Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 22, 2017 | Jul. 01, 2016 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | VEC | ||
Entity Registrant Name | Vectrus, Inc. | ||
Entity Central Index Key | 1,601,548 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 10,894,924 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Public Float | $ 308,908,348 |
Consolidated and Combined State
Consolidated and Combined Statements of Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | |||
Revenue | $ 1,190,519 | $ 1,180,684 | $ 1,203,269 |
Cost of revenue | 1,083,607 | 1,075,035 | 1,084,512 |
Selling, general and administrative expenses | 64,086 | 65,687 | 80,340 |
Operating income | 42,826 | 39,962 | 38,417 |
Interest (expense) income, net | (5,639) | (6,531) | (1,526) |
Income from operations before income taxes | 37,187 | 33,431 | 36,891 |
Income tax expense | 13,532 | 2,458 | 14,079 |
Net income | $ 23,655 | $ 30,973 | $ 22,812 |
Earnings Per Share | |||
Basic (in dollars per share) | $ 2.21 | $ 2.94 | $ 2.18 |
Diluted (in dollars per share) | $ 2.16 | $ 2.86 | $ 2.13 |
Weighted average common shares outstanding - basic (in shares) | 10,714 | 10,551 | 10,476 |
Weighted average common shares outstanding - diluted (in shares) | 10,974 | 10,825 | 10,692 |
Consolidated and Combined Stat3
Consolidated and Combined Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 23,655 | $ 30,973 | $ 22,812 |
Changes in derivative instrument: | |||
Net change in fair value of interest rate swap | 216 | (43) | 0 |
Net (loss) gain reclassified to interest expense | (2) | 3 | 0 |
Tax (expense) benefit | (76) | 14 | 0 |
Net change in derivative instrument | 138 | (26) | 0 |
Foreign currency translation adjustments | (975) | (1,186) | (1,642) |
Other comprehensive loss, net of tax | (837) | (1,212) | (1,642) |
Total comprehensive income | $ 22,818 | $ 29,761 | $ 21,170 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash | $ 47,651 | $ 39,995 |
Receivables | 172,072 | 210,561 |
Costs incurred in excess of billings | 11,002 | 1,243 |
Other current assets | 13,412 | 9,708 |
Total current assets | 244,137 | 261,507 |
Non-current assets | ||
Property, plant, and equipment, net | 3,061 | 4,762 |
Goodwill | 216,930 | 216,930 |
Other non-current assets | 1,177 | 1,197 |
Total non-current assets | 221,168 | 222,889 |
Total Assets | 465,305 | 484,396 |
Current liabilities | ||
Accounts payable | 118,055 | 122,442 |
Billings in excess of costs | 1,421 | 6,025 |
Compensation and other employee benefits | 34,917 | 36,783 |
Short-term debt | 15,750 | 22,000 |
Other accrued liabilities | 17,693 | 25,268 |
Total current liabilities | 187,836 | 212,518 |
Non-current liabilities | ||
Long-term debt | 67,842 | 89,615 |
Deferred tax liability | 89,667 | 91,343 |
Other non-current liabilities | 2,559 | 1,610 |
Total non-current liabilities | 160,068 | 182,568 |
Total liabilities | 347,904 | 395,086 |
Commitments and contingencies (Note 16) | ||
Shareholders' Equity | ||
Preferred stock; $0.01 par value; 10,000,000 shares authorized; No shares issued and outstanding | 0 | 0 |
Common stock; $0.01 par value; 100,000,000 shares authorized; 10,894,924 and 10,612,246 shares issued and outstanding | 109 | 106 |
Additional paid in capital | 63,910 | 58,640 |
Retained earnings | 57,959 | 34,304 |
Accumulated other comprehensive loss | (4,577) | (3,740) |
Total shareholders' equity | 117,401 | 89,310 |
Total Liabilities and Shareholders' Equity | $ 465,305 | $ 484,396 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Stockholders' Equity Attributable to Parent [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 10,894,924 | 10,612,246 |
Common stock, shares outstanding (in shares) | 10,894,924 | 10,612,246 |
Consolidated and Combined Stat6
Consolidated and Combined Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities | |||
Net income | $ 23,655 | $ 30,973 | $ 22,812 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization expense | 1,920 | 3,138 | 2,149 |
Loss on disposal of property, plant, and equipment | 405 | 686 | 103 |
Stock-based compensation | 4,649 | 6,658 | 2,324 |
Amortization of debt issuance costs | 1,198 | 1,130 | 185 |
Changes in assets and liabilities: | |||
Receivables | 37,814 | (9,886) | 21,608 |
Other assets | (13,903) | 12,005 | (1,329) |
Accounts payable | (3,766) | 8,874 | 6,169 |
Billings in excess of costs | (4,605) | 219 | (5,266) |
Deferred taxes | (2,163) | (9,404) | 11,282 |
Compensation and other employee benefits | (1,808) | 275 | (13,245) |
Other liabilities | (6,778) | (25,788) | (3,813) |
Net cash provided by operating activities | 36,618 | 18,880 | 42,979 |
Investing activities | |||
Purchases of capital assets | (741) | (793) | (3,847) |
Proceeds from the disposition of assets | 116 | 387 | 497 |
Distributions from equity investment | 573 | 524 | 0 |
Net cash (used in) provided by investing activities | (52) | 118 | (3,350) |
Financing activities | |||
Proceeds from issuance of long-term debt | 0 | 0 | 140,000 |
Repayments of long-term debt | (29,000) | (23,375) | (2,625) |
Proceeds from revolver | 74,000 | 324,000 | 23,000 |
Repayments of revolver | (74,000) | (324,000) | (23,000) |
Distribution to subsidiary of Exelis | 0 | 0 | (136,281) |
Proceeds from exercise of stock options | 2,146 | 239 | 0 |
Payment of debt issuance costs | (221) | 0 | (3,701) |
Proceeds from insurance financing | 0 | 14,857 | 0 |
Repayments of insurance financing | 0 | (12,130) | 0 |
Payments of employee withholding taxes on share-based compensation | (987) | (1,301) | (229) |
Working capital adjustment payment from Exelis | 0 | 0 | 2,600 |
Transfer to Former Parent, net | 0 | 0 | (6,371) |
Net cash (used in) financing activities | (28,062) | (21,710) | (6,607) |
Exchange rate effect on cash | (848) | (116) | (645) |
Net change in cash | 7,656 | (2,828) | 32,377 |
Cash-beginning of year | 39,995 | 42,823 | 10,446 |
Cash-end of year | 47,651 | 39,995 | 42,823 |
Supplemental Disclosure of Cash Flow Information: | |||
Interest paid | 5,278 | 6,047 | 1,201 |
Income taxes paid | 26,068 | 16,096 | 2,667 |
Non-cash investing activities: | |||
Non-cash investing activities: Purchase of capital assets on account | $ 0 | $ 0 | $ 92 |
Consolidated and Combined Stat7
Consolidated and Combined Statements of Shareholders' and Parent Company Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock Issued | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Net Parent Company Equity | Spinoff | SpinoffCommon Stock Issued | SpinoffAdditional Paid-in Capital | SpinoffNet Parent Company Equity |
Balance (in shares) at Dec. 31, 2013 | 0 | |||||||||
Balance at Dec. 31, 2013 | $ 191,332 | $ 0 | $ 0 | $ 0 | $ (886) | $ 192,218 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Net income | 22,812 | 3,331 | 19,481 | |||||||
Foreign currency translation adjustments | (1,642) | (1,642) | ||||||||
Transfer to former parent, net | (6,371) | (6,371) | ||||||||
Distribution to subsidiary of Exelis | (136,281) | |||||||||
Spin-off related adjustments | (17,841) | (17,841) | ||||||||
Unrealized (loss) gain on cash flow hedge | 0 | |||||||||
Reclassification of net parent equity to common stock and additional paid-in capital in conjunction with the Spin-off (in shares) | 10,474 | |||||||||
Reclassification of net parent equity to common stock and additional paid-in capital in conjunction with the Spin-off | $ 0 | $ 105 | $ 51,101 | $ (51,206) | ||||||
Employee stock awards and stock options (in shares) | 11 | |||||||||
Employee stock awards and stock options | (229) | (229) | ||||||||
Stock-based compensation | 2,095 | 2,095 | ||||||||
Balance (in shares) at Dec. 31, 2014 | 10,485 | |||||||||
Balance at Dec. 31, 2014 | 53,875 | $ 105 | 52,967 | 3,331 | (2,528) | 0 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Net income | 30,973 | 30,973 | ||||||||
Foreign currency translation adjustments | (1,186) | (1,186) | ||||||||
Unrealized (loss) gain on cash flow hedge | (26) | (26) | ||||||||
Employee stock awards and stock options (in shares) | 127 | |||||||||
Employee stock awards and stock options | (576) | $ 1 | (577) | |||||||
Stock-based compensation | 6,250 | 6,250 | ||||||||
Balance (in shares) at Dec. 31, 2015 | 10,612 | |||||||||
Balance at Dec. 31, 2015 | 89,310 | $ 106 | 58,640 | 34,304 | (3,740) | 0 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Net income | 23,655 | 23,655 | ||||||||
Foreign currency translation adjustments | (975) | (975) | ||||||||
Unrealized (loss) gain on cash flow hedge | 138 | 138 | ||||||||
Employee stock awards and stock options (in shares) | 283 | |||||||||
Employee stock awards and stock options | 1,291 | $ 3 | 1,288 | |||||||
Stock-based compensation | 3,982 | 3,982 | ||||||||
Balance (in shares) at Dec. 31, 2016 | 10,895 | |||||||||
Balance at Dec. 31, 2016 | $ 117,401 | $ 109 | $ 63,910 | $ 57,959 | $ (4,577) | $ 0 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Our Business Vectrus, Inc. (Vectrus, the Company, our company, we, us or our) is a leading provider of services to the U.S. government worldwide. We operate in one segment and offer the following services: facility and logistics services and information technology and network communications services. On September 27, 2014, Exelis Inc. (Exelis) completed the spin-off (the Spin-off) of Vectrus, formerly Exelis' Mission Systems business, which was part of Exelis' Information and Technical Services segment, and Vectrus became an independent, publicly traded company. Vectrus was incorporated in the State of Indiana on February 4, 2014. Unless the context otherwise requires, references in these notes to "Vectrus", "we," "us," "our," "the Company" and "our Company" refer to Vectrus, Inc. References in these notes to Exelis or "Former Parent" refer to Exelis Inc., an Indiana corporation, and its consolidated subsidiaries (other than Vectrus). Exelis was acquired by Harris Corporation in May 2015. Principles of Consolidation and Equity Investment Vectrus consolidates companies in which it has a controlling financial interest. All intercompany transactions and balances have been eliminated. In 2011, we entered into a joint venture agreement with Shaw Environmental & Infrastructure, Inc., which is now CB&I Federal Services LLC. Pursuant to the joint venture agreement, High Desert Support Services, LLC (HDSS) was established to pursue and perform work on the Ft. Irwin Installation Support Services Contract, which was awarded to HDSS in October 2012. We account for our investment in HDSS under the equity method as we have the ability to exercise significant influence, but do not hold a controlling interest. We record our proportionate 40% share of income or losses, which has historically been insignificant, in the Consolidated and Combined Statements of Income. Our investment in HDSS is recorded in other non-current assets in the Consolidated Balance Sheets. When we receive cash distributions from HDSS, the cash distribution is compared to cumulative earnings and any excess is recorded as a distribution from equity investment in the Consolidated and Combined Statements of Cash Flows. Any remaining cash distribution is recorded in other assets in the Consolidated and Combined Statements of Cash Flows. Principles of Combination and Basis of Presentation The Consolidated and Combined Financial Statements reflect the consolidated operations of Vectrus as a separate stand-alone entity. Prior to September 27, 2014, our Consolidated and Combined Financial Statements have been prepared on a stand-alone basis and have been derived from the consolidated financial statements of Exelis and accounting records of Exelis. The Consolidated and Combined Financial Statements reflect our financial position, results of operations and cash flows as we were historically managed, in conformity with U.S. generally accepted accounting principles (GAAP). Prior to September 27, 2014, all intercompany transactions between Vectrus and Exelis have been included in these Consolidated and Combined Financial Statements and were considered to be effectively settled for cash at the time the transaction was recorded. The total net effect of the settlement of these intercompany transactions is reflected in the Consolidated and Combined Statements of Cash Flows as a financing activity. Prior to September 27, 2014, our Consolidated and Combined Financial Statements included expenses of Exelis allocated to us for certain functions provided by Exelis, including, but not limited to, general corporate expenses related to finance, legal, information technology, human resources, communications, ethics and compliance, shared services, employee benefits and incentives, insurance and stock-based compensation. These expenses were allocated to us on the basis of direct usage when identifiable, with the remainder allocated on the basis of revenue, headcount or other measures. We consider the basis on which the expenses had been allocated to be a reasonable reflection of the utilization of services provided to, or the benefit received by, us during the periods presented. The allocations may not, however, reflect the expense we would have incurred as an independent, publicly traded company for the periods presented. Actual costs that may have been incurred if we had been a stand-alone company would depend on a number of factors, including the organization of our operations, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. Following our Spin-off from Exelis, we perform these functions using our own resources or purchased services. For an interim period, however, some of these functions were provided by Exelis under a transition services agreement (See Note 15, "Agreements and Transactions with Former Parent"). Exelis used a centralized approach to cash management and financing of its operations. Prior to the Spin-off, the majority of our cash was transferred to Exelis daily and Exelis funded our operating and investing activities as needed. Cash transfers to and from the cash management accounts of Exelis are reflected in the Consolidated and Combined Statements of Cash Flows as “Transfer to Former Parent, net.” The Consolidated and Combined Financial Statements also include the push down of certain assets and liabilities that were historically held at the Exelis corporate level but were specifically identifiable or otherwise allocable to us. The cash and cash equivalents held by Exelis at the corporate level, prior to the Spin-off, were not specifically identifiable to the Company and therefore were not allocated to us for any of the periods presented. Third-party debt and the related interest expense of Exelis were not allocated to us for any of the periods presented as we are not the legal obligor of the debt and the Exelis borrowings were not directly attributable to our business. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, revenue recognition, income tax contingency accruals, fair value and impairment of goodwill and valuation of assets and certain contingent liabilities. Actual results could differ from these estimates. Revenue Recognition As a defense contractor engaging in long-term contracts, the majority of our revenue is derived from long-term service contracts for which revenue is recognized under the percentage-of-completion method based on levels of effort or percentage of costs incurred to total costs. For levels of effort, revenue and profits are recognized based upon the ratio of actual services delivered to estimated total services to be delivered under the contract. Under the cost-to-total cost method, revenue is recognized based upon the ratio of costs incurred to estimated total costs at completion. Revenue under cost-reimbursable contracts is recorded as costs are incurred and includes estimated earned fees or profits calculated on the basis of the relationship between costs incurred and total estimated costs. Revenue and profits on time-and-material type contracts are recognized based on billable rates multiplied by direct labor hours incurred plus material and other reimbursable costs incurred. The completed contract method is utilized when reasonable and reliable cost estimates for a project cannot be made. Amounts invoiced to customers in excess of revenue recognized are recorded as deferred revenue, until the revenue recognition criteria are satisfied, and are recorded as billings in excess of costs in the accompanying Consolidated Balance Sheets. Revenue that is earned and recognized in excess of amounts invoiced is recorded as a component of receivables. During the performance of our long-term contracts, estimated final contract prices and costs are reviewed periodically and changes are made as required and recorded as changes in revenue and cost of revenue in the period in which they are determined. Additionally, the fees under certain contracts may be increased or decreased in accordance with cost or performance incentive provisions which measure actual performance against established targets or other criteria. Such incentive fee awards or penalties are included in revenue when there is sufficient information to reasonably assess anticipated contract performance. Amounts representing contract change orders, claims, requests for equitable adjustment, or limitations in funding on contracts are recorded only if it is probable the claim will result in additional contract revenue and the amounts can be reliably estimated. Changes in contract revenue and cost estimates and the related effect to operating income are recognized using a cumulative catch-up adjustment, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a contract’s percentage of completion. Changes in estimated revenue and cost could result in a forward loss or an adjustment to a forward loss. Provisions for estimated losses on uncompleted long-term contracts are made in the period in which such losses are determined and are recorded as a component of cost of revenue. Cumulative catch-up adjustments for the years ended December 31, 2016 , 2015 and 2014 are presented in the following table: Year Ended December 31, (In thousands) 2016 2015 2014 Favorable adjustments $ 15,296 $ 9,721 $ 3,981 Unfavorable adjustments ¹ (7,837 ) (11,641 ) (6,629 ) Net favorable (unfavorable) adjustments $ 7,459 $ (1,920 ) $ (2,648 ) ¹ Of the $6.6 million unfavorable change in estimates in 2014, $2.5 million is due to the TARS program, which was retained by Exelis following the Spin-off. Our primary customer is the U.S. Department of Defense, with a high concentration in the U.S. Army. For each of the years ended December 31, 2016 , 2015 and 2014 , we had total revenue of $1.2 billion , all of which was derived from U.S. government customers. For the years ended December 31, 2016 , 2015 and 2014 , we generated approximately 84% , 85% and 88% , respectively, of our total revenue from the U.S. Army. Income Taxes We determine the provision for income taxes using the asset and liability approach. Under this approach, deferred income taxes represent the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. In assessing the need for a valuation allowance, we look to the future reversal of existing taxable temporary differences, taxable income in carryback years, the feasibility of tax planning strategies and estimated future taxable income. The valuation allowance can be affected by changes to tax laws, changes to statutory tax rates and changes to future taxable income estimates. Prior to September 27, 2014, our operating results were included in the consolidated U.S. Federal and state income tax returns of Exelis as well as in certain tax filings of Exelis for non-U.S. jurisdictions. Amounts presented in these Consolidated and Combined Financial Statements related to income taxes have been determined on a separate return basis. Our contribution to the tax position of Exelis on a separate return basis for periods prior to September 27, 2014 has been included in these financial statements. Our separate return basis tax losses and tax credits may not reflect the tax positions taken or to be taken by Exelis. In many cases the tax losses and tax credits we generated have been available for use by Exelis and may remain with Exelis after the separation from Exelis. Goodwill Goodwill represents purchase