Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 23, 2016 | Jun. 30, 2015 | |
Entity Information [Line Items] | |||
Entity Registrant Name | TELOS CORP | ||
Entity Central Index Key | 320,121 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 0 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 | ||
Class A Common Stock [Member] | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 40,238,461 | ||
Class B Common Stock [Member] | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 4,037,628 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenue (Note 5) | |||
Services | $ 97,659 | $ 103,071 | $ 143,489 |
Products | 22,975 | 24,491 | 63,905 |
Total Revenue | 120,634 | 127,562 | 207,394 |
Costs and expenses | |||
Cost of sales - Services | 73,079 | 82,481 | 109,676 |
Cost of sales - Products | 16,882 | 20,128 | 59,118 |
Total costs and expenses | 89,961 | 102,609 | 168,794 |
Selling, general and administrative expenses | 34,290 | 36,597 | 32,489 |
Operating (loss) income | (3,617) | (11,644) | 6,111 |
Other income (expenses) | |||
Non-operating income | 19 | 414 | 239 |
Interest expense | (5,639) | (5,370) | (5,483) |
(Loss) income before income taxes | (9,237) | (16,600) | 867 |
(Provision) benefit for income taxes (Note 9) | (4,265) | 5,988 | (1,678) |
Net loss | (13,502) | (10,612) | (811) |
Less: Net income attributable to non-controlling interest (Note 2) | (2,438) | (1,676) | (1,807) |
Net loss attributable to Telos Corporation | $ (15,940) | $ (12,288) | $ (2,618) |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Abstract] | |||
Net loss | $ (13,502) | $ (10,612) | $ (811) |
Other comprehensive loss: | |||
Foreign currency translation adjustments | (6) | (3) | (24) |
Actuarial loss on pension liability adjustments, net of tax | (2) | 0 | 0 |
Total other comprehensive loss, net of tax | (8) | (3) | (24) |
Comprehensive income attributable to non-controlling interest | (2,438) | (1,676) | (1,807) |
Comprehensive loss attributable to Telos Corporation | $ (15,948) | $ (12,291) | $ (2,642) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets (Note 6) | ||
Cash and cash equivalents | $ 58 | $ 32 |
Accounts receivable, net of reserve of $485 and $372, respectively (Note 5) | 19,045 | 22,522 |
Inventories, net of obsolescence reserve of $1,457 and $1,366, respectively | 2,901 | 3,345 |
Deferred program expenses | 734 | 1,391 |
Other current assets | 3,105 | 6,144 |
Total current assets | 25,843 | 33,434 |
Deferred income taxes, long-term (Note 9) | 0 | 1,914 |
Property and equipment (Note 6) | ||
Furniture and equipment | 7,381 | 11,623 |
Leasehold improvements | 2,418 | 2,431 |
Property and equipment under capital leases | 30,829 | 30,849 |
Property and equipment, gross | 40,628 | 44,903 |
Accumulated depreciation and amortization | (23,366) | (25,990) |
Property and equipment, net | 17,262 | 18,913 |
Goodwill (Note 3) | 14,916 | 14,916 |
Other intangible assets (Note 3) | 1,129 | 3,386 |
Other assets (Note 6) | 814 | 1,257 |
Total assets | 59,964 | 73,820 |
Current liabilities | ||
Accounts payable and other accrued payables (Note 6) | 12,678 | 17,816 |
Accrued compensation and benefits | 4,755 | 4,203 |
Deferred revenue | 3,466 | 3,344 |
Senior credit facility - short-term (Note 6) | 1,400 | 2,300 |
Capital lease obligations - short-term (Note 10) | 827 | 772 |
Other current liabilities | 1,644 | 1,774 |
Total current liabilities | 24,770 | 30,209 |
Senior revolving credit facility (Note 6) | 7,144 | 8,590 |
Subordinated debt (Note 6) | 2,500 | 0 |
Capital lease obligations (Note 10) | 19,908 | 20,735 |
Deferred income taxes (Note 9) | 3,199 | 0 |
Senior redeemable preferred stock (Note 7) | 2,025 | 1,958 |
Public preferred stock (Note 7) | 123,919 | 120,097 |
Other liabilities | 882 | 717 |
Total liabilities | $ 184,347 | $ 182,306 |
Commitments, contingencies and subsequent events (Notes 10 and 13) | ||
Telos stockholders' deficit | ||
Additional paid-in capital | $ 3,229 | $ 3,229 |
Accumulated other comprehensive income | 37 | 45 |
Accumulated deficit | (128,362) | (112,422) |
Total Telos stockholders' deficit | (125,018) | (109,070) |
Non-controlling interest in subsidiary (Note 2) | 635 | 584 |
Total stockholders' deficit | (124,383) | (108,486) |
Total liabilities, redeemable preferred stock, and stockholders' deficit | 59,964 | 73,820 |
Class A Common Stock [Member] | ||
Telos stockholders' deficit | ||
Common stock | 65 | 65 |
Total stockholders' deficit | 65 | 65 |
Class B Common Stock [Member] | ||
Telos stockholders' deficit | ||
Common stock | 13 | 13 |
Total stockholders' deficit | $ 13 | $ 13 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Accounts receivable, reserve | $ 485 | $ 372 |
Inventories, obsolescence reserve | $ 1,457 | $ 1,366 |
Class A Common Stock [Member] | ||
Telos stockholders' deficit | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 40,238,461 | 40,238,461 |
Common stock, shares outstanding (in shares) | 40,238,461 | 40,238,461 |
Class B Common Stock [Member] | ||
Telos stockholders' deficit | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Common stock, shares issued (in shares) | 4,037,628 | 4,037,628 |
Common stock, shares outstanding (in shares) | 4,037,628 | 4,037,628 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating activities: | |||
Net loss | $ (13,502) | $ (10,612) | $ (811) |
Adjustments to reconcile net loss to cash provided by operating activities: | |||
Gain on redemption of senior preferred stock | 0 | 0 | (222) |
Stock-based compensation | 0 | 12 | 43 |
Dividends of preferred stock as interest expense | 3,889 | 3,890 | 3,926 |
Depreciation and amortization | 4,291 | 4,251 | 3,817 |
Provision for inventory obsolescence | 92 | 1,359 | 1 |
Provision for doubtful accounts receivable | 113 | 51 | 2 |
Amortization of debt issuance costs | 152 | 36 | 71 |
Deferred income tax (benefit) provision | 5,113 | (4,035) | 195 |
Loss on disposal of fixed assets | 11 | 56 | 0 |
Changes in assets and liabilities: | |||
Decrease (increase) in accounts receivable | 3,364 | 23,059 | (11,755) |
Decrease in inventories | 352 | 181 | 5,391 |
Decrease (increase) in deferred program expenses | 657 | (815) | 4,705 |
Decrease (increase) in other current assets and other assets | 1,330 | (3,192) | 259 |
(Decrease) increase in accounts payable and other accrued payables | (3,840) | (6,490) | 390 |
Increase (decrease) in accrued compensation and benefits | 552 | (1,738) | 976 |
Increase (decrease) in deferred revenue | 122 | 576 | (3,327) |
Increase (decrease) in other current liabilities and other liabilities | 27 | (405) | 1,149 |
Cash provided by operating activities | 2,723 | 6,184 | 4,810 |
Investing activities: | |||
Purchases of property and equipment | (394) | (665) | (539) |
Cash used in investing activities | (394) | (665) | (539) |
Financing activities: | |||
Proceeds from senior credit facility | 139,072 | 163,112 | 244,746 |
Repayments of senior credit facility | (139,118) | (171,363) | (243,476) |
Repayments of term loan | (2,300) | (688) | (375) |
(Decrease) increase in book overdrafts | (1,298) | 1,016 | (238) |
Proceeds from subordinated debt | 2,500 | 0 | 0 |
Proceeds from assignment of purchase option under lease | 0 | 1,669 | 0 |
Payments under capital lease obligations | (772) | (779) | (1,242) |
Redemption of senior preferred stock | 0 | 0 | (2,000) |
Proceeds from sale of Telos ID 10% membership interest | 2,000 | 3,000 | 0 |
Distributions to Telos ID Class B member - non-controlling interest | (2,387) | (1,548) | (1,821) |
Cash used in financing activities | (2,303) | (5,581) | (4,406) |
Increase (decrease) in cash and cash equivalents | 26 | (62) | (135) |
Cash and cash equivalents, beginning of the year | 32 | 94 | 229 |
Cash and cash equivalents, end of year | 58 | 32 | 94 |
Cash paid during the year for: | |||
Interest | 1,523 | 1,497 | 1,533 |
Income taxes | 65 | 879 | 849 |
Noncash: | |||
Interest on redeemable preferred stock | 3,889 | 3,890 | 3,926 |
Financing of capital leases | 0 | 5,680 | 11,712 |
Receivable from sale of Telos ID 10% membership interest | $ 0 | $ 2,000 | $ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) $ in Thousands | Class A Common Stock [Member] | Class B Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Other Comprehensive Income [Member] | Accumulated Deficit [Member] | Noncontrolling Interest [Member] | Total |
Balance at Dec. 31, 2012 | $ 65 | $ 13 | $ 103 | $ 72 | $ (97,516) | $ 468 | $ (96,795) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | 0 | 0 | (2,618) | 1,807 | (811) | ||
Foreign currency translation loss | 0 | (24) | 0 | 0 | (24) | ||
Pension liability adjustments | 0 | ||||||
Stock-based compensation | 0 | 0 | 43 | 0 | 0 | 0 | 43 |
Distributions | 0 | 0 | 0 | (1,821) | (1,821) | ||
Balance at Dec. 31, 2013 | 65 | 13 | 146 | 48 | (100,134) | 454 | (99,408) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | 0 | (12,288) | 1,676 | (10,612) | |||
Sale of Telos ID membership interest | 0 | 0 | 3,071 | 0 | 0 | 2 | 3,073 |
Foreign currency translation loss | 0 | 0 | 0 | (3) | 0 | 0 | (3) |
Pension liability adjustments | 0 | ||||||
Stock-based compensation | 12 | 0 | 0 | 0 | 12 | ||
Distributions | 0 | 0 | 0 | (1,548) | (1,548) | ||
Balance at Dec. 31, 2014 | 65 | 13 | 3,229 | 45 | (112,422) | 584 | (108,486) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | 0 | 0 | (15,940) | 2,438 | (13,502) | ||
Foreign currency translation loss | 0 | (6) | 0 | 0 | (6) | ||
Pension liability adjustments | 0 | 0 | 0 | (2) | 0 | 0 | (2) |
Distributions | 0 | 0 | 0 | (2,387) | (2,387) | ||
Balance at Dec. 31, 2015 | $ 65 | $ 13 | $ 3,229 | $ 37 | $ (128,362) | $ 635 | $ (124,383) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 1. Summary of Significant Accounting Policies Business and Organization Telos Corporation, together with its subsidiaries, (the "Company" or "Telos" or "We") is an information technology solutions and services company addressing the needs of U.S. Government and commercial customers worldwide. We own all of the issued and outstanding share capital of Xacta Corporation, a subsidiary that develops, markets and sells government-validated secure enterprise solutions to government and commercial customers. We also own all of the issued and outstanding share capital of Ubiquity.com, Inc., a holding company for Xacta Corporation. We also have a 50% ownership interest in Telos Identity Management Solutions, LLC ("Telos ID") and a 100% ownership interest in Teloworks, Inc. ("Teloworks"). Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements include the accounts of Telos and its subsidiaries, including Ubiquity.com, Inc., Xacta Corporation, and Teloworks, all of whose issued and outstanding share capital is owned by the Company. We have also consolidated the results of operations of Telos ID (see Note 2 – Non-controlling Interests). Significant intercompany transactions have been eliminated on consolidation. In preparing these consolidated financial statements, we have evaluated subsequent events through the date that these consolidated financial statements were issued. Segment Reporting Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker ("CODM"), or decision making group, in deciding how to allocate resources and assess performance. We currently operate in one operating and reportable business segment for financial reporting purposes. We currently have the following three business lines: Cyber Operations and Defense, Identity Management, and IT & Enterprise Solutions. Our Chief Executive Officer is the CODM. Our CODM manages our business primarily by function and reviews financial information on a consolidated basis, accompanied by disaggregated information by line of business as well as certain operational data, for purposes of allocating resources and evaluating financial performance. The CODM only evaluates profitability based on consolidated results. Use of Estimates The preparation of consolidated financial statements in conformity with Generally Accepted Accounting Principles ("GAAP") in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions used in the preparation of our consolidated financial statements include revenue recognition, allowance for doubtful accounts receivable, allowance for inventory obsolescence, the valuation allowance for deferred tax assets, income taxes, contingencies and litigation, potential impairments of goodwill and intangible assets, estimated pension-related costs for our foreign subsidiaries and accretion of Public Preferred Stock. Actual results could differ from those estimates. Revenue Recognition Revenues are recognized in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") ASC 605-10-S99. We consider amounts earned upon evidence that an arrangement has been obtained, services are delivered, fees are fixed or determinable, and collectability is reasonably assured. Additionally, revenues on arrangements requiring the delivery of more than one product or service are recognized in accordance with ASC 605-25, "Revenue Arrangements with Multiple Deliverables," which addresses and requires the separation and allocation at the inception of the arrangement of all deliverables based on their relative selling prices. This determination is made first by employing vendor-specific objective evidence ("VSOE"), to the extent it exists, then third-party evidence ("TPE") of selling price, to the extent that it exists. Given the nature of the deliverables contained in our multi-element arrangements, which often involve the design and/or delivery of complex or technical solutions to the government, we have not obtained TPE of selling prices on multi-element arrangements due to the significant differentiation which makes obtaining comparable pricing of products with similar functionality impractical. Therefore we do not utilize TPE. If VSOE and TPE are not determinable, we use our best estimate of selling price ("ESP") as defined in ASC 605-25, which represents our best estimate of the prices under the terms and conditions of a particular order for the various elements if they were sold on a stand-alone basis. We recognize revenues for software arrangements upon persuasive evidence of an arrangement, delivery of the software, and determination that collection of a fixed or determinable license fee is probable. Revenues for software licenses sold on a subscription basis are recognized ratably over the related license period. For arrangements where the sale of software licenses are bundled with other products, including software products, upgrades and enhancements, post-contract customer support ("PCS"), and installation, the relative fair value of each element is determined based on VSOE. VSOE is defined by ASC 985-605, "Software Revenue Recognition," and is limited to the price charged when the element is sold separately or, if the element is not yet sold separately, the price set by management having the relevant authority. When VSOE exists for undelivered elements, the remaining consideration is allocated to delivered elements using the residual method. If VSOE does not exist for the allocation of revenue to the various elements of the arrangement, all revenue from the arrangement is deferred until the earlier of the point at which (1) such VSOE does exist or (2) all elements of the arrangement are delivered. PCS revenues, upon being unbundled from a software license fee, are recognized ratably over the PCS period. Software arrangements requiring significant production, modification, or customization of the software are accounted for in accordance with ASC 605-35 "Construction-Type and Production-Type Contracts". We may use subcontractors and suppliers in the course of performing contracts and under certain contracts we provide supplier procurement services and materials for our customers. Some of these arrangements may fall within the scope of ASC 605-45, "Reporting Revenue Gross as a Principal versus Net as an Agent." We presume that revenues on our contracts are recognized on a gross basis, as we generally provide significant value-added services, assume credit risk, and reserve the right to select subcontractors and suppliers, but we evaluate the various criteria specified in the guidance in making the determination of whether revenue should be recognized on a gross or net basis. A description of the business lines, the typical deliverables, and the revenue recognition criteria in general for such deliverables follows: Cyber Operations and Defense – Regarding our deliverables of Cyber Security (formerly Information Assurance) solutions, Regarding our deliverables of Secure Mobility (formerly Secure Networks ) Identity Management (formerly Telos ID) – IT & Enterprise Solutions (formerly Secure Communications) Estimating future costs and, therefore, revenues and profits, is a process requiring a high degree of management judgment. In the event of a change in total estimated contract cost or profit, the cumulative effect of a change is recorded in the period the change in estimate occurs. To the extent contracts are incomplete at the end of an accounting period, revenue is recognized on the percentage-of-completion method, on a proportional performance basis, using costs incurred in relation to total estimated costs, or costs are deferred as appropriate under the terms of a particular contract. In the event cost estimates indicate a loss on a contract, the total amount of such loss, excluding overhead and general and administrative expense, is recorded in the period in which the loss is first estimated. Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Our cash management program utilizes zero balance accounts. Accordingly, all book overdraft balances have been reclassified to accounts payable and other accrued payables, to the extent that availability of funds exists on our revolving credit facility. Accounts Receivable Accounts receivable are stated at the invoiced amount, less allowances for doubtful accounts. Collectability of accounts receivable is regularly reviewed based upon managements' knowledge of the specific circumstances related to overdue balances. The allowance for doubtful accounts is adjusted based on such evaluation. Accounts receivable balances are written off against the allowance when management deems the balances uncollectible. Inventories Inventories are stated at the lower of cost or net realizable value, where cost is determined on the weighted average method. Substantially all inventories consist of purchased customer off-the-shelf hardware and software, and component computer parts used in connection with system integration services that we perform. An allowance for obsolete, slow-moving or nonsalable inventory is provided for all other inventory. This allowance is based on our overall obsolescence experience and our assessment of future inventory requirements. This charge is taken primarily due to the age of the specific inventory and the significant additional costs that would be necessary to upgrade to current standards as well as the lack of forecasted sales for such inventory in the near future. Gross inventory is $4.4 million and $4.7 million at December 31, 2015 and 2014, respectively. As of December 31, 2015, it is management's judgment that we have fully provided for any potential inventory obsolescence. The components of the allowance for inventory obsolescence are set forth below (in thousands): Balance Beginning of Year Additions Charge to Costs and Expense Recoveries Balance End of Year Year Ended December 31, 2015 $ 1,366 $ 92 $ (1 ) $ 1,457 Year Ended December 31, 2014 $ 417 $ 1,359 $ (410 ) $ 1,366 Year Ended December 31, 2013 $ 416 $ 1 $ -- $ 417 Property and Equipment Property and equipment is recorded at cost. Depreciation is provided on the straight-line method at rates based on the estimated useful lives of the individual assets or classes of assets as follows: Buildings 20 Years Machinery and equipment 3-5 Years Office furniture and fixtures 5 Years Leasehold improvements Lesser of life of lease or useful life of asset Leased property meeting certain criteria is capitalized at the present value of the related minimum lease payments. Amortization of property and equipment under capital leases is computed on the straight-line method over the lesser of the term of the related lease and the useful life of the related asset. Upon sale or retirement of property and equipment, the costs and related accumulated depreciation are eliminated from the accounts, and any gain or loss on such disposition is reflected in the consolidated statements of operations. For the years ended December 31, 2015, 2014, and 2013, such amounts are negligible. Expenditures for repairs and maintenance are charged to operations as incurred. Our policy on internal use software is in accordance with ASC 350, "Intangibles- Goodwill and Other." This standard requires companies to capitalize qualifying computer software costs which are incurred during the application development stage and amortize them over the software's estimated useful life. We expensed all such software development costs in 2015, 2014, and 2013, as we believe that such amounts are immaterial. Depreciation and amortization expense related to property and equipment, including property and equipment under capital leases was $2.0 million, $2.0 million, and $1.6 million Income Taxes We account for income taxes in accordance with ASC 740-10, "Income Taxes." Under ASC 740-10, deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences and income tax credits. