1 unchanged sentence
Evaluation of Disclosure Controls and Procedures.
−Removed: Based on an evaluation under the supervision and with the participation of the Company’s management, the principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, were effective as of December 31, 2022 to provide reasonable assurance that information required to be disclosed in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
−Removed: Management’s Annual Report on Internal Control Over Financial Reporting.
−Removed: The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined as of December 31, 2022 in Exchange Act Rules 13a-15(f) and 15d-15(f)).
−Removed: Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
+Added: Based on an evaluation under the supervision and with the participation of the Company’s management, the principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, were effective as of December 31, 2023 to provide reasonable assurance that information required to be disclosed in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
+Added: Management’s Annual Report on Internal Control Over Financial Reporting.
+Added: The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined as of December 31, 2023 in Exchange Act Rules 13a-15(f) and 15d-15(f)).
+Added: Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on the assessment, management has concluded that its internal control over financial reporting was effective as of December 31, 2023.
−Removed: As permitted by the SEC rules, management’s assessment and conclusion on the effectiveness of the Company’s internal controls over financial reporting as of December 31, 2022, excludes an assessment of the internal control over financial reporting of SemanticBits and Blanton, acquired on July 13, 2022 and September 1, 2022, respectively.
−Removed: SemanticBits and Blanton represent total assets, excluding goodwill and intangibles related to the acquisitions, and revenues constituting 1.2% and 3.8%, respectively, of the Company’s consolidated total assets and total revenues as of and for the year ended December 31, 2022.
−Removed: The Company’s independent registered public accounting firm, Grant Thornton LLP , has issued an audit report on the Company’s internal control over financial reporting, which appears herein.
−Removed: The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting, and the preparation of financial statements for external purposes in accordance with U.S.
−Removed: The Company’s internal control over financial reporting includes those policies and procedures that:
−Removed: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;
+Added: The Company’s independent registered public accounting firm, Grant Thornton LLP , has issued an audit report on the Company’s internal control over financial reporting, which appears herein.
+Added: The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting, and the preparation of financial statements for external purposes in accordance with U.S.
+Added: The Company’s internal control over financial reporting includes those policies and procedures that:
+Added: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.
−Removed: (iii) that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors;
−Removed: and (iv) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
+Added: (iii) that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors;
+Added: and (iv) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Changes in Internal Control Over Financial Reporting.
−Removed: There were no material changes in our internal control over financial reporting during the last quarter of 2022, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
+Added: There were no material changes in our internal control over financial reporting during the last quarter of 2023 which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Inherent Limitations Over Internal Controls.
7 unchanged sentences
DIRECTORS, EXECUTIVE OF FICERS AND CORPORATE GOVERNANCE
−Removed: The information required by this item will be included in our Proxy Statement for the 2023 Annual Meeting of Stockholders (the “2023 Proxy Statement”) and is incorporated herein by reference.
+Added: The information required by this item will be included in our Proxy Statement for the 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”) and is incorporated herein by reference.
EXECUTI VE COMPENSATION
11 unchanged sentences
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2023, 2022, and 2021
−Removed: Consolidated Statements of Stockholders’
−Removed: Equity for the Years Ended December 31, 2022, 2021, and 2020
+Added: Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2023, 2022, and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022, and 2021
4 unchanged sentences
Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q, filed August 3, 2017).
−Removed: Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K, filed June 2, 2017).
−Removed: Specimen common stock certificate (Incorporated by reference to Exhibit 4.1 to the Company’s Form S-1/A (File No.
+Added: Amended and Restated Bylaws of ICF International, Inc.
+Added: (Incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K, filed September 26, 2023).
+Added: Specimen common stock certificate (Incorporated by reference to Exhibit 4.1 to the Company’s Form S-1/A (File No.
333-134018), filed September 12, 2006).
1 unchanged sentence
Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (Incorporated by reference to Exhibit 4.3 to the Company's Form 10-K, filed February 25, 2022).
−Removed: 2006 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.3 to the Company’s Form S-1 (File No.
+Added: 2006 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.3 to the Company’s Form S-1 (File No.
333-134018), filed May 11, 2006).
ICF International, Inc.
−Removed: Nonqualified Deferred Compensation Plan, as amended and restated as of January 1, 2012 (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-K, filed March 1, 2013).
+Added: Nonqualified Deferred Compensation Plan, as amended and restated as of January 1, 2012 (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-K, filed March 1, 2013).
ICF International, Inc.
−Removed: 2018 Omnibus Incentive Plan (Incorporated by reference to Exhibit A to the Company’s Definitive Proxy Statement for the 2018 Annual Meeting of Stockholders, filed April 20, 2018).
+Added: Amended and Restated 2018 Omnibus Incentive Plan (Incorporated by reference to Exhibit A to the Company’s Definitive Proxy Statement for the 2023 Annual Meeting of Stockholders, filed April 21, 2023).
Form of Restricted Stock Unit Award under the 2018 Omnibus Incentive Plan.
−Removed: (Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K, filed June 1, 2018).
−Removed: Form of Non-Employee Restricted Stock Unit Award under the 2018 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed June 27, 2018).
−Removed: Form of CEO Performance Share Award Agreement (Incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K, filed June 1, 2018).
−Removed: Form of COO Performance Share Award Agreement (Incorporated by reference to Exhibit 10.5 to the Company’s Form 8-K, filed June 1, 2018).
+Added: (Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K, filed June 1, 2018).
+Added: Form of Non-Employee Restricted Stock Unit Award under the 2018 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed June 27, 2018).
+Added: Form of CEO Performance Share Award Agreement (Incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K, filed June 1, 2018).
+Added: Form of COO Performance Share Award Agreement (Incorporated by reference to Exhibit 10.5 to the Company’s Form 8-K, filed June 1, 2018).
Form of General Performance Share Award Agreement under the 2018 Omnibus Incentive Plan.
−Removed: (Incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K, filed June 1, 2018).
+Added: (Incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K, filed June 1, 2018).
Form of Cash-Settled Restricted Stock Unit Award under the 2018 Omnibus Incentive Plan.
−Removed: (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed June 1, 2018).
−Removed: Restated Employment Agreement by and between the Company and Sudhakar Kesavan, dated December 29, 2008 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed December 30, 2008).
−Removed: Restated Severance Protection Agreement by and between the Company and Sudhakar Kesavan, dated December 29, 2008 (Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K, filed December 30, 2008).
+Added: (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed June 1, 2018).
Restated Severance Protection Agreement between John Wasson and ICF International, Inc.
−Removed: dated October 1, 2019 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed October 1, 2019).
−Removed: Amended Severance Letter Agreement by and between the Company and John Wasson, dated December 12, 2008 (Incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K, filed December 18, 2008).
+Added: dated October 1, 2019 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed October 1, 2019).
+Added: Amended Severance Letter Agreement by and between the Company and John Wasson, dated December 12, 2008 (Incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K, filed December 18, 2008).