consideration paid in a business combination that exceeds the fair values assigned to the net assets of acquired businesses. Goodwill is not amortized, but instead is tested for impairment annually (or more frequently if impairment indicators arise, such as changes to the reporting unit structure or significant adverse changes in the business climate). We conduct our annual impairment testing during the fourth fiscal quarter. The impairment test is a two-step process measuring the magnitude of any impairment. In the first step, the estimated fair value of the reporting unit is developed and compared to the carrying value of the reporting unit. If the estimated fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and the second step of the impairment test is not performed. If the carrying value of the reporting unit exceeds its estimated fair value, then the second step of the impairment test is performed in order to measure the impairment loss to be recorded. If the carrying value of the reporting unit's goodwill exceeds its implied fair value, then we record an impairment loss equal to the difference. We estimate the fair value of our reporting unit using an income approach and a market approach. Under the income approach, we estimate fair value based on the present value of estimated future cash flows. Under the market approach, we compare our company to select reasonably similar publicly traded companies. No impairment charges related to goodwill have been recorded during 2016 , 2015 or 2014 . There were no acquisitions during the years ended December 31, 2016 and 2015 or any prior periods. Severance Expense We periodically initiate management approved restructuring activities to achieve cost savings through reduced operational redundancies and to strategically position ourselves in the market in response to prevailing economic conditions and associated customer demand. Costs associated with restructuring actions can include severance and related benefit charges. For involuntary separation plans, a liability is recognized when it is probable and reasonably estimable. For voluntary separation plans, a liability is recognized when the employee irrevocably accepts the termination. Foreign Currency Translation The financial statements of programs for which the functional currency is not the U.S. dollar, are translated into U.S. dollars. Balance sheet accounts are translated at the exchange rate in effect at the end of each period; income statement accounts are translated at the average rates of exchange prevailing during the period. Gains and losses on foreign currency translations are recorded as translation adjustments to other comprehensive (loss) income. Net gains or losses from foreign currency transactions are reported in selling, general and administrative (SG&A) expenses and have historically been immaterial. Receivables Receivables include amounts billed and currently due from customers, amounts unbilled, certain estimated contract change amounts, estimates related to expected award fees, claims or requests for equitable adjustment in negotiation that are probable of recovery, and amounts retained by the customer pending contract completion. Property, Plant and Equipment, Net Property, plant and equipment, net are stated at cost less accumulated depreciation. Major improvements are capitalized at cost while expenditures for maintenance, repairs and minor improvements are expensed. For asset sales or retirements, the assets and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is reflected in operating income. Depreciation and amortization is generally computed using either an accelerated or straight-line method and is based on estimated useful lives or lease term as follows: Years Buildings and improvements 5 – 40 Machinery and equipment 3 – 10 Furniture, fixtures, and office equipment 3 – 7 Operating Leases Many of our real property lease agreements contain incentives for tenant improvements, rent holidays, or rent escalation clauses. For incentives for tenant improvements, the Company records a deferred rent liability and amortizes the deferred rent over the term of the lease as a reduction to rent expense. For rent holidays and rent escalation clauses during the lease term, the Company records minimum rental expenses on a straight-line basis over the term of the lease. Leasehold improvements are amortized over the lesser of the remaining life of the lease or the estimated useful life of the improvement. Long-Lived Asset Impairment Long-lived assets are tested for impairment whenever events or changes in circumstances indicate their carrying value may not be recoverable. We assess the recoverability of long-lived assets based on the undiscounted future cash flow the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When an impairment is identified, we reduce the carrying value of the asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. Stock-Based Compensation We recognize stock-based compensation expense primarily within SG&A expenses based on the grant date fair values, net of estimated forfeitures, for all share-based awards granted over the requisite service periods of the awards, which is generally equivalent to the vesting terms. Prior to September 27, 2014, our employees and directors participated in equity incentive plans maintained by Exelis. Stock-based compensation expense related to the Exelis plans is immaterial. Fair Value Measurements We determine fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In measuring fair value, a fair value hierarchy is applied which categorizes and prioritizes the inputs used to estimate fair value into three levels. The fair value hierarchy is based on maximizing the use of observable inputs and minimizing the use of unobservable inputs when measuring fair value. Classification within the fair value hierarchy is based on the lowest level input that is significant to the fair value measurement. There are three levels of the fair value hierarchy. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices (in nonactive markets or in active markets for similar assets or liabilities), inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 inputs are unobservable inputs for the assets or liabilities. Segment Information Management has concluded that the Company operates in one segment based upon the information used by the chief operating decision maker in evaluating the performance of the Company’s business and allocating resources and capital. Although we perform services worldwide, all of our revenue for the years ended December 31, 2016 , 2015 and 2014 was with the U.S. government. Commitments and Contingencies We record accruals for commitments and loss contingencies when they are probable of occurrence and the amounts can be reasonably estimated. In addition, legal fees are accrued for cases where a loss is probable and the related fees can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount of loss. We review these accruals quarterly and adjust the accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other updated information. Earnings Per Share We compute earnings per common share on the basis of the weighted average number of common shares, and, where dilutive, common share equivalents, outstanding during the indicated periods. Derivative Instruments Derivative instruments are recognized as either an asset or liability at fair value in our Consolidated Balance Sheets and are classified as current or long-term based on the scheduled maturity of the instrument. Our derivative instruments have been formally designated and qualify as part of a cash flow hedging relationship under applicable accounting standards. The derivative instruments are adjusted to fair value through accumulated other comprehensive income (loss). If we were to determine that a derivative was no longer highly effective as a hedge, we would discontinue the hedge accounting prospectively. Gains or losses would be immediately reclassified from accumulated other comprehensive income (loss) to earnings relating to hedged forecasted transactions that are no longer probable of occurring. Gains or losses relating to terminations of effective cash flow hedges in which the forecasted transactions would still be probable of occurring would be deferred and recognized consistent with the income or loss recognition of the underlying hedged item. Refer to Note 7, "Derivative Instruments" for additional information regarding our derivative activities. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS Standard Description Date of issuance Effect on the financial statements or other significant matters Standards that are not yet adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, as amended by ASU 2015-14 The standard will replace existing revenue recognition standards and significantly expand the disclosure requirements for revenue arrangements. It may be adopted either retrospectively or on a modified retrospective basis to new contracts and existing contracts with remaining performance obligations as of the effective date. The standard is effective for the first interim period within annual reporting periods beginning after December 15, 2017. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016. In addition, the Financial Accounting Standards Board has issued related revenue recognition guidance in four ASUs: principal versus agent considerations (ASU 2016-08), identifying performance obligations and licensing (ASU 2016-10), a revision of certain SEC staff observer comments (ASU 2016-11) and implementation guidance (ASU 2016-12). May 2014, as amended in August 2015 Our initial analysis identifying areas that will be impacted by the new guidance is substantially complete, and we are currently analyzing the potential impacts to the consolidated financial statements and related disclosures. We plan to adopt the standard in the first quarter of 2018 using the modified retrospective transition method with a cumulative-effect adjustment to opening retained earnings. We believe the most significant impact of the new guidance relates to our accounting for firm-fixed price contracts. Our firm-fixed price contracts will continue to recognize revenue and earnings over time because of the continuous transfer of services to the customer, generally using an input measure (e.g., costs incurred) to reflect progress. However, we will be precluded from recognizing adjustments in estimated costs at completion as costs incurred in excess of billings on the balance sheet for firm-fixed price contracts. Adjustments in contract estimates for firm-fixed price contracts will result in more variability to revenue from period to period. The total impact of an adjustment in estimated profit recorded to date on a contract will continue to be recognized in the period it is identified (cumulative catch-up method). Despite this variability, a firm-fixed price contract’s cash flows and overall profitability at completion are the same. Anticipated losses on contracts will continue to be recognized in the quarter in which they are identified. ASU 2016-02, Leases The objective of the amendment to this standard is to recognize lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The standard is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of this standard is permitted. February 2016 The primary effect of adopting the new standard will be to record assets and obligations for current operating leases. As disclosed in Note 10, there are $6.4 million in future minimum rental payments for operating leases that are not currently on our balance sheet; therefore, we expect this will not have a material impact on our balance sheets and related disclosures. ASU 2016-09, Improvements to Employee Share-Based Payment Accounting The objective of the standard is to simplify several aspects of accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. March 2016 We will adopt the standard in the first quarter of 2017. All excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit in the income statement prospectively. The tax effects of exercised or vested awards will be treated as discrete items in the reporting period in which they occur and we will recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. We will also elect a new accounting policy in which we will no longer estimate the total number of awards for which the requisite service period will not be rendered. Instead, we will elect to account for award forfeitures as they occur. The effect of the adoption will result in a cumulative-effect adjustment to opening retained earnings for unrecognized excess tax benefits and the effect of accounting for forfeitures as they occur, which is not expected to be material. Cash paid by us when directly withholding shares for tax-withholding purposes will be classified as a financing activity and excess tax benefits will be classified along with other income tax cash flows as an operating activity in the statement of cash flows. ASU 2016-16, Intra-Entity Transfers of Assets Other than Inventory The objective of this standard is to require companies to account for the income tax effects of intercompany sales and transfers of assets other than inventory ( e.g., intangible assets) when the transfer occurs. Prior to the implementation of this guidance, companies are required to defer the income tax effects of intercompany transfers of assets until the asset has been sold to an outside party or otherwise recognized (e.g., depreciated, amortized, or impaired). Companies will still be required to defer the income tax effects of intercompany sales and transfers of inventory in an exception to the income tax accounting guidance. The standard is effective in annual periods beginning after December 15, 2017, and interim periods within those periods. Early adoption is permitted as of the beginning of an annual period. October 2016 We are currently evaluating the impact of adopting ASU 2016-16; however, the standard is not expected to have a material impact on our Consolidated and Combined Financial Statements. Standards that were adopted ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments ASU 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. Topic 230 lacked consistent principles for evaluating the classification of cash payments and receipts in the statement of cash flows, which led to diversity in practice. ASU 2016-15 was issued to reduce diversity in practice with respect to eight types of cash flows. One of the eight types of cash flows, distributions received from equity method investees, applies to us. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted for all entities. August 2016 We have adopted the guidance as outlined in ASU 2016-15. The adoption had no impact on our financial statements as we were already recording such items in accordance with the new standard. ASU 2014-15, Presentation of Financial Statements The objective of the standard is to provide guidance on management’s responsibility to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. The standard is effective for the annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. August 2014 We have adopted the guidance as outlined in ASU 2014-15. The adoption had no impact on our financial statements. Other new pronouncements issued but not effective until after December 31, 2016 are not expected to have a material impact on our financial position, results of operations or cash flows. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES Prior to September 27, 2014, our operating results were included in the consolidated U.S. Federal and state income tax returns of Exelis as well as in certain tax filings of Exelis for non-U.S. jurisdictions. Amounts presented in these Consolidated and Combined Financial Statements related to income taxes have been determined on a separate return basis. Our contribution to the tax position of Exelis on a separate return basis for the periods prior to September 27, 2014, has been included in these financial statements. Our separate return basis tax losses and tax credits may not reflect the tax positions taken or to be taken by Exelis. In many cases the tax losses and tax credits we generated have been available for use by Exelis and remain with Exelis. We determine the provision for income taxes using the asset and liability approach. Under this approach, deferred income taxes represent the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. In assessing the need for a valuation allowance, we look to the future reversal of existing taxable temporary differences, taxable income in carryback years, the feasibility of tax planning strategies and estimated future taxable income. The valuation allowance can be affected by changes to tax laws, changes to statutory tax rates and changes to future taxable income estimates. During the year ended December 31, 2016 , we established a valuation allowance of $0.2 million for deferred tax assets that are not expected to be realized in the foreseeable future. We provide for U.S. deferred taxes on the excess of financial reporting basis over the U.S. tax basis for our foreign earnings, when we do not plan to reinvest such earnings indefinitely outside the U.S. The source of pre-tax income and the components of income tax expense at December 31, 2016 , 2015 and 2014 , respectively, are as follows: (in thousands) 2016 2015 2014 Income Components United States $ 37,276 $ 33,274 36,377 Foreign (89 ) 157 514 Total pre-tax income from continuing operations $ 37,187 $ 33,431 $ 36,891 Income tax expense components Current income tax provision United States-Federal $ 15,106 $ 10,549 $ 2,385 United States-State and local 311 401 29 Foreign 371 910 382 Total current income tax provision 15,788 11,860 2,796 Deferred income tax provision (benefit) United States-Federal (1,733 ) (9,350 ) 10,385 United States-State and local (278 ) (42 ) 898 Foreign (245 ) (10 ) — Total deferred income tax provision (benefit) (2,256 ) (9,402 ) 11,283 Total income tax expense $ 13,532 $ 2,458 $ 14,079 Effective income tax rate 36.4 % 7.4 % 38.2 % A reconciliation of the income tax provision at the U.S. statutory rate to the effective income tax rate as reported is as follows: 2016 2015 2014 Tax provision at U.S. statutory rate 35.0 % 35.0 % 35.0 % State and local income tax, net of Federal benefit 0.1 % 0.7 % 1.6 % Release of uncertain tax positions — % (29.9 )% — % Indemnity expense — % 3.3 % — % Other 1.3 % (1.7 )% 1.6 % Effective income tax rate 36.4 % 7.4 % 38.2 % Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities, applying enacted tax rates in effect for the year in which we expect the differences will reverse. Deferred tax assets and liabilities include the following: (in thousands) 2016 2015 Deferred Tax Assets Costs incurred in excess of billings $ 506 $ 2,477 Compensation and benefits 10,816 11,353 Reserves 2,660 2,371 Other 3,116 3,332 Net Operating Losses 168 106 Subtotal $ 17,266 $ 19,639 Valuation allowance (157 ) (96 ) Total deferred tax assets $ 17,109 $ 19,543 Deferred Tax Liabilities Goodwill $ (77,171 ) $ (77,306 ) Property, plant and equipment, net (769 ) (1,165 ) Unbilled receivables (27,431 ) (31,218 ) Other liabilities (1,178 ) (1,187 ) Total deferred tax liabilities $ (106,549 ) $ (110,876 ) Deferred taxes are classified in the Consolidated Balance Sheets as follows: (in thousands) 2016 2015 Non-current assets $ 227 $ 10 Non-current liabilities 89,667 91,343 Net deferred tax liabilities $ 89,440 $ 91,333 Uncertain Tax Position A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 31, 2016 , 2015 and 2014 is as follows: (in thousands) 2016 2015 2014 Unrecognized tax benefits-January 1, $ — $ 7,604 $ 8,541 Additions for: Current year tax positions 429 — — Prior year tax positions — — 6,954 Reductions for: Prior year tax positions — (7,604 ) (7,891 ) Unrecognized tax benefits-December 31, $ 429 $ — $ 7,604 As of December 31, 2016 , 2015 and 2014 , unrecognized tax benefits from uncertain tax positions were $0.4 million , $0.0 million and $7.6 million , respectively. We effectively settled $6.9 million of unrecognized tax benefits during 2015 due to the resolution of examinations of tax returns of our Former Parent. The balance of $0.7 million was effectively settled with the filing of our 2014 income tax returns during 2015. We classify interest relating to tax matters as a component of interest expense and tax penalties as a component of income tax expense in our Consolidated and Combined Statements of Income. During 2016 , 2015 and 2014 , we recognized interest expense related to tax matters of $0.0 million , $0.1 million and $0.0 million , respectively. As of December 31, 2016 , 2015 , and 2014 , we had interest accrued for tax matters of $0.0 million , $0.0 million and $0.6 million , respectively. The following table summarizes the Company's earliest open tax years by major jurisdiction; Jurisdiction Earliest Open Year United States 2013 Tax Indemnifications In connection with the Spin-off, pursuant to a Tax Matters Agreement with our Former Parent, our Former Parent agreed to indemnify us for up to $3.3 million of income tax return liabilities, which were settled with the filing of our Former Parent’s 2014 income tax return during the year ended December 31, 2015 . As a result, as of December 31, 2015 , we reduced the tax liabilities, which were included in “other long term liabilities” in the Consolidated Balance Sheets, from $3.2 million to zero , which provided an income tax benefit of $3.2 million . We had a corresponding indemnification receivable, net of interest of $0.1 million , which was included in “other non-current assets” in the Consolidated Balance Sheets. We reduced the indemnification receivable from $3.3 million to zero , creating an expense of $3.3 million , which is included in "selling, general and administrative expenses" in the Consolidated and Combined Statements of Income for the year ended December 31, 2015. The net settlement of these tax liabilities and the indemnification receivable had no impact on our net income. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE Basic earnings per share (EPS) is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS reflects potential dilution that could occur if securities to issue common stock were exercised or converted into common stock. Diluted EPS includes the dilutive effect of share-based compensation outstanding after application of the treasury stock method. Year Ended December 31, (In thousands, except per share data) 2016 2015 2014 Net Income $ 23,655 $ 30,973 $ 22,812 Weighted average common shares outstanding 10,714 10,551 10,476 Add: Dilutive impact of stock options 97 98 76 Add: Dilutive impact of restricted stock units 163 176 140 Diluted weighted average common shares outstanding 10,974 10,825 10,692 Earnings per share Basic $ 2.21 $ 2.94 $ 2.18 Diluted $ 2.16 $ 2.86 $ 2.13 The table below provides a summary of securities that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the period presented. Year Ended December 31, (In thousands) 2016 2015 2014 Anti-dilutive stock options — 13 11 Anti-dilutive restricted stock units 9 — — Total 9 13 11 |