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates that are applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized for differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Any change in tax rates on deferred tax assets and liabilities is recognized in net income in the period in which the tax rate change is enacted. We record a valuation allowance that reduces deferred tax assets when it is "more likely than not" that deferred tax assets will not be realized. We are required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on available evidence, realization of deferred tax assets is dependent upon the generation of future taxable income. We considered projected future taxable income, tax planning strategies, and reversal of taxable temporary differences in making this assessment. As such, we have determined that a full valuation allowance is required as of December 31, 2015. We are not able to use temporary taxable differences related to goodwill, as a source of future taxable income. As a result of a full valuation allowance against our deferred tax assets, a deferred tax liability ("hanging credit") related to goodwill remains on our consolidated balance sheet at December 31, 2015. We follow the provisions of ASC 74-10 related to accounting for uncertainty in income taxes. The accounting estimates related to liabilities for uncertain tax positions require us to make judgments regarding the sustainability of each uncertain tax position based on its technical merits. If we determine it is more likely than not that a tax position will be sustained based on its technical merits, we record the impact of the position in our consolidated financial statements at the largest amount that is greater than fifty percent likely of being realized upon ultimate settlement. These estimates are updated at each reporting date based on the facts, circumstances and information available. We are also required to assess at each reporting date whether it is reasonably possible that any significant increases or decreases to our unrecognized tax benefits will occur during the next 12 months. Goodwill and other intangible assets We evaluate the impairment of goodwill and other intangible assets in accordance with ASC 350, "Intangibles - Goodwill and Other," which requires goodwill and indefinite-lived intangible assets to be assessed on at least an annual basis for impairment using a fair value basis. Between annual evaluations, if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount, then impairment must be evaluated. Such circumstances could include, but are not limited to: (1) a significant adverse change in legal factors or business climate, or (2) a loss of key contracts or customers. As the result of an acquisition, we record any excess purchase price over the net tangible and identifiable intangible assets acquired as goodwill. An allocation of the purchase price to tangible and intangible net assets acquired is based upon our valuation of the acquired assets. Goodwill is not amortized, but is subject to annual impairment tests. We complete our goodwill impairment tests as of December 31st each year. Additionally, we make evaluations between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The evaluation is based on the estimation of the fair values of our three reporting units, Cyber Operations and Defense ("CO&D"), Identity Management, and IT & Enterprise Solutions, of which goodwill is housed in the CO&D reporting unit, Other intangible assets consist primarily of customer relationship enhancements. Other intangible assets are amortized on a straight-line basis over their estimated useful lives of 5 years. The amortization is based on a forecast of approximately equal annual customer orders over the 5-year period. Other intangible assets are subject to impairment review if there are events or changes in circumstances that indicate that the carrying amount is not recoverable. As of December 31, 2015, no impairment charges were taken. Stock-Based Compensation Compensation cost is recognized based on the requirements of ASC 718, "Stock Compensation," for all share-based awards granted. In March 2013, we granted 4,312,000 shares of restricted stock (Class A common) to our executive officers and employees. There were no grants issued in 2015. As of December 31, 2015, there were 19,047,259 shares of restricted stock outstanding. Such stock is subject to a vesting schedule as follows: 25% of the restricted stock vests immediately on the date of grant, thereafter, an additional 25% will vest annually on the anniversary of the date of grant subject to continued employment or services. In the event of death of the employee or a change in control, as defined by the Telos Corporation 2008 Omnibus Long-Term Incentive Plan or the 2013 Omnibus Long-Term Incentive Plan, all unvested shares shall automatically vest in full. In accordance with ASC 718, we recorded immaterial compensation expense for the 2013 grants as the value of the common stock was nominal, based on the deduction of our outstanding debt, capital lease obligations, and preferred stock from an estimated enterprise value, which was estimated based on discounted cash flow analysis, comparable public company analysis, and comparable transaction analysis. Additionally, we determined that a significant change in the valuation estimate for common stock would not have a significant effect on the consolidated financial statements. Research and Development For all years presented, we charge all research and development costs to expense as incurred. For research and development costs for software to be sold, leased or otherwise marketed, such costs are capitalized once technological feasibility is reached. Technological feasibility is established when all planning, designing, coding and testing activities have been completed, and all risks have been identified. To date, no such costs have been capitalized, as costs incurred after reaching technological feasibility have been insignificant. During 2015, 2014, and 2013, we incurred salary costs for research and development of approximately $2.1 million, $2.2 million, and $1.7 million, respectively, which are included as part of the selling, general and administrative expense in the consolidated statements of operations. Earnings (Loss) per Share As we do not have publicly held common stock or potential common stock, no earnings per share data is reported for any of the years presented. Comprehensive Income Comprehensive income includes changes in equity (net assets) during a period from non-owner sources. Our accumulated other comprehensive income was comprised of a loss from foreign currency translation of $70,000 and $64,000 as of December 31, 2015 and 2014, respectively; and actuarial gain on pension liability adjustments in Teloworks of $107,000 and $109,000 as of December 31, 2015 and 2014, respectively. Financial Instruments We use various methods and assumptions to estimate the fair value of our financial instruments. Due to their short-term nature, the carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates fair value. The fair value of long-term debt is based on the discounted cash flows for similar term borrowings based on market prices for the same or similar issues. See Note 4 – Fair Value Measurements for fair value disclosures of the senior redeemable preferred stock. Fair value estimates are made at a specific point in time, based on relevant market information. These estimates are subjective in nature and involve matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers," which requires an entity to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. In July 2015, the FASB finalized the delay of the effective date by one year, making the new standard effective for interim periods and annual period beginning after December 15, 2017. The new standard can be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the change recognized at the date of the initial application. We are currently assessing the impact the adoption of ASU 2014-09 will have on our consolidated financial position, results of operations and cash flows. In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern." The new standard addresses management's responsibility to evaluate whether there is substantial doubt about an entity ' In April 2015, the FASB issued ASU 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." The new standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, instead of as an asset. In August 2015, the FASB issued ASU 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements – Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting," which clarified that this guidance is not required to be applied to line-of-credit arrangements. The new standard will be effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. The adoption of this update will not have a material impact on our consolidated financial position, results of operations and cash flows. In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory," which requires an entity to measure inventory at the lower of cost and net realizable value. The provisions of the ASU are effective for periods beginning after December 15, 2016. We are currently assessing the impact the adoption of this ASU will have on our consolidated financial position, results of operations and cash flows. In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes," which requires all deferred income tax assets and liabilities to be classified as noncurrent on the balance sheet. The new standard is effective for annual reporting periods beginning after December 15, 2016 with early adoption permitted. We have elected to early adopt this requirement retrospectively in the current period. We reclassified $1.0 million of net current deferred income tax assets from current to noncurrent at December 31, 2014. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." The guidance in this update supersedes the requirements in ASC Topic 840, Leases. The update will require business entities to recognize lease assets and liabilities on the balance sheet and to disclose key information about leasing arrangements. A lessee would recognize a liability to make lease payments and a right-of-use asset representing its right to use the leased asset for the lease term. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2018, and is to be applied on a modified retrospective basis. We are currently assessing the impact the adoption of this ASU will have on our consolidated financial position, results of operations and cash flows. |
Non-controlling Interests
Non-controlling Interests | 12 Months Ended |
Dec. 31, 2015 | |
Non-controlling Interests [Abstract] | |
Non-controlling Interests | Note 2. Non-controlling Interests On April 11, 2007, Telos ID was formed as a limited liability company under the Delaware Limited Liability Company Act. We contributed substantially all of the assets of our Identity Management business line and assigned our rights to perform under our U.S. Government contract with the Defense Manpower Data Center ("DMDC") to Telos ID at their stated book values. The net book value of assets we contributed totaled $17,000. Until April 19, 2007, we owned 99.999% of the membership interests of Telos ID and certain private equity investors ("Investors") owned 0.001% of the membership interests of Telos ID. On April 20, 2007, we sold an additional 39.999% of the membership interests to the Investors in exchange for $6 million in cash consideration. In accordance with ASC 505-10, "Equity-Overall," we recognized a gain of $5.8 million. As a result, we owned 60% of Telos ID, and therefore continue to account for the investment in Telos ID using the consolidation method. On December 24, 2014 (the "Closing Date"), we entered into a Membership Interest Purchase Agreement (the "Purchase Agreement"), between the Company and the Investors, pursuant to which the Investors acquired from the Company an additional ten percent (10 %) membership interest in Telos ID in exchange for $0 million (the "Transaction"). In connection with the Transaction, the Company and the Investors entered into the Second Amended and Restated Operating Agreement (the "Operating Agreement") governing the business, allocation of profits and losses and management of Telos ID. Under the Operating Agreement, Telos ID is managed by a board of directors comprised of five (5) members (the "Telos ID Board"). The Operating Agreement provides for two classes of membership units, Class A (owned by the Company) and Class B (owned by the Investors). The Class A member (the Company) owns 50% of Telos ID, is entitled to receive 50% of the profits of Telos ID, and may appoint three (3) members of the Telos ID Board. The Class B member (the Investors) owns 50% of Telos ID, is entitled to receive 50% of the profits of Telos ID, and may appoint two (2) members of the Telos ID Board. Notwithstanding the foregoing, the allocations of profits and losses and distributions (including any distributions that relate to the year ending December 31, 2014, that are paid in a subsequent year) from the Closing Date through and including December 31, 2014, continued to be governed by the operating agreement of Telos ID in effect prior to the Closing Date and allocated based on the percentages of ownership prior to the Closing Date. As of December 31, 2014, we had received $3 million of the $5 million of consideration for the sale. The remaining $2 million was recorded as a receivable and received in January 2015. Despite the post-Transaction ownership of Telos ID being evenly split at 50% by each member, Telos maintains control of the subsidiary through its holding of three of the five Telos ID board of director seats. Under the Operating Agreement, the Class A and Class B members each have certain options with regard to the ownership interests held by the other party including the following: ● Upon the occurrence of a change in control of the Class A member (as defined in the Operating Agreement, a "Change in Control"), the Class A member has the option to purchase the entire membership interest of the Class B member. ● Upon the occurrence of the following events: (i) the involuntary termination of John B. Wood as CEO and chairman of the Class A member; (ii) the bankruptcy of the Class A member; or (iii) unless the Class A member exercises its option to acquire the entire membership interest of the Class B member upon a Change in Control of the Class A member, the transfer or issuance of more than fifty-one percent (51%) of the outstanding voting securities of the Class A member to a third party, the Class B member has the option to purchase the membership interest of the Class A member; provided, however, that in the event that the Class B member exercises the foregoing option, the Class A Member may then choose to purchase the entire interest of the Class B member. ● In the event that more than fifty percent (50%) of the ownership interests in the Class B member are transferred to persons or individuals (other than members of the immediate family of the initial owners of the Class B member) without the consent of Telos ID, the Class A member has the option to purchase the entire membership interest of the Class B member. ● The Class B member has the option to sell its interest to the Class A member at any time if there is not a letter of intent to sell Telos ID, a binding contract to sell all of the assets or membership interests in Telos ID, or a standstill for due diligence with respect to a sale of Telos ID. Notwithstanding the foregoing, the Class A member will not be obligated to purchase the interest of the Class B member if that purchase would constitute a violation of the Facility or if a Default or Event of Default (as each is defined in the Facility) would occur immediately after giving effect to that purchase and the Agent refuses to consent to that purchase or to waive such violation, Default, or Event of Default. If either the Class A member or the Class B member elects to sells its interest or buy the other member's interest upon the occurrence of any of the foregoing events, the purchase price for the interest will be based on an appraisal of Telos ID prepared by a nationally recognized investment banker. If the Class A member fails to satisfy its obligation , Pursuant to the Transaction, the Class A and Class B members each owns 50% of Telos ID, as mentioned above, and as such was allocated 50% of the profits, which was $2.4 million for 2015. Prior to the Transaction, the Class A member owned 60% of Telos ID, as mentioned above, and as such was allocated 60% of the profits, which was $2.5 million and $2.7 million for 2014 and 2013, respectively. The Class B member owned 40% of Telos ID prior to the Transaction, and as such was allocated 40% of the profits, which was $1.7 million and $1.8 million for 2014 and 2013, respectively. The Class B member was the non-controlling interest. Distributions are made to the members only when and to the extent determined by the Telos ID's Board of Directors, in accordance with the Operating Agreement. During the year ended December 31, 2015, 2014, and 2013, the Class B membership unit received a total of $2.4 million, $1.5 million and $1.8 million, respectively, of such distributions. The following table details the changes in non-controlling interest for the years ended December 31, 2015, 2014, and 2013 (in thousands): 2015 2014 2013 Non-controlling interest, beginning of period 584 $ 454 $ 468 Net income 2,438 1,676 1,807 Distributions (2,387 ) (1,548 ) (1,821 ) Purchase of 10% membership interest -- 2 -- Non-controlling interest, end of period $ 635 $ 584 $ 454 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets [Abstract] | |
Goodwill and Intangible Assets | Note 3. Goodwill and Other Intangible Assets The goodwill balance was $14.9 million as of December 31, 2015 and 2014. Goodwill is subject to annual impairment tests and if triggering events are present before the annual tests, we will assess impairment. As of December 31, 2015, no impairment charges were taken. Other intangible assets consist primarily of customer relationship enhancements. Other intangible assets are amortized on a straight-line basis over their estimated useful lives of 5 years. The amortization is based on a forecast of approximately equal annual customer orders over the 5-year period. Amortization expense for 2015, 2014 and 2013 was $2.3 million. The remaining balance of $1.1 million will be fully amortized as of June 30, 2016. Other intangible assets are subject to impairment review if there are events or changes in circumstances that indicate that the carrying amount is not recoverable. As of December 31, 2015, no impairment charges were taken. Other intangible assets consist of the following: December 31, 2015 December 31, 2014 Cost Accumulated Amortization Cost Accumulated Amortization Other intangible assets $ 11,286 $ 10,157 $ 11,286 $ 7,900 $ 11,286 $ 10,157 $ 11,286 $ 7,900 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 4. Fair Value Measurements The accounting standard for fair value measurements provides a framework for measuring fair value and expands disclosures about fair value measurements. The framework requires the valuation of investments using a three-tiered approach. The statement requires fair value measurement to be classified and disclosed in one of the following categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities; Level 2: Quoted prices in the markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity). As of December 31, 2015 and 2014, we did not have any financial instruments with significant Level 3 inputs and we did not have any financial instruments that are measured at fair value on a recurring basis. Due to the liquid and short-term nature of cash, accounts receivable, and accounts payable, fair value is assumed to approximate book value. We believe the fair value of other debt approximates book value. On June 14, 2013, 54.5% of the Senior Redeemable Preferred Stock was redeemed for $2.0 million (see Note 7 – Redeemable Preferred Stock). As of December 31, 2015 and 2014, the carrying value of the Senior Redeemable Preferred Stock was $2.0 million. Since there have been no material modifications to the financial instruments, the estimated fair value of the Senior Redeemable Preferred Stock remains consistent with amounts recorded as of December 31, 2015. As of December 31, 2015 and 2014, the carrying value of the Company's 12% Cumulative Exchangeable Redeemable Preferred Stock, par value $.01 per share (the "Public Preferred Stock") was $123.9 million and $120.1 million, respectively, and the estimated fair market value was $32.3 million and $43.0 million, respectively, based on quoted market prices. |
Revenue and Accounts Receivable
Revenue and Accounts Receivable | 12 Months Ended |
Dec. 31, 2015 | |
Revenue and Accounts Receivable [Abstract] | |
Revenue and Accounts Receivable | Note 5. Revenue and Accounts Receivable Revenue resulting from contracts and subcontracts with the U.S. Government accounted for 97.3%, 96.1%, and 98.3% of consolidated revenue in 2015, 2014, and 2013, respectively. As our primary customer base includes agencies of the U.S. Government, we have a concentration of credit risk associated with our accounts receivable, as 99.9% of our billed accounts receivable were directly with U.S. Government customers. While we acknowledge the potentially material and adverse risk of such a significant concentration of credit risk, our past experience of collecting substantially all of such receivables provide us with an informed basis that such risk, if any, is manageable. We perform ongoing credit evaluations of all of our customers and generally do not require collateral or other guarantee from our customers. We maintain allowances for potential losses. The components of accounts receivable are as follows (in thousands): December 31, 2015 2014 Billed accounts receivable $ 15,340 $ 15,447 Unbilled receivables 4,190 7,447 Allowance for doubtful accounts (485 ) (372 ) $ 19,045 $ 22,522 The activities in the allowance for doubtful accounts are set forth below (in thousands): Balance Beginning of Year Bad Debt Expenses (1) Recoveries (2) Balance End of Year Year Ended December 31, 2015 $ 372 $ 113 $ -- $ 485 Year Ended December 31, 2014 $ 321 $ 51 $ -- $ 372 Year Ended December 31, 2013 $ 319 $ 2 $ -- $ 321 (1) Accounts receivable reserves and reversal of allowance for subsequent collections, net (2) Accounts receivable written-off and subsequent recoveries, net Revenue by Major Market and Significant Customers We derived substantially all of our revenues from contracts and subcontracts with the U.S. Government. Revenue by customer sector for the last three fiscal years is as follows: 2015 2014 2013 (dollar amounts in thousands) Federal $ 117,328 97.3 % $ 122,549 96.1 % $ 203,917 98.3 % State & Local, and Commercial 3,306 2.7 % 5,013 3.9 % 3,477 1.7 % Total $ 120,634 100.0 % $ 127,562 100.0 % $ 207,394 100.0 % |
Current Liabilities and Debt Ob
Current Liabilities and Debt Obligations | 12 Months Ended |
Dec. 31, 2015 | |
Current Liabilities and Debt Obligations [Abstract] | |
