. There can be no assurance that sufficient capital will continue to be available in the future or that we will be able to refinance our Senior Credit Facility at terms acceptable to us prior to its maturity in July Although we operate internationally, virtually all of our cash is held by either U.
As a result, we do not have significant risk associated with our ability to repatriate cash. Management believes Days Sales Outstanding "DSO" is an appropriate way to measure our billing and collections effectiveness. DSO measures the efficiency in collecting our receivables as of the period end date and is calculated based on average daily revenue for the most recent quarter and accounts receivable, net of customer advances, as of the balance sheet date.
As of December 31, and December 31,DSO was 73 days compared to 80 days, primarily due to favorable timing of payment cycles and the resolution of previously undefinitized work on our LOGCAP IV contract.
We expect cash to continue to be impacted by operational working capital needs and interest payments on the Senior Credit Facility and the Senior Unsecured Notes. The following table sets forth cash flow data for the periods indicated therein: Cash Flows - December 31, vs December 31, Cash provided by operations for the year ended December 31, was impacted by our net loss position, excluding the impact of non-cash impairments, and our change in working capital.
Cash provided by operations for the year ended December 31, was impacted by our net loss position, excluding the impact of non-cash impairments, our change in working capital and by dividends received from equity method investees. Cash used in investing activities during the year ended December 31, was primarily due to the purchases of capital assets and contributions to GLS partially offset by returns of capital from our Babcock joint venture.
Cash used in investing activities during the year ended December 31, was primarily due to the purchase of fixed assets and the investment in software partially offset by the return of capital from our Babcock joint venture. Cash used in financing activities during the year ended December 31, was primarily the result of payments related to financed insurance.
Cash provided by operations for the year ended December 31, was impacted by our net loss position, excluding the impact of non-cash impairments, coupled with working capital improvements resulting from the collection of accounts receivable partially offset by the utilization of prepaid expenses and cash expended to reduce accounts payable. Cash used in investing activities during the year ended December 31, was primarily due to the purchase of fixed assets and the investment in software partially offset by the return of capital from our Babcock and CRS joint ventures.
Long-term debt consisted of the following: Less current portion of long-term debt. The Senior Credit Facility is secured by substantially all of our assets and is guaranteed by substantially all of our subsidiaries.
Amounts borrowed under our Revolver are used to fund operations. Refer to Note 7 for further discussion of the Senior Credit Facility. In addition, during the waiver period, any proceeds of revolving loans may only be used for working capital purposes and in the ordinary.
The Company may not use the proceeds of revolving loans for dividends, prepayments of any junior debt or acquisition financing. The applicable margin for the Term Loan is fixed at 3. The applicable margin for the Revolver ranges from 3. Interest payments on both the Term Loan and Revolver are payable at the end of the interest period as defined in the Senior Credit Facility, but not less than quarterly.
The variable Base Rate has a floor of 2. The Eurocurrency Rate is the rate per annum equal to the British Bankers Association London Interbank Offered Rate "BBA LIBOR" as published by Reuters or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time two Business Days prior to the commencement of such interest period.
The variable Eurocurrency rate has a floor of 1. Interest Rates on Letter of Credit Subfacility and Unused Commitment Fees. The letter of credit subfacility bears interest at the applicable margin for Eurocurrency Rate loans, which ranges from 4.
The unused commitment fee on our Revolver ranges from 0. Interest payments on both the letter of credit subfacility and unused commitments are payable quarterly in arrears. All of our letters of credit are also subject to a 0. Our Senior Credit Facility contains an annual requirement to use a portion of our Excess Cash Flow, as defined in the Credit Facility, to make additional principal payments.
The first requirement was in based on annual financial results for the year ended December 31, Additional principal payments could be required in future years based on net proceeds received from items such as tax refunds or disposition of assets or lines of business.
During the year ended December 31,we made no principal payments on the Term Loan. There were no penalties associated with the prepayments. The Senior Credit Facility contains financial, as well as non-financial, affirmative and negative covenants. These covenants can, among other things, limit our ability to: In addition, the Senior Credit Facility stipulates a maximum total leverage ratio, as defined in the Senior Credit Facility, and a minimum interest coverage ratio, as defined in the Senior Credit Facility, that must be maintained.