Receivables
Receivables | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
Receivables | RECEIVABLES Receivables were comprised of the following: December 31, (In thousands) 2016 2015 Billed receivables $ 41,992 $ 53,070 Unbilled contract receivables 127,150 154,658 Other 2,930 2,833 Receivables $ 172,072 $ 210,561 As of December 31, 2016 and 2015 , all billed receivables are due from the U.S. government, either directly as prime contractor to the U.S. government or as subcontractor to another prime contractor to the U.S. government. Because the Company’s billed receivables are with the U.S. government, the Company does not believe it has a material credit risk exposure. Unbilled contract receivables represent revenue recognized on long-term contracts in excess of amounts billed as of the balance sheet date. We estimate that approximately $3.8 million of our unbilled contract receivables as of December 31, 2016 may not be collected within the next twelve months. These amounts relate to the timing of the U.S. government review of indirect rates and contract line item realignments with our customers. As part of the Spin-off, Exelis indemnified Vectrus for a receivable of approximately $11.4 million . We recorded a corresponding liability in other accrued liabilities on our Consolidated Balance Sheet as of December 31, 2015 because we were required to remit amounts collected related to the indemnified receivable to Harris Corporation. On November 19, 2015, we reached a settlement for the indemnified receivable of approximately $8.2 million . As part of the settlement, we cleared the corresponding liability by remitting payment of $8.2 million to Harris Corporation for the amount of the settlement. In addition, we recognized $0.2 million in selling, general and administrative expenses due to the effect of foreign currency translation during the period. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Senior Secured Credit Facilities Term Loan and Revolver. In September 2014, Vectrus, Inc. and its wholly-owned subsidiary Vectrus Systems Corporation entered into a credit agreement with a group of lenders, including JPMorgan Chase Bank, N.A. as administrative agent. The credit agreement was amended as of April 19, 2016, to modify certain financial and negative covenants (as so amended, the Credit Agreement). The Credit Agreement provides for $215.0 million in senior secured financing, consisting of a $140.0 million five -year term loan facility (the Term Loan) and a $75.0 million five -year senior secured revolving credit facility (the Revolver, and together with the Term Loan, the Senior Secured Credit Facilities). We used $136.3 million from the Term Loan to pay a distribution to a subsidiary of Exelis on September 26, 2014. The remaining $3.7 million from the Term Loan consisted of debt financing fees, which are included in "Long-term debt, net" in the Consolidated Balance Sheets and are being amortized as an adjustment to interest expense over the life of the Credit Agreement. Amortization expenses relating to debt issuance costs were $1.2 million for the period ended December 31, 2016 and $1.1 million for the period ended December 31, 2015 . These costs are included in interest expense in the Consolidated and Combined Statements of Income. The Term Loan amortizes in quarterly installments at the following rates per annum: 7.5% in year one, 10.0% in each of years two and three, 15.0% in year four and 57.5% in year five. Amounts borrowed under the Term Loan that are repaid or prepaid may not be re-borrowed. Any unpaid amounts must be repaid by September 17, 2019. As of December 31, 2016 , the balance outstanding under the Term Loan was $85.0 million . In addition to the quarterly installments, we voluntarily prepaid $15.0 million of the principal amount of the Term Loan during the year ended December 31, 2016 . The Revolver is available for working capital, capital expenditures, and other general corporate purposes. Up to $35.0 million of the Revolver is available for the issuance of letters of credit, and there is a swingline facility in an amount equal to $10.0 million . The Revolver will mature and the commitments thereunder will terminate on September 17, 2019. As of December 31, 2016 , there were eight letters of credit outstanding in the aggregate amount of $12.3 million , which reduced our borrowing availability to $62.7 million under the Revolver. The Company's aggregate scheduled maturities of the Term Loan as of December 31, 2016 , are as follows: (In thousands) Payments due 2017 $ 15,750 2018 35,875 2019 33,375 Total $ 85,000 Guarantees and Collateral . The indebtedness and other obligations under the Senior Secured Credit Facilities are unconditionally guaranteed jointly and severally on a senior secured basis by Vectrus and certain of its restricted subsidiaries and are secured, subject to permitted liens and other exceptions, by a first-priority lien on substantially all tangible and intangible assets of Vectrus and each domestic guarantor. Mandatory Prepayments . The Term Loan requires the following mandatory prepayments, subject to certain thresholds, exceptions and reinvestment rights: (i) 100% of the net cash proceeds from the incurrence of indebtedness (other than permitted debt), non-ordinary course asset sales or other dispositions of property by Vectrus and its restricted subsidiaries; and (ii) 50% of excess cash flow with step-downs to 25% and 0% based on certain leverage ratios, commencing with the year ended December 31, 2015. Voluntary Prepayments . We may voluntarily prepay the Term Loan in whole or in part at any time without premium or penalty, subject to the payment of customary breakage costs under certain conditions. Voluntary prepayments of the Term Loan will be applied to the remaining installments thereof as directed by us. We may reduce the commitments under the Revolver in whole or in part at any time without premium or penalty. Covenants . The Senior Secured Credit Facilities contain customary covenants, including covenants that, under certain circumstances and subject to certain qualifications and exceptions: limit or restrict our ability to incur additional indebtedness; merge, dissolve, liquidate or consolidate; make acquisitions, investments, advances or loans; dispose of or transfer assets; pay dividends; redeem or repurchase certain debt; and enter into certain restrictive agreements. As of December 31, 2016 , the maximum amount of dividends we could pay was $12.9 million . In addition, we are required to comply with (a) a maximum ratio of total consolidated indebtedness to consolidated earnings before interest, tax, depreciation and amortization (EBITDA) of 3.25 to 1.00 , which will step down to 3.00 to 1.00 beginning with the first quarter of 2017 and 2.75 to 1.00 beginning with the first fiscal quarter of 2018, and (b) a minimum ratio of consolidated EBITDA to consolidated interest expense (net of cash interest income) of 4.50 to 1.00 . As of December 31, 2016 , we had a ratio of total consolidated indebtedness to EBITDA of 1.63 to 1.00 and a ratio of consolidated EBITDA to consolidated interest expense of 9.09 to 1.00 . We were in compliance with all covenants related to the Senior Secured Credit Facilities as of December 31, 2016 . Interest Rates and Fees . Outstanding borrowings under the Senior Secured Credit Facilities accrue interest, at our option, at a per annum rate of (i) LIBOR plus the applicable margin, which ranges from 2.50% to 3.00% , or (ii) a base rate plus the applicable margin. The interest rate under the Senior Secured Credit Facilities at December 31, 2016 was 3.52% . We pay a commitment fee on the undrawn portion of the Revolver ranging from 0.40% to 0.50% , depending on the leverage ratio. Carrying Value and Fair Value . The fair value of the Senior Secured Credit Facilities approximates the carrying value as of December 31, 2016 because the debt bears interest at a floating rate of interest. The fair value is based on observable inputs of interest rates that are currently available to us for debt with similar terms and maturities for non-public debt. Carrying values and fair values of the Term Loan on the Consolidated Balance Sheet as of December 31, 2016 were as follows: December 31, 2016 (In thousands) Carrying Amount Fair Value Short-term debt $ 15,750 $ 15,750 Long-term debt 69,250 69,250 Total debt 85,000 $ 85,000 Debt financing fees (1,408 ) Total debt with debt financing fees $ 83,592 Carrying values and fair values of the Term Loan on the Consolidated Balance Sheet as of December 31, 2015 were as follows: December 31, 2015 (In thousands) Carrying Amount Fair Value Short-term debt $ 22,000 $ 22,000 Long-term debt 92,000 92,000 Total debt 114,000 $ 114,000 Debt financing fees (2,385 ) Total debt with debt financing fees $ 111,615 |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | DERIVATIVE INSTRUMENTS Risk Management Policy We are exposed to the risk that our earnings and cash flows could be adversely impacted due to fluctuations in interest rates. We will periodically enter into interest rate swaps to manage interest costs in which we agree to exchange, at specified intervals, the difference between variable and fixed interest amounts calculated by reference to an agreed-upon notional amount. Derivative instruments are not used for trading purposes or to manage exposure to changes in interest rates for investment securities, and our outstanding derivative instrument does not contain credit risk related contingent features. Collateral is generally not required. Derivative Instrument On May 5, 2016 and May 5, 2015, we entered into derivative instruments to hedge a portion of our exposure to interest rate risk under the variable-rate portion of the Term Loan (the interest rate swaps). The interest rate swaps are designated and qualify as effective cash flow hedges. The contracts, with notional amounts totaling $51.5 million at December 31, 2016 , are recorded at fair value. The interest rate swaps are measured at fair value on a recurring basis and are determined using the income approach based on a discounted cash flow model to determine the present value of future cash flows over the remaining terms of the contracts incorporating observable market inputs such as prevailing interest rates as of the reporting date (Level 2). Changes in fair value of the interest rate swaps are recorded, net of tax, as a component of accumulated other comprehensive loss in the accompanying Consolidated Balance Sheets. We reclassify the effective gain or loss from accumulated other comprehensive loss, net of tax, to interest expense on the Consolidated and Combined Statements of Income as the interest expense is recognized on the related debt. The ineffective portion of the change in fair value of the interest rate swap, if any, is recognized directly in earnings in interest expense. The following table summarizes the amount at fair value and location of the derivative instruments in the Consolidated Balance Sheet as of December 31, 2016 : Fair Value (In thousands) Balance sheet caption Amount Interest rate swap designated as cash flow hedge Other accrued liabilities $ 86 Interest rate swap designated as cash flow hedge Other non-current assets $ 259 The following table summarizes the amount at fair value and location of the derivative instrument in the Consolidated Balance Sheet as of December 31, 2015 : Fair Value (In thousands) Balance sheet caption Amount Interest rate swap designated as cash flow hedge Other accrued liabilities $ 15 Interest rate swap designated as cash flow hedge Other non-current liabilities $ 28 By utilizing interest rate swaps, we are exposed to credit-related losses in the event that the counterparty fails to perform under the terms of the derivative contract. To mitigate this risk, we entered into interest rate swaps with a major financial institution based upon credit ratings and other factors. We regularly assess the creditworthiness of the counterparty. As of December 31, 2016 , the counterparty to the interest rate swaps had performed in accordance with its contractual obligations. Both the counterparty credit risk and our credit risk were considered in the fair value determination. |
Composition of Certain Financia
Composition of Certain Financial Statement Captions | 12 Months Ended |
Dec. 31, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |
Composition of Certain Financial Statement Captions | COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS The following tables present financial information underlying certain balance sheet captions. Compensation and other employee benefits Compensation and other employee benefits were comprised of the following at December 31: (In thousands) 2016 2015 Accrued salaries and wages $ 14,741 $ 13,820 Accrued bonus 4,371 4,302 Accrued employee benefits 15,805 18,661 Total $ 34,917 $ 36,783 Other accrued liabilities Other accrued liabilities were comprised of the following at December 31: (In thousands) 2016 2015 Workers' compensation, auto and general liability reserve $ 6,123 $ 7,537 Defense Base Act insurance financing — 2,727 Other accrued liabilities $ 11,570 $ 15,004 Total $ 17,693 $ 25,268 |
Plant, Property and Equipment,
Plant, Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Plant, Property and Equipment, Net | PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following at December 31 : (In thousands) 2016 2015 Buildings and improvements $ 5,230 $ 4,866 Machinery and equipment 4,422 4,877 Furniture, fixtures and office equipment 3,721 3,772 Property, plant and equipment, gross 13,373 13,515 Less: accumulated depreciation and amortization (10,312 ) (8,753 ) Property, plant and equipment, net $ 3,061 $ 4,762 Depreciation expense of property, plant and equipment was $1.9 million , $3.1 million and $2.1 million in 2016 , 2015 , and 2014 , respectively. |
Leases and Rentals
Leases and Rentals | 12 Months Ended |
Dec. 31, 2016 | |
Leases [Abstract] | |
Leases and Rentals | LEASES AND RENTALS Operating Leases The Company leases certain offices, buildings, automobiles, computers, land and other equipment under operating leases. Such leases expire at various dates through 2021 and may include renewal and payment escalation clauses. The Company often pays maintenance, insurance and tax expense related to leased assets. Rental expenses under our operating leases were $6.0 million , $5.0 million and $9.9 million for 2016 , 2015 and 2014 , respectively. Future operating lease payments under non-cancellable operating leases with an initial term in excess of one year as of December 31, 2016 are shown below. (In thousands) Payments due 2017 $ 3,298 2018 1,809 2019 739 2020 504 2021 72 Total minimum lease payments $ 6,422 Capital Leases There was $0.3 million , $0.5 million and $0.4 million of depreciation on capital leases during the years ended December 31, 2016 , 2015 and 2014 , respectively. Capital lease terms vary in length from 24 to 60 months. The following is a schedule, by year, of future minimum lease payments under capital leases, together with the present value of the net minimum lease payments as of December 31, 2016 : (In thousands) Amount 2017 $ 68 2018 65 2019 50 Total minimum lease payments 183 Less: estimated executory costs — Net minimum lease payments 183 Less: amount representing interest (3 ) Present value of net minimum lease payments $ 180 Capital leases included in property, plant and equipment, net (See Note 9): December 31, (In thousands) 2016 2015 Machinery and equipment $ 1,625 $ 1,625 Accumulated depreciation (1,409 ) (1,064 ) Machinery and equipment, net $ 216 $ 561 Capital lease obligations consisted of the following: December 31, (In thousands) 2016 2015 Other accrued liabilities $ 69 $ 302 Other non-current liabilities 111 186 Total $ 180 $ 488 |
Work Force Reduction and CEO Tr
Work Force Reduction and CEO Transition | 12 Months Ended |
Dec. 31, 2016 | |
Restructuring and Related Activities [Abstract] | |
Work Force Reduction and CEO Transition | WORK FORCE REDUCTION AND CEO TRANSITION Work Force Reduction On October 18, 2016, we announced a corporate reduction in force and a realignment of effort that resulted in the elimination of 62 positions at our Colorado Springs headquarters. As a result, we recognized $1.5 million in severance expense for the year ended December 31, 2016. These expenses are included in selling, general and administrative expenses for the year ended December 31, 2016. CEO Transition On November 30, 2016, Kenneth Hunzeker, our former CEO, notified us of his intention to retire. On December 7, 2016, the Company and Mr. Hunzeker entered into a Separation Agreement. Pursuant to the Separation Agreement, the Company and Mr. Hunzeker agreed that his last day of active full-time employment with the Company was December 5, 2016. We agreed to continue to pay Mr. Hunzeker his present salary for the period from December 6, 2016 through December 5, 2018 (the Severance Pay Period). In addition, Mr. Hunzeker was paid a lump sum payment of $10,000 to assist with relocation expenses and is eligible to continue participation in the Company’s medical, dental and vision plans through the Severance Pay Period. Mr. Hunzeker is eligible for consideration for a bonus for 2016 payable in 2017, and the bonus amount will be calculated based on the performance payout factor that is applied to the 2016 bonus pool, as determined by the Compensation and Personnel Committee of the Board of Directors. As a result, we recognized $1.2 million in severance expense for the year ended December 31, 2016. A portion of the severance payments have been paid out pursuant to agreements entered into with affected employees, and we do not expect to incur significant additional charges related to these activities in future periods. The severance and related benefit costs for the year ended December 31, 2016 are summarized in the table below: (In thousands) Balance, December 31, 2015 $ 11 Severance and benefit related costs - Work Force Reduction 1,479 Severance and benefit related costs - CEO Transition 1,245 Payments (721 ) Balance, December 31, 2016 $ 2,014 |