Current Liabilities and Debt Obligations | Note 6. Current Liabilities and Debt Obligations Accounts Payable and Other Accrued Payables As of December 31, 2015 and 2014, the accounts payable and other accrued payables consisted of $9.3 million and $13.6 million, respectively, in trade account payables and $3.4 million and $4.2 million, respectively, in accrued payables. Senior Revolving Credit Facility The Facility has various covenants that may, among other things, affect our ability to merge with another entity, sell or transfer certain assets, pay dividends and make other distributions beyond certain limitations. The Facility contains financial covenants including minimum EBITDA, minimum recurring revenue and a limit on capital expenditures. On July 31, 2013, we amended our revolving credit facility (the "Facility") with Wells Fargo Capital Finance, LLC ("Wells Fargo") to extend the maturity date to November 13, 2014 from May 17, 2014. On March 27, 2014, we amended the Facility to extend the maturity date to November 13, 2015. In addition, Wells Fargo issued a waiver of certain existing defaults under the Facility including failure to maintain required EBITDA (as defined in the Facility) covenants. The March 2014 amendment also amended the terms of the Facility with respect to repayment on the term loan component. Since 2010, the principal of the term loan component had been repaid in quarterly installments of $93,750. The amended Facility required quarterly installment payments of $250,000 beginning July 1, 2014, with a final installment of the unpaid principal amount payable on November 13, 2015, the maturity date of the amended Facility. In consideration for the closing of this amendment, we paid Wells Fargo a fee of $75,000, plus expenses related to the closing. On December 24, 2014, the Facility was amended to provide for Wells Fargo's consent to the sale of 10% of our membership interests in Telos ID to certain private equity investors and to specify the amount of the transaction proceeds that were to be applied to the term loan component of the Facility. The amendment specified that $1 million of the proceeds from the sale of the membership interests would be applied to the term loan component of the Facility, with the remaining balance of the proceeds being applied to the revolving component of the Facility. As of December 31, 2014, the $1 million application to the term loan had not occurred and accordingly this amount was classified as a current liability, which, when added to the regular quarterly amortization of the term loan, resulted in a total short term liability of $2 million related to the Facility. Additional information regarding the sale transaction is disclosed in Note 2 – Non-controlling Interests. On February 27, 2015 the Facility was amended to change the February 28, 2015 dates specified in the November 2014 amendment to March 23, 2015. On March 19, 2015, the Facility was amended to change the March 23, 2015 dates specified in the February 2015 amendment to March 31, 2015. On March 31, 2015 the Facility was amended ("the Twelfth Amendment") to extend the maturity date to April 1, 2016. The Twelfth Amendment also amended the terms of the Facility, reducing the total credit available from $30 million to $20 million, and reducing the letter of credit sub-line limit from $5 million to $1 million. The reduced limits under the Facility more appropriately reflected the Company's projected utilization of the Facility. The Twelfth Amendment required quarterly installment payments of $350,000 beginning April 1, 2015, and extended the maturity date to April 1, 2016. The Twelfth Amendment established EBITDA and recurring revenue covenants, amending and restating in the entirety previously established financial covenants. The Twelfth Amendment authorized the issuance of $5 million in subordinated notes to affiliated entities of John R.C. Porter ("Porter Notes"), a holder of Telos Class A Common Stock and Senior Redeemable Preferred Stock. The Twelfth Amendment also established a minimum excess availability requirement under the revolving component of $1.25 million and allows for the payment of interest under the Porter Notes, subject to separate subordination agreements. In conjunction with the Twelfth Amendment, Wells Fargo issued a waiver of certain existing defaults under the Facility. In consideration for the closing of this amendment, we paid Wells Fargo a fee of $150,000, plus expenses related to the closing. Prior to the Twelfth Amendment, the interest rate on the term loan component was the same as that on the revolving credit component of the Facility, which was the higher of the Wells Fargo Bank "prime rate" plus 1%, the Federal Funds rate plus 1.5%, or the 3-month LIBOR rate plus 2%. In lieu of having interest charged at the foregoing rates, the Company could have elected to have the interest on all or a portion of the advances on the revolving credit component be a rate based on the LIBOR Rate (as defined in the Facility) plus 3.75%. The Twelfth Amendment also amended the interest rate on the components of the Facility. The Twelfth Amendment established two tiers of interest rate pricing based upon the Company's performance compared to projections provided to Wells Fargo for 2015. The first tier interest rate pricing was effective as of the date of the amendment and is the higher of the Wells Fargo Bank "prime rate" plus 2.25%, the Federal Funds rate plus 2.75%, or the 3-month LIBOR rate plus 3.25%. In lieu of having interest charged at the foregoing rates, the Company may elect to have the interest on all or a portion of the advances on the revolving credit component be a rate based on the LIBOR Rate plus 5%. Upon receipt by Wells Fargo of our second quarter 2015 financials, pricing will be redetermined based on the Company's performance compared to plan. Failure to meet or exceed plan EBITDA for each quarter (as defined by the Facility) would result in the first tier rates remaining in effect until the quarter-end reflecting plan achievement. Assuming plan achievement, which was the case for the quarter ended June 30, 2015, the second tier interest rate pricing becomes effective, which is the higher of the Wells Fargo Bank "prime rate" plus 1%, the Federal Funds rate plus 1.5%, or the 3-month LIBOR rate plus 2%. In lieu of having interest charged at the foregoing rates, the Company may elect to have the interest on all or a portion of the advances on the revolving credit component be a rate based on the LIBOR Rate plus 3.75%. As of December 31, 2015, we had not elected the LIBOR Rate option. Borrowings under the Facility are collateralized by substantially all of the Company's assets including inventory, equipment, and accounts receivable. As of December 31, 2015, the interest rate on the Facility was 5.75%. We incurred interest expense in the amount of $0.6 million, $0.7 million, and $0.6 million for the years ended December 31, 2015, 2014, and 2013, respectively, on the Facility. On June 11, 2013, the Facility was amended to allow for the further redemption of Senior Redeemable Preferred Stock, under certain conditions, at a discount from par value plus accrued dividends of at least 10%, at an aggregate price not to exceed $2.0 million. On June 14, 2013, a portion of the Senior Redeemable Preferred Stock was redeemed (see Note 7 – Redeemable Preferred Stock). On August 12, 2015, the Facility was amended to extend the maturity date to July 1, 2016. On November 17, 2015, the Facility was further amended ("the Fifteenth Amendment") to extend the maturity date to October 1, 2016, and the EBITDA covenant for the period ending September 30, 2015 was reset to more accurately reflect the Company's revised estimates of operating results. On February 19, 2016, the Facility was amended, effective February 15, 2016, and the EBITDA covenant for the period ending December 31, 2015 was revised to more accurately reflect the Company's estimates of operating results. As of December 31, 2015, we were in compliance with the Facility's financial covenants, including EBITDA covenants. On March 30, 2016 the Facility was amended ("the Seventeenth Amendment") to extend the maturity date to January 1, 2017. The Seventeenth Amendment also amends the terms of the Facility, reducing the total credit available from $20 million to $10 million effective as of the date of the amendment, which more appropriately reflect the Company's projected utilization of the Facility. The Seventeenth Amendment sets the quarterly EBITDA (as defined by the Facility) covenants to more accurately reflect the Company's current operating budget. All other financial covenants remain unchanged. The Seventeenth Amendment eliminates the bottom tier of pricing established in the Twelfth Amendment, fixing the interest rate at the higher of the Wells Fargo Bank "prime rate" plus 2.25%, the Federal Funds rate plus 2.75%, or the 3-month LIBOR rate plus 3.25%. The Seventeenth Amendment also increases the minimum excess availability requirement under the revolving component from $1.25 million to $2.0 million, effective as of the date of the amendment, and increases the requirement to $2.5 million, effective July 1, 2016, and $3.0 million, effective November 1, 2016, if the Company does not receive $5 million of equity or subordinated debt investment by June 1, 2016. If such capital investment is not received by June 1, 2016, we would pay a fee of $100,000 to Wells Fargo. In consideration for the closing of the Seventeenth Amendment, we paid Wells Fargo a fee of $100,000, plus expenses related to the closing. At December 31, 2015, we had outstanding borrowings of $8.5 million on the Facility, which included the $3.2 million term loan, of which $1.4 million was short-term. At December 31, 2014, the outstanding borrowings on the Facility were $10.9 million, which included the $5.5 million term loan, of which $2.3 million was short-term. At December 31, 2015 and 2014, we had unused borrowing availability on the Facility of $5.8 million and $4.9 million, respectively. The effective weighted average interest rates on the outstanding borrowings under the Facility were 6.7% and 5.6% for the years ended December 31, 2015 and 2014, respectively. The following are maturities of the Facility presented by year (in thousands): 2016 2017 Total Short-term: Term loan $ 1,400 $ -- $ 1,400 1 Long-term: Term loan $ -- $ 1,800 $ 1,800 1 Revolving credit -- 5,344 5,344 2 Subtotal $ -- $ 7,144 $ 7,144 Total $ 1,400 $ 7,144 $ 8,544 1 The principal will be repaid in quarterly installments of $350,000, with a final installment of the unpaid principal amount payable on January 1, 2017. 2 Balance due represents balance as of December 31, 2015, with fluctuating balances based on working capital requirements of the Company. Subordinated Debt On March 31, 2015, the Company entered into Subordinated Loan Agreements and Subordinated Promissory Notes ("Porter Notes") with affiliated entities of Mr. John R. C. Porter (together referenced as "Porter"). Mr. Porter and Toxford Corporation, of which Mr. Porter is the sole shareholder, own 39.3% of our Class A Common Stock. Under the terms of the Porter Notes, Porter lent the Company $2.5 million on or about March 31, 2015. Telos also entered into Subordination and Intercreditor Agreements (the "Subordination Agreements") with Porter and Wells Fargo, in which the Porter Notes are fully subordinated to the Facility and payments under the Porter Notes are permitted only if certain conditions specified by Wells Fargo are met. According to the terms of the Porter Notes, the outstanding principal sum bears interest at the fixed rate of twelve percent (12%) per annum which would be payable in arrears in cash on the 20th day of each May, August, November and February, with the first interest payment date due on August 20, 2015. The Porter Notes do not call for amortization payments and are unsecured. The unpaid principal, together with interest, is due and payable in full on July 1, 2017. The Porter Notes, in whole or in part, may be repaid at any time without premium or penalty. We incurred interest expense in the amount of $229,000 on the Porter Notes for 2015. In accordance with the terms of the Porter Notes, interest has been accrued but was not paid due to restrictions on the payment of interest in the Subordination Agreements, and is not expected to be paid in the near term. Note 7. Redeemable Preferred Stock |
Redeemable Preferred Stock
Redeemable Preferred Stock | 12 Months Ended |
Dec. 31, 2015 | |
Redeemable Preferred Stock [Abstract] | |
Redeemable Preferred Stock | Senior Redeemable Preferred Stock The Senior Redeemable Preferred Stock is senior to all other outstanding equity of the Company, including the Public Preferred Stock. The Series A-1 ranks on a parity with the Series A-2. The components of the authorized Senior Redeemable Preferred Stock are 1,250 shares of Series A-1 and 1,750 shares of Series A-2 Senior Redeemable Preferred Stock, each with $.01 par value. The Senior Redeemable Preferred Stock carries a cumulative per annum dividend rate of 14.125% of its liquidation value of $1,000 per share. The dividends are payable semiannually on June 30 and December 31 of each year. We have not declared dividends on our Senior Redeemable Preferred Stock since its issuance. The liquidation preference of the Senior Redeemable Preferred Stock is the face amount of the Series A-1 and A-2 ($1,000 Due to the terms of the Facility and of the Senior Redeemable Preferred Stock, we have been and continue to be precluded from paying any accrued and unpaid dividends on the Senior Redeemable Preferred Stock, other than described below. Certain holders of the Senior Redeemable Preferred Stock have entered into standby agreements whereby, among other things, those holders will not demand any payments in respect of dividends or redemptions of their instruments and the maturity dates of the instruments have been extended. As a result of such standby agreements, as of December 31, 2015, instruments held by Toxford Corporation ( "Toxford"), the holder of 76.4% of the Senior Redeemable Preferred Stock, will mature on February 28, 2018. On June 11, 2013, the Facility was amended to allow for the redemption of Senior Redeemable Preferred Stock, under certain conditions, at a discount from par value plus accrued dividends of at least 10%, at an aggregate price not to exceed $2.0 million. On June 14, 2013, with the consent of the holders of the outstanding shares of Senior Redeemable Preferred Stock, 54.5% of the Senior Redeemable Preferred Stock with a carrying value of $2.2 million was redeemed for $2.0 million, resulting in a gain in the amount of approximately $0.2 million, representing a discount of 10%, which was recorded in other income on the condensed consolidated statements of operations. Subsequent to such redemption, the total number of shares of Senior Redeemable Preferred Stock issued and outstanding was 197 shares and 276 shares for Series A-1 and Series A-2, respectively. At December 31, 2015 and 2014, the total number of shares of Senior Redeemable Preferred Stock issued and outstanding was 197 shares and 276 shares for Series A-1 and Series A-2, respectively. Due to the limitations, contractual restrictions, and agreements described above, the Senior Redeemable Preferred Stock is classified as noncurrent as of December 31, 2015. At December 31, 2015 and 2014, cumulative undeclared, unpaid dividends relating to Senior Redeemable Preferred stock totaled $1.6 million and $1.5 million, respectively. We accrued dividends on the Senior Redeemable Preferred Stock of $67,000, $67,000 and $103,000 for the years ended December 31, 2015, 2014, and 2013, respectively, which were reported as interest expense. Prior to the effective date of ASC 480-10, "Distinguishing Liabilities from Equity," on July 1, 2003, such dividends were charged to stockholders' deficit. Public Preferred Stock A maximum of 6,000,000 shares of the Public Preferred Stock, par value $.01 per share, has been authorized for issuance. We initially issued 2,858,723 shares of the Public Preferred Stock pursuant to the acquisition of the Company during fiscal year 1990. The Public Preferred Stock was recorded at fair value on the date of original issue, November 21, 1989, and we made periodic accretions under the interest method of the excess of the redemption value over the recorded value. We adjusted our estimate of accrued accretion in the amount of $1.5 million in the second quarter of 2006. The Public Preferred Stock was fully accreted as of December 2008. We declared stock dividends totaling 736,863 shares in 1990 and 1991. Since 1991, no other dividends, in stock or cash, have been declared. In November 1998, we retired 410,000 shares of the Public Preferred Stock. The total number of shares issued and outstanding at December 31, 2015 and 2014, was 3,185,586. The Public Preferred Stock is quoted as TLSRP on the OTCQB marketplace and the OTC Bulletin Board. Since 1991, no dividends were declared or paid on our Public Preferred Stock, based upon our interpretation of restrictions in our Articles of Amendment and Restatement, limitations in the terms of the Public Preferred Stock instrument, specific dividend payment restrictions in the Facility entered into with Wells Fargo to which the Public Preferred Stock is subject, other senior obligations, and Maryland law limitations in existence prior to October 1, 2009. Pursuant to their terms, we were scheduled, but not required, to redeem the Public Preferred Stock in five annual tranches during the period 2005 through 2009. However, due to our substantial senior obligations, limitations set forth in the covenants in the Facility, foreseeable capital and operational requirements, and restrictions and prohibitions of our Articles of Amendment and Restatement, we were unable to meet the redemption schedule set forth in the terms of the Public Preferred Stock. Moreover, the Public Preferred Stock is not payable on demand, nor callable, for failure to redeem the Public Preferred Stock in accordance with the redemption schedule set forth in the instrument. Therefore, we classify these securities as noncurrent liabilities in the consolidated balance sheets as of December 31, 2015 and 2014. We are parties with certain of our subsidiaries to the Facility agreement with Wells Fargo, whose term expires on January 1, 2017. Under the Facility, we agreed that, so long as any credit under the Facility is available and until full and final payment of the obligations under the Facility, we would not make any distribution or declare or pay any dividends (other than common stock) on our stock, or purchase, acquire, or redeem any stock, or exchange any stock for indebtedness, or retire any stock. Accordingly, as stated above, we will continue to classify the entirety of our obligation to redeem the Public Preferred Stock as a long-term obligation. The Facility prohibits, among other things, the redemption of any stock, common or preferred, other than as described above. The Public Preferred Stock by its terms cannot be redeemed if doing so would violate the terms of an agreement regarding the borrowing of funds or the extension of credit which is binding upon us or any of our subsidiaries, and it does not include any other provisions that would otherwise require any acceleration of the redemption of or amortization payments with respect to the Public Preferred Stock. Thus, the Public Preferred Stock is not and will not be due on demand, nor callable, within 12 months from December 31, 2015. This classification is consistent with ASC 210-10, "Balance Sheet" and 470-10, "Debt" and the FASB ASC Master Glossary definition of "Current Liabilities." ASC 210-10 and the FASB ASC Master Glossary define current liabilities as follows: The term current liabilities is used principally to designate obligations whose liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets, or the creation of other current liabilities. As a balance sheet category, the classification is intended to include obligations for items which have entered into the operating cycle, such as payables incurred in the acquisition of materials and supplies to be used in the production of goods or in providing services to be offered for sale; collections received in advance of the delivery of goods or performance of services; and debts that arise from operations directly related to the operating cycle, such as accruals for wages, salaries, commissions, rentals, royalties, and income and other taxes. Other liabilities whose regular and ordinary liquidation is expected to occur within a relatively short period of time, usually twelve months, are also intended for inclusion, such as short-term debts arising from the acquisition of capital assets, serial maturities of long-term obligations, amounts required to be expended within one year under sinking fund provisions, and agency obligations arising from the collection or acceptance of cash or other assets for the account of third persons. ASC 470-10 provides the following: The current liability classification is also intended to include obligations that, by their terms, are due on demand or will be due on demand within one year (or operating cycle, if longer) from the balance sheet date, even though liquidation may not be expected within that period. It is also intended to include long-term obligations that are or will be callable by the creditor either because the debtor's violation of a provision of the debt agreement at the balance sheet date makes the obligation callable or because the violation, if not cured within a specified grace period, will make the obligation callable. If, pursuant to the terms of the Public Preferred Stock, we do not redeem the Public Preferred Stock in accordance with the scheduled redemptions described above, the terms of the Public Preferred Stock require us to discharge our obligation to redeem the Public Preferred Stock as soon as we are financially capable and legally permitted to do so. Therefore, by its very terms, the Public Preferred Stock is not due on demand or callable for failure to make a scheduled payment pursuant to its redemption provisions and is properly classified as a noncurrent liability. We pay dividends on the Public Preferred Stock when and if declared by the Board of Directors. The Public Preferred Stock accrues a semi-annual dividend at the annual rate of 12% ($1.20) per share, based on the liquidation preference of $10 per share and is fully cumulative. Dividends in additional shares of the Public Preferred Stock for 1990 and 1991 were paid at the rate of 6% of a share for each $.60 of such dividends not paid in cash. For the cash dividends payable since December 1, 1995, we have accrued $92.1 million and $88.2 million as of December 31, 2015 and 2014, respectively. We accrued dividends on the Public Preferred Stock of $3.8 million for the years ended December 31, 2015, 2014, and 2013, which was recorded as interest expense. Prior to the effective date of ASC 480-10 on July 1, 2003, such dividends were charged to stockholders' accumulated deficit. The carrying value of the accrued Paid-in-Kind ("PIK") dividends on the Public Preferred Stock for the period 1992 through June 1995 was $4.0 million. Had we accrued such dividends on a cash basis for this time period, the total amount accrued would have been $15.1 million. However, as a result of the redemption of the 410,000 shares of the Public Preferred Stock in November 1998, such amounts were reduced and adjusted to $3.5 million and $13.4 million, respectively. Our Articles of Amendment and Restatement, Section 2(a) states, "Any dividends payable with respect to the Exchangeable Preferred Stock ("Public Preferred Stock") during the first six years after the Effective Date (November 20, 1989) may be paid (subject to restrictions under applicable state law), in the sole discretion of the Board of Directors, in cash or by issuing additional fully paid and nonassessable shares of Exchangeable Preferred Stock …". Accordingly, the Board had the discretion to pay the dividends for the referenced period in cash or by the issuance of additional shares of Public Preferred Stock. During the period in which we stated our intent to pay PIK dividends, we stated our intention to amend our Charter to permit such payment by the issuance of additional shares of Public Preferred Stock. In consequence, as required by applicable accounting requirements, the accrual for these dividends was recorded at the estimated fair value (as the average of the ask and bid prices) on the dividend date of the shares of Public Preferred Stock that would have been (but were not) issued. This accrual was $9.9 million lower than the accrual would be if the intent was only to pay the dividend in cash, at that date or any later date. In May 2006, the Board concluded that the accrual of PIK dividends for the period 1992 through June 1995 was no longer appropriate. Since 1995, we have disclosed in the footnotes to our audited financial statements the carrying value of the accrued PIK dividends on the Public Preferred Stock for the period 1992 through June 1995 as $4.0 million, and that had we accrued cash dividends during this time period, the total amount accrued would have been $15.1 million. As stated above, such amounts were reduced and adjusted to $3.5 million and $13.4 million, respectively, due to the redemption of 410,000 shares of the Public Preferred Stock in November 1998. On May 12, 2006, the Board voted to confirm that our intent with respect to the payment of dividends on the Public Preferred Stock for this period changed from its previously stated intent to pay PIK dividends to that of an intent to pay cash dividends. We therefore changed the accrual from $3.5 million to $13.4 million, the result of which was to increase our negative shareholder equity by the $9.9 million difference between those two amounts, by recording an additional $9.9 million charge to interest expense for the second quarter of 2006, resulting in a balance of $123.9 million and $120.1 million for the principal amount and all accrued dividends on the Public Preferred Stock as of December 31, 2015 and 2014, respectively. This action is considered a change in assumption that results in a change in accounting estimate as defined in ASC 250-10, which sets forth guidance concerning accounting changes and error corrections. |