Employment Terms by and between the Company and James C.
−Removed: Morgan, dated June 8, 2012 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q, filed August 6, 2012).
+Added: Morgan, dated June 8, 2012 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q, filed August 6, 2012).
Severance Benefit/Protection Agreement by and between the Company and James C.
−Removed: Morgan, dated June 8, 2012 (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q, filed August 6, 2012).
+Added: Morgan, dated June 8, 2012 (Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q, filed August 6, 2012).
Severance Letter Agreement by and between the Company and Sergio J.
−Removed: Ostria, dated March 6, 2012 (Incorporated by reference to Exhibit 10.18 to the Company’s Form 10-K, filed on March 8, 2016).
−Removed: Amended and Restated Credit Agreement, dated May 6, 2022 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed May 6, 2022).
−Removed: Deed of Lease by and between Hunters Branch Leasing, LLC and ICF Consulting Group, Inc., effective April 1, 2010 (Incorporated by reference to Exhibit 10.6 to the Company’s Form 10-K, filed March 11, 2010).
+Added: Ostria, dated March 6, 2012 (Incorporated by reference to Exhibit 10.18 to the Company’s Form 10-K, filed on March 8, 2016).
+Added: Amended and Restated Credit Agreement, dated May 6, 2022 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed May 6, 2022).
+Added: First Amendment to Amended and Restated Credit Agreement, dated May 17, 2023 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed May 19, 2023).
+Added: Second Amendment to Amended and Restated Credit Agreement, dated November 6, 2023.
Lease Agreement between ICF Consulting Group, Inc.
−Removed: and CRS Plaza II, LLC, dated as of October 24, 2019 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed October 30, 2019).
−Removed: Equity Purchase Agreement between Incentive Technology Group, LLC, Project Lucky Holdings, LLC, Shadi Michelle Branch, Adam Branch, and ICF Incorporated, L.L.C., dated January 13, 2020 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K/A, filed January 14, 2020).
−Removed: Equity Purchase Agreement by and among Creative Systems and Consulting, L.L.C., Project Apple Holdings, LLC, Vanitha Khera, Vishal Khera, and ICF Incorporated, L.L.C., dated December 13, 2021
−Removed: (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K/A, filed December 17, 2021).
−Removed: Equity Purchase Agreement by and among ICF Incorporated, L.L.C., SemanticBits, LLC, Ramprakash Chilukuri, Vinay Kumar, and Ramprakash Chilukuri, as the Sellers’
−Removed: Representative, dated June 8, 2022 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K/A, filed July 1, 2022).
+Added: and CRS Plaza II, LLC, dated as of October 24, 2019 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, filed October 30, 2019).
+Added: Equity Purchase Agreement by and among Creative Systems and Consulting, L.L.C., Project Apple Holdings, LLC, Vanitha Khera, Vishal Khera, and ICF Incorporated, L.L.C., dated December 13, 2021 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K/A, filed December 17, 2021).
+Added: Equity Purchase Agreement by and among ICF Incorporated, L.L.C., SemanticBits, LLC, Ramprakash Chilukuri, Vinay Kumar, and Ramprakash Chilukuri, as the Sellers’ Representative, dated June 8, 2022 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K/A, filed July 1, 2022).
+Added: Separation Agreement and Release between Rodney Mark Lee, Jr.
+Added: and the Company (Incorporated by reference to Exhibit 10.1 to the Company's Form 8-K, filed December 4, 2023).
Subsidiaries of the Registrant.*
4 unchanged sentences
Certifications of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
+Added: Compensation Recovery Policy.*
The following materials from the ICF International, Inc.
Annual Report on Form 10-K for the year ended December 31, 2023 formatted in Inline eXtensible Business Reporting Language (iXBRL):
−Removed: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Stockholders’
−Removed: Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.
+Added: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.
The cover page from the Company ’ s Annual Report on Form 10-K for the year ended December 31, 2023, formatted in Inline XBRL
3 unchanged sentences
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
−Removed: March 1, 2023
+Added: February 28, 2024
ICF INTERNATIONAL, INC.
5 unchanged sentences
(Principal Executive Officer)
−Removed: March 1, 2023
+Added: February 28, 2024
/s/ BARRY BROADUS
Chief Financial Officer
−Removed: (Principal Financial Officer and Interim Principal Accounting Officer)
−Removed: March 1, 2023
+Added: (Principal Financial Officer)
+Added: February 28, 2024
Barry Broadus
+Added: /s/ RANJIT CHADHA
+Added: Principal Accounting Officer
+Added: February 28, 2024
+Added: Ranjit Chadha
/s/ MARILYN CROUTHER
−Removed: March 1, 2023
+Added: February 28, 2024
Marilyn Crouther
/s/ SCOTT SALMIRS
−Removed: March 1, 2023
+Added: February 28, 2024
Scott Salmirs
−Removed: March 1, 2023
+Added: February 28, 2024
/s/ CHERYL W.
−Removed: March 1, 2023
+Added: February 28, 2024
/s/ MICHAEL J.
−Removed: March 1, 2023
+Added: February 28, 2024
Michael Van Handel
/s/ RANDALL MEHL
−Removed: March 1, 2023
−Removed: March 1, 2023
+Added: February 28, 2024
+Added: February 28, 2024
REPORT OF INDEPENDENT REGIST ERED PUBLIC ACCOUNTING FIRM
1 unchanged sentence
ICF International, Inc.
−Removed: Board of Directors and Stockholders
−Removed: ICF International, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of ICF International, Inc.
−Removed: (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of comprehensive income, changes in stockholders’
−Removed: equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).
+Added: (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 1, 2023 expressed an unqualified opinion.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 28, 2024 expressed an unqualified opinion.
Basis for opinion
−Removed: These financial statements are the responsibility of the Company’s management.
−Removed: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
+Added: These financial statements are the responsibility of the Company’s management.
+Added: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
10 unchanged sentences
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Revenue Recognition –
−Removed: estimates-at-completion
−Removed: As described further in Note 2 to the consolidated financial statements, the Company generally recognizes revenue over time as control transfers to a client, based on the extent of progress towards satisfaction of the related performance obligation.
−Removed: On certain contracts in which costs incurred represents a reasonable measure of progress toward satisfaction of a performance obligation and transfer of control to a customer, revenue is recognized over time using a cost-input method (referred to as the cost-to-cost method).
−Removed: Under the cost-to-cost method, revenue is recognized based on the proportion of total costs incurred to estimated total costs-at-completion (“EAC”).
−Removed: A performance obligation’s EAC includes all direct costs such as level of effort from internal staff and/or subcontractors and costs of materials needed to complete the tasks.
−Removed: The accounting for these contracts involves judgement, particularly as it relates to the process of estimating total costs for the performance obligation.
−Removed: We identified the estimates of total costs for the performance obligations that recognize revenue using the cost-to-cost method as a critical audit matter.