Post Employment Benefit Plans
Post Employment Benefit Plans | 12 Months Ended |
Dec. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Post Employment Benefit Plans | POST EMPLOYMENT BENEFIT PLANS Vectrus sponsors one defined contribution savings plan, which allows employees to contribute a portion of their pre-tax and/or after-tax income in accordance with specified guidelines. The Company matches a percentage of the employee contributions up to certain limits of employee base pay. Our portion of the matching contributions charged to income amounted to $2.7 million and $3.0 million for the years ended December 31, 2016 and 2015 , respectively. On September 11, 2014, our Board of Directors adopted and approved the Vectrus Systems Corporation Excess Savings Plan (the Excess Savings Plan). Since federal law limits the amount of compensation that can be used to determine employee and employer contribution amounts to our tax-qualified plans, we established the Excess Savings Plan to allow for Company contributions based on an eligible employee's base salary in excess of these limits. No employee contributions are permitted. All balances under the Excess Savings Plan are maintained on the books of the Company and credits and deductions are made to the accumulated savings under the plan based on the earnings or losses attributable to a stable value fund as defined in the Excess Savings Plan. Benefits will be paid in a lump sum generally in the seventh month following the date on which the employee's separation from service occurs. Employees are 100% vested at all times in any amounts credited to their accounts. As of December 31, 2016 , we had accrued $0.2 million of contributions under the Excess Savings Plan. On November 9, 2016, the Compensation Committee approved an amendment and restatement of the Company’s Senior Executive Severance Pay Plan (as amended and restated, the “Amended Plan”), effective as of November 9, 2016. The Amended Plan removed (i) a provision that disallowed severance pay in the event of a termination of the executive’s employment by the Company with a scheduled termination date after the executive’s “Normal Retirement Date” (i.e., the first of the month which coincides with or follows the executive’s 65th birthday) and (ii) a provision that used the executive’s Normal Retirement Date in determining the maximum period of time for which severance pay is calculated. The Amended Plan did not change the schedule of severance pay. Termination benefits offered under the Company’s Amended Plan are other post employment benefits as defined by ASC 712-10 - Compensation - Nonretirement Postemployment Benefits. Benefits under the Amended Plan vest or accumulate with the employee’s years of service; however, the payment of benefits is not probable and the Company does not have the ability to reliably estimate when there will be an involuntary termination without cause under the Amended Plan. Accordingly, the Company does not accrue a benefit obligation for severance costs under the Amended Plan over the duration of executive employment. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | STOCK-BASED COMPENSATION The Company maintains an equity incentive plan (the 2014 Omnibus Plan) to govern awards granted to Vectrus employees and directors, including nonqualified stock options (NQOs), restricted stock units (RSUs), total shareholder return (TSR) awards and other awards. We account for NQOs and stock-settled RSUs as equity-based compensation awards. TSR awards, described below, and cash-settled RSUs are accounted for as liability-based compensation awards. The maximum number of shares of the Company's common stock authorized for issuance under the 2014 Omnibus Plan is 2.6 million shares. As of December 31, 2016 , there were 1.3 million shares remaining available for future awards. Stock-based compensation expense and the associated tax benefits impacting our Consolidated and Combined Statements of Income were as follows: Year Ended December 31, (In thousands) 2016 2015 Compensation costs for equity-based awards $ 3,982 $ 6,250 Compensation costs for liability-based awards 667 408 Total compensation costs, pre-tax $ 4,649 $ 6,658 Future tax benefit $ 1,654 $ 2,373 Liability-based awards are revalued at the end of each reporting period to reflect changes in fair value. The Company paid $0.5 million related to liability-based compensation awards during the years ended December 31, 2016 and 2015 . At December 31, 2016 , total unrecognized compensation costs related to equity-based awards and liability-based awards were $3.2 million and $0.4 million , respectively, which are expected to be recognized ratably over a weighted average period of 1.80 years and 1.74 years, respectively. In connection with the Spin-off, Vectrus employees' outstanding NQOs and RSUs were adjusted to preserve the aggregate intrinsic value of each award at the date of the Spin-off on terms which were in all material respects identical to the terms of the awards replaced. The fair value of the converted NQOs immediately following the Spin-off was higher than the fair value of such awards immediately prior to the Spin-off. As a result, we incurred incremental compensation expense of approximately $0.7 million of which $0.6 million was recognized as of December 31, 2016 . The remaining balance will be expensed over the remaining terms of the specific awards and recognized through 2017. Non-Qualified Stock Options NQOs vest in one-third increments on the first, second and third anniversaries of the grant date and expire 10 years from the date of grant. A summary of the status of our NQOs as of December 31, 2016 , 2015 and 2014 and changes during the years then ended is presented below: Year Ended December 31, 2016 2015 2014 (In thousands, except per share data) Shares Weighted Average Exercise Price Per Share Shares Weighted Average Exercise Price Per Share Shares Weighted Average Exercise Price Per Share Outstanding at January 1, 486 $19.25 446 $17.43 Granted 87 $20.06 58 $31.52 Exercised (158 ) $13.63 (18 ) $13.37 Forfeited, canceled or expired (31 ) $22.51 — $0.00 Outstanding at Spin-off — $0.00 — $0.00 — $ — Conversion related to the Spin-off ¹ — $0.00 — $0.00 275 $14.83 Post Spin-off activities Granted — $0.00 — $0.00 171 $20.62 Outstanding at December 31, 384 $21.47 486 $19.25 446 $17.43 Options exercisable at December 31, 214 $20.35 212 $16.13 47 $13.12 ¹ The weighted average grant date fair value of the stock options converted is equal to the weighted average grant date fair value of such stock options prior to the Spin-off, reduced by the Spin-off conversion adjustment. The following table summarizes information about NQOs outstanding and exercisable as of December 31, 2016 : (In thousands, except per share data) Options Outstanding Options Exercisable Range of Exercise Prices Per Share Number Weighted Average Remaining Contractual Life (In Years) Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Number Weighted Average Remaining Contractual Life (In Years) Weighted Average Exercise Price Per Share Aggregate Intrinsic Value $12.94 - $20.62 283 7.78 $ 19.09 $ 1,344 163 7.20 $ 18.19 $ 919 $22.16 - $32.04 101 7.67 28.10 — 51 7.49 27.21 — Total options and aggregate intrinsic value 384 7.75 $ 21.47 $ 1,344 214 7.27 $ 20.35 $ 919 The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on Vectrus' closing stock price of $23.85 per share on December 31, 2016 , which would have been received by the option holders if all option holders had exercised their options as of that date. There were less than 0.1 million exercisable options "out of the money" as of December 31, 2016 . The aggregate intrinsic value of options exercised during the years ended December 31, 2016 , 2015 and 2014 was $1.6 million , $0.2 million and $0.0 million , respectively. As of December 31, 2016 , the total number of stock options expected to vest (including those that have already vested) was 0.4 million . These stock options have a weighted-average exercise price of $21.56 per share, an aggregate intrinsic value of $1.4 million and a weighted average remaining contractual life of 7.8 years . The fair value of stock options is determined on the date of grant utilizing a Black-Scholes valuation model. The following weighted-average assumptions were utilized in deriving the fair value for NQOs: Year Ending December 31, 2016 2015 2014 Expected volatility 30.2 % 34.1 % 34.6 % Expected life (in years) 7 7 7 Risk-free rates 1.69 % 2.00 % 2.07 % Weighted-average grant date fair value per share $ 7.06 $ 12.42 $ 8.24 Black-Scholes model volatility is based on daily average volatility of our peer group over 7 years , which is consistent with the expected term. Peer group companies were selected from companies within the aerospace and defense industry that most closely match our business, including size, diversification, and customer base. The expected term of the stock option represents the estimated period of time until exercise and is based on the vesting period of the award and the estimated exercise patterns of employees. The risk-free rate is based on the U.S. Treasury stripped coupon rates with maturities corresponding to the expected term of 7 years, measured as of the grant date. Restricted Stock Units The fair value of RSUs is determined based on the closing price of Vectrus common stock on the date of the grant. Under the 2014 Omnibus Plan, RSUs awarded prior to 2014 typically cliff vest 3 years from the date of grant. In general, for employee RSUs granted in 2014 and after, one-third of the award vests on each of the three anniversary dates following the grant date. Director RSUs are granted on the date of the annual meeting and vest the business day immediately prior to the next annual meeting. RSUs have no voting rights. If an employee leaves the Company prior to vesting, whether through resignation or termination for cause, the RSUs are forfeited. If an employee retires or is terminated by the Company other than for cause, all or a pro rata portion of the RSUs may vest. The RSUs outstanding at the date of the Spin-off retained the vesting schedule of the original Exelis awards. The table below provides a roll-forward of outstanding RSUs subsequent to the Spin-off. Year Ended December 31, 2016 2015 2014 (In thousands, except per share data) Shares Weighted Average Grant Date Fair Value Per Share Shares Weighted Average Grant Date Fair Value Per Share Shares Weighted Average Grant Date Fair Value Per Share Outstanding at January 1, 350 $ 22.47 423 $ 19.28 Granted 181 $ 21.25 104 $ 26.69 Vested (206 ) $ 20.56 (171 ) $ 19.03 Forfeited or canceled (40 ) $ 22.68 (6 ) $ 19.86 Outstanding at Spin-off — $ — — $ — — $0.00 Conversion related to the Spin-off — $ — — $ — 240 $17.61 Post Spin-off activities Granted — $ — — $ — 203 $20.62 Vested — $ — — $ — (20 ) $13.03 Forfeited or canceled — $ — — $ — — $0.00 Outstanding at December 31, 285 $ 23.01 350 $ 22.47 423 $19.28 The total grant date fair value of RSUs vested during the years ended December 31, 2016 , 2015 and 2014 was $3.4 million , $3.0 million and $0.3 million , respectively. Total Shareholder Return Awards TSR awards are performance-based cash awards that are subject to a three -year performance period. Any payments earned are made in cash following completion of the performance period according to the achievement of specified performance goals. During the years ended December 31, 2016 and 2015 , we granted 2016 and 2015 TSR awards with aggregate target TSR values of $1.5 million and $1.8 million , respectively. The fair value of TSR awards is measured quarterly and is based on the Company’s performance relative to the performance of the Aerospace and Defense Companies in the S&P 1500 Index. Depending on the Company’s performance during the three -year performance period, payments can range from 0% to 200% of the target value. For the year ended December 31, 2016 , we recorded $0.6 million in compensation expense related to 2015 and 2016 TSR awards. Payment, if any, will be made in January 2018 and January 2019 with respect to the 2015 TSR awards and 2016 TSR awards, respectively. As of December 31, 2016 and 2015, we had $0.9 million and $0.4 million , respectively, recorded as a liability related to TSR awards in compensation and other employee benefits and other non-current liabilities on the Consolidated Balance Sheets. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Shareholders' Equity | SHAREHOLDERS' EQUITY In connection with the Spin-off, each of the shareholders of Exelis received one share of Vectrus common stock for every 18 shares of common stock of Exelis held on the record date resulting in the distribution of 10.5 million shares of Vectrus common stock to Exelis shareholders. As of December 31, 2016 , our authorized capital was comprised of 100.0 million shares of common stock and 10.0 million shares of preferred stock. At December 31, 2016 , there were 10.9 million shares of common stock issued and outstanding. No preferred stock was issued and outstanding at December 31, 2016 and 2015 . We issue shares of our common stock in connection with our 2014 Omnibus Plan. There are 2.6 million shares of common stock authorized under this plan. At December 31, 2016 , we had a remaining balance of 1.3 million shares of common stock available for future grants under this plan. Any shares related to awards that terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of shares, are settled in cash in lieu of shares or are exchanged with the Committee's permission for awards not involving shares and are available again for grant under the 2014 Omnibus Plan. |
Agreements and Transactions wit
Agreements and Transactions with Former Parent | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Agreements and Transactions with Former Parent | TRANSACTIONS WITH FORMER PARENT Agreements with Former Parent Following the Spin-off, Vectrus and Exelis began operating independently of each other, and neither has any ownership interest in the other. In order to govern certain ongoing relationships between Vectrus and Exelis following the Spin-off and to provide mechanisms for an orderly transition, on September 27, 2014, Vectrus and Exelis executed various agreements that govern the ongoing relationships between the companies after the Spin-off and provide for the allocation of employee benefits, income taxes, and certain other liabilities and obligations attributable to periods prior to the Spin-off. The executed agreements include a Distribution Agreement, Employee Matters Agreement, Tax Matters Agreement, Master Transition Services Agreement, Technology License Agreement and Transitional Trademark License Agreement. Parent Company Equity Net transfers to former parent are included within net parent company equity on the Consolidated and Combined Statements of Shareholders' and Parent Company Equity prior to September 27, 2014. The components of the net transfers (to)/from former parent company are as follows: December 31, (In thousands) 2014 Cash pooling and general financing activities $ (33,565 ) Corporate allocations including income taxes 27,194 Total net transfers (to)/from Former Parent Company $ (6,371 ) |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES General From time to time we are involved in legal proceedings that are incidental to the operation of our business. Some of these proceedings seek remedies relating to employment matters, matters in connection with our contracts and matters arising under laws relating to the protection of the environment. Among these proceedings, we are defending a purported class action employment lawsuit that was initiated in the United States District Court for the Western District of Washington in April 2010 against our former parent by individuals who worked on a particular contract in Kuwait after April 12, 2009. The plaintiffs are alleging a breach of employment contract by our former parent due to an alleged violation of Kuwait labor law. On November 3, 2016, following an interlocutory appeal by Vectrus, the Ninth Circuit Court of Appeals affirmed the District Court’s decision certifying a class of plaintiffs. Vectrus continues to vigorously defend the case, and plans to file a petition for certiorari with the U.S. Supreme Court on the class certification decision in March 2017. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including our assessment of the merits of the particular claim, we do not expect that any asserted or unasserted legal claims or proceedings, individually or in the aggregate, will have a material adverse effect on our cash flow, results of operations or financial condition. U.S. Government Contracts, Investigations and Claims We have U.S. government contracts that are funded incrementally on a year-to-year basis. Changes in government policies, priorities or funding levels through agency or program budget reductions by the U.S. Congress or executive agencies could materially adversely affect our financial condition or results of operations. Furthermore, our contracts with the U.S. government may be terminated or suspended by the U.S. government at any time, with or without cause. Such contract suspensions or terminations could result in unreimbursable expenses or charges or otherwise adversely affect our financial condition and results of operations. Departments and agencies of the U.S. government have the authority to investigate various transactions and operations of the Company, and the results of such investigations may lead to administrative, civil or criminal proceedings, the ultimate outcome of which could be fines, penalties, repayments or compensatory or treble damages. U.S. government regulations provide that certain findings against a contractor may lead to suspension or debarment from future U.S. government contracts or the loss of export privileges for a company or an operating division or subdivision. Suspension or debarment could have a material adverse effect on the Company because of its reliance on U.S. government contracts. U.S. government agencies, including the DCAA, the DCMA and others, routinely audit and review our performance on government contracts, indirect rates and pricing practices, and compliance with applicable contracting and procurement laws, regulations and standards. Accordingly, costs billed or billable to U.S. government customers are subject to potential adjustment upon audit by such agencies. The U.S. government agencies also review the adequacy of our compliance with government standards for our business systems, including our accounting, earned value management, estimating, materials management and accounting, purchasing and property management systems. From time to time, U.S. government customers advise the Company of claims and penalties concerning certain potential disallowed costs. When such findings are presented, Vectrus and the U.S. government representatives engage in discussions to enable Vectrus to evaluate the merits of these claims as well as to assess the amounts being claimed. Where appropriate, provisions are made to reflect probable losses to the matters raised by the U.S. government representatives and such provisions are reviewed on a quarterly basis for sufficiency based on the most recent information available to us. We have estimated and accrued $2.8 million and $2.4 million as of December 31, 2016 and 2015 , respectively, in "Other accrued liabilities" in the Consolidated Balance Sheets for open years subject to audit. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected Quarterly Financial Data (Unaudited) | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) The following table comprises selected financial data for the years ended December 31, 2016 and 2015 : 2016 QUARTERS 2015 QUARTERS (In thousands, except per share data) 1st 2nd 3rd 4th 1st 2nd 3rd 4th Total revenue $ 310,682 $ 307,895 $ 283,782 $ 288,160 $ 260,920 $ 309,509 $ 299,061 $ 311,194 Gross Profit 26,971 27,251 26,095 26,595 24,538 26,946 26,837 27,328 Operating income 11,811 11,298 11,162 8,555 9,355 10,845 8,471 11,291 Net income 6,589 6,050 6,607 4,409 4,965 6,020 14,028 5,960 Basic earnings per share $ 0.62 $ 0.57 $ 0.62 $ 0.40 $ 0.47 $ 0.57 $ 1.33 $ 0.57 Diluted earnings per share $ 0.61 $ 0.55 $ 0.60 $ 0.40 $ 0.46 $ 0.56 $ 1.29 $ 0.55 Weighted average number of shares outstanding Basic 10,628 10,702 10,733 10,794 10,495 10,548 10,560 10,599 Diluted 10,856 10,958 11,061 10,988 10,780 10,804 10,848 10,869 |