Stockholders' Deficit, Option P
Stockholders' Deficit, Option Plans, and Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders' Deficit, Option Plans, and Employee Benefit Plan [Abstract] | |
Stockholders' Deficit, Option Plans, and Employee Benefit Plan | Note 8. Stockholders' Deficit, Option Plans, and Employee Benefit Plan Common Stock The relative rights, preferences, and limitations of the Class A common stock and the Class B common stock are in all respects identical. The holders of the common stock have one vote for each share of common stock held. Subject to the priority rights of the Public Preferred Stock and any series of the Senior Preferred Stock, holders of Class A and Class B common stock are entitled to receive such dividends as may be declared. Restricted Stock Grants Since June 2008, we have issued restricted stock (Class A common) to our executive officers, directors and employees. In March 2013, we granted an additional 4,312,000 shares of restricted stock (Class A common) to our executive officers and employees. There were no grants issued in 2015. As of December 31, 2015, there were 19,047,259 shares of restricted stock outstanding. Such stock is subject to a vesting schedule as follows: 25% of the restricted stock vests immediately on the date of grant, thereafter, an additional 25% will vest annually on the anniversary of the date of grant subject to continued employment or services. In the event of death of the employee or a change in control, as defined by the Telos Corporation 2008 Omnibus Long-Term Incentive Plan or the 2013 Omnibus Long-Term Incentive Plan, all unvested shares shall automatically vest in full. In accordance with ASC 718, we recorded immaterial compensation expense for the 2013 grants as the value of the common stock was nominal, based on the deduction of our outstanding debt, capital lease obligations, and preferred stock from an estimated enterprise value, which was estimated based on discounted cash flow analysis, comparable public company analysis, and comparable transaction analysis. Additionally, we determined that a significant change in the valuation estimate for common stock would not have a significant effect on the consolidated financial statements. Stock Options In 1996, the Board of Directors approved and the shareholders ratified the 1996 Stock Option Plan ("1996 Stock Option Plan"). As determined by the members of the Compensation Committee, we generally grant options under our respective plans at the estimated fair value at the date of grant, based upon all information available to it at the time. 1996 Stock Option Plan The 1996 Stock Option Plan allowed for the award of options to purchase up to 6,644,974 shares of Class A common stock at an exercise price of not lower than the estimated fair value at the date of grant. Vesting of the stock options for key employees was based both upon the passage of time, generally four years, and certain key events occurring including an initial public offering or a change in control. The stock options may be exercised over a ten-year period subject to the vesting requirements. Effective May 10, 2004, the 1996 Stock Option Plan was amended by the Board of Directors to increase the total amount of authorized shares of Class A common stock to 7,345,433, an increase of 700,459 shares, to reflect those options granted to Mr. Wood that were not exercised under the 1993 Stock Option Plan. The 1996 Stock Option Plan expired in March 2006, with its remaining 516,000 unissued options canceled. There were 0 and 20,000 options outstanding at December 31, 2015 and 2014. A total of 20,000 options were exercised in 2014. A total of 2,463,500 options were exchanged for restricted stock in June 2008. Number of Shares (000's) Weighted Average Exercise Price 2014 Stock Option Activity Outstanding at beginning of year 20 $ 0.62 Granted -- -- Exercised (20 ) 0.62 Canceled -- -- Outstanding at end of year -- -- Exercisable at end of year -- -- 2013 Stock Option Activity Outstanding at beginning of year 20 $ 0.62 Granted -- -- Exercised -- -- Canceled -- -- Outstanding at end of year 20 $ 0.62 Exercisable at end of year 20 $ 0.62 Telos Shared Savings Plan We sponsor a defined contribution employee savings plan (the "Plan") under which substantially all full-time employees are eligible to participate. The Plan holds 3,658,536 shares of Telos Class A common stock. Since no public market exists for Telos Class A common stock, the Trustees of the Plan and their professional advisors undertake an annual evaluation, based upon the most recent audited financial statements. To date, the Plan's trustees have priced the stock at the exact midpoint of the evaluated range of the value of the stock. We match one-half of employee contributions to the Plan up to a maximum of 2% of such employee's eligible annual base salary. Participant contributions vest immediately, and Company contributions vest at the rate of 20% for each year, with full vesting occurring after completion of five years of service. The Company's matching contributions to the Plan were suspended for 2015. Our total contributions to this Plan for 2015, 2014, and 2013 were $0, $624,000, and $598,000, respectively. Additionally, effective September 1, 2007, Telos ID sponsors a defined contribution savings plan (the "Telos ID Plan") under which substantially all full-time employees are eligible to participate. Telos ID matches one-half of employee contributions to the Plan up to a maximum of 2% of such employee's eligible annual base salary. Telos ID's matching contributions to the Telos ID Plan were suspended for 2015. The total 2015, 2014, and 2013 Telos ID contributions to this plan were $0, $83,000, and $83,000, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes [Abstract] | |
Income Taxes | Note 9. Income Taxes The provision (benefit) for income taxes attributable to income from operations includes the following (in thousands): For the Years Ended December 31, 2015 2014 2013 Current (benefit) provision Federal $ (902 ) $ (1,759 ) $ 1,219 State 54 (194 ) 264 Total current (848 ) (1,953 ) 1,483 Deferred provision (benefit) Federal 4,333 (3,820 ) 133 State 780 (215 ) 62 Total deferred 5,113 (4,035 ) 195 Total provision (benefit) $ 4,265 $ (5,988 ) $ 1,678 The provision for income taxes related to operations varies from the amount determined by applying the federal income tax statutory rate to the income or loss before income taxes, exclusive of net income attributable to non-controlling interest. The reconciliation of these differences is as follows: For the Years Ended December 31, 2015 2014 2013 Computed expected income tax provision 34.0% 35.0% 35.0% State income taxes, net of federal income tax benefit 2.1 2.5 (17.3) Change in valuation allowance for deferred tax assets (61.3) 0.1 (0.3) Cumulative deferred adjustments (0.1) (0.3) (16.9) Provision to return adjustments 1.3 1.1 (11.5) Other permanent differences (1.1) (0.5) (15.4) Dividend and accretion on preferred stock (11.3) (7.5) (146.0) FIN 48 liability (0.8) (0.6) (5.9) R&D credit 1.6 3.0 -- Other (0.9) -- -- (36.5)% 32.8% (178.3)% The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2015 and 2014 are as follows (in thousands): December 31, 2015 2014 Deferred tax assets: Accounts receivable, principally due to allowance for doubtful accounts $ 176 $ 137 Allowance for inventory obsolescence and amortization 623 694 Accrued liabilities not currently deductible 2,218 2,196 Accrued compensation 840 535 Deferred rent 8,008 8,512 Net operating loss carryforwards - federal 524 -- Net operating loss carryforwards - state 344 180 R&D credit 202 -- Total gross deferred tax assets 12,935 12,254 Less valuation allowance (9,027 ) (1,868 ) Total deferred tax assets, net of valuation allowance 3,908 10,386 Deferred tax liabilities: Amortization and depreciation (3,307 ) (4,650 ) Unbilled accounts receivable, deferred for tax purposes (589 ) (756 ) Goodwill basis adjustment and amortization (3,199 ) (3,021 ) Telos ID basis difference (12 ) (45 ) Total deferred tax liabilities (7,107 ) (8,472 ) Net deferred tax (liabilities) assets $ (3,199 ) $ 1,914 The components of the valuation allowance are as follows (in thousands): Balance Beginning of Period Additions Recoveries Balance End of Period December 31, 2015 $ 1,868 $ 7,159 $ -- $ 9,027 December 31, 2014 $ 1,901 $ -- $ (33 ) $ 1,868 December 31, 2013 $ 2,084 $ -- $ (183 ) $ 1,901 We are required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on available evidence, realization of deferred tax assets is dependent upon the generation of future taxable income. We considered projected future taxable income, tax planning strategies, and reversal of taxable temporary differences in making this assessment. As such, we have determined that a full valuation allowance is required as of December 31, 2015. We are not able to use temporary taxable differences related to goodwill, as a source of future taxable income. As a result of a full valuation allowance against our deferred tax assets, a deferred tax liability (hanging credit) related to goodwill remains on our consolidated balance sheet at December 31, 2015. At December 31, 2015, for federal income tax purposes there was approximately $4.6 million net operating loss generated, $3.0 million of which will be carried back to 2013 for refund of taxes paid, the remaining will be carried forward to offset future taxable income. These net operating loss carryforwards expire in 2035. Under the provisions of ASC 740-10, we determined that there were approximately $803,000 and $708,000 of unrecognized tax benefits, including $210,000 and $188,000 of related interest and penalties, required to be recorded in other current liabilities as of December 31, 2015 and 2014, respectively. We believe that the total amounts of unrecognized tax benefits will not significantly increase or decrease within the next 12 months. The period for which tax years are open, 2012 to 2015, has not been extended beyond the applicable statute of limitations. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): 2015 2014 2013 Unrecognized tax benefits, beginning of period $ 708 $ 607 $ 534 Gross increases—tax positions in prior period 92 105 55 Gross increases—tax positions in current period 38 47 18 Settlements (35 ) (51 ) -- Unrecognized tax benefits, end of period $ 803 $ 708 $ 607 |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2015 | |
Commitments [Abstract] | |
Commitments | Note 10. Commitments Leases We lease office space and equipment under noncancelable operating and capital leases with various expiration dates, some of which contain renewal options. On March 1, 1996, we entered into a 20-year capital lease for a building in Ashburn, Virginia, that serves as our corporate headquarters. We had accounted for this transaction as a capital lease and had accordingly recorded assets and a corresponding liability of approximately $12.3 million. Effective November 1, 2013, this lease was terminated and we entered into a 13-year lease ("the 2013 lease") that would have expired in October 31, 2026. The 2013 lease was treated as a modification in accordance with ASC 840, "Leases". As a result of the 2013 lease, the corresponding capital asset and liability increased by $11.7 million, resulting in a net book value of the capital asset of $13.1 million, and capital obligation of $15.5 million. The 2013 lease included an option to purchase, assign to, or designate a purchaser on June 1, 2014, which required notice of intent to exercise the option by not later than March 31, 2014. On March 28, 2014, we entered into a definitive agreement with an unrelated third party to assign the purchase option to that third party in return for cash consideration of $1.7 million, payable upon the closing of the purchase transaction, and certain obligations under the agreement, including entering into a new 15-year lease with the third party upon the third party's exercise of the purchase option and purchase of the building from the prior landlord. On March 28, 2014, we provided the prior landlord notice of our assignment and exercise of the purchase option. On May 28, 2014 the third party completed the purchase transaction and the 2013 lease was terminated, with no ongoing obligations, by mutual agreement between us and the prior landlord. On the same day we entered into a new lease ("the 2014 lease") with the third party that expires on May 31, 2029. The 2014 lease was treated as a modification of the prior lease on the property in accordance with ASC 840, and determined to be a capital lease. As a result of the new lease, the corresponding capital asset increased by $5.7 million, resulting in a net book value of the capital asset of $18.3 million and the liability increased by $6.7 million, resulting in a capital obligation of $22.0 million. As part of this treatment, the net cash consideration received in connection with the definitive agreement was treated as a lease incentive that will be amortized over the life of the lease. The following is a schedule by years of future minimum payments under capital leases together with the present value of the net minimum lease payments as of December 31, 2015 (in thousands): Property Equipment Total 2016 $ 1,853 1 1,854 2017 1,899 1 1,900 2018 1,947 -- 1,947 2019 1,995 -- 1,995 2020 2,045 -- 2,045 Remainder 19,364 -- 19,364 Total minimum obligations 29,103 2 29,105 Less amounts representing interest (ranging from 5.0% to 18.8%) (8,370 ) -- (8,370 ) Net present value of minimum obligations 20,733 2 20,735 Less current portion (826 ) (1 ) (827 ) Long-term capital lease obligations at December 31, 2015 $ 19,907 $ 1 $ 19,908 Future minimum lease payments for all noncancelable operating leases at December 31, 2015 are as follows (in thousands): 2016 $ 531 2017 319 2018 298 2019 292 2020 300 Remainder 982 Total minimum lease payments $ 2,722 In accordance with the 2014 Lease, the basic rent increases by a fixed 2.5% escalation annually. Rent expense charged to operations totaled $1.8 million, $1.1 million, and $1.1 million for 2015, 2014, and 2013, respectively. Accumulated amortization for property and equipment under capital leases at December 31, 2015 and 2014 is $14.5 million and $13.2 million, respectively. Warranties We provide product warranties for products sold through certain U.S. Government contract vehicles. We accrue a warranty liability at the time that we recognize revenue for the estimated costs that may be incurred in connection with providing warranty coverage. Warranties are valued using historical warranty usage trends; however, if actual product failure rates or service delivery costs differ from estimates, revisions to the estimated warranty liability may be required. Accrued warranties are reported as other current liabilities on the consolidated balance sheets. Balance Beginning of Year Accruals Warranty Expenses Balance End of Year (amount in thousands) Year Ended December 31, 2015 $ 189 $ 125 $ (181 ) $ 133 Year Ended December 31, 2014 $ 113 $ 140 $ (64 ) $ 189 Year Ended December 31, 2013 $ 226 $ 70 $ (183 ) $ 113 |
Certain Relationships and Relat
Certain Relationships and Related Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Certain Relationships and Related Transactions [Abstract] | |
Certain Relationships and Related Transactions | Note 11. Certain Relationships and Related Transactions Information concerning certain relationships and related transactions between us and certain of our current shareholders and former officers is set forth below. The brother of our Chairman and CEO, Emmett J. Wood, has been an employee of ours since 1996. The amounts paid to this individual as compensation for 2015, 2014, and 2013 were $305,000, $446,000, and $340,000, respectively. Additionally, Mr. Wood owned 650,000 shares and 50,000 shares of the Company's Class A and Class B Common Stock, respectively, as of December 31, 2015 and 2014. On June 14, 2013, the Company redeemed a total of 567 shares of Senior Redeemable Preferred Stock, including 195 shares and 274 shares of Series A-1 and Series A-2 Redeemable Preferred Stock, respectively, held by Mr. Porter and Toxford, who own 39.3% of our Class A Common Stock. Subsequent to such redemption, Mr. Porter and Toxford beneficially held 163 shares and 228 shares of Series A-1 and Series A-2, respectively, or 82.7% of the Senior Redeemable Preferred Stock. In May 2013, the Company formally engaged Avison Young, a full-service commercial real estate company, to assist the Company with its various options related to its current facility in Ashburn, Virginia. Mr. Kevin Malloy is a Principal of Avison Young and is the main relationship partner for the Company. Mr. Malloy is the brother of Mr. Brendan Malloy, a named executive officer of the Company, and the engagement of Avison Young is subject to the Telos Corporation Policy with Respect to Related Person Transactions ("RPT"). Consistent with standard practice in the industry, Avison Young's compensation will consist entirely of a commission payable solely by the landlord to the extent a transaction with the landlord is later consummated. The engagement of Avison Young was approved by the Board of Directors, consistent with the Company's RPT policy. On March 31, 2015, the Company entered into the Porter Notes. Mr. Porter and Toxford Corporation, of which Mr. Porter is the sole shareholder, own 39.3% of our Class A Common Stock. Under the terms of the Porter Notes, Porter lent the Company $2.5 million on or about March 31, 2015. According to the terms of the Porter Notes, the outstanding principal sum bears interest at the fixed rate of twelve percent (12%) per annum which would be payable in arrears in cash on the 20th day of each May, August, November and February, with the first interest payment date due on August 20, 2015. The Porter Notes do not call for amortization payments and are unsecured. The unpaid principal, together with interest, is due and payable in full on July 1, 2017. The Porter Notes, in whole or in part, may be repaid at any time without premium or penalty. We incurred interest expense in the amount of $229,000 on the Porter Notes for 2015. In accordance with the terms of the Porter Notes, interest has been accrued but was not paid due to restrictions on the payment of interest in the Subordination Agreements, and is not expected to be paid in the near term. |
Summary of Selected Quarterly F
Summary of Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Selected Quarterly Financial Data (Unaudited) [Abstract] | |
Summary of Selected Quarterly Financial Data (Unaudited) | Note 12. Summary of Selected Quarterly Financial Data (Unaudited) The following is a summary of selected quarterly financial data for the previous two fiscal years (in thousands): Quarters Ended March 31 June 30 Sept. 30 Dec. 31 2015 Revenue $ 28,019 $ 32,028 $ 33,662 $ 26,925 Gross profit 6,778 7,170 8,674 8,051 Loss before income taxes and non-controlling interest (3,030 ) (2,564 ) (959 ) (2,684 ) Net loss attributable to Telos Corporation (1)(2) (2,746 ) (2,408 ) (1,406 ) (9,380 ) 2014 Revenue $ 30,144 $ 29,009 $ 38,507 $ 29,902 Gross profit 6,442 5,396 7,504 5,611 Loss before income taxes and non-controlling interest (4,786 ) (5,384 ) (3,611 ) (2,819 ) Net loss attributable to Telos Corporation (1) (5,559 ) (4,346 ) (774 ) (1,609 ) (1) Changes in net income are the result of several factors, including seasonality of the government year-end buying season, as well as the nature and timing of other deliverables. (2) A full valuation allowance was recorded against the Company's deferred tax assets in the fourth quarter of 2015. |
Commitments, Contingencies and
Commitments, Contingencies and Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Commitments, Contingencies and Subsequent Events [Abstract] | |