−Removed: The principal considerations for our determination that the use of estimates-at-completion in recognizing revenue is a critical audit matter are the significant management judgments involved in the initial creation and subsequent updates to the Company’s
−Removed: estimates-at-completion and related profit recognized, which required challenging and subjective auditor judgment in the execution of our procedures.
+Added: Revenue recognition – estimates-at-completion
+Added: As described further in Note 2 to the consolidated financial statements, the Company recognizes revenue over time using a cost-input method on certain contracts in which costs incurred represents a reasonable measure of progress toward satisfaction of a performance obligation and transfer of control to a customer.
+Added: Under the cost input method, revenue is recognized based on the proportion of total costs incurred to total estimated costs-at-completion (“EAC”).
+Added: A performance obligation’s EAC includes all direct costs such as level of effort from internal staff and/or subcontractors and costs of materials needed to complete the tasks.
+Added: The accounting for these contracts involves judgement, particularly as it relates to the process of estimating total costs to satisfy the performance obligation.
+Added: We identified the estimate of total costs to satisfy the performance obligations for contracts with revenue recognized using the cost input method as a critical audit matter.
+Added: The principal considerations for our determination that the use of estimates-at-completion in recognizing revenue is a critical audit matter are the significant management judgments involved in the initial creation and subsequent updates to the Company’s EAC and related profit recognized, which required challenging and subjective auditor judgment in the execution of our procedures.
Our audit procedures in response to this matter included the following, among others:
−Removed: We tested the design and operating effectiveness of controls related to management’s review of estimate-at-completion analyses and the significant assumptions underlying the estimated total costs to complete.
−Removed: We tested management’s process for developing, revising and applying estimates-at-completion to a selection of contracts.
−Removed: Our testing included evaluating key inputs and assumptions by comparing them to underlying supporting documentation, contract documentation or other corroborating evidence, such as subcontractor agreements, customer correspondence and contractual milestones or other documentation that supports estimated costs.
−Removed: We performed a lookback analysis of certain contracts completed during the year ended December 31, 2022 and compared the final estimated costs at completion to the estimate of costs throughout the contract life cycle to assess the Company’s ability to develop reasonable estimates.
+Added: • Testing the design and operating effectiveness of controls related to management’s review of estimate-at-completion analyses and the significant assumptions underlying the estimated total costs to complete
+Added: • Testing management’s process for developing, revising and applying EAC, evaluating key inputs and assumptions by comparing them to underlying support, including contract documents, rate of cost incurred to date, subcontractor agreements, customer correspondence, documentation related to contractual milestones or other documentation, as applicable, that supports estimated costs
+Added: • Performing a lookback analysis of certain contracts completed during the year ended December 31, 2023 and compared the final estimated costs-at-completion to the estimate of costs throughout the contract life cycle to assess the Company’s ability to develop reasonable estimates
/s/ GRANT THORNTON LLP
−Removed: We have served as the Company’s auditor since 2000.
+Added: We have served as the Company’s auditor since 2000.
Arlington, Virginia
−Removed: March 1, 2023
+Added: February 28, 2024
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
3 unchanged sentences
We have audited the internal control over financial reporting of ICF International, Inc.
−Removed: (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
−Removed: In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2022, and our report dated March 1, 2023 expressed an unqualified opinion on those financial statements.
+Added: (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
+Added: In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2023, and our report dated February 28, 2024 expressed an unqualified opinion on those financial statements.
Basis for opinion
−Removed: The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting (“Management’s Report”).
−Removed: Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
+Added: The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Annual Report on Internal Control Over Financial Reporting” (“Management’s Report”).
+Added: Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
4 unchanged sentences
We believe that our audit provides a reasonable basis for our opinion.
−Removed: Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of SemanticBits, LLC and Blanton & Associates, wholly-owned subsidiaries, whose financial statements reflect total assets and revenues constituting 1.2% and 3.8% percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2022.
−Removed: As indicated in Management’s Report, SemanticBits, LLC and Blanton & Associates were acquired during 2022.
−Removed: Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of SemanticBits, LLC and Blanton & Associates.
Definition and limitations of internal control over financial reporting
−Removed: A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
−Removed: A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
+Added: A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
+Added: A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
−Removed: and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
+Added: and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
1 unchanged sentence
/s/ GRANT THORNTON LLP
−Removed: Arlington, Virginia
−Removed: March 1, 2023
+Added: Arlington, VA
+Added: February 28, 2024
ICF INTERNATIONAL, INC.
21 unchanged sentences
Contract liabilities
−Removed: Operating lease liabilities - current
−Removed: Finance lease liabilities - current
+Added: Operating lease liabilities
+Added: Finance lease liabilities
Accrued salaries and benefits
10 unchanged sentences
Commitments and Contingencies (Note 20)
−Removed: Stockholders’
+Added: Stockholders’ Equity:
Preferred stock, par value $ .001 per share;
8 unchanged sentences
Accumulated other comprehensive loss
−Removed: Total Stockholders’
−Removed: Total Liabilities and Stockholders’
+Added: Total Stockholders’ Equity
+Added: Total Liabilities and Stockholders’ Equity
The accompanying notes are an integral part of these statements.
11 unchanged sentences
Interest, net
−Removed: Other expense
+Added: Other income (expense)
Income before income taxes
3 unchanged sentences
Cash dividends declared per common share
−Removed: Other comprehensive income (loss), net of tax
+Added: Other comprehensive (loss) income, net of tax
Comprehensive income, net of tax
2 unchanged sentences
and Subsidiaries
−Removed: Consolidated Statements of Stockholders’
+Added: Consolidated Statements of Stockholders’ Equity
Treasury Stock
2 unchanged sentences
Balance at January 1, 2021
−Removed: Other comprehensive loss
+Added: Other comprehensive income
Equity compensation
2 unchanged sentences
Net payments for stock buybacks
−Removed: Cumulative-effect adjustments for adoption of accounting principle
Dividends declared
7 unchanged sentences
Balance at December 31, 2022
−Removed: Other comprehensive income
+Added: Other comprehensive loss
Equity compensation
13 unchanged sentences
Provision for credit losses
−Removed: Deferred income taxes
+Added: Deferred income taxes and unrecognized income tax benefits
Non-cash equity compensation
3 unchanged sentences
Impairment of long-lived assets
+Added: Gain on divestiture of a business
Other adjustments, net
15 unchanged sentences
Proceeds from working capital adjustments related to prior business acquisition
+Added: Proceeds from divestiture of a business
Net Cash Used in Investing Activities
2 unchanged sentences
Payments on working capital facilities
−Removed: Payments on capital expenditure obligations
+Added: Proceeds from other short-term borrowings
+Added: Repayments of other short-term borrowings
Receipt of restricted contract funds
1 unchanged sentence
Debt issuance costs
+Added: Payments of principal portion of finance leases
Proceeds from exercise of options
2 unchanged sentences
Payments on business acquisition liabilities
−Removed: Net Cash Provided by Financing Activities
+Added: Net Cash (Used in) Provided by Financing Activities
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash
−Removed: (Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash
+Added: Decrease in Cash, Cash Equivalents, and Restricted Cash
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period
6 unchanged sentences
Acquisition of property and equipment through finance lease
−Removed: Exercise of options receivable from shareholders
The accompanying notes are an integral part of these statements.