Description of Business and S25
Description of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation and Equity Investment | Vectrus consolidates companies in which it has a controlling financial interest. All intercompany transactions and balances have been eliminated. In 2011, we entered into a joint venture agreement with Shaw Environmental & Infrastructure, Inc., which is now CB&I Federal Services LLC. Pursuant to the joint venture agreement, High Desert Support Services, LLC (HDSS) was established to pursue and perform work on the Ft. Irwin Installation Support Services Contract, which was awarded to HDSS in October 2012. We account for our investment in HDSS under the equity method as we have the ability to exercise significant influence, but do not hold a controlling interest. We record our proportionate 40% share of income or losses, which has historically been insignificant, in the Consolidated and Combined Statements of Income. Our investment in HDSS is recorded in other non-current assets in the Consolidated Balance Sheets. When we receive cash distributions from HDSS, the cash distribution is compared to cumulative earnings and any excess is recorded as a distribution from equity investment in the Consolidated and Combined Statements of Cash Flows. Any remaining cash distribution is recorded in other assets in the Consolidated and Combined Statements of Cash Flows. |
Basis of Presentation | The Consolidated and Combined Financial Statements reflect the consolidated operations of Vectrus as a separate stand-alone entity. Prior to September 27, 2014, our Consolidated and Combined Financial Statements have been prepared on a stand-alone basis and have been derived from the consolidated financial statements of Exelis and accounting records of Exelis. The Consolidated and Combined Financial Statements reflect our financial position, results of operations and cash flows as we were historically managed, in conformity with U.S. generally accepted accounting principles (GAAP). |
Principles of Combination | Prior to September 27, 2014, all intercompany transactions between Vectrus and Exelis have been included in these Consolidated and Combined Financial Statements and were considered to be effectively settled for cash at the time the transaction was recorded. The total net effect of the settlement of these intercompany transactions is reflected in the Consolidated and Combined Statements of Cash Flows as a financing activity. Prior to September 27, 2014, our Consolidated and Combined Financial Statements included expenses of Exelis allocated to us for certain functions provided by Exelis, including, but not limited to, general corporate expenses related to finance, legal, information technology, human resources, communications, ethics and compliance, shared services, employee benefits and incentives, insurance and stock-based compensation. These expenses were allocated to us on the basis of direct usage when identifiable, with the remainder allocated on the basis of revenue, headcount or other measures. We consider the basis on which the expenses had been allocated to be a reasonable reflection of the utilization of services provided to, or the benefit received by, us during the periods presented. The allocations may not, however, reflect the expense we would have incurred as an independent, publicly traded company for the periods presented. Actual costs that may have been incurred if we had been a stand-alone company would depend on a number of factors, including the organization of our operations, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. Following our Spin-off from Exelis, we perform these functions using our own resources or purchased services. For an interim period, however, some of these functions were provided by Exelis under a transition services agreement (See Note 15, "Agreements and Transactions with Former Parent"). Exelis used a centralized approach to cash management and financing of its operations. Prior to the Spin-off, the majority of our cash was transferred to Exelis daily and Exelis funded our operating and investing activities as needed. Cash transfers to and from the cash management accounts of Exelis are reflected in the Consolidated and Combined Statements of Cash Flows as “Transfer to Former Parent, net.” The Consolidated and Combined Financial Statements also include the push down of certain assets and liabilities that were historically held at the Exelis corporate level but were specifically identifiable or otherwise allocable to us. The cash and cash equivalents held by Exelis at the corporate level, prior to the Spin-off, were not specifically identifiable to the Company and therefore were not allocated to us for any of the periods presented. Third-party debt and the related interest expense of Exelis were not allocated to us for any of the periods presented as we are not the legal obligor of the debt and the Exelis borrowings were not directly attributable to our business. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, revenue recognition, income tax contingency accruals, fair value and impairment of goodwill and valuation of assets and certain contingent liabilities. Actual results could differ from these estimates. |
Revenue Recognition | As a defense contractor engaging in long-term contracts, the majority of our revenue is derived from long-term service contracts for which revenue is recognized under the percentage-of-completion method based on levels of effort or percentage of costs incurred to total costs. For levels of effort, revenue and profits are recognized based upon the ratio of actual services delivered to estimated total services to be delivered under the contract. Under the cost-to-total cost method, revenue is recognized based upon the ratio of costs incurred to estimated total costs at completion. Revenue under cost-reimbursable contracts is recorded as costs are incurred and includes estimated earned fees or profits calculated on the basis of the relationship between costs incurred and total estimated costs. Revenue and profits on time-and-material type contracts are recognized based on billable rates multiplied by direct labor hours incurred plus material and other reimbursable costs incurred. The completed contract method is utilized when reasonable and reliable cost estimates for a project cannot be made. Amounts invoiced to customers in excess of revenue recognized are recorded as deferred revenue, until the revenue recognition criteria are satisfied, and are recorded as billings in excess of costs in the accompanying Consolidated Balance Sheets. Revenue that is earned and recognized in excess of amounts invoiced is recorded as a component of receivables. During the performance of our long-term contracts, estimated final contract prices and costs are reviewed periodically and changes are made as required and recorded as changes in revenue and cost of revenue in the period in which they are determined. Additionally, the fees under certain contracts may be increased or decreased in accordance with cost or performance incentive provisions which measure actual performance against established targets or other criteria. Such incentive fee awards or penalties are included in revenue when there is sufficient information to reasonably assess anticipated contract performance. Amounts representing contract change orders, claims, requests for equitable adjustment, or limitations in funding on contracts are recorded only if it is probable the claim will result in additional contract revenue and the amounts can be reliably estimated. Changes in contract revenue and cost estimates and the related effect to operating income are recognized using a cumulative catch-up adjustment, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a contract’s percentage of completion. Changes in estimated revenue and cost could result in a forward loss or an adjustment to a forward loss. Provisions for estimated losses on uncompleted long-term contracts are made in the period in which such losses are determined and are recorded as a component of cost of revenue. |
Income Taxes | We determine the provision for income taxes using the asset and liability approach. Under this approach, deferred income taxes represent the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. In assessing the need for a valuation allowance, we look to the future reversal of existing taxable temporary differences, taxable income in carryback years, the feasibility of tax planning strategies and estimated future taxable income. The valuation allowance can be affected by changes to tax laws, changes to statutory tax rates and changes to future taxable income estimates. Prior to September 27, 2014, our operating results were included in the consolidated U.S. Federal and state income tax returns of Exelis as well as in certain tax filings of Exelis for non-U.S. jurisdictions. Amounts presented in these Consolidated and Combined Financial Statements related to income taxes have been determined on a separate return basis. Our contribution to the tax position of Exelis on a separate return basis for periods prior to September 27, 2014 has been included in these financial statements. Our separate return basis tax losses and tax credits may not reflect the tax positions taken or to be taken by Exelis. In many cases the tax losses and tax credits we generated have been available for use by Exelis and may remain with Exelis after the separation from Exelis. |
Goodwill | Goodwill represents purchase consideration paid in a business combination that exceeds the fair values assigned to the net assets of acquired businesses. Goodwill is not amortized, but instead is tested for impairment annually (or more frequently if impairment indicators arise, such as changes to the reporting unit structure or significant adverse changes in the business climate). We conduct our annual impairment testing during the fourth fiscal quarter. The impairment test is a two-step process measuring the magnitude of any impairment. In the first step, the estimated fair value of the reporting unit is developed and compared to the carrying value of the reporting unit. If the estimated fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and the second step of the impairment test is not performed. If the carrying value of the reporting unit exceeds its estimated fair value, then the second step of the impairment test is performed in order to measure the impairment loss to be recorded. If the carrying value of the reporting unit's goodwill exceeds its implied fair value, then we record an impairment loss equal to the difference. We estimate the fair value of our reporting unit using an income approach and a market approach. Under the income approach, we estimate fair value based on the present value of estimated future cash flows. Under the market approach, we compare our company to select reasonably similar publicly traded companies. No impairment charges related to goodwill have been recorded during 2016 , 2015 or 2014 . There were no acquisitions during the years ended December 31, 2016 and 2015 or any prior periods. |
Severance Expense | We periodically initiate management approved restructuring activities to achieve cost savings through reduced operational redundancies and to strategically position ourselves in the market in response to prevailing economic conditions and associated customer demand. Costs associated with restructuring actions can include severance and related benefit charges. For involuntary separation plans, a liability is recognized when it is probable and reasonably estimable. For voluntary separation plans, a liability is recognized when the employee irrevocably accepts the termination. |
Foreign Currency Translation | The financial statements of programs for which the functional currency is not the U.S. dollar, are translated into U.S. dollars. Balance sheet accounts are translated at the exchange rate in effect at the end of each period; income statement accounts are translated at the average rates of exchange prevailing during the period. Gains and losses on foreign currency translations are recorded as translation adjustments to other comprehensive (loss) income. Net gains or losses from foreign currency transactions are reported in selling, general and administrative (SG&A) expenses and have historically been immaterial. |
Receivables | Receivables include amounts billed and currently due from customers, amounts unbilled, certain estimated contract change amounts, estimates related to expected award fees, claims or requests for equitable adjustment in negotiation that are probable of recovery, and amounts retained by the customer pending contract completion. |
Property, Plant and Equipment, Net | Property, plant and equipment, net are stated at cost less accumulated depreciation. Major improvements are capitalized at cost while expenditures for maintenance, repairs and minor improvements are expensed. For asset sales or retirements, the assets and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is reflected in operating income. Depreciation and amortization is generally computed using either an accelerated or straight-line method and is based on estimated useful lives or lease term as follows: Years Buildings and improvements 5 – 40 Machinery and equipment 3 – 10 Furniture, fixtures, and office equipment 3 – 7 |
Operating Leases | Many of our real property lease agreements contain incentives for tenant improvements, rent holidays, or rent escalation clauses. For incentives for tenant improvements, the Company records a deferred rent liability and amortizes the deferred rent over the term of the lease as a reduction to rent expense. For rent holidays and rent escalation clauses during the lease term, the Company records minimum rental expenses on a straight-line basis over the term of the lease. Leasehold improvements are amortized over the lesser of the remaining life of the lease or the estimated useful life of the improvement. |
Long-Lived Asset Impairment | Long-lived assets are tested for impairment whenever events or changes in circumstances indicate their carrying value may not be recoverable. We assess the recoverability of long-lived assets based on the undiscounted future cash flow the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When an impairment is identified, we reduce the carrying value of the asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. |
Stock-Based Compensation | We recognize stock-based compensation expense primarily within SG&A expenses based on the grant date fair values, net of estimated forfeitures, for all share-based awards granted over the requisite service periods of the awards, which is generally equivalent to the vesting terms. Prior to September 27, 2014, our employees and directors participated in equity incentive plans maintained by Exelis. Stock-based compensation expense related to the Exelis plans is immaterial. |
Fair Value Measurements | We determine fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In measuring fair value, a fair value hierarchy is applied which categorizes and prioritizes the inputs used to estimate fair value into three levels. The fair value hierarchy is based on maximizing the use of observable inputs and minimizing the use of unobservable inputs when measuring fair value. Classification within the fair value hierarchy is based on the lowest level input that is significant to the fair value measurement. There are three levels of the fair value hierarchy. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices (in nonactive markets or in active markets for similar assets or liabilities), inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 inputs are unobservable inputs for the assets or liabilities. |
Segment Information | Management has concluded that the Company operates in one segment based upon the information used by the chief operating decision maker in evaluating the performance of the Company’s business and allocating resources and capital. Although we perform services worldwide, all of our revenue for the years ended December 31, 2016 , 2015 and 2014 was with the U.S. government. |
Commitments and Contingencies | We record accruals for commitments and loss contingencies when they are probable of occurrence and the amounts can be reasonably estimated. In addition, legal fees are accrued for cases where a loss is probable and the related fees can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount of loss. We review these accruals quarterly and adjust the accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other updated information. |
Earnings Per Share | We compute earnings per common share on the basis of the weighted average number of common shares, and, where dilutive, common share equivalents, outstanding during the indicated periods. |
Derivative Instruments | Derivative instruments are recognized as either an asset or liability at fair value in our Consolidated Balance Sheets and are classified as current or long-term based on the scheduled maturity of the instrument. Our derivative instruments have been formally designated and qualify as part of a cash flow hedging relationship under applicable accounting standards. The derivative instruments are adjusted to fair value through accumulated other comprehensive income (loss). If we were to determine that a derivative was no longer highly effective as a hedge, we would discontinue the hedge accounting prospectively. Gains or losses would be immediately reclassified from accumulated other comprehensive income (loss) to earnings relating to hedged forecasted transactions that are no longer probable of occurring. Gains or losses relating to terminations of effective cash flow hedges in which the forecasted transactions would still be probable of occurring would be deferred and recognized consistent with the income or loss recognition of the underlying hedged item. Refer to Note 7, "Derivative Instruments" for additional information regarding our derivative activities. |