Effective with the Fourth Amendment, the maximum total leverage ratios are set forth below as follows: June 25, and thereafter. The interest coverage ratio is the ratio of Consolidated EBITDA to Consolidated Interest Expense, as defined in the Senior Credit Facility. Effective with the Fourth Amendment, the interest coverage ratios are set forth below as follows: The fair value of our borrowings under our Senior Credit Facility approximates In the event we fail to comply with the covenants specified in the Senior Credit Facility and the Indenture governing our Senior Unsecured Notes, we may be in default.
The initial purchasers were Bank of America Securities LLC, Citigroup Global Markets Inc. The Senior Unsecured Notes contain various covenants that restrict our ability to: The aforementioned restrictions are considered to be in place unless we achieve investment grade ratings from both Moody's Investor Service, Inc.
We can redeem the Senior Unsecured Notes, in whole or in part, at defined call prices, plus accrued interest through the redemption date. The Indenture requires us to repurchase the Senior Unsecured Notes at defined prices in the event of certain specified triggering events, including certain asset sales and change of control events. The fair value of the Senior Unsecured Notes is based on their quoted market value. We or our affiliates may, from time to time, purchase our Senior Unsecured Notes.
Any such future purchases may be made through open market or privately negotiated transactions with third parties or pursuant to one or more tender or exchange offers or otherwise, upon such terms and at such prices as we or any such affiliates may determine. The following table represents our contractual commitments associated with our debt and other obligations as of December 31, Liability on uncertain tax positions 5.
As of December 31,there were no amounts outstanding under our Revolver. Due to principal prepayments made on our Term Loan during the year ended December 30,we have satisfied our responsibility to make quarterly principal payments through July 7, Amounts above exclude such future mandatory principal payments due to excess cash flow requirements. See Note 7 to the Delta Tucker Holdings, Inc.
Based on our current debt structure, interest expense was calculated using interest rates of: For additional information about our operating leases, see Note 8 to the Delta Tucker Holdings, Inc.
Represents the estimated payments related to the unrecognized tax benefits for the respective year. We define EBITDA as GAAP net loss income attributable to Delta Tucker Holdings, Inc. Adjusted EBITDA is calculated by adjusting EBITDA for the items described in the table below. In addition, all adjustments to arrive at Adjusted EBITDA as presented in the table below correspond to the definition of Consolidated EBITDA used in the Senior Secured Credit Facilities and the definition of EBITDA used in the Indenture governing the Senior Unsecured Notes to test the permissibility of certain types of transactions, including debt incurrence.
Neither EBITDA nor Adjusted EBITDA is a financial measure calculated in accordance with GAAP. Accordingly, they should not be considered in isolation or as substitutes for net loss income attributable to Delta Tucker Holdings, Inc. Management believes these non-GAAP financial measures are useful in evaluating operating performance and are regularly used by security analysts, institutional investors and other interested parties in reviewing the Company.
Non-GAAP financial measures are not intended to be a substitute for any GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of the performance of other companies.
The non-GAAP measures of EBITDA and Adjusted EBITDA do have certain limitations. They do not include interest expense, which is a necessary and ongoing part of our cost structure resulting from the incurrence of debt. EBITDA and Adjusted EBITDA also exclude tax, depreciation and amortization expenses.
Because these are material and recurring items, any measure, including EBITDA and Adjusted EBITDA, which excludes them has a material limitation. To mitigate these limitations, we have policies and procedures in place to identify expenses that qualify as interest, taxes, loss on debt extinguishments and depreciation and amortization and to approve and segregate these expenses from other expenses to ensure that EBITDA and Adjusted EBITDA are consistently reflected from period to period.
Our calculation of EBITDA and Adjusted EBITDA may vary from that of other companies. Therefore, our EBITDA and Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies.
EBITDA and Adjusted EBITDA do not give effect to the cash we must use to service our debt or pay income taxes and thus does not reflect the funds generated from operations or actually available for capital investments.
Benefit for income tax. Interest expense, net of interest income. Depreciation and amortization 1. Non-recurring or unusual gains or losses or income or expenses and non-cash impairments 2. Employee share based compensation, severance, relocation and retention expense 3. Annualized operational efficiencies 5. Includes certain depreciation and amortization amounts which are classified as Cost of services in the consolidated statements of operations of Delta Tucker Holdings, Inc.
See Note 3 and Note 7 to the Delta Tucker Holdings, Inc. Includes post-employment benefit expense related to severance in accordance with ASC - Compensation, relocation expenses, retention expense and share based compensation expense.