6 unchanged sentences
The accompanying consolidated financial statements include the accounts of ICF International, Inc.
−Removed: (“ICFI”) and its principal subsidiary, ICF Consulting Group, Inc.
−Removed: (“Consulting,”
−Removed: and together with ICFI, “the Company”), and have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S.
−Removed: GAAP”).
+Added: (“ICFI”) and its principal subsidiary, ICF Consulting Group, Inc.
+Added: (“Consulting,” and together with ICFI, the “Company”), and have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S.
Consulting is a wholly owned subsidiary of ICFI.
1 unchanged sentence
All other subsidiaries of the Company are wholly owned by Consulting.
−Removed: All significant intercompany transactions and balances have been eliminated.
+Added: Intercompany transactions and balances have been eliminated.
Nature of Operations
−Removed: The Company provides professional services and technology-based solutions, including management, marketing, technology, and policy consulting and implementation services, in the areas of energy, environment, and infrastructure;
−Removed: health, education, and social programs;
−Removed: safety and security;
−Removed: and consumer and financial.
+Added: The Company provides professional services and technology-based solutions, including management, technology, and policy consulting and implementation services, in the areas of energy, environment, infrastructure, and disaster recovery;
+Added: health and social programs;
+Added: security and other civilian & commercial.
The Company offers a full range of services to clients throughout the entire life cycle of a policy, program, project, or initiative, from research and analysis, assessment and advice, to design and implementation of programs and technology-based solutions, and the provision of engagement services and programs.
−Removed: The Company’s major clients are U.S.
−Removed: federal government departments and agencies, most significantly the Department of Health and Human Services, Department of State, and Department of Defense.
+Added: The Company’s major customers are U.S.
+Added: federal government departments and agencies.
The Company also serves U.S.
state (including territories) and local government departments and agencies, international governments, and commercial clients worldwide.
−Removed: Commercial clients include airlines, airports, electric and gas utilities, health care companies, banks and other financial services companies, transportation, travel and hospitality firms, non-profit associations, manufacturing firms, retail chains, and distribution companies.
−Removed: The term “federal”
−Removed: or “federal government”
−Removed: refers to the U.S.
−Removed: federal government, and “state and local”
−Removed: or “state and local government”
−Removed: refers to U.S.
+Added: Commercial clients primarily include airlines, airports, electric and gas utilities, health care companies, banks and other financial services companies.
+Added: The terms “federal” or “federal government” refer to the U.S.
+Added: federal government, and “state and local” or “state and local government” refer to U.S.
state (including territories) and local governments, unless otherwise indicated.
1 unchanged sentence
It maintains additional offices throughout the world, including 55 offices in the U.S.
−Removed: territories and 24 offices in key markets outside the U.S., including offices in the United Kingdom (“U.K.”), Belgium, India, and Canada.
−Removed: Reclassification
−Removed: Certain immaterial amounts in the consolidated statements of comprehensive income have been reclassified to conform to the current year’s presentation.
−Removed: To be consistent with the current presentation of interest, net, the Company reclassified $ 0.3 million and $ 0.2 million in interest income for the years ended December 31, 2021 and 2020, respectively, from “Other expense”
−Removed: to “Interest, net”.
+Added: territories and 15 offices in key markets outside the U.S., including offices in the United Kingdom (“U.K.”), Belgium, India, and Canada.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2 unchanged sentences
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.
−Removed: Areas of the consolidated financial statements where estimates may have the most significant effect include contractual and regulatory reserves, valuation and lives of tangible and intangible assets, contingent consideration related to business acquisitions, impairment of goodwill and long-lived assets, accrued liabilities, revenue recognition (including estimates of variable considerations in determining the total contract price and allocation of performance obligations), the remaining costs-to-complete fixed-price contracts, bonus and other incentive compensation, stock-based compensation, reserves for tax benefits and valuation allowances on deferred tax assets, provisions for income taxes, collectability of receivables, and loss accruals for litigation.
−Removed: Actual results experienced by the Company may differ from management’s estimates.
+Added: Areas of the consolidated financial statements where estimates may have the most significant effect include contractual and regulatory reserves, valuation and lives of tangible and intangible assets, contingent consideration related to business acquisitions and divestitures, impairment of goodwill and long-lived assets, accrued liabilities, revenue recognition (including estimates of variable considerations in determining the total contract price and allocation of performance obligations), the remaining costs to complete fixed-price contracts, bonus and other incentive compensation, stock-based compensation, reserves for tax benefits and valuation allowances on deferred tax assets, provisions for income taxes, collectability of receivables, and loss accruals for litigation.
+Added: Actual results experienced by the Company may differ from management’s estimates.
Revenue Recognition
1 unchanged sentence
The Company enters into agreements with clients that create enforceable rights and obligations and for which it is probable that the Company will collect the consideration to which it will be entitled as services and solutions are transferred to the client.
−Removed: Except in certain narrowly defined situations, the Company’s agreements with its clients are written and revenue is generally not recognized on
−Removed: oral or implied arrangements.
+Added: Except in certain narrowly defined situations, the Company’s agreements with its clients are written and revenue is generally not recognized on oral or implied arrangements.
The Company recognizes revenue based on the consideration specified in the applicable agreement and excludes from revenue amounts collected on behalf of third parties.
1 unchanged sentence
The Company evaluates whether two or more agreements should be accounted for as one single contract and whether combined or single agreements should be accounted for as more than one performance obligation.
−Removed: For most contracts, the client requires the Company to perform a number of tasks in providing an integrated output for which the client has contracted, and, hence, contracts of this type are tracked as having only one performance obligation since a substantial part of the Company’s promise is to ensure the individual tasks are incorporated into a combined output in accordance with contract requirements.
−Removed: When contracts are separated into multiple performance obligations, the Company allocates the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised services underlying each performance obligation.
+Added: For most contracts, the client requires the Company to perform a number of tasks in providing an integrated output for which the client has contracted, and, hence, contracts of this type are tracked as having only one performance obligation since a substantial part of the Company’s promise is to ensure the individual tasks are incorporated into a combined output in accordance with contract requirements.
+Added: When contracts have multiple performance obligations, the Company allocates the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised services underlying each performance obligation.
The Company generally provides customized solutions in which the pricing is based on specific negotiations with each client, and, in these cases, the Company uses a cost-plus margin approach to estimate the standalone selling price of each performance obligation.
−Removed: Certain long-term contracts contain award fees, incentive fees or other provisions that can either increase or decrease the transaction price.
