SEC Filing | Booz Allen Hamilton

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bah-20211231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________________

FORM 10-Q

___________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-34972

___________________________________

Booz Allen Hamilton Holding Corporation

(Exact name of registrant as specified in its charter)

___________________________________

Delaware

26-2634160

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

8283 Greensboro Drive,

McLean,

Virginia

22102

(Address of principal executive offices)

(Zip Code)

(703) 902-5000

Registrant’s telephone number, including area code

(Former name, former address, and former fiscal year if changed since last report.)

___________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Class A Common Stock	BAH	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-Accelerated Filer

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


			Shares Outstanding as of January 25, 2022
Class A Common Stock			133,257,688

TABLE OF CONTENTS


		Page
PART I. Financial Information		1
ITEM 1	Financial Statements	1
ITEM 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	42
ITEM 4	Controls and Procedures	42
PART II. Other Information		43
ITEM 1	Legal Proceedings	43
ITEM 1A	Risk Factors	44
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	44
ITEM 3	Defaults Upon Senior Securities	44
ITEM 4	Mine Safety Disclosures	44
ITEM 5	Other Information	44
ITEM 6	Exhibits	46

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

INDEX TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


			Page
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Operations			2
Condensed Consolidated Statements of Comprehensive Income			3
Condensed Consolidated Statements of Cash Flows			4
Condensed Consolidated Statement of Stockholders' Equity			5
Notes to Unaudited Condensed Consolidated Financial Statements
1. Business Overview			7
2. Basis of Presentation			7
3. Revenue			7
4. Earnings Per Share			10
5. Acquisition, Goodwill and Intangible Assets			12

6. Accounts Payable and Other Accrued Expenses			14
7. Accrued Compensation and Benefits			15
8. Debt			15
9. Derivatives			17
10. Income Taxes			18
11. Other Long Term Liabilities			19
12. Employee Benefit Plans			19
13. Accumulated Other Comprehensive Loss			20
14. Stock Based Compensation			20
15. Fair Value Measurements			21
16. Related Party Transactions			23
17. Commitments and Contingencies			23

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BOOZ ALLEN HAMILTON HOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)


	December 31, 2021		March 31, 2021

	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	642,709	$	990,955
Accounts receivable, net	1,618,494		1,411,894
Prepaid expenses and other current assets	93,937		233,323
Total current assets	2,355,140		2,636,172
Property and equipment, net of accumulated depreciation	195,515		204,642
Operating lease right-of-use assets	229,041		239,374
Intangible assets, net of accumulated amortization	664,640		307,128
Goodwill	2,021,931		1,581,160
Other long-term assets	477,766		531,125
Total assets	$	5,944,033	$	5,499,601
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	68,379	$	77,865
Accounts payable and other accrued expenses	796,438		666,971
Accrued compensation and benefits	404,678		425,615
Operating lease liabilities	50,717		54,956
Other current liabilities	72,142		65,698
Total current liabilities	1,392,354		1,291,105
Long-term debt, net of current portion	2,747,892		2,278,731
Operating lease liabilities, net of current portion	250,792		263,144
Deferred tax liabilities	242,859		364,461
Other long-term liabilities	235,882		230,984
Total liabilities	4,869,779		4,428,425
Commitments and contingencies (Note 17)
Stockholders’ equity:
Common stock, Class A — $0.01 par value — authorized, 600,000,000 shares; issued, 163,721,966 shares at December 31, 2021 and 162,950,606 shares at March 31, 2021; outstanding, 133,427,292 shares at December 31, 2021 and 136,246,029 shares at March 31, 2021	1,637		1,629
Treasury stock, at cost — 30,294,674 shares at December 31, 2021 and 26,704,577 shares at March 31, 2021	(1,515,903)		(1,216,163)
Additional paid-in capital	620,632		557,957
Retained earnings	1,981,715		1,757,524
Accumulated other comprehensive loss	(17,054)		(29,771)
Total Booz Allen stockholders' equity	1,071,027		1,071,176
Non-controlling interest	3,227		—
Total stockholders’ equity	1,074,254		1,071,176
Total liabilities and stockholders’ equity	$	5,944,033	$	5,499,601

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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BOOZ ALLEN HAMILTON HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(Amounts in thousands, except per share data)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020