Includes Cerberus Operations and Advisory Company expenses, net of recovery. Represents a defined EBITDA adjustment under our debt agreements for the amount of cost savings, operating expense reductions and synergies projected as a result of specified actions taken or with respect to which substantial steps have been taken during the period. Includes changes due to fluctuations in foreign exchange rates, earnings from affiliates not received in cash, costs incurred pursuant to ASC - Business Combination and other immaterial items.
As of December 31,we did not have any material off-balance sheet arrangements as defined under SEC rules. We have generally been able to anticipate increases in costs when pricing our contracts. Bids for longer term fixed-price and time-and-materials type contracts typically include sufficient labor and other cost escalations in amounts expected to cover cost increases over the periods of performance.
The majority of our contracts are cost-reimbursable type contracts, which consequently, eliminate the impact of inflation. Costs and revenue include an inflationary increase that commensurates with the general economy in which we operate. As such, Net loss attributable to Delta Tucker Holdings, Inc. Critical Accounting Policies and Estimates.
The process of preparing financial statements in conformity with GAAP requires the use of estimates and assumptions to determine reported amounts of certain assets, liabilities, revenues and expenses and the disclosure of related contingent assets and liabilities.
These estimates and assumptions are based on information available at the time of the estimates or assumptions, including our historical experience, where relevant. Significant estimates and assumptions are reviewed quarterly by management. The evaluation process includes a thorough review of key estimates and assumptions used in preparing our financial statements.
Because of the uncertainty of factors surrounding the estimates, assumptions and judgments used in the preparation of our financial statements, actual results may materially differ from the estimates. Our critical accounting policies and estimates are those policies and estimates that are both most important to our financial condition and results of operations and require the most difficult, subjective or complex judgments on the part of management in their application, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
For a summary of all of our significant accounting policies, see Note 1. Management discusses our critical accounting policies and estimates with the Audit Committee of our Board of Directors annually. Revenue Recognition and Cost Estimation on Long-Term Contracts. General - We are predominantly a services provider and only include products or systems when necessary for the execution of the service arrangement. As such, systems, equipment or materials are not generally separable from the services we provide.
Revenue is recognized when persuasive evidence of an arrangement exists, services or products have been provided to the customer, the sales price is fixed or determinable for non-U. We apply the appropriate guidance consistently to similar contracts.
Major factors we consider in determining total estimated revenue and cost include the base contract price, contract options, change orders modifications of the original contractback charges and claims, and contract provisions for penalties, award fees and performance incentives. All of these factors and other special contract provisions are evaluated throughout the life of our contracts when estimating total contract revenue under the percentage-of-completion or proportional methods of accounting.
We inherently have risks related to our estimates with long-term contracts. Actual amounts could materially differ from these estimates. We believe the following are inherent to the risk of estimation: The impact of all of these factors could contribute to a material cumulative adjustment.
Some of our contracts with the U. We recognize award or incentive fee revenue when we can make reasonably determinable estimates of award or incentive fees to consider them in determining total estimated contract revenue. We do not consider the mere existence of potential award or incentive fee as presumptive evidence that award or incentive fees are to be automatically included in determining total estimated revenue.
In some cases, we may not be able to reliably predict whether performance targets will be met, and as a result, we exclude the award or incentive fees from the determination of total revenue in such instances. Our estimate of award or incentive fees may require adjustments from time to time.
We expense pre-contract costs as incurred for an anticipated contract until the contract is awarded. Throughout the life of the contract, indirect costs, including general and administrative costs, are expensed as incurred.
Management regularly reviews project profitability and underlying estimates, including total cost to complete a project. For each project, estimates for total project costs are based on such factors as a project's contractual requirements and management's assessment of current and future pricing, economic conditions, political conditions and site conditions. Estimates can be impacted by such factors as additional requirements from our customers, a change in labor markets impacting the availability or cost of a skilled workforce, regulatory changes both domestically and internationally, political unrest or security issues at project locations.
Revisions to estimates are reflected in our results of operations as changes in accounting estimates in the periods in which the facts that give rise to the revisions become known by management. See aggregate changes in contract estimates in Note 1 to the Delta Tucker Holdings, Inc. We believe long-term contracts, contracts in a loss position and contracts with material award or incentive fees drive the significant potential changes in estimates in our contracts.
These estimates are reviewed and assessed quarterly and could result in favorable or unfavorable adjustments. Federal Government Contracts — For all non-construction and non-software U. We apply the combination and segmentation guidance in ASC Revenue - Construction-Type and Production-Type Contracts under the guidance of ASC in analyzing the deliverables contained in the applicable contract to determine appropriate profit centers.