+Added: Certain contracts contain award fees, incentive fees or other provisions that can either increase or decrease the transaction price.
These variable amounts are generally awarded at the completion of a contractually stipulated performance assessment period based on the achievement of performance metrics, program milestones or cost targets, and the amount awarded may be subject to client discretion.
3 unchanged sentences
The Company evaluates contractual arrangements to determine whether revenue should be recognized on a gross versus net basis.
−Removed: The Company’s assessment is based on the nature of the promise to the client.
+Added: The Company’s assessment is based on the nature of the contractual obligation to the client.
In most cases, the Company itself agrees to provide specified services to the client as a principal and revenue is recognized on a gross basis.
3 unchanged sentences
Exceptions to monthly billing terms are to ensure that the Company performs satisfactorily rather than representing a significant financing component.
−Removed: For cost-based contracts, the Company’s performance is evaluated during a contractually stipulated performance period and, while contract costs may be billed on a monthly basis, the Company is generally permitted to bill for incentive or award fees only after the completion of the performance assessment period, which may occur quarterly, semi-annually or annually, and after the client completes the performance assessment.
+Added: For cost-based contracts, the Company’s performance is evaluated during a contractually-stipulated performance period and, while contract costs may be billed on a monthly basis, the Company is generally permitted to bill for incentive or award fees only after the completion of the performance assessment period, which may occur quarterly, semi-annually or annually, and after the client completes the performance assessment.
Fixed-price contracts may provide for milestone billings based on the attainment of specific project objectives rather than for billing on a monthly basis.
3 unchanged sentences
The selection of the method used to measure progress requires judgment and is dependent, among other factors, on the contract type and the nature of the services provided.
−Removed: For time-and-materials contracts, the Company uses the right to invoice practical expedient to determine the revenue earned based on hours worked in contract performance at negotiated billing rates.
+Added: For time-and-materials contracts, the Company uses the right-to-invoice practical expedient to recognize revenue earned based on hours worked in contract performance at negotiated billing rates.
Fixed-price level-of-effort contracts are substantially similar to time-and-materials contracts except that the Company is required to deliver a specified level of effort over a stated period of time.
For these contracts, the Company determines the revenue earned using contract hours worked at negotiated bill rates as the Company delivers the contractually required workforce.
−Removed: For cost-based contracts, the Company recognizes revenue based on contract costs incurred, as the Company becomes contractually entitled to reimbursement of the contract costs, plus a most likely estimate of award or incentive fees earned on those costs even though final determination of fees earned occurs after the contractually-stipulated performance assessment period ends.
−Removed: For fixed-price contracts, the Company uses the percentage-of-completion method to estimate the amount of revenue, based on the ratio of actual costs incurred to total estimated costs, provided that costs incurred (an input method) represents a reasonable measure of progress towards the satisfaction of a performance obligation and transfer of control to the customer.
+Added: For cost-based contracts, the Company uses the right-to-invoice practical expedient to recognize revenue based on the amount to which the Company has a contractual right to invoice.
+Added: For series-services performance obligations, the Company measures progress using either a cost input measure, a time-elapsed output measure, or the right to invoice practical expedient.
+Added: Award or incentive fees are allocated to the distinct periods in which they relate to and recognized in that period.
+Added: For certain fixed-price contracts, the Company uses the percentage-of-completion method to estimate the amount of revenue, based on the ratio of actual costs incurred to total estimated costs, provided that costs incurred (an input method) represents a reasonable measure of progress towards the satisfaction of a performance obligation and transfer of control to the customer.
This method provides a faithful depiction of the transfer of value to the client when the Company is satisfying a performance obligation that entails integration of tasks for a combined output, which requires the Company to coordinate the work of employees, subcontractors and delivery of other contract costs.
−Removed: Contract costs that are not reflective of the Company’s progress toward satisfying a performance obligation are not included in the calculation of the measure of progress.
+Added: Contract costs that are not reflective of the Company’s progress toward satisfying a performance obligation are not included in the calculation of the measure of progress.
When this method is used, the changes in estimated costs to complete the obligations result in adjustments to revenue on a cumulative catch-up basis, which causes the effect of revised estimates for prior periods to be recognized in the current period.
4 unchanged sentences
or performing better or worse than previously estimated.
−Removed: In some fixed-price service contracts, the Company performs services of a recurring nature, such as maintenance and other services of a “stand ready”
+Added: For fixed-price contracts in which the estimated cost to perform exceeds the consideration to be received, the Company accrues for the entire estimated loss during the period in which the loss is determined by recording additional direct costs.
+Added: In some fixed-price service contracts, the Company performs services of a recurring nature, such as maintenance and other services of a “stand ready” nature.
For these contracts, the Company has the right to consideration in an amount that corresponds directly with the value that the client has received.
2 unchanged sentences
Modifications that are for services that are not distinct from the existing agreement due to the significant integration service that the Company provides are accounted for as part of an existing performance obligation.
−Removed: The effect of these modifications on the transaction price and the Company’s measure of progress in fulfilling the performance obligation to which they relate is recognized as an adjustment to revenue on a cumulative catch-up basis.
−Removed: Revenue from modifications that create new, distinct performance obligations is recognized based on the Company’s progress in fulfilling the requirements of the new obligations.
−Removed: For construction-type fixed-price contracts in which the estimated cost to perform exceeds the consideration to be received, the Company accrues for the entire estimated loss during the period in which the loss is determined by recording additional direct costs.
+Added: The effect of these modifications on the transaction price and the Company’s measure of progress in fulfilling the performance obligation to which they relate is recognized as an adjustment to revenue on a cumulative catch-up basis.
+Added: Revenue from modifications that create new, distinct performance obligations is recognized based on the Company’s progress in fulfilling the requirements of the new obligations.
For performance obligations that are satisfied over time, the Company recognizes the cost to fulfill contracts when incurred, unless the costs are within the scope of another topic in which case the guidance of that topic is applied.
1 unchanged sentence
The Company expenses these costs when incurred if the amortization period is one year or less.
−Removed: Unfulfilled performance obligations represent amounts expected to be earned on contracts and do not include the value of negotiated, unexercised contract options, which are classified as marketing offers.
+Added: Unfulfilled performance obligations represent amounts expected to be earned on non-cancellable contracts or those that the are cancellable but the Company has determined to have substantive termination penalties, and do not include the value of negotiated, unexercised contract options, which are classified as marketing offers.
Indefinite delivery/indefinite quantity and similar arrangements provide a framework for the client to issue specific tasks, delivery or purchase orders in the future and these arrangements are considered marketing offers until a specific order is executed.
−Removed: Revenue recognition entails the use of significant judgment, including, but not limited to, the following:
−Removed: evaluating agreements in terms of the number and nature of performance obligations;
−Removed: determining the appropriate method for measuring progress to satisfaction of obligations;
−Removed: determining if the Company is acting as a principal or an agent, and preparing estimates in terms of the amount of progress that the Company has made.