Commitments, Contingencies and Subsequent Events | Note 13. Commitments, Contingencies and Subsequent Events Financial Condition and Liquidity As described in Note 6 – Current Liabilities and Debt Obligations, we maintain the Facility with Wells Fargo. Borrowings under the Facility are collateralized by substantially all of our assets including inventory, equipment, and accounts receivable. The amount of available borrowings fluctuates based on the underlying asset-borrowing base, in general 85% of our trade accounts receivable, as adjusted by certain reserves (as further defined in the Facility agreement). The Facility provides us with virtually all of the liquidity we require to meet our operating, investing and financing needs. Therefore, maintaining sufficient availability on the Facility is the most critical factor in our liquidity. While a variety of factors related to sources and uses of cash, such as timeliness of accounts receivable collections, vendor credit terms, or significant collateral requirements, ultimately impact our liquidity, such factors may or may not have a direct impact on our liquidity, based on how the transactions associated with such circumstances impact our availability under the Facility. For example, a contractual requirement to post collateral for a duration of several months, depending on the materiality of the amount, could have an immediate negative effect on our liquidity, as such a circumstance would utilize availability on the Facility without a near-term cash inflow back to us. Likewise, the release of such collateral could have a corresponding positive effect on our liquidity, as it would represent an addition to our availability without any corresponding near-term cash outflow. Similarly, a slow-down of payments from a customer, group of customers or government payment office would not have an immediate and direct effect on our availability on the Facility unless the slowdown was material in amount and over an extended period of time. Any of these examples would have an impact on the Facility, and therefore our liquidity. Our ability to renew the Facility, which matures in January 2017, or to enter into a new credit facility to replace or supplement the Facility may be limited due to various factors, including the status of our business, global credit market conditions, and perceptions of our business or industry by sources of financing. In addition, if credit is available, lenders may seek more restrictive covenants and higher interest rates that may reduce our borrowing capacity, increase our costs, or reduce our operating flexibility. The failure to extend, renew or replace the Facility with a comparable credit facility that provides similar amounts of liquidity for the Company would have a material negative impact on our overall liquidity, financial and operating results. Additionally, as a result of operations for 2014, and the continued impact of contract delays as well as other government budgetary funding issues, in 2014 management determined the need to raise additional working capital. Accordingly, in December 2014, we sold 10% of the membership interests in Telos ID to the Telos ID Class B member for $5 million, and, in March 2015, we issued the Porter Notes. For 2016, management believes that the Company's existing borrowing capacity is sufficient to fund our capital and liquidity needs for the foreseeable future. Additionally, management may determine that in order to reduce capital and liquidity requirements, planned spending on capital projects and indirect expense growth may be curtailed, subject to growth in operating results. For 2016, should management determine that additional capital is required, management would likely look to the sources of funding discussed above first to meet any requirements, although no assurances can be given that these investors would be able to invest or that the Company and the investors would agree upon terms for such investments. We anticipate the continued need for a credit facility upon terms and conditions substantially similar to the Facility in order to meet our long term needs for operating expenses, debt service requirements, and projected capital expenditures. Our working capital was $1.1 million and $4.2 million as of December 31, 2015 and 2014, respectively. Although no assurances can be given, we expect that we will be in compliance throughout the term of the Facility with respect to the financial and other covenants. Legal Proceedings Costa Brava Partnership III, L.P. As previously reported, on October 17, 2005, Costa Brava Partnership III, L.P. ("Costa Brava"), a holder of Public Preferred Stock, instituted litigation against the Company and certain past and present directors and officers in the Circuit Court for Baltimore City, Maryland (the "Circuit Court"). A second holder of the Company's Public Preferred Stock, Wynnefield Small Cap Value, L.P. ("Wynnefield"), subsequently intervened as a co-Plaintiff (Costa Brava and Wynnefield are hereinafter referred to as "Plaintiffs"). On February 27, 2007, Plaintiffs added, as an additional defendant, Mr. John R. C. Porter, a holder of the Company's common stock. In the litigation, Plaintiffs allege, among other things, that the Company and its officers and directors engaged in tactics to avoid paying dividends on the Public Preferred Stock, that the Company made improper bonus payments or awards to officers and directors, that certain former and present officers and directors breached legal duties or the standard of care that they owed the Company, that the Company improperly paid consulting fees to and engaged in loan transactions with Mr. Porter, that the Company failed to improve on the Company's purported insolvency, that the Company failed to redeem the Public Preferred Stock as alledgedly required by the Company's charter, and shareholder oppression against Mr. Porter. On December 22, 2005, the Company's Board of Directors established a special litigation committee ("Special Litigation Committee"), composed of certain independent directors, to review and evaluate the matters raised in the litigation. On July 20, 2007, the Special Litigation Committee, in its final report, concluded that the available evidence did not support Plaintiffs' derivative claims and that it was not in the best interests of the Company to pursue such claims in the litigation. On August 24, 2007, the Company moved to dismiss Plaintiffs' derivative claims based upon the report and to dismiss all remaining claims for failure to state a claim. Following an evidentiary hearing, the Circuit Court dismissed all derivative claims based upon the recommendation of the Special Litigation Committee on January 7, 2008. On February 12, 2008, the Plaintiffs filed a Third Amended Complaint that included both new counts and previously dismissed counts. The Company moved to dismiss or strike the Third Amended Complaint and, on April 15, 2008, the Circuit Court issued an order dismissing with prejudice all counts in the Third Amended Complaint that were not previously disposed of by motion or stipulation. On December 2, 2008, the Company filed a motion for voluntary dismissal of its counterclaim against Plaintiffs (for their interference with the Company's relationship with Wells Fargo) without prejudice. The Circuit Court granted that motion, over Plaintiffs' opposition, on January 23, 2009. Following Plaintiffs' appeal of the dismissal of their derivative claims and shareholder oppression claim, on September 7, 2012, the Court of Special Appeals of Maryland ruled that the Circuit Court applied an incorrect standard of review to evaluate the conclusions of the Special Litigation Committee. The Court of Special Appeals held that the Circuit Court's dismissal of a shareholder oppression claim (asserted against Mr. Porter) raised an issue of first impression under Maryland law and required further briefing in the Circuit Court. The Court of Special Appeals vacated the decision of the Circuit Court that had been appealed and remanded the case for further consideration and proceedings. On October 24, 2012, the Company filed a petition for writ of certiorari in the Court of Appeals of Maryland, which was denied on January 22, 2013. On remand, the Circuit Court held a status and scheduling conference on July 26, 2013, as a result of which the Circuit Court issued a memorandum to counsel setting a briefing schedule to address the motion filed by the Company and other defendants to dismiss or otherwise dispose of the derivative claims as a result of the findings of the Special Litigation Committee in its final report of July 20, 2007. On November 1, 2013, the Defendants filed a Motion to Dismiss the derivative claims under the standard of review dictated by the opinion of the Court of Special Appeals. Plaintiffs filed their Opposition to the Motion on December 23, 2013, and Defendants filed their Reply on January 23, 2014. A hearing on the Motion to Dismiss was held on April 24, 2014. No decision has been rendered on the Company's motion to dismiss or otherwise dispose of the derivative claims, and the matter remains pending. On September 17, 2013, the Plaintiffs filed a request for an entry of an order for default as to Mr. Porter, which was denied by the Circuit Court on November 8, 2013. Mr. Porter ultimately filed a motion to dismiss the claim against him on May 13, 2014, raising multiple grounds. No decision has been rendered on Mr. Porter's motion to dismiss, and the matter remains pending. Following a hearing on April 24, 2014, a hearing was held on the Company's (and certain past and present directors' and officers') Motions to Dismiss Plaintiffs Derivative Claims Pursuant to Maryland Rule 2-502 and the Report of the Special Litigation Committee before Judge W. Michel Pierson in the Circuit Court. The Circuit Court has yet to render a decision on these pending motions. As of December 31, 2015, Costa Brava and Wynnefield own 12.7% and 17.3%, respectively, of the outstanding Public Preferred Stock. At this stage of the litigation, it is impossible to reasonably determine the degree of probability related to Plaintiffs' success in relation to any of their assertions in the litigation. Although there can be no assurance as to the ultimate outcome of the case, the Company and its present and former officers and directors strenuously deny Plaintiffs' allegations and continue to vigorously defend the matter and oppose all relief sought by Plaintiffs. Hamot et al. v. Telos Corporation As previously reported, since August 2, 2007, Messrs. Seth W. Hamot and Andrew R. Siegel, principals of Costa Brava Partnership III L.P. ("Costa Brava") and Class D Directors of the Company ("Class D Directors"), have been involved in litigation against the Company in the Circuit Court for Baltimore City, Maryland (the "Circuit Court"). The Class D Directors initially alleged that certain documents and records had not been promptly provided to them and were necessary to fulfill their duties as directors of the Company. Subsequently, the Class D Directors further alleged that the Company had failed to follow certain provisions concerning the noticing of Board committee meetings and the recording of Board meeting minutes and, additionally, that Mr. Wood's service as both CEO and Chairman of the Board was improper and impermissible under the Company's Bylaws. By way of preliminary injunctions entered on August 28, 2007 and September 24, 2007, the Circuit Court ordered that the Class D Directors are entitled to documents in response to reasonable requests for information pertinent and necessary to perform their duties as members of the Board but, in light of the Costa Brava shareholder litigation, the Company is entitled to designated certain documents as "confidential" or "highly confidential" and to withhold certain documents from the Class D Directors based upon the attorney work product doctrine or attorney-client privilege. Pursuant to the preliminary injunctions, the Class D Directors are also entitled to receive written responses to requests for Board of Directors or Board committee minutes within seven days of any such requests and copies of such minutes within fifteen days of any such requests, as well as written responses to all other requests for information and/or documents related to their duties as directors within seven days of such requests, and all Board of Directors appropriate information and/or documents within thirty days of any such requests. On April 23, 2008, the Company filed a counterclaim against the Class D Directors for money damages and preliminary and injunctive relief based upon the Class D Directors' interference with, and improper influence of, the Company's independent auditors regarding, among other things, a specific accounting treatment. On June 27, 2008, the Circuit Court granted the Company's motion for preliminary injunction and enjoined the Class D Directors from contacting the Company's auditors until the completion of the Company's Form 10-K for the preceding year. This preliminary injunction expired by its own terms and an appeal from that ordered was held to be moot by the Court of Special Appeals of Maryland. On April 12, 2010, the Class D Directors filed a motion for the advancement of legal fees and expenses incurred in defense of the Company's counterclaim. On November 3, 2011, the Circuit Court denied the Plaintiffs' motion, as well as the Plaintiffs' motion for partial summary judgment and request for attorneys' fees. On May 21, 2012, the Circuit Court denied Plaintiffs' motion for reconsideration of the same. Trial on both the Class D Directors' books and records claims and the Company's counterclaims realated to the auditor interference commenced on July 5, 2013, and continued on several days in July 2013. The evidentiary portion of the trial concluded on August 1, 2013, and post-trial briefing concluded on September 16, 2013. The court decision on this matter is still pending and no material developments occurred in this litigation during 2015. At this stage of the litigation it is impossible to reasonably determine the degree of probability related to the Class D Directors' success in any of their assertions and claims, or whether such success would entitle them to monetary relief. Although there can be no assurance as to the ultimate outcome of these proceedings, the Company and its officers and directors strenuously deny the Class D Directors' claims, and will vigorously defend the matter, and continue to oppose the relief sought. Other Litigation In addition, the Company is a party to litigation arising in the ordinary course of business. In the opinion of management, while the results of such litigation cannot be predicted with any reasonable degree of certainty, the final outcome of such known matters will not, based upon all available information, have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows. Subsequent Events On February 19, 2016, the Facility was amended, effective February 15, 2016, and the EBITDA covenant for the period ending December 31, 2015 was revised to more accurately reflect the Company's estimates of operating results. On March 30, 2016 the Facility was amended ("the Seventeenth Amendment") to extend the maturity date to January 1, 2017. The Seventeenth Amendment also amends the terms of the Facility, reducing the total credit available from $20 million to $10 million effective as of the date of the amendment, which more appropriately reflect the Company's projected utilization of the Facility. The Seventeenth Amendment sets the quarterly EBITDA (as defined by the Facility) covenants to more accurately reflect the Company's current operating budget. All other financial covenants remain unchanged. The Seventeenth Amendment eliminates the bottom tier of pricing established in the Twelfth Amendment, fixing the interest rate at the higher of the Wells Fargo Bank "prime rate" plus 2.25%, the Federal Funds rate plus 2.75%, or the 3-month LIBOR rate plus 3.25%. The Seventeenth Amendment also increases the minimum excess availability requirement under the revolving component from $1.25 million to $2.0 million, effective as of the date of the amendment, and increases the requirement to $2.5 million, effective July 1, 2016, and $3.0 million, effective November 1, 2016, if the Company does not receive $5 million of equity or subordinated debt investment by June 1, 2016. If such capital investment is not received by June 1, 2016, we would pay a fee of $100,000 to Wells Fargo. In consideration for the closing of the Seventeenth Amendment, we paid Wells Fargo a fee of $100,000, plus expenses related to the closing. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements include the accounts of Telos and its subsidiaries, including Ubiquity.com, Inc., Xacta Corporation, and Teloworks, all of whose issued and outstanding share capital is owned by the Company. We have also consolidated the results of operations of Telos ID (see Note 2 – Non-controlling Interests). Significant intercompany transactions have been eliminated on consolidation. In preparing these consolidated financial statements, we have evaluated subsequent events through the date that these consolidated financial statements were issued. |
Segment Reporting | Segment Reporting Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker ("CODM"), or decision making group, in deciding how to allocate resources and assess performance. We currently operate in one operating and reportable business segment for financial reporting purposes. We currently have the following three business lines: Cyber Operations and Defense, Identity Management, and IT & Enterprise Solutions. Our Chief Executive Officer is the CODM. Our CODM manages our business primarily by function and reviews financial information on a consolidated basis, accompanied by disaggregated information by line of business as well as certain operational data, for purposes of allocating resources and evaluating financial performance. The CODM only evaluates profitability based on consolidated results. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with Generally Accepted Accounting Principles ("GAAP") in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions used in the preparation of our consolidated financial statements include revenue recognition, allowance for doubtful accounts receivable, allowance for inventory obsolescence, the valuation allowance for deferred tax assets, income taxes, contingencies and litigation, potential impairments of goodwill and intangible assets, estimated pension-related costs for our foreign subsidiaries and accretion of Public Preferred Stock. Actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition Revenues are recognized in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") ASC 605-10-S99. We consider amounts earned upon evidence that an arrangement has been obtained, services are delivered, fees are fixed or determinable, and collectability is reasonably assured. Additionally, revenues on arrangements requiring the delivery of more than one product or service are recognized in accordance with ASC 605-25, "Revenue Arrangements with Multiple Deliverables," which addresses and requires the separation and allocation at the inception of the arrangement of all deliverables based on their relative selling prices. This determination is made first by employing vendor-specific objective evidence ("VSOE"), to the extent it exists, then third-party evidence ("TPE") of selling price, to the extent that it exists. Given the nature of the deliverables contained in our multi-element arrangements, which often involve the design and/or delivery of complex or technical solutions to the government, we have not obtained TPE of selling prices on multi-element arrangements due to the significant differentiation which makes obtaining comparable pricing of products with similar functionality impractical. Therefore we do not utilize TPE. If VSOE and TPE are not determinable, we use our best estimate of selling price ("ESP") as defined in ASC 605-25, which represents our best estimate of the prices under the terms and conditions of a particular order for the various elements if they were sold on a stand-alone basis. We recognize revenues for software arrangements upon persuasive evidence of an arrangement, delivery of the software, and determination that collection of a fixed or determinable license fee is probable. Revenues for software licenses sold on a subscription basis are recognized ratably over the related license period. For arrangements where the sale of software licenses are bundled with other products, including software products, upgrades and enhancements, post-contract customer support ("PCS"), and installation, the relative fair value of each element is determined based on VSOE. VSOE is defined by ASC 985-605, "Software Revenue Recognition," and is limited to the price charged when the element is sold separately or, if the element is not yet sold separately, the price set by management having the relevant authority. When VSOE exists for undelivered elements, the remaining consideration is allocated to delivered elements using the residual method. If VSOE does not exist for the allocation of revenue to the various elements of the arrangement, all revenue from the arrangement is deferred until the earlier of the point at which (1) such VSOE does exist or (2) all elements of the arrangement are delivered. PCS revenues, upon being unbundled from a software license fee, are recognized ratably over the PCS period. Software arrangements requiring significant production, modification, or customization of the software are accounted for in accordance with ASC 605-35 "Construction-Type and Production-Type Contracts". We may use subcontractors and suppliers in the course of performing contracts and under certain contracts we provide supplier procurement services and materials for our customers. Some of these arrangements may fall within the scope of ASC 605-45, "Reporting Revenue Gross as a Principal versus Net as an Agent." We presume that revenues on our contracts are recognized on a gross basis, as we generally provide significant value-added services, assume credit risk, and reserve the right to select subcontractors and suppliers, but we evaluate the various criteria specified in the guidance in making the determination of whether revenue should be recognized on a gross or net basis. A description of the business lines, the typical deliverables, and the revenue recognition criteria in general for such deliverables follows: Cyber Operations and Defense – Regarding our deliverables of Cyber Security (formerly Information Assurance) solutions, Regarding our deliverables of Secure Mobility (formerly Secure Networks ) Identity Management (formerly Telos ID) – IT & Enterprise Solutions (formerly Secure Communications) Estimating future costs and, therefore, revenues and profits, is a process requiring a high degree of management judgment. In the event of a change in total estimated contract cost or profit, the cumulative effect of a change is recorded in the period the change in estimate occurs. To the extent contracts are incomplete at the end of an accounting period, revenue is recognized on the percentage-of-completion method, on a proportional performance basis, using costs incurred in relation to total estimated costs, or costs are deferred as appropriate under the terms of a particular contract. In the event cost estimates indicate a loss on a contract, the total amount of such loss, excluding overhead and general and administrative expense, is recorded in the period in which the loss is first estimated. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Our cash management program utilizes zero balance accounts. Accordingly, all book overdraft balances have been reclassified to accounts payable and other accrued payables, to the extent that availability of funds exists on our revolving credit facility. |