Revenue	$	2,030,520	$	1,904,020	$	6,125,624	$	5,879,658
Operating costs and expenses:
Cost of revenue	929,568		866,771		2,840,044		2,758,270
Billable expenses	621,550		577,059		1,817,215		1,729,788
General and administrative expenses	262,614		254,820		826,606		745,375
Depreciation and amortization	39,576		21,113		104,923		62,860
Total operating costs and expenses	1,853,308		1,719,763		5,588,788		5,296,293
Operating income	177,212		184,257		536,836		583,365
Interest expense	(23,677)		(20,878)		(69,201)		(60,900)
Other income (expense), net	5,401		2,604		11,716		(10,266)
Income before income taxes	158,936		165,983		479,351		512,199
Income tax expense	30,090		21,612		103,569		102,418
Net income	$	128,846	$	144,371	$	375,782	$	409,781
Net loss attributable to non-controlling interest	(85)		—		(85)		—
Net income attributable to common stockholders	128,931		144,371		375,867		409,781
Earnings per common share (Note 4):
Basic	$	0.96	$	1.04	$	2.77	$	2.95
Diluted	$	0.95	$	1.03	$	2.76	$	2.93

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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BOOZ ALLEN HAMILTON HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(Amounts in thousands)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020

Net income	$	128,846	$	144,371	$	375,782	$	409,781
Other comprehensive income, net of tax:
Change in unrealized gain on derivatives designated as cash flow hedges	6,925		3,758		12,658		5,983
Change in postretirement plan costs	20		22		59		66
Total other comprehensive income, net of tax	6,945		3,780		12,717		6,049
Comprehensive income	$	135,791	$	148,151	$	388,499	$	415,830

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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BOOZ ALLEN HAMILTON HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Amounts in thousands)


	Nine Months Ended December 31,
	2021		2020

Cash flows from operating activities
Net income	$	375,782	$	409,781
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	104,923		62,860
Noncash lease expense	41,718		40,861
Stock-based compensation expense	45,187		40,972
Amortization of debt issuance costs	3,463		3,302
Loss on debt extinguishment	2,515		13,239
Gains on dispositions, and other	(3,564)		(3,479)
Gains associated with equity method investment activities	(12,761)		—
Changes in assets and liabilities:
Accounts receivable, net	(150,156)		38,270
Deferred income taxes and income taxes receivable / payable	38,453		36,902
Prepaid expenses and other current and long-term assets	(19,953)		(3,656)

Accrued compensation and benefits	(5,371)		76,658
Accounts payable and other accrued expenses	88,529		125,887
Other current and long-term liabilities	(27,614)		(42,638)


Net cash provided by operating activities	481,151		798,959
Cash flows from investing activities
Purchases of property, equipment, and software	(51,608)		(54,033)
Payments for business acquisitions, net of cash acquired	(780,213)		—
Payment for minority investment in entity	—		(72,152)
Payment for cost method investment	(3,000)		—
Proceeds from sales of assets, net of payment	—		3,330
Other investing activities	(427)		—

Net cash used in investing activities	(835,248)		(122,855)
Cash flows from financing activities
Proceeds from issuance of common stock	17,240		13,948
Stock option exercises	3,558		10,193
Repurchases of common stock	(315,148)		(143,354)
Cash dividends paid	(151,664)		(129,862)
Debt extinguishment costs	—		(8,971)
Repayments on revolving credit facility and term loan	(95,162)		(508,399)
Net proceeds from debt issuance	487,027		691,496
Proceeds from revolving credit facility	60,000		—
Other financing activities	—		(1,755)
Net cash provided by (used in) financing activities	5,851		(76,704)
Net (decrease) increase in cash and cash equivalents	(348,246)		599,400
Cash and cash equivalents––beginning of period	990,955		741,901
Cash and cash equivalents––end of period	$	642,709	$	1,341,301
Supplemental disclosures of cash flow information
Net cash paid during the period for:
Interest	$	34,185	$	39,737
Income taxes	$	62,142	$	69,374

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Table of Contents


BOOZ ALLEN HAMILTON HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(Amounts in thousands, except share data)	Class A Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-Controlling Interest		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at September 30, 2021	163,627,651	$	1,636	(29,302,541)	$	(1,433,136)	$	600,930	$	1,902,667	$	(23,999)	$	—	$	1,048,098
Issuance of common stock	79,085	1		—	—		5,713		—		—		—		5,714
Stock options exercised	15,230	—		—	—		542		—		—		—		542
Repurchase of common stock	—	—		(992,133)	(82,767)		–		—		—		—		(82,767)
Recognition of liability related to future restricted stock units vesting	—	—		—	—		—		—		—		—		—
Net income	—	—		—	—		—		128,931		—		(85)		128,846