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS Standard Description Date of issuance Effect on the financial statements or other significant matters Standards that are not yet adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, as amended by ASU 2015-14 The standard will replace existing revenue recognition standards and significantly expand the disclosure requirements for revenue arrangements. It may be adopted either retrospectively or on a modified retrospective basis to new contracts and existing contracts with remaining performance obligations as of the effective date. The standard is effective for the first interim period within annual reporting periods beginning after December 15, 2017. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016. In addition, the Financial Accounting Standards Board has issued related revenue recognition guidance in four ASUs: principal versus agent considerations (ASU 2016-08), identifying performance obligations and licensing (ASU 2016-10), a revision of certain SEC staff observer comments (ASU 2016-11) and implementation guidance (ASU 2016-12). May 2014, as amended in August 2015 Our initial analysis identifying areas that will be impacted by the new guidance is substantially complete, and we are currently analyzing the potential impacts to the consolidated financial statements and related disclosures. We plan to adopt the standard in the first quarter of 2018 using the modified retrospective transition method with a cumulative-effect adjustment to opening retained earnings. We believe the most significant impact of the new guidance relates to our accounting for firm-fixed price contracts. Our firm-fixed price contracts will continue to recognize revenue and earnings over time because of the continuous transfer of services to the customer, generally using an input measure (e.g., costs incurred) to reflect progress. However, we will be precluded from recognizing adjustments in estimated costs at completion as costs incurred in excess of billings on the balance sheet for firm-fixed price contracts. Adjustments in contract estimates for firm-fixed price contracts will result in more variability to revenue from period to period. The total impact of an adjustment in estimated profit recorded to date on a contract will continue to be recognized in the period it is identified (cumulative catch-up method). Despite this variability, a firm-fixed price contract’s cash flows and overall profitability at completion are the same. Anticipated losses on contracts will continue to be recognized in the quarter in which they are identified. ASU 2016-02, Leases The objective of the amendment to this standard is to recognize lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The standard is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of this standard is permitted. February 2016 The primary effect of adopting the new standard will be to record assets and obligations for current operating leases. As disclosed in Note 10, there are $6.4 million in future minimum rental payments for operating leases that are not currently on our balance sheet; therefore, we expect this will not have a material impact on our balance sheets and related disclosures. ASU 2016-09, Improvements to Employee Share-Based Payment Accounting The objective of the standard is to simplify several aspects of accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. March 2016 We will adopt the standard in the first quarter of 2017. All excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit in the income statement prospectively. The tax effects of exercised or vested awards will be treated as discrete items in the reporting period in which they occur and we will recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. We will also elect a new accounting policy in which we will no longer estimate the total number of awards for which the requisite service period will not be rendered. Instead, we will elect to account for award forfeitures as they occur. The effect of the adoption will result in a cumulative-effect adjustment to opening retained earnings for unrecognized excess tax benefits and the effect of accounting for forfeitures as they occur, which is not expected to be material. Cash paid by us when directly withholding shares for tax-withholding purposes will be classified as a financing activity and excess tax benefits will be classified along with other income tax cash flows as an operating activity in the statement of cash flows. ASU 2016-16, Intra-Entity Transfers of Assets Other than Inventory The objective of this standard is to require companies to account for the income tax effects of intercompany sales and transfers of assets other than inventory ( e.g., intangible assets) when the transfer occurs. Prior to the implementation of this guidance, companies are required to defer the income tax effects of intercompany transfers of assets until the asset has been sold to an outside party or otherwise recognized (e.g., depreciated, amortized, or impaired). Companies will still be required to defer the income tax effects of intercompany sales and transfers of inventory in an exception to the income tax accounting guidance. The standard is effective in annual periods beginning after December 15, 2017, and interim periods within those periods. Early adoption is permitted as of the beginning of an annual period. October 2016 We are currently evaluating the impact of adopting ASU 2016-16; however, the standard is not expected to have a material impact on our Consolidated and Combined Financial Statements. Standards that were adopted ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments ASU 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. Topic 230 lacked consistent principles for evaluating the classification of cash payments and receipts in the statement of cash flows, which led to diversity in practice. ASU 2016-15 was issued to reduce diversity in practice with respect to eight types of cash flows. One of the eight types of cash flows, distributions received from equity method investees, applies to us. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted for all entities. August 2016 We have adopted the guidance as outlined in ASU 2016-15. The adoption had no impact on our financial statements as we were already recording such items in accordance with the new standard. ASU 2014-15, Presentation of Financial Statements The objective of the standard is to provide guidance on management’s responsibility to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. The standard is effective for the annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. August 2014 We have adopted the guidance as outlined in ASU 2014-15. The adoption had no impact on our financial statements. Other new pronouncements issued but not effective until after December 31, 2016 are not expected to have a material impact on our financial position, results of operations or cash flows. |
Description of Business and S26
Description of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Cumulative Catch-Up Adjustments | Cumulative catch-up adjustments for the years ended December 31, 2016 , 2015 and 2014 are presented in the following table: Year Ended December 31, (In thousands) 2016 2015 2014 Favorable adjustments $ 15,296 $ 9,721 $ 3,981 Unfavorable adjustments ¹ (7,837 ) (11,641 ) (6,629 ) Net favorable (unfavorable) adjustments $ 7,459 $ (1,920 ) $ (2,648 ) ¹ Of the $6.6 million unfavorable change in estimates in 2014, $2.5 million is due to the TARS program, which was retained by Exelis following the Spin-off. |
Schedule of Depreciation and Amortization Useful Lives | Depreciation and amortization is generally computed using either an accelerated or straight-line method and is based on estimated useful lives or lease term as follows: Years Buildings and improvements 5 – 40 Machinery and equipment 3 – 10 Furniture, fixtures, and office equipment 3 – 7 Property, plant and equipment, net consisted of the following at December 31 : (In thousands) 2016 2015 Buildings and improvements $ 5,230 $ 4,866 Machinery and equipment 4,422 4,877 Furniture, fixtures and office equipment 3,721 3,772 Property, plant and equipment, gross 13,373 13,515 Less: accumulated depreciation and amortization (10,312 ) (8,753 ) Property, plant and equipment, net $ 3,061 $ 4,762 |
Recent Accounting Pronounceme27
Recent Accounting Pronouncements (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Schedule of Recent Accounting Pronouncements | Standard Description Date of issuance Effect on the financial statements or other significant matters Standards that are not yet adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, as amended by ASU 2015-14 The standard will replace existing revenue recognition standards and significantly expand the disclosure requirements for revenue arrangements. It may be adopted either retrospectively or on a modified retrospective basis to new contracts and existing contracts with remaining performance obligations as of the effective date. The standard is effective for the first interim period within annual reporting periods beginning after December 15, 2017. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016. In addition, the Financial Accounting Standards Board has issued related revenue recognition guidance in four ASUs: principal versus agent considerations (ASU 2016-08), identifying performance obligations and licensing (ASU 2016-10), a revision of certain SEC staff observer comments (ASU 2016-11) and implementation guidance (ASU 2016-12). May 2014, as amended in August 2015 Our initial analysis identifying areas that will be impacted by the new guidance is substantially complete, and we are currently analyzing the potential impacts to the consolidated financial statements and related disclosures. We plan to adopt the standard in the first quarter of 2018 using the modified retrospective transition method with a cumulative-effect adjustment to opening retained earnings. We believe the most significant impact of the new guidance relates to our accounting for firm-fixed price contracts. Our firm-fixed price contracts will continue to recognize revenue and earnings over time because of the continuous transfer of services to the customer, generally using an input measure (e.g., costs incurred) to reflect progress. However, we will be precluded from recognizing adjustments in estimated costs at completion as costs incurred in excess of billings on the balance sheet for firm-fixed price contracts. Adjustments in contract estimates for firm-fixed price contracts will result in more variability to revenue from period to period. The total impact of an adjustment in estimated profit recorded to date on a contract will continue to be recognized in the period it is identified (cumulative catch-up method). Despite this variability, a firm-fixed price contract’s cash flows and overall profitability at completion are the same. Anticipated losses on contracts will continue to be recognized in the quarter in which they are identified. ASU 2016-02, Leases The objective of the amendment to this standard is to recognize lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The standard is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of this standard is permitted. February 2016 The primary effect of adopting the new standard will be to record assets and obligations for current operating leases. As disclosed in Note 10, there are $6.4 million in future minimum rental payments for operating leases that are not currently on our balance sheet; therefore, we expect this will not have a material impact on our balance sheets and related disclosures. ASU 2016-09, Improvements to Employee Share-Based Payment Accounting The objective of the standard is to simplify several aspects of accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. March 2016 We will adopt the standard in the first quarter of 2017. All excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit in the income statement prospectively. The tax effects of exercised or vested awards will be treated as discrete items in the reporting period in which they occur and we will recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. We will also elect a new accounting policy in which we will no longer estimate the total number of awards for which the requisite service period will not be rendered. Instead, we will elect to account for award forfeitures as they occur. The effect of the adoption will result in a cumulative-effect adjustment to opening retained earnings for unrecognized excess tax benefits and the effect of accounting for forfeitures as they occur, which is not expected to be material. Cash paid by us when directly withholding shares for tax-withholding purposes will be classified as a financing activity and excess tax benefits will be classified along with other income tax cash flows as an operating activity in the statement of cash flows. ASU 2016-16, Intra-Entity Transfers of Assets Other than Inventory The objective of this standard is to require companies to account for the income tax effects of intercompany sales and transfers of assets other than inventory ( e.g., intangible assets) when the transfer occurs. Prior to the implementation of this guidance, companies are required to defer the income tax effects of intercompany transfers of assets until the asset has been sold to an outside party or otherwise recognized (e.g., depreciated, amortized, or impaired). Companies will still be required to defer the income tax effects of intercompany sales and transfers of inventory in an exception to the income tax accounting guidance. The standard is effective in annual periods beginning after December 15, 2017, and interim periods within those periods. Early adoption is permitted as of the beginning of an annual period. October 2016 We are currently evaluating the impact of adopting ASU 2016-16; however, the standard is not expected to have a material impact on our Consolidated and Combined Financial Statements. Standards that were adopted ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments ASU 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. Topic 230 lacked consistent principles for evaluating the classification of cash payments and receipts in the statement of cash flows, which led to diversity in practice. ASU 2016-15 was issued to reduce diversity in practice with respect to eight types of cash flows. One of the eight types of cash flows, distributions received from equity method investees, applies to us. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted for all entities. August 2016 We have adopted the guidance as outlined in ASU 2016-15. The adoption had no impact on our financial statements as we were already recording such items in accordance with the new standard. ASU 2014-15, Presentation of Financial Statements The objective of the standard is to provide guidance on management’s responsibility to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. The standard is effective for the annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. August 2014 We have adopted the guidance as outlined in ASU 2014-15. The adoption had no impact on our financial statements. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense | The source of pre-tax income and the components of income tax expense at December 31, 2016 , 2015 and 2014 , respectively, are as follows: (in thousands) 2016 2015 2014 Income Components United States $ 37,276 $ 33,274 36,377 Foreign (89 ) 157 514 Total pre-tax income from continuing operations $ 37,187 $ 33,431 $ 36,891 Income tax expense components Current income tax provision United States-Federal $ 15,106 $ 10,549 $ 2,385 United States-State and local 311 401 29 Foreign 371 910 382 Total current income tax provision 15,788 11,860 2,796 Deferred income tax provision (benefit) United States-Federal (1,733 ) (9,350 ) 10,385 United States-State and local (278 ) (42 ) 898 Foreign (245 ) (10 ) — Total deferred income tax provision (benefit) (2,256 ) (9,402 ) 11,283 Total income tax expense $ 13,532 $ 2,458 $ 14,079 Effective income tax rate 36.4 % 7.4 % 38.2 % |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the income tax provision at the U.S. statutory rate to the effective income tax rate as reported is as follows: 2016 2015 2014 Tax provision at U.S. statutory rate 35.0 % 35.0 % 35.0 % State and local income tax, net of Federal benefit 0.1 % 0.7 % 1.6 % Release of uncertain tax positions — % (29.9 )% — % Indemnity expense — % 3.3 % — % Other 1.3 % (1.7 )% 1.6 % Effective income tax rate 36.4 % 7.4 % 38.2 % |
Schedule of Deferred Tax Assets and Liabilities | Deferred tax assets and liabilities include the following: (in thousands) 2016 2015 Deferred Tax Assets Costs incurred in excess of billings $ 506 $ 2,477 Compensation and benefits 10,816 11,353 Reserves 2,660 2,371 Other 3,116 3,332 Net Operating Losses 168 106 Subtotal $ 17,266 $ 19,639 Valuation allowance (157 ) (96 ) Total deferred tax assets $ 17,109 $ 19,543 Deferred Tax Liabilities Goodwill $ (77,171 ) $ (77,306 ) Property, plant and equipment, net (769 ) (1,165 ) Unbilled receivables (27,431 ) (31,218 ) Other liabilities (1,178 ) (1,187 ) Total deferred tax liabilities $ (106,549 ) $ (110,876 ) Deferred taxes are classified in the Consolidated Balance Sheets as follows: (in thousands) 2016 2015 Non-current assets $ 227 $ 10 Non-current liabilities 89,667 91,343 Net deferred tax liabilities $ 89,440 $ 91,333 |
Schedule of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 31, 2016 , 2015 and 2014 is as follows: (in thousands) 2016 2015 2014 Unrecognized tax benefits-January 1, $ — $ 7,604 $ 8,541 Additions for: Current year tax positions 429 — — Prior year tax positions — — 6,954 Reductions for: Prior year tax positions — (7,604 ) (7,891 ) Unrecognized tax benefits-December 31, $ 429 $ — $ 7,604 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic and Diluted Weighted Average Shares Outstanding | Year Ended December 31, (In thousands, except per share data) 2016 2015 2014 Net Income $ 23,655 $ 30,973 $ 22,812 Weighted average common shares outstanding 10,714 10,551 10,476 Add: Dilutive impact of stock options 97 98 76 Add: Dilutive impact of restricted stock units 163 176 140 Diluted weighted average common shares outstanding 10,974 10,825 10,692 Earnings per share Basic $ 2.21 $ 2.94 $ 2.18 Diluted $ 2.16 $ 2.86 $ 2.13 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The table below provides a summary of securities that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the period presented. Year Ended December 31, (In thousands) 2016 2015 2014 Anti-dilutive stock options — 13 11 Anti-dilutive restricted stock units 9 — — Total 9 13 11 |
Receivables (Tables)
Receivables (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
Schedule of Receivables | Receivables were comprised of the following: December 31, (In thousands) 2016 2015 Billed receivables $ 41,992 $ 53,070 Unbilled contract receivables 127,150 154,658 Other 2,930 2,833 Receivables $ 172,072 $ 210,561 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Maturities of Term Facility | The Company's aggregate scheduled maturities of the Term Loan as of December 31, 2016 , are as follows: (In thousands) Payments due 2017 $ 15,750 2018 35,875 2019 33,375 Total $ 85,000 |
Schedule of Carrying Values and Fair Values of Term Facility | Carrying values and fair values of the Term Loan on the Consolidated Balance Sheet as of December 31, 2016 were as follows: December 31, 2016 (In thousands) Carrying Amount Fair Value Short-term debt $ 15,750 $ 15,750 Long-term debt 69,250 69,250 Total debt 85,000 $ 85,000 Debt financing fees (1,408 ) Total debt with debt financing fees $ 83,592 Carrying values and fair values of the Term Loan on the Consolidated Balance Sheet as of December 31, 2015 were as follows: December 31, 2015 (In thousands) Carrying Amount Fair Value Short-term debt $ 22,000 $ 22,000 Long-term debt 92,000 92,000 Total debt 114,000 $ 114,000 Debt financing fees (2,385 ) Total debt with debt financing fees $ 111,615 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Liabilities at Fair Value | The following table summarizes the amount at fair value and location of the derivative instruments in the Consolidated Balance Sheet as of December 31, 2016 : Fair Value (In thousands) Balance sheet caption Amount Interest rate swap designated as cash flow hedge Other accrued liabilities $ 86 Interest rate swap designated as cash flow hedge Other non-current assets $ 259 The following table summarizes the amount at fair value and location of the derivative instrument in the Consolidated Balance Sheet as of December 31, 2015 : Fair Value (In thousands) Balance sheet caption Amount Interest rate swap designated as cash flow hedge Other accrued liabilities $ 15 Interest rate swap designated as cash flow hedge Other non-current liabilities $ 28 |
Composition of Certain Financ33
Composition of Certain Financial Statement Captions (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Compensation and Other Employee Benefits | Compensation and other employee benefits were comprised of the following at December 31: (In thousands) 2016 2015 Accrued salaries and wages $ 14,741 $ 13,820 Accrued bonus 4,371 4,302 Accrued employee benefits 15,805 18,661 Total $ 34,917 $ 36,783 |