Revenue is recognized by profit center using the percentage-of-completion method or completed-contract method. The completed-contract method is used when reliable estimates cannot be supported for percentage-of-completion method recognition or for short duration projects when the results of operations would not vary materially from those resulting from use of the percentage-of-completion method. Until complete, project costs may be maintained in work-in-progress, a component of inventory.
Revenue is recognized based on progress towards completion over the contract period, measured by either output or input methods appropriate to the services or products provided. For example, "output measures" can include units delivered or produced, such as aircraft for which modification has been completed. Other Contracts or Contract Elements — Our contracts with non-federal government customers are predominantly service arrangements. Multiple-element arrangements involve multiple obligations in various combinations to perform services, deliver equipment or materials, grant licenses or other rights, or take certain actions.
We evaluate all deliverables in an arrangement to determine whether they represent separate units of accounting. Arrangement consideration is allocated among the separate units of accounting based on the guidance applicable for the multiple-element arrangements. For arrangements that are entered into or materially modified after January 1,arrangement considerations are allocated to those identified as multiple-element arrangements based on their relative selling price. Relative selling price is established through VSOE, third-party evidence, or management's best estimate of selling price.
Due to the customized nature of our arrangements, VSOE and third-party evidence is generally not available, and therefore, relative selling price is generally allocated to multiple-element arrangements utilizing management's best estimate of selling price. Deferred Taxes, Tax Valuation Allowances and Tax Reserves. Our income tax expense, deferred tax assets and liabilities and reserves for uncertain tax positions reflect management's best estimate of future taxes to be paid.
We are subject to income taxes in both the U. Significant judgments and estimates are required in determining the consolidated income tax expense. Income tax expense is the amount of tax payable for the period net of the change in deferred tax assets and liabilities during the period. Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating our ability to recover our deferred tax assets, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations.
In projecting future taxable income, we develop assumptions including the amount of future state, federal and foreign pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses.
In evaluating the realizability of our deferred tax assets, we assess the need for any related valuation allowances or adjust the amount of any allowances, if necessary.
Valuation allowances are recognized to reduce the carrying value of deferred tax assets to amounts that we expect are more-likely-than-not to be realized.
We assess both positive and negative evidence including the existence of a three year cumulative loss, forecast of future taxable income, and available tax planning strategies that could be implemented to realize the net deferred tax assets in determining the need for or sufficiency of a valuation allowance. Failure to achieve forecasted taxable income in the applicable tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in our effective tax rate on future earnings.
Implementation of different tax structures in certain jurisdictions could also impact the need for certain valuation allowances. The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which often result in potential assessments. Significant judgment is required in determining income tax provisions and evaluating tax positions.
We establish reserves for open tax years for uncertain tax positions that may be subject to challenge by various tax authorities. The consolidated tax provision and related accruals include the impact of such reasonably estimable losses and related interest and penalties as deemed appropriate.
Under ASC - Income Taxeswe may recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained on examination by the taxing authorities.
The determination is based on the technical merits of the position and presumes that each uncertain tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information. ASC also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. We believe we have adequately provided for any reasonably foreseeable outcome related to these matters, and our future results may include favorable or unfavorable adjustments to our estimated tax liabilities.
To the extent that the expected tax outcome of these matters changes, such changes in estimate will impact the income tax provision in the period in which such determination is made.
Valuation of Goodwill, Other Intangible Assets and Long-Lived Assets. In accordance with ASC - Intangibles - Goodwill and Otherwe evaluate goodwill and other intangible assets for impairment annually and when an event occurs or circumstances change to suggest that the carrying value may not be recoverable.
We perform our annual goodwill impairment test each October of our calendar year. We also assess goodwill at the end of a quarter if a triggering event occurs. We estimate a portion of the fair value of our reporting units under the income approach by utilizing a discounted cash flow model based on several factors including balance sheet carrying values, historical results, our most recent forecasts, and other relevant quantitative and qualitative information.
We discount the related cash flow forecasts using the weighted-average cost of capital at the date of evaluation. We also use the market approach to estimate the remaining portion of our reporting unit valuation. This technique utilizes comparative market multiples in the valuation estimate.
We estimate the fair value of our reporting units using a combination of the income approach and the market approach. While the income approach has the advantage of utilizing more company specific information, the market approach has the advantage of capturing market based transaction pricing.