Other comprehensive income, net of tax	—	—		—	—		–		—		6,945		—		6,945
Dividends declared of $0.37 per share of common stock	—	—		—	—		–		(49,883)		—		—		(49,883)
Stock-based compensation expense	—	—		—	—		16,759		—		—		—		16,759
Contribution to non-controlling interest	—	—		—	—		(3,312)		—		—		3,312		—
Balance at December 31, 2021	163,721,966	$	1,637	(30,294,674)	$	(1,515,903)	$	620,632	$	1,981,715	$	(17,054)	$	3,227	$	1,074,254

Balance at March 31, 2021	162,950,606	$	1,629	(26,704,577)	$	(1,216,163)	$	557,957	$	1,757,524	$	(29,771)	$	—	$	1,071,176

Issuance of common stock	637,766	7		—	—		16,030		—		—		—		16,037
Stock options exercised	133,594	1		—	—		3,557		—		—		—		3,558
Repurchase of common stock (1)	—	—		(3,590,097)	(299,740)		—		—		—		—		(299,740)
Recognition of liability related to future restricted stock units vesting	—	—		—	—		1,213		—		—		—		1,213
Net income	—	—		—	—		—		375,867		—		(85)		375,782
Other comprehensive income, net of tax	—	—		—	—		—		—		12,717		—		12,717
Dividends declared of $1.11 per share of common stock	—	—		—	—		—		(151,676)		—		—		(151,676)
Stock-based compensation expense	—	—		—	—		45,187				—		—		45,187
Contribution to non-controlling interest	—	—		—	—		(3,312)		—		—		3,312		—
Balance at December 31, 2021	163,721,966	$	1,637	(30,294,674)	$	(1,515,903)	$	620,632	$	1,981,715	$	(17,054)	$	3,227	$	1,074,254

(1) During the nine months ended December 31, 2021, the Company purchased 3.4 million shares of the Company’s Class A Common Stock in a series of open market transactions for $286.3 million. Additionally, the Company repurchased shares for $13.4 million during the nine months ended December 31, 2021 to cover the minimum statutory withholding taxes on restricted stock units that vested on various dates during the period.

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BOOZ ALLEN HAMILTON HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) [CONTINUED]
(Amounts in thousands, except share data)	Class A Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at September 30, 2020	162,079,334	$	1,621	(24,054,733)	$	(1,003,650)	$	509,512	$	1,508,206	$	(43,732)	$	971,957
Issuance of common stock	35,460	—		—	—		4,262		—		—		4,262
Stock options exercised	128,379	1		—	—		3,700		—		—		3,701
Repurchase of common stock	—	—		(323,128)	(27,063)		—		—		—		(27,063)
Recognition of liability related to future restricted stock units vesting	—	—		—	—		(58)		—		—		(58)
Net income	—	—		—	—		—		144,371		—		144,371
Other comprehensive income, net of tax	—	—		—	—		—		—		3,780		3,780
Dividends paid of $0.31 per share of common stock	—	—		—	—		—		(43,026)		—		(43,026)
Stock-based compensation expense	—	—		—	—		15,341		—		—		15,341
Balance at December 31, 2020	162,243,173	$	1,622	(24,377,861)	$	(1,030,713)	$	532,757	$	1,609,551	$	(39,952)	$	1,073,265

Balance at March 31, 2020	161,333,973	$	1,613	(22,614,052)	$	(898,095)	$	468,027	$	1,330,812	$	(46,001)	$	856,356
Topic 326 adoption impact	—	—		—	—		—		(1,180)		—		(1,180)
Issuance of common stock	478,798	5		—	—		13,349				—		13,354
Stock options exercised	430,402	4		—	—		10,189		—		—		10,193
Repurchase of common stock (2)	—	—		(1,763,809)	(132,618)		—		—		—		(132,618)
Recognition of liability related to future restricted stock units vesting	—	—		—	—		222		—		—		222
Net income	—	—		—	—		—		409,781		—		409,781
Other comprehensive income, net of tax	—	—		—	—		—		—		6,049		6,049
Dividends paid of $0.93 per share of common stock	—	—		—	—		—		(129,862)		—		(129,862)
Stock-based compensation expense	—	—		—	—		40,970		—		—		40,970
Balance at December 31, 2020	162,243,173	$	1,622	(24,377,861)	$	(1,030,713)	$	532,757	$	1,609,551	$	(39,952)	$	1,073,265