Schedule of Other Accrued Liabilities | Other accrued liabilities were comprised of the following at December 31: (In thousands) 2016 2015 Workers' compensation, auto and general liability reserve $ 6,123 $ 7,537 Defense Base Act insurance financing — 2,727 Other accrued liabilities $ 11,570 $ 15,004 Total $ 17,693 $ 25,268 |
Plant, Property and Equipment34
Plant, Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Plant, Property and Equipment, Net | Depreciation and amortization is generally computed using either an accelerated or straight-line method and is based on estimated useful lives or lease term as follows: Years Buildings and improvements 5 – 40 Machinery and equipment 3 – 10 Furniture, fixtures, and office equipment 3 – 7 Property, plant and equipment, net consisted of the following at December 31 : (In thousands) 2016 2015 Buildings and improvements $ 5,230 $ 4,866 Machinery and equipment 4,422 4,877 Furniture, fixtures and office equipment 3,721 3,772 Property, plant and equipment, gross 13,373 13,515 Less: accumulated depreciation and amortization (10,312 ) (8,753 ) Property, plant and equipment, net $ 3,061 $ 4,762 |
Leases and Rentals (Tables)
Leases and Rentals (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Leases [Abstract] | |
Schedule of Future Operating Lease Payments Under Non-Cancellable Operating Leases | Future operating lease payments under non-cancellable operating leases with an initial term in excess of one year as of December 31, 2016 are shown below. (In thousands) Payments due 2017 $ 3,298 2018 1,809 2019 739 2020 504 2021 72 Total minimum lease payments $ 6,422 |
Schedule of Future Minimum Lease Payments for Capital Leases | The following is a schedule, by year, of future minimum lease payments under capital leases, together with the present value of the net minimum lease payments as of December 31, 2016 : (In thousands) Amount 2017 $ 68 2018 65 2019 50 Total minimum lease payments 183 Less: estimated executory costs — Net minimum lease payments 183 Less: amount representing interest (3 ) Present value of net minimum lease payments $ 180 |
Schedule of Capital Leases Included in Plant, Property and Equipment, Net | Capital leases included in property, plant and equipment, net (See Note 9): December 31, (In thousands) 2016 2015 Machinery and equipment $ 1,625 $ 1,625 Accumulated depreciation (1,409 ) (1,064 ) Machinery and equipment, net $ 216 $ 561 |
Schedule of Capital Lease Obligations | Capital lease obligations consisted of the following: December 31, (In thousands) 2016 2015 Other accrued liabilities $ 69 $ 302 Other non-current liabilities 111 186 Total $ 180 $ 488 |
Work Force Reduction and CEO 36
Work Force Reduction and CEO Transition (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Severance and Related Benefit Costs | The severance and related benefit costs for the year ended December 31, 2016 are summarized in the table below: (In thousands) Balance, December 31, 2015 $ 11 Severance and benefit related costs - Work Force Reduction 1,479 Severance and benefit related costs - CEO Transition 1,245 Payments (721 ) Balance, December 31, 2016 $ 2,014 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Impact of Stock-Based Compensation in Consolidated and Combined Statements of Income | Stock-based compensation expense and the associated tax benefits impacting our Consolidated and Combined Statements of Income were as follows: Year Ended December 31, (In thousands) 2016 2015 Compensation costs for equity-based awards $ 3,982 $ 6,250 Compensation costs for liability-based awards 667 408 Total compensation costs, pre-tax $ 4,649 $ 6,658 Future tax benefit $ 1,654 $ 2,373 |
Schedule of Non-Qualified Stock Options, Activity | A summary of the status of our NQOs as of December 31, 2016 , 2015 and 2014 and changes during the years then ended is presented below: Year Ended December 31, 2016 2015 2014 (In thousands, except per share data) Shares Weighted Average Exercise Price Per Share Shares Weighted Average Exercise Price Per Share Shares Weighted Average Exercise Price Per Share Outstanding at January 1, 486 $19.25 446 $17.43 Granted 87 $20.06 58 $31.52 Exercised (158 ) $13.63 (18 ) $13.37 Forfeited, canceled or expired (31 ) $22.51 — $0.00 Outstanding at Spin-off — $0.00 — $0.00 — $ — Conversion related to the Spin-off ¹ — $0.00 — $0.00 275 $14.83 Post Spin-off activities Granted — $0.00 — $0.00 171 $20.62 Outstanding at December 31, 384 $21.47 486 $19.25 446 $17.43 Options exercisable at December 31, 214 $20.35 212 $16.13 47 $13.12 ¹ The weighted average grant date fair value of the stock options converted is equal to the weighted average grant date fair value of such stock options prior to the Spin-off, reduced by the Spin-off conversion adjustment. |
Schedule of Non-Qualified Stock Options Outstanding and Exercisable | The following table summarizes information about NQOs outstanding and exercisable as of December 31, 2016 : (In thousands, except per share data) Options Outstanding Options Exercisable Range of Exercise Prices Per Share Number Weighted Average Remaining Contractual Life (In Years) Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Number Weighted Average Remaining Contractual Life (In Years) Weighted Average Exercise Price Per Share Aggregate Intrinsic Value $12.94 - $20.62 283 7.78 $ 19.09 $ 1,344 163 7.20 $ 18.19 $ 919 $22.16 - $32.04 101 7.67 28.10 — 51 7.49 27.21 — Total options and aggregate intrinsic value 384 7.75 $ 21.47 $ 1,344 214 7.27 $ 20.35 $ 919 |
Schedule of Weighted Average Assumptions | The following weighted-average assumptions were utilized in deriving the fair value for NQOs: Year Ending December 31, 2016 2015 2014 Expected volatility 30.2 % 34.1 % 34.6 % Expected life (in years) 7 7 7 Risk-free rates 1.69 % 2.00 % 2.07 % Weighted-average grant date fair value per share $ 7.06 $ 12.42 $ 8.24 |
Schedule of Restricted Stock Units, Activity | The table below provides a roll-forward of outstanding RSUs subsequent to the Spin-off. Year Ended December 31, 2016 2015 2014 (In thousands, except per share data) Shares Weighted Average Grant Date Fair Value Per Share Shares Weighted Average Grant Date Fair Value Per Share Shares Weighted Average Grant Date Fair Value Per Share Outstanding at January 1, 350 $ 22.47 423 $ 19.28 Granted 181 $ 21.25 104 $ 26.69 Vested (206 ) $ 20.56 (171 ) $ 19.03 Forfeited or canceled (40 ) $ 22.68 (6 ) $ 19.86 Outstanding at Spin-off — $ — — $ — — $0.00 Conversion related to the Spin-off — $ — — $ — 240 $17.61 Post Spin-off activities Granted — $ — — $ — 203 $20.62 Vested — $ — — $ — (20 ) $13.03 Forfeited or canceled — $ — — $ — — $0.00 Outstanding at December 31, 285 $ 23.01 350 $ 22.47 423 $19.28 |
Agreements and Transactions w38
Agreements and Transactions with Former Parent (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of Net Transfers To/From Parent | The components of the net transfers (to)/from former parent company are as follows: December 31, (In thousands) 2014 Cash pooling and general financing activities $ (33,565 ) Corporate allocations including income taxes 27,194 Total net transfers (to)/from Former Parent Company $ (6,371 ) |
Selected Quarterly Financial 39
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | The following table comprises selected financial data for the years ended December 31, 2016 and 2015 : 2016 QUARTERS 2015 QUARTERS (In thousands, except per share data) 1st 2nd 3rd 4th 1st 2nd 3rd 4th Total revenue $ 310,682 $ 307,895 $ 283,782 $ 288,160 $ 260,920 $ 309,509 $ 299,061 $ 311,194 Gross Profit 26,971 27,251 26,095 26,595 24,538 26,946 26,837 27,328 Operating income 11,811 11,298 11,162 8,555 9,355 10,845 8,471 11,291 Net income 6,589 6,050 6,607 4,409 4,965 6,020 14,028 5,960 Basic earnings per share $ 0.62 $ 0.57 $ 0.62 $ 0.40 $ 0.47 $ 0.57 $ 1.33 $ 0.57 Diluted earnings per share $ 0.61 $ 0.55 $ 0.60 $ 0.40 $ 0.46 $ 0.56 $ 1.29 $ 0.55 Weighted average number of shares outstanding Basic 10,628 10,702 10,733 10,794 10,495 10,548 10,560 10,599 Diluted 10,856 10,958 11,061 10,988 10,780 10,804 10,848 10,869 |
Description of Business and S40
Description of Business and Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jul. 01, 2016USD ($) | Apr. 01, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 25, 2015USD ($) | Jun. 26, 2015USD ($) | Mar. 27, 2015USD ($) | Dec. 31, 2016USD ($)segment | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Accounting Policies [Line Items] | |||||||||||
Number of reportable segments | segment | 1 | ||||||||||
Revenue | $ 288,160 | $ 283,782 | $ 307,895 | $ 310,682 | $ 311,194 | $ 299,061 | $ 309,509 | $ 260,920 | $ 1,190,519 | $ 1,180,684 | $ 1,203,269 |
Goodwill impairment charges | 0 | 0 | 0 | ||||||||
Goodwill, acquired | $ 0 | $ 0 | $ 0 | ||||||||
Buildings and improvements | Minimum | |||||||||||
Accounting Policies [Line Items] | |||||||||||
Estimated useful life | 5 years | ||||||||||
Buildings and improvements | Maximum | |||||||||||
Accounting Policies [Line Items] | |||||||||||
Estimated useful life | 40 years | ||||||||||
Machinery and equipment | Minimum | |||||||||||
Accounting Policies [Line Items] | |||||||||||
Estimated useful life | 3 years | ||||||||||
Machinery and equipment | Maximum | |||||||||||
Accounting Policies [Line Items] | |||||||||||
Estimated useful life | 10 years | ||||||||||
Furniture, fixtures, and office equipment | Minimum | |||||||||||
Accounting Policies [Line Items] | |||||||||||
Estimated useful life | 3 years | ||||||||||
Furniture, fixtures, and office equipment | Maximum | |||||||||||
Accounting Policies [Line Items] | |||||||||||
Estimated useful life | 7 years | ||||||||||
Total revenue | Credit risk | U.S. Army | |||||||||||
Accounting Policies [Line Items] | |||||||||||
Concentration risk, percentage | 84.00% | 85.00% | 88.00% | ||||||||
High Desert Support Services (HDSS) | |||||||||||
Accounting Policies [Line Items] | |||||||||||
Ownership percentage | 40.00% |
Description of Business and S41
Description of Business and Summary of Significant Accounting Policies - Summary of Cumulative Catch-Up Adjustments (Details) - Contracts accounted for under percentage of completion - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Concentration Risk [Line Items] | |||
Favorable adjustments | $ 15,296 | $ 9,721 | $ 3,981 |
Unfavorable adjustments | (7,837) | (11,641) | (6,629) |
Net favorable (unfavorable) adjustments | $ 7,459 | $ (1,920) | (2,648) |
Tethered Aerostat Radar System | |||
Concentration Risk [Line Items] | |||
Unfavorable adjustments | $ (2,500) |
Recent Accounting Pronounceme42
Recent Accounting Pronouncements Recent Accounting Pronouncements (Details) $ in Thousands | Dec. 31, 2016USD ($) |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Total minimum lease payments | $ 6,422 |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Components | |||
United States | $ 37,276 | $ 33,274 | $ 36,377 |
Foreign | (89) | 157 | 514 |
Income from operations before income taxes | 37,187 | 33,431 | 36,891 |
Current income tax provision | |||
United States-Federal | 15,106 | 10,549 | 2,385 |
United States-State and local | 311 | 401 | 29 |
Foreign | 371 | 910 | 382 |
Total current income tax provision | 15,788 | 11,860 | 2,796 |
Deferred income tax provision (benefit) | |||
United States-Federal | (1,733) | (9,350) | 10,385 |
United States-State and local | (278) | (42) | 898 |
Foreign | (245) | (10) | 0 |
Total deferred income tax provision (benefit) | (2,256) | (9,402) | 11,283 |
Total income tax expense | $ 13,532 | $ 2,458 | $ 14,079 |
Effective income tax rate | 36.40% | 7.40% | 38.20% |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Tax provision at U.S. statutory rate | 35.00% | 35.00% | 35.00% |
State and local income tax, net of Federal benefit | 0.10% | 0.70% | 1.60% |
Release of uncertain tax positions | 0.00% | (29.90%) | 0.00% |
Indemnity expense | 0.00% | 3.30% | 0.00% |
Other | 1.30% | (1.70%) | 1.60% |
Effective income tax rate | 36.40% | 7.40% | 38.20% |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred Tax Assets | ||
Costs incurred in excess of billings | $ 506 | $ 2,477 |
Compensation and benefits | 10,816 | 11,353 |
Reserves | 2,660 | 2,371 |
Other | 3,116 | 3,332 |
Net Operating Losses | 168 | 106 |
Subtotal | 17,266 | 19,639 |
Valuation allowance | (157) | (96) |
Total deferred tax assets | 17,109 | 19,543 |
Deferred Tax Liabilities | ||
Goodwill | (77,171) | (77,306) |
Property, plant and equipment, net | (769) | (1,165) |
Unbilled receivables | (27,431) | (31,218) |
Other liabilities | (1,178) | (1,187) |
Total deferred tax liabilities | $ (106,549) | $ (110,876) |
Income Taxes - Classification o
Income Taxes - Classification of Deferred Taxes on the Consolidated and Combined Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred Tax Liabilities, Net, Classification [Abstract] | ||
Non-current assets | $ 227 | $ 10 |
Non-current liabilities | 89,667 | 91,343 |
Deferred Tax Liabilities, Net | $ 89,440 | $ 91,333 |
Income Taxes - Schedule of Unre
Income Taxes - Schedule of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits-January 1, | $ 0 | $ 7,604 | $ 8,541 |
Additions for: | |||
Current year tax positions | 429 | 0 | 0 |
Prior year tax positions | 0 | 0 | 6,954 |
Reductions for: | |||
Prior year tax positions | 0 | (7,604) | (7,891) |
Unrecognized tax benefits-December 31, | $ 429 | $ 0 | $ 7,604 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 30, 2015 | Sep. 24, 2015 | Sep. 27, 2014 | Dec. 31, 2013 | |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||||
Valuation allowance | $ 200 | ||||||
Unrecognized tax benefits | 429 | $ 0 | $ 7,604 | $ 8,541 | |||
Unrecognized tax benefits settled | 6,900 | ||||||
Balance of unrecognized tax benefits lapsed | 700 | ||||||
Interest expense related to tax matters | 0 | 100 | 0 | ||||
Interest accrued for tax matters (less than $0.3 million in 2013) | 0 | 0 | 600 | ||||
Interest payable | (13,532) | (2,458) | (14,079) | ||||
Selling, general and administrative expenses | 64,086 | 65,687 | $ 80,340 | ||||
Spinoff | Indemnified receivable | |||||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||||
Income taxes | 0 | $ 3,200 | |||||
Interest payable | $ 3,200 | ||||||
Indemnification receivable | 0 | $ 3,300 | |||||
Selling, general and administrative expenses | $ 3,300 | ||||||
Spinoff | Indemnified receivable | Exelis | |||||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||||
Income tax indemnification amount | $ 3,300 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Basic and Diluted Weighted Average Shares Outstanding (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jul. 01, 2016 | Apr. 01, 2016 | Dec. 31, 2015 | Sep. 25, 2015 | Jun. 26, 2015 | Mar. 27, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||
Net income | $ 4,409 | $ 6,607 | $ 6,050 | $ 6,589 | $ 5,960 | $ 14,028 | $ 6,020 | $ 4,965 | $ 23,655 | $ 30,973 | $ 22,812 |
Weighted average common shares outstanding - basic (in shares) | 10,794 | 10,733 | 10,702 | 10,628 | 10,599 | 10,560 | 10,548 | 10,495 | 10,714 | 10,551 | 10,476 |
Add: Dilutive impact of stock options (in shares) | 97 | 98 | 76 | ||||||||
Diluted weighted average common shares outstanding (in shares) | 10,988 | 11,061 | 10,958 | 10,856 | 10,869 | 10,848 | 10,804 | 10,780 | 10,974 | 10,825 | 10,692 |
Basic earnings per share (in dollars per share) | $ 0.40 | $ 0.62 | $ 0.57 | $ 0.62 | $ 0.57 | $ 1.33 | $ 0.57 | $ 0.47 | $ 2.21 | $ 2.94 | $ 2.18 |
Diluted earnings per share (in dollars per share) | $ 0.40 | $ 0.60 | $ 0.55 | $ 0.61 | $ 0.55 | $ 1.29 | $ 0.56 | $ 0.46 | $ 2.16 | $ 2.86 | $ 2.13 |
Anti-dilutive restricted stock units | |||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||
Add: Dilutive impact of restricted stock units (in shares) | 163 | 176 | 140 |
Earnings Per Share Earnings Per
Earnings Per Share Earnings Per Share - Anti-dilutive Options (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive stock options (in shares) | 9 | 13 | 11 |
Anti-dilutive stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive stock options (in shares) | 0 | 13 | 11 |
Anti-dilutive restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive stock options (in shares) | 9 | 0 | 0 |
Receivables - Schedule of Recei
Receivables - Schedule of Receivables (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Nov. 19, 2015 | Nov. 18, 2015 | Sep. 27, 2014 | |
Receivables [Abstract] | |||||
Billed receivables | $ 41,992 | $ 53,070 | |||
Unbilled contract receivables | 127,150 | 154,658 | |||
Other | 2,930 | 2,833 | |||
Receivables | 172,072 | $ 210,561 | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Estimated unbilled contract receivables related to requests for equitable adjustments and contract line item realignments | 3,800 | ||||
Foreign currency transaction loss | 200 | ||||
Indemnified receivable | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Exelis indemnified receivable obligation | $ 0 | $ 8,200 | $ 11,400 | ||
Payment of indemnification liability | $ 8,200 |
Debt - Additional Information (
Debt - Additional Information (Details) | Sep. 26, 2014USD ($) | Sep. 17, 2014USD ($) | Dec. 31, 2016USD ($)letters_of_credit | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Apr. 01, 2016 | Sep. 25, 2015 |
Debt Instrument [Line Items] | |||||||
Distribution to subsidiary of Exelis | $ 0 | $ 0 | $ 136,281,000 | ||||
Debt financing fees | 1,408,000 | 2,385,000 | |||||
Amortization expense | $ 1,198,000 | $ 1,130,000 | $ 185,000 | ||||
Letters of credit | |||||||
Debt Instrument [Line Items] | |||||||
Credit facility, maximum borrowing capacity | $ 35,000,000 | ||||||
Number of letters of credit outstanding | letters_of_credit | 8 | ||||||
Letters of credit outstanding | $ 12,300,000 | ||||||
Swingline | |||||||
Debt Instrument [Line Items] | |||||||
Credit facility, maximum borrowing capacity | 10,000,000 | ||||||
Senior secured credit facilities | |||||||
Debt Instrument [Line Items] | |||||||
Credit facility, maximum borrowing capacity | $ 215,000,000 | ||||||
Maximum allowed dividend distribution | $ 12,859,794 | ||||||
Covenant terms, ratio of total indebtedness to combined EBITDA | 3.25 | 2.75 | 3 | ||||
Covenant terms, ratio of combined EBITDA to combined interest expense | 4.50 | ||||||
Ratio of total indebtedness to combined EBITDA | 1.63 | ||||||
Ratio of combined EBITDA to combined interest expense | 9.09 | ||||||
Interest rate | 3.52% | ||||||
Senior secured credit facilities | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Undrawn portion of revolving facility, commitment fee percentage | 0.40% | ||||||
Senior secured credit facilities | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Undrawn portion of revolving facility, commitment fee percentage | 0.50% | ||||||
Senior secured credit facilities | London Interbank Offered Rate (LIBOR) | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Spread on variable rate | 2.50% | ||||||
Senior secured credit facilities | London Interbank Offered Rate (LIBOR) | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Spread on variable rate | 3.00% | ||||||
Term facility | |||||||
Debt Instrument [Line Items] | |||||||
Term facility, amortization rate, year one | 7.50% | ||||||
Term facility, amortization rate, year two | 10.00% | ||||||
Term facility, amortization rate, year three | 10.00% | ||||||
Term facility, amortization rate, year four | 15.00% | ||||||
Term facility, amortization rate, year five | 57.50% | ||||||
Balance outstanding under term loan facility | $ 85,000,000 | ||||||
Term facility, mandatory prepayment terms, percentage of net cash proceeds from incurrence of indebtedness | 100.00% | ||||||
Term facility, mandatory prepayment terms, percentage of borrower's excess cash flow | 50.00% | ||||||
Term facility, mandatory prepayment terms, percentage of borrower's excess cash flow, stepdown to 25% | 25.00% | ||||||
Term facility, mandatory prepayment terms, percentage of borrower's excess cash flow, stepdown to 0% | 0.00% | ||||||
Term facility | Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Credit facility, maximum borrowing capacity | $ 140,000,000 | ||||||
Debt instrument, term | 5 years | ||||||
Distribution to subsidiary of Exelis | $ 136,300,000 | ||||||
Debt financing fees | $ 3,700,000 | ||||||