Accounts Receivable | Accounts Receivable Accounts receivable are stated at the invoiced amount, less allowances for doubtful accounts. Collectability of accounts receivable is regularly reviewed based upon managements' knowledge of the specific circumstances related to overdue balances. The allowance for doubtful accounts is adjusted based on such evaluation. Accounts receivable balances are written off against the allowance when management deems the balances uncollectible. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value, where cost is determined on the weighted average method. Substantially all inventories consist of purchased customer off-the-shelf hardware and software, and component computer parts used in connection with system integration services that we perform. An allowance for obsolete, slow-moving or nonsalable inventory is provided for all other inventory. This allowance is based on our overall obsolescence experience and our assessment of future inventory requirements. This charge is taken primarily due to the age of the specific inventory and the significant additional costs that would be necessary to upgrade to current standards as well as the lack of forecasted sales for such inventory in the near future. Gross inventory is $4.4 million and $4.7 million at December 31, 2015 and 2014, respectively. As of December 31, 2015, it is management's judgment that we have fully provided for any potential inventory obsolescence. The components of the allowance for inventory obsolescence are set forth below (in thousands): Balance Beginning of Year Additions Charge to Costs and Expense Recoveries Balance End of Year Year Ended December 31, 2015 $ 1,366 $ 92 $ (1 ) $ 1,457 Year Ended December 31, 2014 $ 417 $ 1,359 $ (410 ) $ 1,366 Year Ended December 31, 2013 $ 416 $ 1 $ -- $ 417 |
Property and Equipment | Property and Equipment Property and equipment is recorded at cost. Depreciation is provided on the straight-line method at rates based on the estimated useful lives of the individual assets or classes of assets as follows: Buildings 20 Years Machinery and equipment 3-5 Years Office furniture and fixtures 5 Years Leasehold improvements Lesser of life of lease or useful life of asset Leased property meeting certain criteria is capitalized at the present value of the related minimum lease payments. Amortization of property and equipment under capital leases is computed on the straight-line method over the lesser of the term of the related lease and the useful life of the related asset. Upon sale or retirement of property and equipment, the costs and related accumulated depreciation are eliminated from the accounts, and any gain or loss on such disposition is reflected in the consolidated statements of operations. For the years ended December 31, 2015, 2014, and 2013, such amounts are negligible. Expenditures for repairs and maintenance are charged to operations as incurred. Our policy on internal use software is in accordance with ASC 350, "Intangibles- Goodwill and Other." This standard requires companies to capitalize qualifying computer software costs which are incurred during the application development stage and amortize them over the software's estimated useful life. We expensed all such software development costs in 2015, 2014, and 2013, as we believe that such amounts are immaterial. Depreciation and amortization expense related to property and equipment, including property and equipment under capital leases was $2.0 million, $2.0 million, and $1.6 million |
Income Taxes | Income Taxes We account for income taxes in accordance with ASC 740-10, "Income Taxes." Under ASC 740-10, deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences and income tax credits. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates that are applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized for differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Any change in tax rates on deferred tax assets and liabilities is recognized in net income in the period in which the tax rate change is enacted. We record a valuation allowance that reduces deferred tax assets when it is "more likely than not" that deferred tax assets will not be realized. We are required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on available evidence, realization of deferred tax assets is dependent upon the generation of future taxable income. We considered projected future taxable income, tax planning strategies, and reversal of taxable temporary differences in making this assessment. As such, we have determined that a full valuation allowance is required as of December 31, 2015. We are not able to use temporary taxable differences related to goodwill, as a source of future taxable income. As a result of a full valuation allowance against our deferred tax assets, a deferred tax liability ("hanging credit") related to goodwill remains on our consolidated balance sheet at December 31, 2015. We follow the provisions of ASC 74-10 related to accounting for uncertainty in income taxes. The accounting estimates related to liabilities for uncertain tax positions require us to make judgments regarding the sustainability of each uncertain tax position based on its technical merits. If we determine it is more likely than not that a tax position will be sustained based on its technical merits, we record the impact of the position in our consolidated financial statements at the largest amount that is greater than fifty percent likely of being realized upon ultimate settlement. These estimates are updated at each reporting date based on the facts, circumstances and information available. We are also required to assess at each reporting date whether it is reasonably possible that any significant increases or decreases to our unrecognized tax benefits will occur during the next 12 months. |
Goodwill and intangible assets | Goodwill and other intangible assets We evaluate the impairment of goodwill and other intangible assets in accordance with ASC 350, "Intangibles - Goodwill and Other," which requires goodwill and indefinite-lived intangible assets to be assessed on at least an annual basis for impairment using a fair value basis. Between annual evaluations, if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount, then impairment must be evaluated. Such circumstances could include, but are not limited to: (1) a significant adverse change in legal factors or business climate, or (2) a loss of key contracts or customers. As the result of an acquisition, we record any excess purchase price over the net tangible and identifiable intangible assets acquired as goodwill. An allocation of the purchase price to tangible and intangible net assets acquired is based upon our valuation of the acquired assets. Goodwill is not amortized, but is subject to annual impairment tests. We complete our goodwill impairment tests as of December 31st each year. Additionally, we make evaluations between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The evaluation is based on the estimation of the fair values of our three reporting units, Cyber Operations and Defense ("CO&D"), Identity Management, and IT & Enterprise Solutions, of which goodwill is housed in the CO&D reporting unit, Other intangible assets consist primarily of customer relationship enhancements. Other intangible assets are amortized on a straight-line basis over their estimated useful lives of 5 years. The amortization is based on a forecast of approximately equal annual customer orders over the 5-year period. Other intangible assets are subject to impairment review if there are events or changes in circumstances that indicate that the carrying amount is not recoverable. As of December 31, 2015, no impairment charges were taken. |
Stock-Based Compensation | Stock-Based Compensation Compensation cost is recognized based on the requirements of ASC 718, "Stock Compensation," for all share-based awards granted. In March 2013, we granted 4,312,000 shares of restricted stock (Class A common) to our executive officers and employees. There were no grants issued in 2015. As of December 31, 2015, there were 19,047,259 shares of restricted stock outstanding. Such stock is subject to a vesting schedule as follows: 25% of the restricted stock vests immediately on the date of grant, thereafter, an additional 25% will vest annually on the anniversary of the date of grant subject to continued employment or services. In the event of death of the employee or a change in control, as defined by the Telos Corporation 2008 Omnibus Long-Term Incentive Plan or the 2013 Omnibus Long-Term Incentive Plan, all unvested shares shall automatically vest in full. In accordance with ASC 718, we recorded immaterial compensation expense for the 2013 grants as the value of the common stock was nominal, based on the deduction of our outstanding debt, capital lease obligations, and preferred stock from an estimated enterprise value, which was estimated based on discounted cash flow analysis, comparable public company analysis, and comparable transaction analysis. Additionally, we determined that a significant change in the valuation estimate for common stock would not have a significant effect on the consolidated financial statements. |
Research and Development | Research and Development For all years presented, we charge all research and development costs to expense as incurred. For research and development costs for software to be sold, leased or otherwise marketed, such costs are capitalized once technological feasibility is reached. Technological feasibility is established when all planning, designing, coding and testing activities have been completed, and all risks have been identified. To date, no such costs have been capitalized, as costs incurred after reaching technological feasibility have been insignificant. During 2015, 2014, and 2013, we incurred salary costs for research and development of approximately $2.1 million, $2.2 million, and $1.7 million, respectively, which are included as part of the selling, general and administrative expense in the consolidated statements of operations. |
Earnings (Loss) per Share | Earnings (Loss) per Share As we do not have publicly held common stock or potential common stock, no earnings per share data is reported for any of the years presented. |
Comprehensive Income | Comprehensive Income Comprehensive income includes changes in equity (net assets) during a period from non-owner sources. Our accumulated other comprehensive income was comprised of a loss from foreign currency translation of $70,000 and $64,000 as of December 31, 2015 and 2014, respectively; and actuarial gain on pension liability adjustments in Teloworks of $107,000 and $109,000 as of December 31, 2015 and 2014, respectively. |
Financial Instruments | Financial Instruments We use various methods and assumptions to estimate the fair value of our financial instruments. Due to their short-term nature, the carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates fair value. The fair value of long-term debt is based on the discounted cash flows for similar term borrowings based on market prices for the same or similar issues. See Note 4 – Fair Value Measurements for fair value disclosures of the senior redeemable preferred stock. Fair value estimates are made at a specific point in time, based on relevant market information. These estimates are subjective in nature and involve matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers," which requires an entity to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. In July 2015, the FASB finalized the delay of the effective date by one year, making the new standard effective for interim periods and annual period beginning after December 15, 2017. The new standard can be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the change recognized at the date of the initial application. We are currently assessing the impact the adoption of ASU 2014-09 will have on our consolidated financial position, results of operations and cash flows. In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern." The new standard addresses management's responsibility to evaluate whether there is substantial doubt about an entity ' In April 2015, the FASB issued ASU 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." The new standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, instead of as an asset. In August 2015, the FASB issued ASU 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements – Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting," which clarified that this guidance is not required to be applied to line-of-credit arrangements. The new standard will be effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. The adoption of this update will not have a material impact on our consolidated financial position, results of operations and cash flows. In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory," which requires an entity to measure inventory at the lower of cost and net realizable value. The provisions of the ASU are effective for periods beginning after December 15, 2016. We are currently assessing the impact the adoption of this ASU will have on our consolidated financial position, results of operations and cash flows. In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes," which requires all deferred income tax assets and liabilities to be classified as noncurrent on the balance sheet. The new standard is effective for annual reporting periods beginning after December 15, 2016 with early adoption permitted. We have elected to early adopt this requirement retrospectively in the current period. We reclassified $1.0 million of net current deferred income tax assets from current to noncurrent at December 31, 2014. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." The guidance in this update supersedes the requirements in ASC Topic 840, Leases. The update will require business entities to recognize lease assets and liabilities on the balance sheet and to disclose key information about leasing arrangements. A lessee would recognize a liability to make lease payments and a right-of-use asset representing its right to use the leased asset for the lease term. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2018, and is to be applied on a modified retrospective basis. We are currently assessing the impact the adoption of this ASU will have on our consolidated financial position, results of operations and cash flows. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Allowance for Obsolescent Inventory | The components of the allowance for inventory obsolescence are set forth below (in thousands): Balance Beginning of Year Additions Charge to Costs and Expense Recoveries Balance End of Year Year Ended December 31, 2015 $ 1,366 $ 92 $ (1 ) $ 1,457 Year Ended December 31, 2014 $ 417 $ 1,359 $ (410 ) $ 1,366 Year Ended December 31, 2013 $ 416 $ 1 $ -- $ 417 |
Property and Equipment Useful Lives | Property and equipment is recorded at cost. Depreciation is provided on the straight-line method at rates based on the estimated useful lives of the individual assets or classes of assets as follows: Buildings 20 Years Machinery and equipment 3-5 Years Office furniture and fixtures 5 Years Leasehold improvements Lesser of life of lease or useful life of asset |
Non-controlling Interests (Tabl
Non-controlling Interests (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Non-controlling Interests [Abstract] | |
Changes in Non-controlling Interest | The following table details the changes in non-controlling interest for the years ended December 31, 2015, 2014, and 2013 (in thousands): 2015 2014 2013 Non-controlling interest, beginning of period 584 $ 454 $ 468 Net income 2,438 1,676 1,807 Distributions (2,387 ) (1,548 ) (1,821 ) Purchase of 10% membership interest -- 2 -- Non-controlling interest, end of period $ 635 $ 584 $ 454 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets [Abstract] | |
Other Intangible Assets | Other intangible assets consist of the following: December 31, 2015 December 31, 2014 Cost Accumulated Amortization Cost Accumulated Amortization Other intangible assets $ 11,286 $ 10,157 $ 11,286 $ 7,900 $ 11,286 $ 10,157 $ 11,286 $ 7,900 |
Revenue and Accounts Receivab25
Revenue and Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Revenue and Accounts Receivable [Abstract] | |
Accounts Receivable Components | The components of accounts receivable are as follows (in thousands): December 31, 2015 2014 Billed accounts receivable $ 15,340 $ 15,447 Unbilled receivables 4,190 7,447 Allowance for doubtful accounts (485 ) (372 ) $ 19,045 $ 22,522 |
Allowance for Doubtful Accounts | The activities in the allowance for doubtful accounts are set forth below (in thousands): Balance Beginning of Year Bad Debt Expenses (1) Recoveries (2) Balance End of Year Year Ended December 31, 2015 $ 372 $ 113 $ -- $ 485 Year Ended December 31, 2014 $ 321 $ 51 $ -- $ 372 Year Ended December 31, 2013 $ 319 $ 2 $ -- $ 321 (1) Accounts receivable reserves and reversal of allowance for subsequent collections, net (2) Accounts receivable written-off and subsequent recoveries, net |
Revenue by Customer Sector | We derived substantially all of our revenues from contracts and subcontracts with the U.S. Government. Revenue by customer sector for the last three fiscal years is as follows: 2015 2014 2013 (dollar amounts in thousands) Federal $ 117,328 97.3 % $ 122,549 96.1 % $ 203,917 98.3 % State & Local, and Commercial 3,306 2.7 % 5,013 3.9 % 3,477 1.7 % Total $ 120,634 100.0 % $ 127,562 100.0 % $ 207,394 100.0 % |
Current Liabilities and Debt 26
Current Liabilities and Debt Obligations (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Current Liabilities and Debt Obligations [Abstract] | |
Maturities of the Facility | The following are maturities of the Facility presented by year (in thousands): 2016 2017 Total Short-term: Term loan $ 1,400 $ -- $ 1,400 1 Long-term: Term loan $ -- $ 1,800 $ 1,800 1 Revolving credit -- 5,344 5,344 2 Subtotal $ -- $ 7,144 $ 7,144 Total $ 1,400 $ 7,144 $ 8,544 1 The principal will be repaid in quarterly installments of $350,000, with a final installment of the unpaid principal amount payable on January 1, 2017. 2 Balance due represents balance as of December 31, 2015, with fluctuating balances based on working capital requirements of the Company. |
Stockholders' Deficit, Option27
Stockholders' Deficit, Option Plans, and Employee Benefit Plan (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders' Deficit, Option Plans, and Employee Benefit Plan [Abstract] | |
Status of Stock Options | Number of Shares (000's) Weighted Average Exercise Price 2014 Stock Option Activity Outstanding at beginning of year 20 $ 0.62 Granted -- -- Exercised (20 ) 0.62 Canceled -- -- Outstanding at end of year -- -- Exercisable at end of year -- -- 2013 Stock Option Activity Outstanding at beginning of year 20 $ 0.62 Granted -- -- Exercised -- -- Canceled -- -- Outstanding at end of year 20 $ 0.62 Exercisable at end of year 20 $ 0.62 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes [Abstract] | |
Provision (Benefit) for Income Taxes | The provision (benefit) for income taxes attributable to income from operations includes the following (in thousands): For the Years Ended December 31, 2015 2014 2013 Current (benefit) provision Federal $ (902 ) $ (1,759 ) $ 1,219 State 54 (194 ) 264 Total current (848 ) (1,953 ) 1,483 Deferred provision (benefit) Federal 4,333 (3,820 ) 133 State 780 (215 ) 62 Total deferred 5,113 (4,035 ) 195 Total provision (benefit) $ 4,265 $ (5,988 ) $ 1,678 |
Reconciliation of Effective Tax Rate | The provision for income taxes related to operations varies from the amount determined by applying the federal income tax statutory rate to the income or loss before income taxes, exclusive of net income attributable to non-controlling interest. The reconciliation of these differences is as follows: For the Years Ended December 31, 2015 2014 2013 Computed expected income tax provision 34.0% 35.0% 35.0% State income taxes, net of federal income tax benefit 2.1 2.5 (17.3) Change in valuation allowance for deferred tax assets (61.3) 0.1 (0.3) Cumulative deferred adjustments (0.1) (0.3) (16.9) Provision to return adjustments 1.3 1.1 (11.5) Other permanent differences (1.1) (0.5) (15.4) Dividend and accretion on preferred stock (11.3) (7.5) (146.0) FIN 48 liability (0.8) (0.6) (5.9) R&D credit 1.6 3.0 -- Other (0.9) -- -- (36.5)% 32.8% (178.3)% |
Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2015 and 2014 are as follows (in thousands): December 31, 2015 2014 Deferred tax assets: Accounts receivable, principally due to allowance for doubtful accounts $ 176 $ 137 Allowance for inventory obsolescence and amortization 623 694 Accrued liabilities not currently deductible 2,218 2,196 Accrued compensation 840 535 Deferred rent 8,008 8,512 Net operating loss carryforwards - federal 524 -- Net operating loss carryforwards - state 344 180 R&D credit 202 -- Total gross deferred tax assets 12,935 12,254 Less valuation allowance (9,027 ) (1,868 ) Total deferred tax assets, net of valuation allowance 3,908 10,386 Deferred tax liabilities: Amortization and depreciation (3,307 ) (4,650 ) Unbilled accounts receivable, deferred for tax purposes (589 ) (756 ) Goodwill basis adjustment and amortization (3,199 ) (3,021 ) Telos ID basis difference (12 ) (45 ) Total deferred tax liabilities (7,107 ) (8,472 ) Net deferred tax (liabilities) assets $ (3,199 ) $ 1,914 |
Components of Valuation Allowance | The components of the valuation allowance are as follows (in thousands): Balance Beginning of Period Additions Recoveries Balance End of Period December 31, 2015 $ 1,868 $ 7,159 $ -- $ 9,027 December 31, 2014 $ 1,901 $ -- $ (33 ) $ 1,868 December 31, 2013 $ 2,084 $ -- $ (183 ) $ 1,901 We are required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on available evidence, realization of deferred tax assets is dependent upon the generation of future taxable income. We considered projected future taxable income, tax planning strategies, and reversal of taxable temporary differences in making this assessment. As such, we have determined that a full valuation allowance is required as of December 31, 2015. We are not able to use temporary taxable differences related to goodwill, as a source of future taxable income. As a result of a full valuation allowance against our deferred tax assets, a deferred tax liability (hanging credit) related to goodwill remains on our consolidated balance sheet at December 31, 2015. |
Unrecognized Tax Benefits Roll Forward | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): 2015 2014 2013 Unrecognized tax benefits, beginning of period $ 708 $ 607 $ 534 Gross increases—tax positions in prior period 92 105 55 Gross increases—tax positions in current period 38 47 18 Settlements (35 ) (51 ) -- Unrecognized tax benefits, end of period $ 803 $ 708 $ 607 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments [Abstract] | |