(2) During the nine months ended December 31, 2020, the Company purchased 1.6 million shares of the Company’s Class A Common Stock in a series of open market transactions for $123.4 million. Additionally, the Company repurchased shares for $9.2 million during the nine months ended December 31, 2020 to cover the minimum statutory withholding taxes on restricted stock units that vested on various dates during the period.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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BOOZ ALLEN HAMILTON HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in tables in thousands, except share and per share data or unless otherwise noted)

1. BUSINESS OVERVIEW

Booz Allen Hamilton Holding Corporation, including its wholly owned subsidiaries, or the Company, we, us, and our, was incorporated in Delaware in May 2008. The Company provides management and technology consulting, analytics, engineering, digital solutions, mission operations, and cyber services to U.S. and international governments, major corporations, and not-for-profit organizations. The Company reports operating results and financial data in one reportable segment. The Company is headquartered in McLean, Virginia, with approximately 29,500 employees as of December 31, 2021.

2. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission, or SEC, and should be read in conjunction with the information contained in the Company's Annual Report on Form 10-K for the year ended March 31, 2021. The interim period unaudited condensed consolidated financial statements are presented as described below. Certain information and disclosures normally required for annual financial statements have been condensed or omitted pursuant to GAAP and SEC rules and regulations. In the opinion of management, all adjustments considered necessary for fair presentation of the results of the interim period presented have been included. The Company’s fiscal year ends on March 31 and unless otherwise noted, references to fiscal year or fiscal are for fiscal years ended March 31. The results of operations for the nine months ended December 31, 2021 are not necessarily indicative of results to be expected for the full fiscal year.

The condensed consolidated financial statements and notes of the Company include its subsidiaries, and the joint ventures and partnerships over which the Company has a controlling financial interest. The Company uses the equity method to account for investments in entities that it does not control if it is otherwise able to exert significant influence over the entities' operating and financial policies.

Certain amounts reported in the Company's prior year condensed consolidated financial statements have been reclassified to conform to the current year presentation.

Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Areas of the financial statements where estimates may have the most significant effect include the provision for claimed indirect costs, valuation and lives of tangible and intangible assets, impairment of long-lived assets, accrued liabilities, revenue recognition, including the accrual of indirect costs, bonus and other incentive compensation, stock-based compensation, reserves for uncertain tax positions and valuation allowances on deferred tax assets, provisions for income taxes, postretirement obligations, collectability of receivables, and loss accruals for litigation. Actual results experienced by the Company may differ materially from management's estimates.

Recent Accounting Pronouncements Not Yet Adopted

In November 2020, the SEC issued Release No. 33-10890, Amendments to Management's Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information, to simplify, modernize and enhance certain financial disclosure requirements in Regulation S-K. This amendment became effective on February 10, 2021. The Company’s adoption is expected to impact fiscal 2022 Form 10-K disclosures.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers to improve the accounting for acquired revenue contracts with customers in a business combination to address recognition of an acquired contract liability and payment terms, and their effect on subsequent revenue recognized by the acquirer. ASU 2021-08 is effective for annual periods beginning after December 15, 2022 on a prospective basis. Early adoption is permitted. The Company is currently assessing the impact of this update on its condensed consolidated financial statements and related disclosures.

Other accounting and reporting pronouncements effective after December 31, 2021 and issued through the filing date are not expected to have a material impact on the Company's condensed consolidated financial statements.

3. REVENUE

The Company's revenues from contracts with customers (clients) are derived from offerings that include consulting, analytics, digital solutions, engineering, mission, and cyber services, substantially with the U.S. government and its agencies and, to a lesser extent, subcontractors. The Company also serves foreign governments, as well as domestic and international

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BOOZ ALLEN HAMILTON HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in tables in thousands, except share and per share data or unless otherwise noted)

commercial clients. The Company performs under various types of contracts, which include cost-reimbursable contracts, time-and-materials contracts, and fixed-price contracts.