Amortization expense | $ 1,200,000 | $ 1,100,000 | |||||
Repayments of term facility | 15,000,000 | ||||||
Revolver | Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Credit facility, maximum borrowing capacity | $ 75,000,000 | ||||||
Debt instrument, term | 5 years | ||||||
Available borrowing capacity | $ 62,700,000 |
Debt - Schedule of Maturities o
Debt - Schedule of Maturities of Term Facility (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Total | $ 83,592 | $ 111,615 |
Term facility | ||
Debt Instrument [Line Items] | ||
2,017 | 15,750 | |
2,018 | 35,875 | |
2,019 | 33,375 | |
Total | $ 85,000 |
Debt - Schedule of Carrying Val
Debt - Schedule of Carrying Values and Fair Values of Term Facility (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt financing fees | $ (1,408) | $ (2,385) |
Total | 83,592 | 111,615 |
Carrying Amount | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 85,000 | 114,000 |
Carrying Amount | Short-term debt | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 15,750 | 22,000 |
Carrying Amount | Long-term debt | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 69,250 | 92,000 |
Fair Value | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 85,000 | 114,000 |
Fair Value | Short-term debt | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 15,750 | 22,000 |
Fair Value | Long-term debt | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 69,250 | $ 92,000 |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Derivative [Line Items] | ||
Derivative, notional amount | $ 51,500 | |
Interest rate swap | Cash flow hedging | Designated as hedging instrument | Other accrued liabilities | ||
Derivative [Line Items] | ||
Interest rate swap liabilities designated as cash flow hedge | 86 | $ 15 |
Interest rate swap | Cash flow hedging | Designated as hedging instrument | Other non-current assets | ||
Derivative [Line Items] | ||
Interest rate swap assets designated as cash flow hedge | $ 259 | |
Interest rate swap | Cash flow hedging | Designated as hedging instrument | Other non-current liabilities | ||
Derivative [Line Items] | ||
Interest rate swap liabilities designated as cash flow hedge | $ 28 |
Composition of Certain Financ56
Composition of Certain Financial Statement Captions - Schedule of Compensation and Other Employee Benefits (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Compensation and Other Employee Benefits | ||
Accrued salaries and wages | $ 14,741 | $ 13,820 |
Accrued bonus | 4,371 | 4,302 |
Accrued employee benefits | 15,805 | 18,661 |
Total | $ 34,917 | $ 36,783 |
Composition of Certain Financ57
Composition of Certain Financial Statement Captions - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Other Accrued Liabilities | ||
Workers' compensation, auto and general liability reserve | $ 6,123 | $ 7,537 |
Defense Base Act insurance financing | 0 | 2,727 |
Other accrued liabilities | 11,570 | 15,004 |
Total | $ 17,693 | $ 25,268 |
Plant, Property and Equipment58
Plant, Property and Equipment, Net - Plant, Property and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 13,373 | $ 13,515 |
Less: accumulated depreciation and amortization | (10,312) | (8,753) |
Property, plant and equipment, net | 3,061 | 4,762 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 5,230 | 4,866 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 4,422 | 4,877 |
Furniture, fixtures, and office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 3,721 | $ 3,772 |
Plant, Property and Equipment59
Plant, Property and Equipment, Net - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 1.9 | $ 3.1 | $ 2.1 |
Leases and Rentals - Schedule o
Leases and Rentals - Schedule of Future Operating Lease Payments Under Non-Cancellable Operating Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Leases [Abstract] | |||
Operating leases, rental expenses | $ 6,000 | $ 5,000 | $ 9,900 |
2,017 | 3,298 | ||
2,018 | 1,809 | ||
2,019 | 739 | ||
2,020 | 504 | ||
2,021 | 72 | ||
Total minimum lease payments | $ 6,422 |
Leases and Rentals - Additional
Leases and Rentals - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Capital Leased Assets [Line Items] | |||
Depreciation on capital leases | $ 0.3 | $ 0.5 | $ 0.4 |
Minimum | Capital lease obligations | |||
Capital Leased Assets [Line Items] | |||
Capital lease term | 24 months | ||
Maximum | Capital lease obligations | |||
Capital Leased Assets [Line Items] | |||
Capital lease term | 60 months |
Leases and Rentals - Schedule62
Leases and Rentals - Schedule of Future Minimum Lease Payments for Capital Leases (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Leases [Abstract] | |
2,017 | $ 68 |
2,018 | 65 |
2,019 | 50 |
Total minimum lease payments | 183 |
Less: estimated executory costs | 0 |
Net minimum lease payments | 183 |
Less: amount representing interest | (3) |
Present value of net minimum lease payments | $ 180 |
Leases and Rentals - Schedule63
Leases and Rentals - Schedule of Capital Leases Included in Plant, Property and Equipment, Net (Details) - Machinery and equipment - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Capital Leases, Balance Sheet, Assets by Major Class, Net [Abstract] | ||
Machinery and equipment | $ 1,625 | $ 1,625 |
Accumulated depreciation | (1,409) | (1,064) |
Machinery and equipment, net | $ 216 | $ 561 |
Leases and Rentals - Schedule64
Leases and Rentals - Schedule of Capital Lease Obligations (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Capital Leased Assets [Line Items] | ||
Total | $ 180 | $ 488 |
Other accrued liabilities | ||
Capital Leased Assets [Line Items] | ||
Other accrued liabilities | 69 | 302 |
Other non-current liabilities | ||
Capital Leased Assets [Line Items] | ||
Other non-current liabilities | $ 111 | $ 186 |
Work Force Reduction and CEO 65
Work Force Reduction and CEO Transition - Additional Information (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($)position | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | $ 11 |
Payments | (721) |
Ending balance | $ 2,014 |
Work Force Reduction | |
Restructuring Cost and Reserve [Line Items] | |
Number of positions eliminated | position | 62 |
Restructuring Reserve [Roll Forward] | |
Severance and benefit related costs | $ 1,479 |
CEO Transition | |
Restructuring Reserve [Roll Forward] | |
Severance and benefit related costs | 1,245 |
CEO Transition | CEO | |
Restructuring Reserve [Roll Forward] | |
Severance and benefit related costs | $ 0 |
Post Employment Benefit Plans (
Post Employment Benefit Plans (Details) $ in Millions | Sep. 11, 2014 | Dec. 31, 2016USD ($)plan | Dec. 31, 2015USD ($) |
Compensation and Retirement Disclosure [Abstract] | |||
Defined contribution plan, number of plans | plan | 1 | ||
Portion of contributions charged to income | $ 2.7 | $ 3 | |
Benefits plan vesting percentage | 100.00% | ||
Contributions accrued by the company | $ 0.2 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of exercisable options, out of the money (less than 0.1 million) | 0.1 | ||
Vested or expected to vest | 0.4 | ||
Vested or expected to vest, weighted average exercise price (in dollars per share) | $ 21.56 | ||
Vested or expected to vest, aggregate intrinsic value | $ 1,400 | ||
Vested or expected to vest, weighted average remaining contractual life | 7 years 9 months 10 days | ||
Expected life | 7 years | ||
Compensation cost for awards | $ 4,649 | $ 6,658 | |
Compensation and other employee benefits | 34,917 | 36,783 | |
Equity Based Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation costs | $ 3,200 | ||
Unrecognized compensation costs, period for recognition | 1 year 9 months 18 days | ||
Compensation cost for awards | $ 3,982 | 6,250 | |
Liability Based Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based liabilities paid | 500 | ||
Unrecognized compensation costs | $ 400 | ||
Unrecognized compensation costs, period for recognition | 1 year 8 months 26 days | ||
Compensation cost for awards | $ 667 | 408 | |
Non-Qualified Stock Options (NQO) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expiration from the date of grant | 10 years | ||
Stock price (in dollars per share) | $ 23.85 | ||
Options exercised in period, intrinsic value | $ 1,600 | $ 200 | $ 0 |
Expected life | 7 years | 7 years | 7 years |
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
RSU's vested in period, fair value | $ 3,400 | $ 3,000 | $ 300 |
Key Employees | Total Shareholder Return Awards (TSR) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Aggregate award target value | $ 1,500 | 1,800 | |
Compensation cost for awards | 600 | ||
Compensation and other employee benefits | $ 900 | 400 | |
Key Employees | Minimum | Total Shareholder Return Awards (TSR) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of shareholder return award target | 0.00% | ||
Key Employees | Maximum | Total Shareholder Return Awards (TSR) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of shareholder return award target | 200.00% | ||
2014 Omnibus Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum number of shares of Company's common stock authorized for issuance (in shares) | 2.6 | ||
Shares available (in shares) | 1.3 | ||
Compensation plan modification, recognized costs | $ 500 | ||
2014 Omnibus Plan | Non-Qualified Stock Options (NQO) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation plan modification, incremental cost | $ 700 | ||
Compensation plan modification, recognized costs | $ 600 | ||
Share-based Compensation Award, Tranche One [Member] | Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting increments | 33.33% | ||
Share-based Compensation Award, Tranche One [Member] | Capital lease obligations | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting increments | 33.33% | ||
Share-based Compensation Award, Tranche Two [Member] | Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting increments | 33.33% | ||
Share-based Compensation Award, Tranche Two [Member] | Capital lease obligations | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting increments | 33.33% | ||
Share-based Compensation Award, Tranche Three [Member] | Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting increments | 33.33% | ||
Share-based Compensation Award, Tranche Three [Member] | Capital lease obligations | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting increments | 33.33% |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Impact of Stock-Based Compensation in Consolidated and Combined Statements of Income (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Compensation cost for awards | $ 4,649 | $ 6,658 |
Future tax benefit | 1,654 | 2,373 |
Compensation costs for equity-based awards | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Compensation cost for awards | 3,982 | 6,250 |
Compensation costs for liability-based awards | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Compensation cost for awards | $ 667 | $ 408 |
Stock-Based Compensation - Sc69
Stock-Based Compensation - Schedule of Non-Qualified Stock Options, Activity (Details) - Non-Qualified Stock Options (NQO) - $ / shares shares in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Shares | ||||
Outstanding at beginning of year (in shares) | 0 | 486 | 446 | |
Granted (in shares) | 87 | 58 | ||
Exercised (in shares) | (158) | (18) | ||
Forfeited, canceled or expired (in shares) | (31) | 0 | ||
Conversion related to the Spin-off (in shares) | [1] | 275 | ||
Outstanding at end of year (in shares) | 446 | 384 | 486 | |
Options exercisable (in shares) | 47 | 214 | 212 | |
Weighted Average Exercise Price Per Share | ||||
Outstanding at beginning of year (in dollars per share) | $ 0 | $ 19.25 | $ 17.43 | |
Granted (in dollars per share) | 20.06 | 31.52 | ||
Exercised (in dollars per share) | 13.63 | 13.37 | ||
Forfeited, canceled or expired (in dollars per share) | 22.51 | 0 | ||
Conversion related to the Spin-off (in dollars per share) | 14.83 | |||
Outstanding at end of year (in dollars per share) | 17.43 | 21.47 | 19.25 | |
Options exercisable (in dollars per share) | $ 13.12 | $ 20.35 | $ 16.13 | |
Spinoff | ||||
Shares | ||||
Granted (in shares) | 171 | 0 | 0 | |
Weighted Average Exercise Price Per Share | ||||
Granted (in dollars per share) | $ 20.62 | $ 0 | $ 0 | |
[1] | The weighted average grant date fair value of the stock options converted is equal to the weighted average grant date fair value of such stock options prior to the Spin-off, reduced by the Spin-off conversion adjustment. |
Stock-Based Compensation - Sc70
Stock-Based Compensation - Schedule of Non-Qualified Stock Options Outstanding and Exercisable (Details) - Non-Qualified Stock Options (NQO) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 27, 2014 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Options outstanding (in shares) | 384 | 486 | 446 | 0 |
Options outstanding, weighted average remaining contractual life | 7 years 9 months | |||
Options outstanding, weighted average price per share (in dollars per share) | $ 21.47 | $ 19.25 | $ 17.43 | $ 0 |
Options outstanding, aggregate intrinsic value | $ 1,344 | |||
Options exercisable (in shares) | 214 | 212 | 47 | |
Options exercisable, weighted average remaining contractual life | 7 years 3 months 7 days | |||
Options exercisable, weighted average exercise price per share (in dollars per share) | $ 20.35 | $ 16.13 | $ 13.12 | |
Options exercisable, aggregate intrinsic value | $ 919 | |||
Range of exercise prices one | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Options outstanding (in shares) | 283 | |||
Options outstanding, weighted average remaining contractual life | 7 years 9 months 10 days | |||
Options outstanding, weighted average price per share (in dollars per share) | $ 19.09 | |||
Options outstanding, aggregate intrinsic value | $ 1,344 | |||
Options exercisable (in shares) | 163 | |||
Options exercisable, weighted average remaining contractual life | 7 years 2 months 12 days | |||
Options exercisable, weighted average exercise price per share (in dollars per share) | $ 18.19 | |||
Options exercisable, aggregate intrinsic value | $ 919 | |||
Exercise price per share, lower range (in dollars per share) | $ 12.94 | |||
Exercise price per share, upper range (in dollars per share) | $ 20.62 | |||
Range of exercise prices two | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Options outstanding (in shares) | 101 | |||
Options outstanding, weighted average remaining contractual life | 7 years 8 months 1 day | |||
Options outstanding, weighted average price per share (in dollars per share) | $ 28.10 | |||
Options outstanding, aggregate intrinsic value | $ 0 | |||
Options exercisable (in shares) | 51 | |||
Options exercisable, weighted average remaining contractual life | 7 years 5 months 26 days | |||
Options exercisable, weighted average exercise price per share (in dollars per share) | $ 27.21 | |||
Options exercisable, aggregate intrinsic value | $ 0 | |||
Exercise price per share, lower range (in dollars per share) | $ 22.16 | |||
Exercise price per share, upper range (in dollars per share) | $ 32.04 |
Stock-Based Compensation - Sc71
Stock-Based Compensation - Schedule of Weighted Average Assumptions (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected life (in years) | 7 years | ||
Non-Qualified Stock Options (NQO) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 30.20% | 34.10% | 34.60% |
Expected life (in years) | 7 years | 7 years | 7 years |
Risk-free rates | 1.69% | 2.00% | 2.07% |
Weighted-average grant date fair value per share (in dollars per share) | $ 7.06 | $ 12.42 | $ 8.24 |
Stock-Based Compensation - Sc72
Stock-Based Compensation - Schedule of Restricted Stock Units, Activity (Details) - Restricted Stock Units (RSUs) - $ / shares shares in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Sep. 27, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Shares | ||||
Outstanding at beginning of year (in shares) | 0 | 350 | 423 | |
Granted (in shares) | 0 | 181 | 104 | |
Vested (in shares) | 0 | (206) | (171) | |
Forfeited or canceled (in shares) | 0 | (40) | (6) | |
Outstanding at end of year (in shares) | 423 | 285 | 350 | |
Weighted Average Exercise Price Per Share | ||||
Outstanding at beginning of year (in dollars per share) | $ 0 | $ 22.47 | $ 19.28 | |
Granted (in dollars per share) | 0 | 21.25 | 26.69 | |
Vested (in dollars per share) | 0 | 20.56 | 19.03 | |
Forfeited or canceled (in dollars per share) | $ 0 | 22.68 | 19.86 | |
Outstanding at end of year (in dollars per share) | $ 19.28 | $ 23.01 | $ 22.47 | |
Spinoff | ||||
Shares | ||||
Outstanding at beginning of year (in shares) | 0 | 0 | ||
Granted (in shares) | 203 | 0 | 0 | |
Vested (in shares) | (20) | 0 | 0 | |
Forfeited or canceled (in shares) | 0 | 0 | 0 | |
Conversion related to the Spin-off (in shares) | 240 | |||
Outstanding at end of year (in shares) | 0 | 0 | 0 | |
Weighted Average Exercise Price Per Share | ||||
Outstanding at beginning of year (in dollars per share) | $ 0 | $ 0 | ||
Granted (in dollars per share) | 20.62 | 0 | $ 0 | |
Vested (in dollars per share) | 13.03 | 0 | 0 | |
Forfeited or canceled (in dollars per share) | 0 | 0 | 0 | |
Conversion related to the Spin-off (in dollars per share) | $ 17.61 | |||
Outstanding at end of year (in dollars per share) | $ 0 | $ 0 | $ 0 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) | Dec. 31, 2016shares | Dec. 31, 2015shares | Sep. 18, 2014 |
Class of Stock [Line Items] | |||
Common stock, shares issued (in shares) | 10,894,924 | 10,612,246 | |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | |
Preferred stock, shares issued (in shares) | 0 | 0 | |
Preferred stock, shares outstanding (in shares) | 0 | 0 | |
Vectrus, Inc. | |||
Class of Stock [Line Items] | |||
Common stock, distribution basis for issued and outstanding shares | 0.0556 | ||
Exelis, Inc. | |||
Class of Stock [Line Items] | |||
Common stock, shares issued (in shares) | 10,474,268 | ||
2014 Omnibus Plan | |||
Class of Stock [Line Items] | |||
Maximum number of shares of Company's common stock authorized for issuance (in shares) | 2,600,000 | ||
Shares available (in shares) | 1,300,000 |
Agreements and Transactions w74
Agreements and Transactions with Former Parent - Parent Company Equity (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Related Party Transaction [Line Items] | |||
Total net transfers (to)/from Former Parent Company | $ 0 | $ 0 | $ (6,371) |
Cash pooling and general financing activities | |||
Related Party Transaction [Line Items] | |||
Total net transfers (to)/from Former Parent Company | (33,565) | ||
Corporate allocations including income taxes | |||
Related Party Transaction [Line Items] | |||
Total net transfers (to)/from Former Parent Company | $ 27,194 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Contract compliance | ||
Loss Contingencies [Line Items] | ||
Contracts loss contingency accrual | $ 2.8 | $ 2.4 |
Selected Quarterly Financial 76
Selected Quarterly Financial Data (Unaudited) - Schedule of Quarterly Financial Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jul. 01, 2016 | Apr. 01, 2016 | Dec. 31, 2015 | Sep. 25, 2015 | Jun. 26, 2015 | Mar. 27, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 288,160 | $ 283,782 | $ 307,895 | $ 310,682 | $ 311,194 | $ 299,061 | $ 309,509 | $ 260,920 | $ 1,190,519 | $ 1,180,684 | $ 1,203,269 |
Gross Profit | 26,595 | 26,095 | 27,251 | 26,971 | 27,328 | 26,837 | 26,946 | 24,538 | |||
Operating income | 8,555 | 11,162 | 11,298 | 11,811 | 11,291 | 8,471 | 10,845 | 9,355 | 42,826 | 39,962 | 38,417 |
Net income | $ 4,409 | $ 6,607 | $ 6,050 | $ 6,589 | $ 5,960 | $ 14,028 | $ 6,020 | $ 4,965 | $ 23,655 | $ 30,973 | $ 22,812 |
Basic earnings per share (in dollars per share) | $ 0.40 | $ 0.62 | $ 0.57 | $ 0.62 | $ 0.57 | $ 1.33 | $ 0.57 | $ 0.47 | $ 2.21 | $ 2.94 | $ 2.18 |
Diluted earnings per share (in dollars per share) | $ 0.40 | $ 0.60 | $ 0.55 | $ 0.61 | $ 0.55 | $ 1.29 | $ 0.56 | $ 0.46 | $ 2.16 | $ 2.86 | $ 2.13 |
Weighted average common shares outstanding - basic (in shares) | 10,794 | 10,733 | 10,702 | 10,628 | 10,599 | 10,560 | 10,548 | 10,495 | 10,714 | 10,551 | 10,476 |
Weighted average common shares outstanding - diluted (in shares) | 10,988 | 11,061 | 10,958 | 10,856 | 10,869 | 10,848 | 10,804 | 10,780 | 10,974 | 10,825 | 10,692 |