Future Minimum Payments Under Capital Leases | The following is a schedule by years of future minimum payments under capital leases together with the present value of the net minimum lease payments as of December 31, 2015 (in thousands): Property Equipment Total 2016 $ 1,853 1 1,854 2017 1,899 1 1,900 2018 1,947 -- 1,947 2019 1,995 -- 1,995 2020 2,045 -- 2,045 Remainder 19,364 -- 19,364 Total minimum obligations 29,103 2 29,105 Less amounts representing interest (ranging from 5.0% to 18.8%) (8,370 ) -- (8,370 ) Net present value of minimum obligations 20,733 2 20,735 Less current portion (826 ) (1 ) (827 ) Long-term capital lease obligations at December 31, 2015 $ 19,907 $ 1 $ 19,908 |
Future Minimum Lease Payments for All Noncancelable Operating Leases | Future minimum lease payments for all noncancelable operating leases at December 31, 2015 are as follows (in thousands): 2016 $ 531 2017 319 2018 298 2019 292 2020 300 Remainder 982 Total minimum lease payments $ 2,722 |
Accrued Warranties | Warranties We provide product warranties for products sold through certain U.S. Government contract vehicles. We accrue a warranty liability at the time that we recognize revenue for the estimated costs that may be incurred in connection with providing warranty coverage. Warranties are valued using historical warranty usage trends; however, if actual product failure rates or service delivery costs differ from estimates, revisions to the estimated warranty liability may be required. Accrued warranties are reported as other current liabilities on the consolidated balance sheets. Balance Beginning of Year Accruals Warranty Expenses Balance End of Year (amount in thousands) Year Ended December 31, 2015 $ 189 $ 125 $ (181 ) $ 133 Year Ended December 31, 2014 $ 113 $ 140 $ (64 ) $ 189 Year Ended December 31, 2013 $ 226 $ 70 $ (183 ) $ 113 |
Summary of Selected Quarterly30
Summary of Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Selected Quarterly Financial Data (Unaudited) [Abstract] | |
Selected Quarterly Financial Data | Note 12. Summary of Selected Quarterly Financial Data (Unaudited) The following is a summary of selected quarterly financial data for the previous two fiscal years (in thousands): Quarters Ended March 31 June 30 Sept. 30 Dec. 31 2015 Revenue $ 28,019 $ 32,028 $ 33,662 $ 26,925 Gross profit 6,778 7,170 8,674 8,051 Loss before income taxes and non-controlling interest (3,030 ) (2,564 ) (959 ) (2,684 ) Net loss attributable to Telos Corporation (1)(2) (2,746 ) (2,408 ) (1,406 ) (9,380 ) 2014 Revenue $ 30,144 $ 29,009 $ 38,507 $ 29,902 Gross profit 6,442 5,396 7,504 5,611 Loss before income taxes and non-controlling interest (4,786 ) (5,384 ) (3,611 ) (2,819 ) Net loss attributable to Telos Corporation (1) (5,559 ) (4,346 ) (774 ) (1,609 ) (1) Changes in net income are the result of several factors, including seasonality of the government year-end buying season, as well as the nature and timing of other deliverables. (2) A full valuation allowance was recorded against the Company's deferred tax assets in the fourth quarter of 2015. |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details) | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2013shares | Dec. 31, 2015USD ($)SegmentBusinessshares | Dec. 31, 2014USD ($)SegmentBusiness | Dec. 31, 2013USD ($) | |
Segment Reporting [Abstract] | ||||
Number of reportable segments | Segment | 1 | 1 | ||
Number of business lines | Business | 3 | 3 | ||
Inventories [Abstract] | ||||
Gross inventory | $ 4,400,000 | $ 4,700,000 | ||
Allowance for Obsolescent Inventory [Roll Forward] | ||||
Balance Beginning of Year | 1,366,000 | 417,000 | $ 416,000 | |
Additions Charge to Costs and Expense | 92,000 | 1,359,000 | 1,000 | |
Deductions | (1,000) | (410,000) | 0 | |
Balance End of Year | 1,457,000 | 1,366,000 | 417,000 | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation and amortization, including capital leases | $ 2,000,000 | 2,000,000 | 1,600,000 | |
Goodwill and other intangible assets [Abstract] | ||||
Estimated useful life of intangible asset | 5 years | |||
Research and Development [Abstract] | ||||
Salary costs associated with research and development | $ 2,100,000 | 2,200,000 | $ 1,700,000 | |
Comprehensive Income [Abstract] | ||||
Foreign currency translation | 70,000 | 64,000 | ||
Gain on pension liability adjustment | $ 107,000 | $ 109,000 | ||
Executive Officers and Employees [Member] | ||||
Restricted Stock Grants [Abstract] | ||||
Restricted stock issued during the period (in shares) | shares | 4,312,000 | |||
Buildings [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, and equipment, useful lives | 20 years | |||
Machinery and Equipment [Member] | Minimum [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, and equipment, useful lives | 3 years | |||
Machinery and Equipment [Member] | Maximum [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, and equipment, useful lives | 5 years | |||
Office Furniture and Fixtures [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, and equipment, useful lives | 5 years | |||
Telos ID [Member] | ||||
Business Acquisition [Line Items] | ||||
Percentage of ownership | 50.00% | |||
Teloworks [Member] | ||||
Business Acquisition [Line Items] | ||||
Percentage of ownership | 100.00% | |||
Restricted Stock Grants [Member] | ||||
Restricted Stock Grants [Abstract] | ||||
Restricted stock issued and outstanding (in shares) | shares | 19,047,259 | |||
Restricted stock issued during the period (in shares) | shares | 4,312,000 | |||
Restricted stock vested on date of grant | 25.00% | |||
Restricted stock vest on anniversary of the date of grant | 25.00% |
Non-controlling Interests (Deta
Non-controlling Interests (Details) | Dec. 24, 2014USD ($)DirectorSubclasses | Apr. 30, 2007USD ($)DirectorSubclasses | Apr. 19, 2007 | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Apr. 20, 2007USD ($) | Apr. 11, 2007USD ($) |
Noncontrolling Interest [Line Items] | ||||||||
Percentage of membership interest sold to investor | 10.00% | |||||||
Profits | $ (13,502,000) | $ (10,612,000) | $ (811,000) | |||||
Proceeds from sale of membership interest | 2,000,000 | 3,000,000 | 0 | |||||
Receivable from sale of membership interest | 0 | 2,000,000 | 0 | |||||
Changes in non-controlling interest [Abstract] | ||||||||
Non-controlling interest, beginning of period | 584,000 | 454,000 | 468,000 | |||||
Net income | 2,438,000 | 1,676,000 | 1,807,000 | |||||
Distributions | (2,387,000) | (1,548,000) | (1,821,000) | |||||
Purchase of 10% membership interest | 0 | 2,000 | 0 | |||||
Non-controlling interest, end of period | 635,000 | 584,000 | 454,000 | |||||
Class A Membership Unit [Member] | ||||||||
Noncontrolling Interest [Line Items] | ||||||||
Profits | 2,400,000 | 2,500,000 | 2,700,000 | |||||
Class B Membership Unit [Member] | ||||||||
Noncontrolling Interest [Line Items] | ||||||||
Profits | 2,400,000 | $ 1,700,000 | $ 1,800,000 | |||||
Telos ID [Member] | ||||||||
Noncontrolling Interest [Line Items] | ||||||||
Net book value of assets contributed | $ 17,000 | |||||||
Percentage of membership interest owned before | 99.999% | |||||||
Owned membership interest from private equity investors | 0.001% | |||||||
Percentage of membership interest sold to investor | 10.00% | 39.999% | ||||||
Cash consideration received on sale of membership interest | $ 5 | $ 6,000,000 | ||||||
Recognized gain on sale of membership interests to the Investors | $ 5,800,000 | |||||||
Number of members in board of director | Director | 5 | 5 | ||||||
Number of subclasses of membership units | Subclasses | 2 | 2 | ||||||
Proceeds from sale of membership interest | 3,000,000 | |||||||
Receivable from sale of membership interest | $ 2,000,000 | |||||||
Portion of the proceeds attributable to the term loan under loan agreement | $ 1,000,000 | |||||||
Telos ID [Member] | Class A Membership Unit [Member] | ||||||||
Noncontrolling Interest [Line Items] | ||||||||
Percentage of ownership interest owned after transaction | 50.00% | 60.00% | ||||||
Percentage of profit and loss allocated | 50.00% | 60.00% | ||||||
Number of directors entitled to be appointed | Director | 3 | 3 | ||||||
Telos ID [Member] | Class B Membership Unit [Member] | ||||||||
Noncontrolling Interest [Line Items] | ||||||||
Percentage of ownership interest owned after transaction | 50.00% | 40.00% | ||||||
Percentage of profit and loss allocated | 50.00% | 40.00% | ||||||
Number of directors entitled to be appointed | Director | 2 | 2 |
Goodwill and Intangible Asset33
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill and Intangible Assets [Abstract] | |||
Goodwill | $ 14,916 | $ 14,916 | |
Estimated useful lives customer relationship | 5 years | ||
Amortization of intangible assets | $ 1,100 | 2,300 | |
Annual amortization expense | $ 2,300 | ||
Asset impairment charges | 0 | ||
Indefinite-lived Intangible Assets [Line Items] | |||
Cost | 11,286 | 11,286 | |
Accumulated Amortization | 10,157 | 7,900 | |
Other Intangible Assets [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Cost | 11,286 | 11,286 | |
Accumulated Amortization | $ 10,157 | $ 7,900 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 14, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 1991 | Dec. 31, 1990 | Dec. 31, 2013 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Percentage of stock redeemed | 54.50% | |||||
Preferred stock dividend rate per annum | 12.00% | 12.00% | ||||
Senior Redeemable Preferred Stock [Member] | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Redemption price of senior preferred stock | $ 2 | |||||
Carrying amount of senior redeemable preferred stock | $ 2 | $ 2 | ||||
Preferred stock dividend rate per annum | 14.125% | 14.125% | ||||
Public Preferred Stock [Member] | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Preferred stock dividend rate per annum | 12.00% | 12.00% | 6.00% | 6.00% | ||
Public preferred stock par value (in dollar per share) | $ 0.01 | |||||
Carrying value of public preferred stock | $ 123.9 | $ 120.1 | ||||
Estimate of Fair Value, Fair Value Disclosure [Member] | Public Preferred Stock [Member] | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Public preferred stock | $ 32.3 | $ 43 |
Revenue and Accounts Receivab35
Revenue and Accounts Receivable (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Accounts Receivable [Line Items] | |||||||||||||||
Concentration risk, percentage | 100.00% | 100.00% | 100.00% | ||||||||||||
Components of Accounts Receivable [Abstract] | |||||||||||||||
Billed accounts receivable | $ 15,340 | $ 15,447 | |||||||||||||
Unbilled receivables | 4,190 | 7,447 | |||||||||||||
Allowance for doubtful accounts | $ (485) | $ (372) | $ (372) | $ (321) | $ (372) | $ (372) | $ (321) | $ (319) | (485) | (372) | |||||
Accounts Receivable, Net, Total | $ 19,045 | $ 22,522 | |||||||||||||
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||||||||||||||
Balance Beginning of Year | 372 | 321 | 372 | 321 | 319 | ||||||||||
Bad Debt Expenses | [1] | 113 | 51 | 2 | |||||||||||
Deductions | [2] | 0 | 0 | $ 0 | |||||||||||
Balance End of Year | 485 | 372 | 485 | 372 | 321 | ||||||||||
Revenue by Customer Sector [Abstract] | |||||||||||||||
Revenue | $ 26,925 | $ 33,662 | $ 32,028 | $ 28,019 | $ 29,902 | $ 38,507 | $ 29,009 | $ 30,144 | $ 120,634 | $ 127,562 | $ 207,394 | ||||
Federal [Member] | |||||||||||||||
Accounts Receivable [Line Items] | |||||||||||||||
Concentration risk, percentage | 97.30% | 96.10% | 98.30% | ||||||||||||
Revenue by Customer Sector [Abstract] | |||||||||||||||
Revenue | $ 117,328 | $ 122,549 | $ 203,917 | ||||||||||||
Federal [Member] | Revenue from Contracts and Subcontracts [Member] | |||||||||||||||
Accounts Receivable [Line Items] | |||||||||||||||
Concentration risk, percentage | 97.30% | 96.10% | 98.30% | ||||||||||||
Federal [Member] | Accounts Receivable [Member] | |||||||||||||||
Accounts Receivable [Line Items] | |||||||||||||||
Concentration risk, percentage | 99.90% | ||||||||||||||
State & Local, and Commercial [Member] | |||||||||||||||
Accounts Receivable [Line Items] | |||||||||||||||
Concentration risk, percentage | 2.70% | 3.90% | 1.70% | ||||||||||||
Revenue by Customer Sector [Abstract] | |||||||||||||||
Revenue | $ 3,306 | $ 5,013 | $ 3,477 | ||||||||||||
[1] | Accounts receivable reserves and reversal of allowance for subsequent collections, net | ||||||||||||||
[2] | Accounts receivable written-off and subsequent recoveries, net |
Current Liabilities and Debt 36
Current Liabilities and Debt Obligations (Details) - USD ($) | Mar. 30, 2016 | Mar. 26, 2015 | Mar. 19, 2015 | Feb. 27, 2015 | Dec. 24, 2014 | Mar. 25, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2010 | Dec. 31, 1991 | Dec. 31, 1990 | Mar. 31, 2015 | Jun. 11, 2013 | Apr. 20, 2007 | |
Accounts Payable and Other Accrued Payables [Abstract] | ||||||||||||||||
Trade account payables | $ 9,300,000 | $ 13,600,000 | ||||||||||||||
Accrued trade payables | 3,400,000 | 4,200,000 | ||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Amended expiration date of revolving credit facility | Apr. 1, 2016 | Mar. 31, 2015 | Mar. 23, 2015 | Nov. 13, 2015 | ||||||||||||
Percentage of membership interest sold to investor | 10.00% | |||||||||||||||
Current line of credit borrowing capacity | $ 1,250,000 | |||||||||||||||
Maximum redemption of redeemable preferred stock | $ 2,000,000 | |||||||||||||||
Discount rate on senior redeemable preferred stock redemption | 10.00% | |||||||||||||||
Interest rate on credit facility | 5.75% | |||||||||||||||
Interest expense | $ 5,639,000 | 5,370,000 | $ 5,483,000 | |||||||||||||
Outstanding borrowing of credit facility | 8,500,000 | 10,900,000 | ||||||||||||||
Remaining borrowing capacity | 5,800,000 | 4,900,000 | ||||||||||||||
Maturities of facility presented by year [Abstract] | ||||||||||||||||
2,016 | 1,400,000 | |||||||||||||||
2,017 | 7,144,000 | |||||||||||||||
Total | 8,544,000 | |||||||||||||||
Subordinated debt (Note 6) | 2,500,000 | $ 0 | $ 5,000,000 | |||||||||||||
Interest Expense, Related Party | $ 229,000 | |||||||||||||||
Common stock held by related parties | 39.30% | |||||||||||||||
Preferred stock dividend rate per annum | 12.00% | 12.00% | ||||||||||||||
Debt instrument, first interest payment date | Aug. 20, 2015 | |||||||||||||||
Debt instrument, last principal and interest payment date | Jul. 1, 2017 | |||||||||||||||
Telos ID [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage of membership interest sold to investor | 10.00% | 39.999% | ||||||||||||||
Portion of the proceeds attributable to the term loan under loan agreement | $ 1,000,000 | |||||||||||||||
Porter [Member] | ||||||||||||||||
Maturities of facility presented by year [Abstract] | ||||||||||||||||
Interest Expense, Related Party | $ 229,000 | |||||||||||||||
Senior Redeemable Preferred Stock [Member] | ||||||||||||||||
Maturities of facility presented by year [Abstract] | ||||||||||||||||
Preferred stock dividend rate per annum | 14.125% | 14.125% | ||||||||||||||
Public Preferred Stock [Member] | ||||||||||||||||
Maturities of facility presented by year [Abstract] | ||||||||||||||||
Preferred stock dividend rate per annum | 12.00% | 12.00% | 6.00% | 6.00% | ||||||||||||
Term Loan [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Principal amount of term loan repaid in quarterly installments | $ 350,000 | $ 250,000 | $ 93,750 | 250,000 | ||||||||||||
Fees paid in connection with amendment | 150,000 | $ 75,000 | ||||||||||||||
Percentage of term loan amortized per year | 5.00% | |||||||||||||||
Outstanding borrowing of credit facility | $ 3,200,000 | $ 5,500,000 | ||||||||||||||
Term Loan [Member] | Telos ID [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Amount of term loan classified as current liabilty | 1,000,000 | |||||||||||||||
Short-term liability | $ 2,000,000 | |||||||||||||||
Term Loan [Member] | Prime Rate [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 1.00% | |||||||||||||||
Term Loan [Member] | Federal Funds Rate [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 1.50% | |||||||||||||||
Term Loan [Member] | LIBOR Rate [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 2.00% | |||||||||||||||
Revolving credit [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Maximum revolving credit facility | 20,000,000 | $ 20,000,000 | 30,000,000 | |||||||||||||
Line of credit sub-line limit | 1,000,000 | $ 5,000,000 | ||||||||||||||
Current line of credit borrowing capacity | $ 1,250,000 | |||||||||||||||
Interest expense | $ 600,000 | $ 700,000 | $ 600,000 | |||||||||||||
Weighted average interest rates on outstanding borrowings | 6.70% | 5.60% | ||||||||||||||
Revolving credit [Member] | Subsequent Events [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Maximum revolving credit facility | $ 10,000,000 | |||||||||||||||
Equity or subordinated debt | 5,000,000 | |||||||||||||||
Fee amount would pay if capital investment is not received by specified date | 100,000 | |||||||||||||||
Fees paid in connection with amendment | 100,000 | |||||||||||||||
Current line of credit borrowing capacity | 2,000,000 | |||||||||||||||
Current line of credit borrowing capacity, condition one | 2,500,000 | |||||||||||||||
Current line of credit borrowing capacity, condition two | $ 3,000,000 | |||||||||||||||
Revolving credit [Member] | Prime Rate [Member] | Subsequent Events [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 2.25% | |||||||||||||||
Revolving credit [Member] | Prime Rate [Member] | First Tier Interest Rate [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 2.25% | |||||||||||||||
Revolving credit [Member] | Prime Rate [Member] | Second Tier Interest Rate [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 1.00% | |||||||||||||||
Revolving credit [Member] | Federal Funds Rate [Member] | Subsequent Events [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 2.75% | |||||||||||||||
Revolving credit [Member] | Federal Funds Rate [Member] | First Tier Interest Rate [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 2.75% | |||||||||||||||
Revolving credit [Member] | Federal Funds Rate [Member] | Second Tier Interest Rate [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 1.50% | |||||||||||||||
Revolving credit [Member] | LIBOR Rate [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 3.75% | |||||||||||||||
Revolving credit [Member] | LIBOR Rate [Member] | Subsequent Events [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 3.25% | |||||||||||||||
Revolving credit [Member] | LIBOR Rate [Member] | First Tier Interest Rate [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 3.25% | |||||||||||||||
Revolving credit [Member] | LIBOR Rate [Member] | Second Tier Interest Rate [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 2.00% | |||||||||||||||
Advances on Revolving Credit [Member] | LIBOR Rate [Member] | First Tier Interest Rate [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 5.00% | |||||||||||||||
Advances on Revolving Credit [Member] | LIBOR Rate [Member] | Second Tier Interest Rate [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Percentage added to reference rate to compute the variable rate | 3.75% | |||||||||||||||
Short-term [Member] | Term Loan [Member] | ||||||||||||||||
Senior Revolving Credit Facility [Abstract] | ||||||||||||||||
Outstanding borrowing of credit facility | $ 1,400,000 | $ 2,300,000 | ||||||||||||||
Maturities of facility presented by year [Abstract] | ||||||||||||||||
2,016 | 1,400,000 | |||||||||||||||
2,017 | 0 | |||||||||||||||
Total | [1] | 1,400,000 | ||||||||||||||
Long-term [Member] | ||||||||||||||||
Maturities of facility presented by year [Abstract] | ||||||||||||||||
2,016 | 0 | |||||||||||||||
2,017 | 7,144,000 | |||||||||||||||
Total | 7,144,000 | |||||||||||||||
Long-term [Member] | Term Loan [Member] | ||||||||||||||||
Maturities of facility presented by year [Abstract] | ||||||||||||||||
2,016 | 0 | |||||||||||||||
2,017 | 1,800,000 | |||||||||||||||
Total | [1] | 1,800,000 | ||||||||||||||
Long-term [Member] | Revolving credit [Member] | ||||||||||||||||
Maturities of facility presented by year [Abstract] | ||||||||||||||||
2,016 | 0 | |||||||||||||||
2,017 | 5,344,000 | |||||||||||||||
Total | [2] | $ 5,344,000 | ||||||||||||||
[1] | The principal will be repaid in quarterly installments of $350,000, with a final installment of the unpaid principal amount payable on January 1, 2017. | |||||||||||||||
[2] | Balance due represents balance as of December 31, 2015, with fluctuating balances based on working capital requirements of the Company. |
Redeemable Preferred Stock (Det
Redeemable Preferred Stock (Details) | Jun. 14, 2013USD ($)shares | Jun. 30, 2006USD ($) | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2013USD ($)shares | Dec. 31, 1998shares | Dec. 31, 1991shares | Dec. 31, 1990Tranche$ / sharesshares | Jun. 30, 1995USD ($) | Jun. 11, 2013USD ($) | Mar. 15, 2011shares |
Class of Stock [Line Items] | |||||||||||
Preferred stock dividend rate per annum | 12.00% | 12.00% | |||||||||
Dividends Payable | $ 3,889,000 | $ 3,890,000 | $ 3,926,000 | ||||||||
Senior Redeemable Preferred Stock [Abstract] | |||||||||||
Redeemable preferred stock liquidation value (in dollar per share) | $ / shares | $ 1,000 | ||||||||||
Maximum redemption of redeemable preferred stock | $ 2,000,000 | ||||||||||
Minimum percentage of discount on redemption of redeemable preferred stock | 10.00% | ||||||||||
Redemption amount of senior redeemable preferred stock | $ 2,000,000 | ||||||||||
Percentage of discount on redemption of redeemable preferred stock | 10.00% | ||||||||||
Common stock held by related parties | 39.30% | ||||||||||
12% Cumulative Exchangeable Redeemable Preferred Stock [Abstract] | |||||||||||
Number of shares declared as dividend (in shares) | shares | 736,863 | 736,863 | |||||||||
Number of annual tranches during the period | Tranche | 5 | ||||||||||
Accrued paid-in cash dividends | $ 15,100,000 | ||||||||||
Senior Redeemable Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Preferred stock dividend rate per annum | 14.125% | 14.125% | |||||||||
Senior Redeemable Preferred Stock [Abstract] | |||||||||||
Percentage of redeemable preferred stock redeemed | 54.50% | ||||||||||
Senior redeemable preferred stock maturity date | Feb. 28, 2018 | ||||||||||
Carrying value of senior redeemable preferred stock | $ 2,200,000 | ||||||||||
Gain on redemption of senior preferred stock | $ 200,000 | ||||||||||
Undeclared unpaid dividends | $ 1,600,000 | 1,500,000 | |||||||||
Accrued dividends reported as interest expenses | $ 67,000 | $ 67,000 | 103,000 | ||||||||
Senior Redeemable Preferred Stock [Member] | Toxford [Member] | |||||||||||
Senior Redeemable Preferred Stock [Abstract] | |||||||||||
Percentage of redeemable preferred stock held by related party after redemption | 76.40% | ||||||||||