Contract Estimates

Many of our contracts recognize revenue under a contract cost-based input method and require an Estimate-at-Completion ("EAC") process, which management uses to review and monitor the progress towards the completion of our performance obligations. Under this process, management considers various inputs and assumptions related to the EAC, including, but not limited to, progress towards completion, labor costs and productivity, material and subcontractor costs, and identified risks. Estimating the total cost at the completion of our performance obligations is subjective and requires management to make assumptions about future activity and cost drivers under the contract. Changes in these estimates can occur for a variety of reasons and, if significant, may impact the revenue and profitability of the Company’s contracts. Changes in estimates related to contracts accounted for under the EAC process are recognized on a cumulative catch-up basis in the period when such changes are determinable and reasonably estimable. If the estimate of contract profitability indicates an anticipated loss on a contract, the Company recognizes the total loss at the time it is identified. For each of the three and nine months ended December 31, 2021 and 2020, the aggregate impact of adjustments in contract estimates was not material.

Disaggregation of Revenue

We disaggregate our revenue from contracts with customers by contract type, customer, as well as whether the Company acts as prime contractor or subcontractor, as we believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. The following series of tables presents our revenue disaggregated by these categories.

Revenue by Contract Type:

We generate revenue under the following three basic types of contracts:

•Cost-Reimbursable Contracts: Cost-reimbursable contracts provide for the payment of allowable costs incurred during performance of the contract, up to a ceiling based on the amount that has been funded, plus a fixed fee or award fee.

•Time-and-Materials Contracts: Under contracts in this category, we are paid a fixed hourly rate for each direct labor hour expended, and we are reimbursed for billable material costs and billable out-of-pocket expenses inclusive of allocable indirect costs. We assume the financial risk on time-and-materials contracts because our costs of performance may exceed negotiated hourly rates.

•Fixed-Price Contracts: Under a fixed-price contract, we agree to perform the specified work for a predetermined price. To the extent our actual direct and allocated indirect costs decrease or increase from the estimates upon which the price was negotiated, we will generate more or less profit, respectively, or could incur a loss.

The table below presents the total revenue for each type of contract:


	Three Months Ended December 31,								Nine Months Ended December 31,
	2021				2020				2021				2020
Cost-reimbursable	$	1,079,893	53	%	$	1,086,679	57	%	$	3,322,507	54	%	$	3,317,228	56	%
Time-and-materials	484,718		24	%	462,206		24	%	1,482,431		24	%	1,469,415		25	%
Fixed-price	465,909		23	%	355,135		19	%	1,320,686		22	%	1,093,015		19	%
Total Revenue	$	2,030,520	100	%	$	1,904,020	100	%	$	6,125,624	100	%	$	5,879,658	100	%

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BOOZ ALLEN HAMILTON HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in tables in thousands, except share and per share data or unless otherwise noted)

Revenue by Customer Type:


	Three Months Ended December 31,								Nine Months Ended December 31,
	2021				2020				2021				2020
U.S. government(1):
Defense Clients	$	946,161	47	%	$	967,671	51	%	$	2,921,262	48	%	$	2,907,842	49	%
Intelligence Clients	368,987		18	%	366,104		19	%	1,139,312		18	%	1,159,156		20	%
Civil Clients	651,372		32	%	519,728		27	%	1,906,528		31	%	1,648,055		28	%
Total U.S. government	1,966,520		97	%	1,853,503		97	%	5,967,102		97	%	5,715,053		97	%
Global Commercial Clients	64,000		3	%	50,517		3	%	158,522		3	%	164,605		3	%
Total Revenue	$	2,030,520	100	%	$	1,904,020	100	%	$	6,125,624	100	%	$	5,879,658	100	%

(1) Certain contracts were reassigned between the various verticals of our U.S. government business shown in the table above to better align our operations to the customers we serve within each market. Prior year revenue by customer type has been recast to reflect the changes.

Revenue by Whether the Company Acts as a Prime Contractor or a Subcontractor:


	Three Months Ended December 31,								Nine Months Ended December 31,
	2021				2020				2021				2020
Prime Contractor	$	1,913,657	94	%	$	1,777,878	93	%	$	5,753,596	94	%	$	5,462,260	93	%
Subcontractor	116,863		6	%	126,142		7	%	372,028		6	%	417,398		7	%
Total Revenue	$	2,030,520	100	%	$	1,904,020	100	%	$	6,125,624	100	%	$	5,879,658	100	%

Performance Obligations

Remaining performance obligations represent the transaction price of exercised contracts for which work has not yet been performed, irrespective of whether funding has or has not been authorized and appropriated as of the date of exercise. Remaining performance obligations exclude negotiated but unexercised options, the unfunded value of expired contracts, and certain variable consideration which the Company does not expect to recognize as revenue.