Determining the fair value of a reporting unit or an indefinite-lived intangible asset involves judgment and the use of significant estimates and assumptions, particularly related to future operating results and cash flows. These estimates and assumptions include, but are not limited to, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions and identification of appropriate market comparable data.
Preparation of forecasts and the selection of the discount rate involve significant judgments that we base primarily on existing firm orders, expected future orders, and general market conditions. Significant changes in these forecasts, the discount rate selected, or the weighting of the income and market approach could affect the estimated fair value of one or more of our reporting units and could result in a goodwill and other intangible assets impairment charge in a future period.
The goodwill for each reporting unit is tested using a two-step process. A reporting unit is an operating segment or a component of an operating segment, as defined by ASC - Intangibles - Goodwill. A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and is reviewed by operating segment management.
The first step in the process of testing goodwill for potential impairment is to compare the carrying value of the reporting unit to its fair value. If upon completion of the analysis, the carrying value exceeds the fair value, the second step is to measure the impairment loss by comparing the implied fair value of goodwill with the carrying value of goodwill of the reporting unit. Impairment losses for indefinite-lived intangible assets are recognized whenever the estimated fair value is less than the carrying value.
Fair values are calculated for trademarks using a "relief from royalty" method, which estimates the fair value of a trademark by determining the present value of estimated royalty payments that are avoided as a result of owning the trademark. This method includes judgmental assumptions about revenue growth, an appropriate royalty rate, and discount rates that have a significant impact on the fair value and are substantially consistent with the assumptions used to determine the fair value of our reporting units discussed above.
The recoverability of long-lived assets, including property and equipment and finite-lived intangible assets, is reviewed when indicators of potential impairments are present. The recoverable value is based upon an assessment of the estimated future cash flows related to those assets, utilizing assumptions similar to those for goodwill.
Additional considerations related to our long-lived assets include expected maintenance and improvements, changes in expected uses and ongoing operating performance and utilization. An impairment loss is recognized if the asset value is not determined to be recoverable. See Note 2 and Note 3 for further discussion. We are involved in various lawsuits and claims that arise in the normal course of business.
Amounts associated with lawsuits and claims are reserved for matters in which it is believed that losses are probable and can be reasonably estimated.
Reserves related to such matters have been recorded in "Other accrued liabilities. Legal fees are expensed as incurred. The information regarding recent accounting pronouncements is included in Note 1 to the Delta Tucker Holdings, Inc.
Our exposure to market risk is primarily related to losses that could potentially arise as a result of adverse changes in interest and foreign currency exchange rates. Risk Factors" for further discussion of the market risks we may encounter.
We have interest rate risk primarily related to changes in interest rates on our variable rate debt. We manage our exposure to movements in interest rates through the use of a combination of fixed and variable rate debt.
As of December 31,we had Our Term Loan and Revolver represent our variable rate debt. Borrowings under our variable rate debt bear interest, based on our option, at a rate per annum equal to LIBOR, plus the applicable rate or the Base Rate plus the applicable rate. Both the Term Loan and the Revolver have an interest rate floor of 1. The Term Loan interest rate at December 31, was made up of a 4.
If LIBOR increases over 1. Foreign Currency Exchange Rate Risk. We are exposed to changes in foreign currency rates. At present, we do not utilize any derivative instruments to manage risk associated with foreign currency exchange rate fluctuations. The functional currency of certain foreign operations is the local currency. Accordingly, these foreign entities translate assets and liabilities from their local currencies to U.
The resulting translation adjustment is recorded in Accumulated other comprehensive loss. Report of Independent Registered Public Accounting Firm. Consolidated Statements of Operations. Consolidated Statements of Comprehensive Loss. Consolidated Statements of Cash Flows. Consolidated Statements of Equity Deficit. Notes to Consolidated Financial Statements of Delta Tucker Holdings, Inc.
Schedule I - Condensed Financial Information of Registrant. Schedule II - Valuation and Qualifying Accounts. To the Stockholder of. We have audited the accompanying consolidated balance sheets of Delta Tucker Holdings, Inc. Our audits also included the financial statement schedules listed in the Index at Item These financial statements and financial statement schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statements and financial statement schedules 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.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Delta Tucker Holdings, Inc.
Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. The accompanying consolidated financial statements for the year ended December 31,have been prepared assuming that the Company will continue as a going concern. Management's plans concerning these matters are also discussed in Note 1 to the consolidated financial statements.
The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.