Senior Redeemable Preferred Stock [Member] | Porter [Member] | |||||||||||
Senior Redeemable Preferred Stock [Abstract] | |||||||||||
Percentage of redeemable preferred stock held by related party after redemption | 6.30% | ||||||||||
Senior Redeemable Preferred Stock [Member] | Porter And Toxford [Member] | |||||||||||
Senior Redeemable Preferred Stock [Abstract] | |||||||||||
Percentage of redeemable preferred stock held by related party after redemption | 82.70% | ||||||||||
Public Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Preferred stock authorized (in shares) | shares | 6,000,000 | ||||||||||
Preferred stock par value (in dollar per share) | $ / shares | $ 0.01 | ||||||||||
Preferred stock dividend rate per annum | 12.00% | 12.00% | 6.00% | 6.00% | |||||||
Dividends Payable | $ 92,100,000 | 88,200,000 | |||||||||
Principal and accrued dividends of redeemable preferred stock | $ 123,900,000 | $ 120,100,000 | |||||||||
Preferred stock issued and outstanding (in shares) | shares | 3,185,586 | 3,185,586 | 2,858,723 | ||||||||
12% Cumulative Exchangeable Redeemable Preferred Stock [Abstract] | |||||||||||
Adjusted accrued accretion of public preferred stock | $ 1,500,000 | ||||||||||
Period during which redeemable preferred stock not callable | 12 months | ||||||||||
Preferred stock dividend rate per annum (in dollars per share) | $ / shares | $ 0.60 | $ 1.20 | |||||||||
Preferred stock, liquidation preference (in dollars per share) | $ / shares | $ 10 | ||||||||||
Dividends on preferred stock | $ 3,800,000 | $ 3,800,000 | $ 3,800,000 | ||||||||
Accrued paid-in kind dividends | 4,000,000 | ||||||||||
Redemption of public preferred stock (in shares) | shares | 410,000 | ||||||||||
Reduced amount of Paid in kind dividends due to redemption of public preferred stock | 3,500,000 | ||||||||||
Adjusted amount of accrued cash dividends due to redemption of public preferred stock | 9,900,000 | ||||||||||
Revised accrued dividends to reflect change from Pik dividends to cash dividends | $ 13,400,000 | ||||||||||
Series A-1 Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Preferred stock authorized (in shares) | shares | 1,250 | ||||||||||
Preferred stock par value (in dollar per share) | $ / shares | $ 0.01 | ||||||||||
Series A-1 Preferred Stock [Member] | Porter And Toxford [Member] | |||||||||||
Senior Redeemable Preferred Stock [Abstract] | |||||||||||
Related party preferred stock held after redemption (in shares) | shares | 163 | ||||||||||
Series A-1 Preferred Stock [Member] | Senior Redeemable Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Preferred stock issued and outstanding (in shares) | shares | 197 | 197 | 197 | ||||||||
Series A-1 Preferred Stock [Member] | Senior Redeemable Preferred Stock [Member] | Porter [Member] | |||||||||||
Senior Redeemable Preferred Stock [Abstract] | |||||||||||
Number of redeemable preferred stock acquired by beneficial owner (in shares) | shares | 75 | ||||||||||
Series A-1 Preferred Stock [Member] | Senior Redeemable Preferred Stock [Member] | Porter And Toxford [Member] | |||||||||||
Senior Redeemable Preferred Stock [Abstract] | |||||||||||
Related party preferred stock held after redemption (in shares) | shares | 163 | ||||||||||
Series A-2 Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Preferred stock authorized (in shares) | shares | 1,750 | ||||||||||
Preferred stock par value (in dollar per share) | $ / shares | $ 0.01 | ||||||||||
Series A-2 Preferred Stock [Member] | Porter And Toxford [Member] | |||||||||||
Senior Redeemable Preferred Stock [Abstract] | |||||||||||
Related party preferred stock held after redemption (in shares) | shares | 228 | ||||||||||
Series A-2 Preferred Stock [Member] | Senior Redeemable Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Preferred stock issued and outstanding (in shares) | shares | 276 | 276 | |||||||||
Series A-2 Preferred Stock [Member] | Senior Redeemable Preferred Stock [Member] | Porter [Member] | |||||||||||
Senior Redeemable Preferred Stock [Abstract] | |||||||||||
Number of redeemable preferred stock acquired by beneficial owner (in shares) | shares | 105 | ||||||||||
Series A-2 Preferred Stock [Member] | Senior Redeemable Preferred Stock [Member] | Porter And Toxford [Member] | |||||||||||
Senior Redeemable Preferred Stock [Abstract] | |||||||||||
Related party preferred stock held after redemption (in shares) | shares | 228 | ||||||||||
Class A Common Stock [Member] | Porter [Member] | |||||||||||
Senior Redeemable Preferred Stock [Abstract] | |||||||||||
Common stock held by related parties | 39.30% | ||||||||||
Class A Common Stock [Member] | Porter And Toxford [Member] | |||||||||||
Senior Redeemable Preferred Stock [Abstract] | |||||||||||
Common stock held by related parties | 39.30% |
Stockholders' Deficit, Option38
Stockholders' Deficit, Option Plans, and Employee Benefit Plan (Details) | 1 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2013shares | Jun. 30, 2008shares | Mar. 31, 2006shares | Dec. 31, 2015USD ($)Vote$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2013USD ($)$ / sharesshares | Dec. 31, 2004$ / sharesshares | Dec. 31, 1996 | Dec. 31, 2014$ / sharesshares | Dec. 31, 2006shares | May. 10, 2004shares | |
Common Stock [Abstract] | |||||||||||
Number of votes per share | Vote | 1 | ||||||||||
Stock Options [Abstract] | |||||||||||
Shares available for issuance (in shares) | 6,644,974 | ||||||||||
Term of stock options | 10 | ||||||||||
Vesting period of stock options | 5 years | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||||||||||
Outstanding at beginning of year (in shares) | 0 | 20,000 | |||||||||
Granted (in shares) | 0 | 0 | |||||||||
Exercised (in shares) | (20,000) | 0 | |||||||||
Cancelled (in shares) | 0 | 0 | |||||||||
Outstanding at end of year (in shares) | 0 | 20,000 | 20,000 | 0 | |||||||
Exercisable at end of year (in shares) | 20,000 | 0 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |||||||||||
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 0 | $ 0.62 | |||||||||
Granted (in dollars per share) | $ / shares | $ 0 | $ 0 | |||||||||
Exercised (in dollars per share) | $ / shares | 0.62 | 0 | |||||||||
Cancelled (in dollars per share) | $ / shares | 0 | 0 | |||||||||
Outstanding at end of year (in dollars per share) | $ / shares | $ 0 | 0.62 | |||||||||
Exercisable at end of year (in dollars per share) | $ / shares | $ 0.62 | $ 0 | |||||||||
Telos Shared Savings Plan [Abstract] | |||||||||||
Shares held in defined contribution employee savings plan (in shares) | 3,658,536 | ||||||||||
Employer matching percentage | 50.00% | ||||||||||
Maximum contribution percentage | 2.00% | ||||||||||
Annual vesting percentage | 20.00% | ||||||||||
Contributions to the Plan | $ | $ 0 | $ 624,000 | $ 598,000 | ||||||||
Telos ID [Member] | |||||||||||
Telos Shared Savings Plan [Abstract] | |||||||||||
Employer matching percentage | 50.00% | ||||||||||
Maximum contribution percentage | 2.00% | ||||||||||
Contributions to the Plan | $ | $ 0 | $ 83,000 | $ 83,000 | ||||||||
1996 Stock Option Plan [Member] | |||||||||||
Restricted Stock Grants [Abstract] | |||||||||||
Stock options exchanged for restricted stocks (in shares) | 2,463,500 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||||||||||
Outstanding at beginning of year (in shares) | 20,000 | ||||||||||
Outstanding at end of year (in shares) | 0 | 20,000 | 20,000 | ||||||||
Telos Delaware Stock Incentive Plan [Member] | |||||||||||
Restricted Stock Grants [Abstract] | |||||||||||
Stock options exchanged for restricted stocks (in shares) | 983,379 | ||||||||||
Xacta Stock Incentive Plan [Member] | |||||||||||
Restricted Stock Grants [Abstract] | |||||||||||
Stock options exchanged for restricted stocks (in shares) | 2,498,564 | ||||||||||
Executive Officers and Employees [Member] | |||||||||||
Restricted Stock Grants [Abstract] | |||||||||||
Restricted stock issued during the period (in shares) | 4,312,000 | ||||||||||
Restricted Stock [Member] | |||||||||||
Restricted Stock Grants [Abstract] | |||||||||||
Restricted stock issued during the period (in shares) | 4,312,000 | ||||||||||
Restricted stock vested on date of grant | 25.00% | ||||||||||
Restricted stock vest on anniversary of the date of grant | 25.00% | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||||||||||
Outstanding at end of year (in shares) | 19,047,259 | ||||||||||
Stock Options [Member] | 1996 Stock Option Plan [Member] | |||||||||||
Stock Options [Abstract] | |||||||||||
Shares available for issuance (in shares) | 7,345,433 | ||||||||||
Vesting period of stock options | 4 years | ||||||||||
Additional shares authorized (in shares) | 700,459 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||||||||||
Exercised (in shares) | 20,000 | ||||||||||
Cancelation of unissued options (in shares) | 516,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | $ 4,600,000 | ||
Current provision [Abstract] | |||
Federal | (902,000) | $ (1,759,000) | $ 1,219,000 |
State | 54,000 | (194,000) | 264,000 |
Total current | (848,000) | (1,953,000) | 1,483,000 |
Deferred provision (benefit) [Abstract] | |||
Federal | 4,333,000 | (3,820,000) | 133,000 |
State | 780,000 | (215,000) | 62,000 |
Total deferred | 5,113,000 | (4,035,000) | 195,000 |
Total provision | $ 4,265,000 | $ (5,988,000) | $ 1,678,000 |
Reconciliation of effective tax rate [Abstract] | |||
Computed expected income tax provision | 34.00% | 35.00% | 35.00% |
State income taxes, net of federal income tax benefit | 2.10% | 2.50% | (17.30%) |
Change in valuation allowance for deferred tax assets | (61.30%) | 0.10% | (0.30%) |
Cumulative deferred adjustments | (0.10%) | (0.30%) | (16.90%) |
Provision to return adjustments | 1.30% | 1.10% | (11.50%) |
Other permanent differences | (1.10%) | (0.50%) | (15.40%) |
Dividend and accretion on preferred stock | (11.30%) | (7.50%) | (146.00%) |
FIN 48 liability | (0.80%) | (0.60%) | (5.90%) |
R&D credit | 1.60% | 3.00% | 0.00% |
Other | (0.90%) | 0.00% | 0.00% |
Effective income tax rate | (36.50%) | 32.80% | (178.30%) |
Deferred tax assets [Abstract] | |||
Accounts receivable, principally due to allowance for doubtful accounts | $ 176,000 | $ 137,000 | |
Allowance for inventory obsolescence and amortization | 623,000 | 694,000 | |
Accrued liabilities not currently deductible | 2,218,000 | 2,196,000 | |
Accrued compensation | 840,000 | 535,000 | |
Deferred rent | 8,008,000 | 8,512,000 | |
Net operating loss carryforwards - federal | 524,000 | 0 | |
Net operating loss carryforwards - state | 344,000 | 180,000 | |
R&D credit | 202,000 | 0 | |
Total gross deferred tax assets | 12,935,000 | 12,254,000 | |
Less valuation allowance | (9,027,000) | (1,868,000) | |
Total deferred tax assets, net of valuation allowance | 3,908,000 | 10,386,000 | |
Deferred tax liabilities [Abstract] | |||
Amortization and depreciation | (3,307,000) | (4,650,000) | |
Unbilled accounts receivable, deferred for tax purposes | (589,000) | (756,000) | |
Goodwill basis adjustment and amortization | (3,199,000) | (3,021,000) | |
Telos ID basis difference | (12,000) | (45,000) | |
Total deferred tax liabilities | (7,107,000) | (8,472,000) | |
Net deferred tax assets | 1,914,000 | ||
Net deferred tax liabilities | (3,199,000) | ||
Unrecognized tax benefits [Roll Forward] | |||
Unrecognized tax benefits, beginning of period | 708,000 | 607,000 | $ 534,000 |
Gross increases-tax positions in prior period | 92,000 | 105,000 | 55,000 |
Gross increases-tax positions in current period | 38,000 | 47,000 | 18,000 |
Settlements | (35,000) | (51,000) | 0 |
Unrecognized tax benefits, end of period | 803,000 | 708,000 | 607,000 |
Interest and penalties | 210,000 | 188,000 | |
Valuation Allowance of Deferred Tax Assets [Member] | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance Beginning of Period | 1,868,000 | 1,901,000 | 2,084,000 |
Additions | 7,159,000 | 0 | 0 |
Deductions | 0 | (33,000) | (183,000) |
Balance End of Period | 9,027,000 | $ 1,868,000 | $ 1,901,000 |
2013 [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss utilized | $ 3,000,000 |
Commitments (Details)
Commitments (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 1996 | |
Property Subject to or Available for Operating Lease [Line Items] | ||||
Term of lease | 15 years | |||
Capital leased property | $ 30,829 | $ 30,849 | ||
Proceeds from assignment of purchase option under lease | 0 | 1,669 | $ 0 | |
Increase in capital leased property | 5,700 | |||
Capital lease obligations | 22,000 | |||
Increase in capital lease obligations | 6,700 | |||
Net book value of capital asset | 18,300 | |||
Capital Leases, Future Minimum Payments, Present Value of Net Minimum Payments, Fiscal Year Maturity [Abstract] | ||||
2,015 | 1,854 | |||
2,016 | 1,900 | |||
2,017 | 1,947 | |||
2,018 | 1,995 | |||
2,019 | 2,045 | |||
Remainder | 19,364 | |||
Total minimum obligations | 29,105 | |||
Less amounts representing interest (ranging from 5.8% to 18.8%) | (8,370) | |||
Net present value of minimum obligations | 20,735 | |||
Less current portion | (827) | (772) | ||
Long-term capital lease obligations at December 31, 2013 | 19,908 | 20,735 | ||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||
2,015 | 531 | |||
2,016 | 319 | |||
2,017 | 298 | |||
2,018 | 292 | |||
2,019 | 300 | |||
Remainder | 982 | |||
Total minimum lease payments | 2,722 | |||
Rent expense charged to operations | 1,800 | 1,100 | 1,100 | |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||||
Balance Beginning of Year | 189 | 113 | 226 | |
Accruals | 125 | 140 | 70 | |
Warranty Expenses | (181) | (64) | (183) | |
Balance End of Year | $ 133 | 189 | $ 113 | |
Capital Lease Obligations [Member] | ||||
Property Subject to or Available for Operating Lease [Line Items] | ||||
Proceeds from assignment of purchase option under lease | 1,700 | |||
Capital Leases, Future Minimum Payments, Present Value of Net Minimum Payments, Fiscal Year Maturity [Abstract] | ||||
Interest rate percentage, minimum | 5.00% | |||
Interest rate percentage, maximum | 18.80% | |||
Annual rent increase percentage | 2.50% | |||
Accumulated amortization for property and equipment under capital leases | $ 14,500 | 13,200 | ||
Property [Member] | ||||
Capital Leases, Future Minimum Payments, Present Value of Net Minimum Payments, Fiscal Year Maturity [Abstract] | ||||
2,015 | 1,853 | |||
2,016 | 1,899 | |||
2,017 | 1,947 | |||
2,018 | 1,995 | |||
2,019 | 2,045 | |||
Remainder | 19,364 | |||
Total minimum obligations | 29,103 | |||
Less amounts representing interest (ranging from 5.8% to 18.8%) | (8,370) | |||
Net present value of minimum obligations | 20,733 | |||
Less current portion | (826) | |||
Long-term capital lease obligations at December 31, 2013 | $ 19,907 | |||
Property [Member] | Capital Lease Obligations [Member] | ||||
Property Subject to or Available for Operating Lease [Line Items] | ||||
Term of lease | 13 years | 20 years | ||
Capital leased property | $ 12,300 | |||
Increase in capital leased property | $ 11,700 | |||
Capital lease obligations | $ 15,500 | $ 12,300 | ||
Net book value of capital asset | 13,100 | |||
Equipment [Member] | ||||
Capital Leases, Future Minimum Payments, Present Value of Net Minimum Payments, Fiscal Year Maturity [Abstract] | ||||
2,015 | 1 | |||
2,016 | 1 | |||
2,017 | 0 | |||
2,018 | 0 | |||
2,019 | 0 | |||
Remainder | 0 | |||
Total minimum obligations | 2 | |||
Less amounts representing interest (ranging from 5.8% to 18.8%) | 0 | |||
Net present value of minimum obligations | 2 | |||
Less current portion | (1) | |||
Long-term capital lease obligations at December 31, 2013 | $ 1 |
Certain Relationships and Rel41
Certain Relationships and Related Transactions (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 14, 2013 | |
Related Party Transaction [Line Items] | ||||
Common stock held by related parties | 39.30% | |||
Proceeds from related party, debt | $ 2,500,000 | |||
Interest Expense, Related Party | $ 229,000 | |||
Debt instrument, fixed interest rate | 12.00% | |||
Debt instrument, last principal and interest payment date | Jul. 1, 2017 | |||
Debt instrument, first interest payment date | Aug. 20, 2015 | |||
Emmett Wood [Member] | ||||
Related Party Transaction [Line Items] | ||||
Compensation to related parties | $ 305,000 | $ 446,000 | $ 340,000 | |
Emmett Wood [Member] | Class A Common Stock [Member] | ||||
Related Party Transaction [Line Items] | ||||
Number of shares held by related party (in shares) | 650,000 | 650,000 | ||
Emmett Wood [Member] | Class B Common Stock [Member] | ||||
Related Party Transaction [Line Items] | ||||
Number of shares held by related party (in shares) | 50,000 | 50,000 | ||
Porter And Toxford [Member] | Class A Common Stock [Member] | ||||
Related Party Transaction [Line Items] | ||||
Common stock held by related parties | 39.30% | |||
Porter And Toxford [Member] | Series A-1 Preferred Stock [Member] | ||||
Related Party Transaction [Line Items] | ||||
Number of Senior Redeemable Preferred Stock redeemed by the Company (in shares) | 195 | |||
Related party preferred stock held after redemption (in shares) | 163 | |||
Porter And Toxford [Member] | Series A-2 Preferred Stock [Member] | ||||
Related Party Transaction [Line Items] | ||||
Number of Senior Redeemable Preferred Stock redeemed by the Company (in shares) | 274 | |||
Related party preferred stock held after redemption (in shares) | 228 | |||
Porter And Toxford [Member] | Senior Redeemable Preferred Stock [Member] | ||||
Related Party Transaction [Line Items] | ||||
Number of Senior Redeemable Preferred Stock redeemed by the Company (in shares) | 567 | |||
Percentage of redeemable preferred stock held by related party after redemption | 82.70% |
Summary of Selected Quarterly42
Summary of Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |||||||||
Summary of Selected Quarterly Financial Data (Unaudited) [Abstract] | |||||||||||||||||||
Revenue | $ 26,925 | $ 33,662 | $ 32,028 | $ 28,019 | $ 29,902 | $ 38,507 | $ 29,009 | $ 30,144 | $ 120,634 | $ 127,562 | $ 207,394 | ||||||||
Gross profit | 8,051 | 8,674 | 7,170 | 6,778 | 5,611 | 7,504 | 5,396 | 6,442 | |||||||||||
Loss before income taxes and non-controlling interest | (2,684) | (959) | (2,564) | (3,030) | (2,819) | (3,611) | (5,384) | (4,786) | (9,237) | (16,600) | 867 | ||||||||
Net loss attributable to Telos Corporation | $ (9,380) | [1] | $ (1,406) | [1] | $ (2,408) | [1] | $ (2,746) | [1] | $ (1,609) | [1] | $ (774) | [1] | $ (4,346) | [1] | $ (5,559) | [1] | $ (15,940) | $ (12,288) | $ (2,618) |
[1] | Changes in net income are the result of several factors, including seasonality of the government year-end buying season, as well as the nature and timing of other deliverables. |
Commitments, Contingencies an43
Commitments, Contingencies and Subsequent Events (Details) - USD ($) | Mar. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2015 | Mar. 26, 2015 | Dec. 24, 2014 | Mar. 25, 2014 | Jun. 14, 2013 | Apr. 20, 2007 |
Financial Condition and Liquidity [Abstract] | ||||||||||
Percentage of trade account receivable collateralized under the facility | 85.00% | |||||||||
Working capital | $ 1,100,000 | $ 4,200,000 | ||||||||
Legal Proceedings [Line Items] | ||||||||||
Percentage of membership interest sold to investor | 10.00% | |||||||||
Proceeds from sale of Telos ID 10% membership interest | $ 2,000,000 | $ 3,000,000 | $ 0 | |||||||
Subsequent Event [Line Items] | ||||||||||
Common stock held by related parties | 39.30% | |||||||||
Proceeds from related party, debt | $ 2,500,000 | |||||||||
Debt instrument, fixed interest rate | 12.00% | |||||||||
Debt instrument, first interest payment date | Aug. 20, 2015 | |||||||||
Debt instrument, last principal and interest payment date | Jul. 1, 2017 | |||||||||
Current line of credit borrowing capacity | $ 1,250,000 | |||||||||
Porter and Toxford [Member] | Common Class A [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Common stock held by related parties | 39.30% | |||||||||
Term loan [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Fees paid in connection with amendment | $ 150,000 | $ 75,000 | ||||||||
Term loan [Member] | Prime Rate [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Percentage added to reference rate to compute the variable rate | 1.00% | |||||||||
Term loan [Member] | Federal Funds Rate [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Percentage added to reference rate to compute the variable rate | 1.50% | |||||||||
Term loan [Member] | LIBOR Rate [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Percentage added to reference rate to compute the variable rate | 2.00% | |||||||||
Revolving credit [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Maximum revolving credit facility | $ 20,000,000 | $ 30,000,000 | 20,000,000 | |||||||
Line of credit sub-line limit | $ 1,000,000 | $ 5,000,000 | ||||||||
Current line of credit borrowing capacity | $ 1,250,000 | |||||||||
Revolving credit [Member] | LIBOR Rate [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Percentage added to reference rate to compute the variable rate | 3.75% | |||||||||
Subsequent Events [Member] | Revolving credit [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Maximum revolving credit facility | $ 10,000,000 | |||||||||
Fee amount would pay if capital investment is not received by specified date | 100,000 | |||||||||
Fees paid in connection with amendment | 100,000 | |||||||||
Current line of credit borrowing capacity | 2,000,000 | |||||||||
Current line of credit borrowing capacity, condition one | 2,500,000 | |||||||||
Current line of credit borrowing capacity, condition two | 3,000,000 | |||||||||
Equity or subordinated debt | $ 5,000,000 | |||||||||
Subsequent Events [Member] | Revolving credit [Member] | Prime Rate [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Percentage added to reference rate to compute the variable rate | 2.25% | |||||||||
Subsequent Events [Member] | Revolving credit [Member] | Federal Funds Rate [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Percentage added to reference rate to compute the variable rate | 2.75% | |||||||||
Subsequent Events [Member] | Revolving credit [Member] | LIBOR Rate [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Percentage added to reference rate to compute the variable rate | 3.25% | |||||||||
Costa Brava [Member] | ||||||||||
Legal Proceedings [Line Items] | ||||||||||
Percentage of public preferred stock owned | 12.70% | |||||||||
Wynnefield [Member] | ||||||||||
Legal Proceedings [Line Items] | ||||||||||
Percentage of public preferred stock owned | 17.30% | |||||||||
Telos ID [Member] | ||||||||||
Legal Proceedings [Line Items] | ||||||||||
Percentage of membership interest sold to investor | 10.00% | 39.999% | ||||||||
Proceeds from sale of Telos ID 10% membership interest | $ 3,000,000 | |||||||||
Telos ID Class B [Member] | ||||||||||
Legal Proceedings [Line Items] | ||||||||||
Percentage of membership interest sold to investor | 10.00% | |||||||||
Proceeds from sale of Telos ID 10% membership interest | $ 5,000,000 |