−Removed: For many fixed-price contracts, in particular, the Company estimates the proportion of total revenue earned using the ratio of contract costs incurred to total estimated contract costs, which requires the Company to prepare and, as necessary, revise estimates, as work progresses, of the total contract costs required to satisfy each respective performance obligation.
−Removed: Moreover, some of the Company’s contracts include variable consideration, which requires the Company to estimate and, as necessary, revise the most likely amounts that will be earned over the respective performance assessment periods.
+Added: Some of the Company’s contracts include variable consideration, which requires the Company to estimate and, as necessary, revise the most likely amounts that will be earned over the respective performance assessment periods.
For these obligations, changes in estimates result in cumulative catch-up adjustments and may have a significant impact on earnings during a given period.
−Removed: The Company’s operating cycle for long-term contracts may be greater than one year and is measured by the average time between the inception and completion of those contracts.
+Added: The Company’s operating cycle for long-term contracts may be greater than one year and is measured by the average time between the inception and completion of those contracts.
Contract-related assets and liabilities are classified as current assets and current liabilities.
−Removed: Significant balance sheet accounts related to the revenue recognition cycle are as follows:
−Removed: Contract receivables, net –
+Added: Cash and Cash Equivalents
+Added: The Company considers cash on deposit and any highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents.
+Added: Restricted Cash
+Added: The Company has restricted cash representing amounts held in escrow accounts and/or not readily available due to contractual restrictions.
+Added: Contract receivables, net
Contract receivables represent amounts billed and due from clients in accordance with respective contractual terms.
1 unchanged sentence
The Company estimates an allowance for estimated credit loss to reflect the amount of receivables that will not be collected.
−Removed: The Company considers a number of factors in estimating the amount of the allowance, including knowledge of a client’s financial condition, its historical collection experience, and other factors relevant to assessing the collectability of the receivables.
+Added: The Company considers a number of factors in estimating the amount of the allowance, including knowledge of a client’s financial condition, its historical collection experience, and other factors relevant to assessing the collectability of the receivables.
The Company writes off specific contract receivables when such amounts are determined to be uncollectible.
−Removed: Contract assets –
−Removed: Contract assets include unbilled amounts typically resulting from revenue recognized on long-term contracts when it exceeds the amounts billed.
−Removed: Contract assets include retainages until the Company has met the contract-stipulated requirements for payment.
−Removed: Contract assets are reported in a net position on a contract-by-contract basis each period even though individual contracts may contain multiple performance obligations.
−Removed: On a contract-by-contract basis, amounts do not exceed their net realizable value.
−Removed: Contract liabilities –
−Removed: Contract liabilities represent advance payments received and billings in excess of revenue recognized on contracts.
−Removed: Contact liabilities are reported in a net position on a contract by contract basis each period even though individual contracts may contain multiple performance obligations.
−Removed: Cash and Cash Equivalents
−Removed: The Company considers cash on deposit and all highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents.
−Removed: Restricted Cash
−Removed: The Company has restricted cash representing amounts held in escrow accounts and/or not readily available due to contractual restrictions.
Property and Equipment
1 unchanged sentence
Leasehold improvements are amortized on a straight-line basis over the shorter of the economic life of the improvement or the related lease term.
−Removed: Goodwill and Other Intangible Assets
−Removed: The purchase price of an acquired business is allocated to the tangible assets and separately identifiable intangible assets acquired, less liabilities assumed, based on their respective fair values, with the excess recorded as goodwill.
+Added: Goodwill and Indefinite-Lived Assets
Goodwill represents the excess of the purchase consideration over the fair value of net assets of businesses acquired.
−Removed: Goodwill and intangible assets acquired in a business combination and deemed to have an indefinite useful life are not amortized, but instead are reviewed for impairment annually, or more frequently if impairment indicators arise.
+Added: Goodwill and any intangible assets acquired in a business combination that are deemed to have an indefinite useful life are not amortized, but instead are reviewed for impairment annually, or more frequently if impairment indicators arise.
Intangible assets with estimable useful lives are amortized over such lives and reviewed for impairment if impairment indicators arise.
The Company performs its annual goodwill impairment test as of October 1 of each year.
−Removed: As its business is highly integrated and all of its components have similar economic characteristics, the Company has concluded it has one aggregated reporting unit at the consolidated entity level.
−Removed: The Company assesses goodwill at the reporting unit.
−Removed: If, after opting to complete a qualitative assessment, the Company determines that it is more likely than not that the estimated fair value of the reporting unit exceeded its carrying amount, it may conclude that no impairment exists.
−Removed: If the Company concludes otherwise, a goodwill impairment test is performed, which includes a comparison of the reporting unit’s fair value to the carrying amount and recognizing, as an impairment loss, the difference of the reporting unit’s fair value and the carrying amount of goodwill.
−Removed: The Company’s qualitative analysis as of October 1, 2022 included macroeconomic, industry and market specific considerations, financial performance indicators and measurements, and other factors.
−Removed: Based on this qualitative assessment, the Company determined that it is more likely than not that the fair value of its reporting unit exceeded its carrying amount, and thus an additional quantitative impairment test was not required to be performed.
−Removed: Therefore, based on management’s review, a goodwill impairment loss was not required for 2022.
−Removed: Historically, the Company has no t recorded any goodwill impairment losses.
+Added: As its business is highly integrated and all of its components have similar economic characteristics, the Company has concluded it has one aggregated reporting unit at the consolidated entity level which it perform the assessment at.
+Added: The Company have the option to perform a qualitative assessment that determines if it is more likely than not that the estimated fair value of goodwill is greater than its carrying value and, if so, the Company may conclude that no impairment exists.
+Added: If the Company concludes that an impairment exist, a quantitative test is performed by comparing the reporting unit’s fair value to the carrying amount and recognizing the difference as an impairment loss.
Long-Lived Assets
−Removed: The Company reviews its long-lived assets, including property and equipment, operating lease right-of-use (“ROU”) assets, and amortizable intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the long-lived asset group may not be fully recoverable.
+Added: The Company reviews its long-lived assets, including property and equipment, operating lease right-of-use (“ROU”) assets, and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the long-lived asset group may not be fully recoverable.
If the total of the expected undiscounted future net cash flows is less than the carrying amount of the long-lived asset group being evaluated, a loss is recognized for any excess of the carrying amount over the fair value of the asset group.
−Removed: The Company recognized impairment expense, included in indirect and selling expenses, of $ 8.4 million, $ 7.9 million, and $ 3.1 million during the years ended December 31, 2022, 2021, and 2020, respectively, related to operating lease right-of-use assets and leasehold improvements.
−Removed: The Company uses leases to obtain use of a variety of different resources, including those for the use of facilities or property and equipment.