As of December 31, 2021 and March 31, 2021, the Company had $7.5 billion and $6.7 billion of remaining performance obligations, respectively. We expect to recognize approximately 70% of the remaining performance obligations at December 31, 2021 as revenue over the next 12 months, and approximately 85% over the next 24 months. The remainder is expected to be recognized thereafter.

Contract Balances

The Company's performance obligations are typically satisfied over time and revenue is generally recognized using a cost-based input method. Fixed-price contracts are typically billed to the customer using milestone or fixed monthly payments, while cost-reimbursable-plus-fee and time-and-material contracts are typically billed to the customer at periodic intervals (e.g. monthly or weekly) as indicated by the terms of the contract. Disparities between the timing of revenue recognition and customer billings and cash collections result in net contract assets or liabilities being recognized at the end of each reporting period.

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BOOZ ALLEN HAMILTON HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in tables in thousands, except share and per share data or unless otherwise noted)

Contract assets primarily consist of unbilled receivables typically resulting from revenue recognized exceeding the amount billed to the customer and right to payment is not just subject to the passage of time. Unbilled amounts represent revenues for which billings have not been presented to customers at quarter-end or year-end. These amounts are generally billed and collected within one year subject to various conditions including, without limitation, appropriated and available funding. Long-term unbilled receivables not anticipated to be billed and collected within one year, which are primarily related to retainage, holdbacks, and long-term rate settlements to be billed at contract closeout, are included in other long-term assets in the accompanying condensed consolidated balance sheets. Contract liabilities primarily consist of advance payments, billings in excess of costs incurred and deferred revenue. Contract assets and liabilities are reported on a net contract basis at the end of each reporting period. The Company maintains an allowance for credit losses to provide for an estimate of uncollectible receivables. Provision for credit losses recognized was not material for the three and nine months ended December 31, 2021 and 2020.

The following table summarizes the contract assets and liabilities, and accounts receivable, net of allowance recognized on the Company’s condensed consolidated balance sheets:


	Contract Balances	December 31, 2021		March 31, 2021
Current assets
Accounts receivable–billed		$	509,632	$	375,383
Accounts receivable–unbilled	Contract assets	1,108,862		1,037,968
Allowance for credit losses		—		(1,457)
Accounts receivable, net		1,618,494		1,411,894
Other long-term assets
Accounts receivable–unbilled	Contract assets	64,395		63,869
Total accounts receivable, net		$	1,682,889	$	1,475,763
Other current liabilities
Advance payments, billings in excess of costs incurred and deferred revenue	Contract liabilities	$	18,147	$	15,906

Changes in contract assets and contract liabilities are primarily due to the timing difference between the Company’s performance of services and billings to customers. For the three months ended December 31, 2021 and 2020, we recognized revenue of $0.1 million and $1.7 million, respectively, and for the nine months ended December 31, 2021 and 2020, we recognized revenue of $14.3 million and $23.7 million, respectively, related to our contract liabilities on April 1, 2021 and 2020, respectively. To determine revenue recognized from contract liabilities during the reporting periods, the Company allocates revenue to individual contract liability balances and applies revenue recognized during the reporting periods first to the beginning balances of contract liabilities until the revenue exceeds the balances.

4. EARNINGS PER SHARE

The Company computes basic and diluted earnings per share amounts based on net income attributable to common stockholders for the periods presented. The Company uses the weighted-average number of common shares outstanding during the period to calculate basic earnings per share, or EPS. Diluted EPS adjusts the weighted average number of shares outstanding to include the dilutive effect of outstanding common stock options and other stock-based awards.

The Company currently has outstanding shares of Class A Common Stock. Unvested Class A Restricted Common Stock holders are entitled to participate in non-forfeitable dividends or other distributions. These unvested restricted shares participated in the Company's dividends declared and were paid in the first, second and third quarters of fiscal 2022 and 2021. As such, EPS is calculated using the two-class method whereby earnings are reduced by distributed earnings as well as any available undistributed earnings allocable to holders of unvested restricted shares. A reconciliation of the income used to compute basic and diluted EPS for the periods presented are as follows:

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BOOZ ALLEN HAMILTON HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in tables in thousands, except share and per share data or unless otherwise noted)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Earnings for basic computations (1)	$	127,992	$	143,488	$	373,413	$	407,454
Weighted-average common shares outstanding for basic computations	133,587,858		137,879,820		134,629,367		137,971,114
Earnings for diluted computations (1)	$	127,995	$	143,492	$	373,421	$	407,465
Dilutive stock options and restricted stock	674,392		1,006,299		684,859