−Removed: The Company determines if an arrangement is a lease at inception and recognizes a right-of-use asset and lease obligation for all leases greater than twelve months based on the present value of the future minimum lease payments as of the commencement date, excluding any lease incentives and initial costs incurred to obtain the lease.
+Added: During the years ended December 31, 2023, 2022, and 2021 , the Company recognized impairment losses of $ 6.8 million, $ 8.4 million, and $ 7.9 million, respectively, related to operating facility lease right-of-use assets and leasehold improvements.
+Added: During the year ended December 31, 2023, the Company recognized an impairment loss of $ 0.9 million related to an amortizable customer-related intangible asset from a prior acquisition.
+Added: The impairment losses were included in indirect and selling expenses on the Company's consolidated statements of comprehensive income.
+Added: The Company leases facilities and property and equipment.
+Added: The Company determines if an arrangement is a lease at its inception and recognizes a right-of-use asset and lease obligation for all leases greater than twelve months based on the present value of the future minimum lease payments as of the commencement date, excluding any lease incentives and initial costs incurred to obtain the lease.
Since most lease agreements do not provide an implicit rate, the Company uses its incremental borrowing rate as of the commencement date, based on publicly available yields adjusted for company-specific considerations and terms, in estimating the present value of future payments.
−Removed: Lease terms, for the purpose of determining each lease’s present value, include options to extend or terminate the lease if it is reasonably certain and economically reasonable that the Company will exercise that option.
+Added: Lease terms, for the purpose of determining each lease’s present value, include options to extend or terminate the lease if it is reasonably certain and economically reasonable that the Company will exercise that option.
Lease costs from minimum lease payments are recognized on a straight-line basis over the lease term.
5 unchanged sentences
Amortization expense is recorded on a straight-line basis over the expected economic life of the software, typically lasting three to five years .
−Removed: As of December 31, 2022, and 2021, capitalized software, net of accumulated amortization, totaled $ 19.0 million and $ 14.5 million , respectively, and is included as part of “other assets”
−Removed: on the consolidated balance sheets.
+Added: As of December 31, 2023, and 2022, capitalized software, net of accumulated amortization, totaled $ 12.8 million and $ 19.0 million , respectively, and is included as part of “other assets” on the consolidated balance sheets.
Stock-based Compensation
−Removed: The Company recognizes stock-based compensation expense related to share-based payments to employees, including grants of employee stock options, restricted stock awards, restricted stock units (“RSUs”), and cash-settled restricted stock units (“CSRSUs”) on a straight-line basis over the requisite service period, which is generally the vesting period.
−Removed: The Company recognizes expense for performance-based share awards (“PSAs”), which have both performance and service conditions, on a straight-line basis over the three-year performance period.
+Added: The Company recognizes stock-based compensation expense to employees and non-employee directors, including grants of stock options, restricted stock awards, restricted stock units (“RSUs”), and cash-settled restricted stock units (“CSRSUs”) on a straight-line basis over the requisite service period, which is generally the vesting period.
+Added: The Company recognizes expense for performance-based share awards (“PSAs”), which have both performance and service conditions, on a straight-line basis over the three-year performance period.
Non-employee director awards are granted annually for Board-related services and therefore expensed over the service period.
Stock-based compensation expense is based on the estimated fair value of the instruments on the grant date and the estimated number of shares the Company ultimately expects will vest.
−Removed: The Company estimates the rate of future forfeitures based on factors which include the historical forfeiture experience for each applicable employee class under the assumption that the rate of future forfeitures will be similar to that experienced in the past.
+Added: The Company estimates the rate of future forfeitures based on factors which include the historical forfeiture experience for each applicable employee class.
In addition, the estimation of PSAs that will ultimately vest requires judgment based on the performance and market conditions that will be achieved over the performance period.
3 unchanged sentences
CSRSUs are settled only in cash payments.
−Removed: The cash payment is based on the fair value of the Company’s stock price at the vesting date, calculated by multiplying the number of CSRSUs vested by the Company’s closing stock price on the vesting date, subject to a maximum payment cap and a minimum payment floor.
−Removed: The Company treats these awards as liability-classified awards, and, therefore, accounts for them at fair value estimated based on the closing price of the Company’s stock at the reporting date.
+Added: The cash payment is based on the fair value of the Company’s stock price at the vesting date, calculated by multiplying the number of CSRSUs vested by the Company’s closing stock price on the vesting date, subject to a maximum payment cap and a minimum payment floor.
+Added: The Company treats these awards as liability-classified awards, and, therefore, accounts for them at fair value estimated based on the closing price of the Company’s stock at the reporting date.
Derivative Instruments
−Removed: Derivative instruments include interest rate swaps and foreign currency hedge contracts.
−Removed: Derivative instruments designated as cash flow hedges are recorded on the consolidated balance sheets at fair value as of the reporting date and reclassified to earnings in the period that the hedged instruments affect earnings, and the effective portion of the hedge is recorded in other comprehensive income (loss), net of tax, on the consolidated statements of comprehensive income.
+Added: Derivative instruments include interest rate swaps, foreign currency hedges, and forward contracts.
+Added: Derivative instruments designated as cash flow hedges are recorded on the consolidated balance sheets at fair value as of the reporting date and reclassified to earnings in the period that the hedged instruments affect earnings, and the effective portion of the hedge is recorded in other comprehensive income (loss) (“AOCI”), net of tax, on the consolidated statements of comprehensive income.
Management reviews the effectiveness of the hedges on a quarterly basis.
8 unchanged sentences
Other Comprehensive Income (Loss)
−Removed: Other comprehensive income (loss) includes foreign currency translation adjustments arising from the use of differing exchange rates from period to period, the gain on the sale of an interest rate hedge agreement designated as a cash flow hedge, and the changes in fair value of interest rate agreements designated as cash flow hedges, net of taxes.
−Removed: The financial positions and results of operations of the Company’s foreign subsidiaries are based on the local currency as the functional currency and are translated to U.S.
+Added: Other comprehensive income (loss) includes foreign currency translation adjustments due to fluctuation in foreign currency exchange rates, the gain on the sale of an interest rate hedge agreement designated as a cash flow hedge, and the changes in fair value of interest rate agreements designated as cash flow hedges, net of taxes.
+Added: The financial positions and results of operations of the Company’s foreign subsidiaries are based on the local currency as the functional currency and are translated to U.S.
dollars for financial reporting purposes.
1 unchanged sentence
Income statement accounts are translated at the average rate of exchange prevailing during the period.
−Removed: Translation adjustments are reported in accumulated other comprehensive loss included in stockholders’
−Removed: equity in the Company’s consolidated balance sheets.
+Added: Translation adjustments are reported in accumulated other comprehensive loss included in stockholders’ equity in the Company’s consolidated balance sheets.
Acquisition-Related Costs
1 unchanged sentence
Segment, Customer, and Geographic Information
−Removed: The Company operates in one segment based on the consolidated information used by its chief operating decision-maker in evaluating the financial performance of its business and allocating resources.
−Removed: This single segment represents the Company’s core business, which is providing professional services.
−Removed: Although the Company disaggregates its revenue by client market areas and type, the Company does not manage its business or allocate resources based on client market or type.
−Removed: Approximately $ 980.4 million , $ 735.0 million , and $ 667.0 million of the Company’s revenue for the years 2022, 2021, and 2020, respectively, was derived under prime contracts and subcontracts with agencies and departments of the federal government representing 55 % , 47 % , and 44 % of total revenue, respectively.
−Removed: No other customer accounted for 10% or more of the Company’s revenue during the years ended 2022, 2021, and 2020.
+Added: The Company operates in one segment based on the consolidated information used by its chief operating decision-maker, currently the Chief Executive Officer, in evaluating the financial performance of its business and allocating resources.
+Added: This single segment represents the Company’s core business, which is providing professional services.
+Added: Although the Company disaggregates its revenue by client markets and client types, the Company does not manage its business or allocate resources based on client market or type.
+Added: No customer accounted for 10% or more of the Company’s revenue during the years ended 2023, 2022, and 2021.
The Company provides services to U.S.
and international clients, and revenue is attributed to a particular geographic area based on the administrative location of the client that awarded the contract.
−Removed: The Company’s revenue generated from international clients as a percentage of total revenue was approximately 8 % , 11 % , and 13 % for the years 2022, 2021, and 2020, respectively.
+Added: The Company’s revenue generated from international clients as a percentage of total revenue was approximately 7 % , 8 % , and 11 % for the years 2023, 2022, and 2021, respectively.
At December 31, 2023 and 2022, long-lived assets held internationally were 6 % and 7 % of total long-lived assets, respectively.
+Added: Foreign currency expense, net of impact of hedges, was $ 1.2 million, $ 0.2 million, and $ 0.6 million, for the years ended December 31, 2023 , 2022 and 2021, respectively.
+Added: The Company measures and reports certain financial assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures.
+Added: Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.
+Added: Generally, fair value is based on observable quoted market prices or derived from observable market data when such market prices or data are available.
+Added: ASC 820 establishes a three-level hierarchy used to estimate fair value by which each level is categorized based on the priority of the inputs used to measure fair value:
+Added: Quoted prices that are available in active markets for identical assets or liabilities;
+Added: Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active;
+Added: inputs other than quoted prices that are observable for the asset or liability (e.g.
+Added: interest rates and yield curves that are observable at commonly quoted intervals, and implied volatilities);
+Added: and inputs derived principally from or corroborated by observable market data by correlation or other means;
+Added: Uses inputs that are unobservable and require the Company to make certain assumptions and require significant estimation and judgment from management to use in pricing the fair value of the assets and liabilities.
+Added: Certain financial instruments, including cash and cash equivalents, contract receivables, and accounts payable are carried at cost, which, due to their short maturities, approximates their fair values.
+Added: The carrying value of the Company's long-term debt approximates the estimated fair value for debt with similar terms, interest rates, and remaining maturities currently available to companies with similar credit ratings (Level 2).
Risks and Uncertainties
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, derivative financial instruments, and contract receivables.
−Removed: The Company’s domestic bank accounts are insured up to $ 250,000 by the Federal Deposit Insurance Corporation.
+Added: The Company’s domestic bank accounts are insured up to $ 250,000 by the Federal Deposit Insurance Corporation.
As of December 31, 2023, the Company had $ 0.3 million in its accounts that exceeded the insured limit.
−Removed: The majority of the Company’s cash transactions are processed through one U.S.
+Added: The majority of the Company’s cash transactions are processed through one U.S.
commercial bank.
−Removed: Cash held domestically in excess of daily requirements is used to reduce any amounts outstanding under the Company’s Credit Facility.
+Added: Cash held domestically in excess of daily requirements is primarily used to reduce any amounts outstanding under the Company’s Credit Facility.
As of December 31, 2023 and 2022, the Company held approximately $ 8.5 million and $ 8.4 million , respectively, of cash and restricted cash in foreign bank accounts.
The Company enters into derivative financial instruments with financial institutions that meet certain credit guidelines and limits its risks by continuously monitoring the credit rating of the institutions.
−Removed: The Company’s receivables consist principally of amounts due from agencies and departments of the federal government, state and local governments, and international governments, as well as from commercial organizations.
+Added: The Company’s receivables consist principally of amounts due from agencies and departments of the federal government, state and local governments, and international governments, as well as from commercial organizations.
The credit risk, with respect to federal and other government clients, is limited due to the creditworthiness of the respective governmental entity.
2 unchanged sentences
The Company extends credit in the normal course of operations and does not require collateral from its clients.
−Removed: The Company’s contracts with the federal government are subject to audit by agencies and departments of the federal government.
+Added: The Company’s contracts with the federal government are subject to audit by agencies and departments of the federal government.
Such audits determine, among other things, whether adjustments to invoices previously rendered are required under regulations as well as the underlying terms of each respective contract.
2 unchanged sentences
Reference Rate Reform
−Removed: In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting.
+Added: In March 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting.
The standard is intended to provide temporary optional expedients and exceptions to the U.S.
−Removed: GAAP guidance on contract modifications and hedge accounting to ease accounting and financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates.
+Added: GAAP guidance on contract modifications and hedge accounting to ease accounting and financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates.
The provisions of this ASU are elective and apply to all entities, subject to meeting certain criteria, that have debt or hedging contracts, among other contracts, that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.
Entities can elect to not apply certain modification accounting requirements to contracts affected by reference rate reform if certain criteria are met.
−Removed: Also, entities can elect various optional expedients that would allow it to continue to apply hedge accounting for hedging relationships affected by reference rate reform if certain criteria are met.
+Added: Also, entities can elect various optional expedients that would allow them to continue to apply hedge accounting for hedging relationships affected by reference rate reform if certain criteria are met.
This guidance was effective beginning on March 12, 2020 and entities may elect to apply the amendments prospectively through December 31, 2022, the sunset date.
In December 2022, the FASB issued ASU 2022-06 Reference Rate Reform (Topic 848):
−Removed: Deferral of the Sunset Date of Topic 848 that extended the sunset date from December 31, 2022 to December 31, 2024.
−Removed: During the third quarter of 2022, the Company amended certain interest rate swap contracts to change the benchmark rate from LIBOR to term Secured Overnight Financing Rate (“SOFR”) based interest pricing conventions.
−Removed: Contemporaneously, the Company adopted ASU 2020-04 and elected to apply the optional expedient to consider the amended swap contracts as a continuation of the existing arrangements.
−Removed: The optional expedient did not result in a material impact on the Company’s operating results, financial position, or cash flows.
−Removed: As of December 31, 2022, the Company has one interest rate swap contract with a variable interest rate that references LIBOR.
−Removed: The contract expires on August 31, 2023.
−Removed: See Note 12 - Derivative Instruments and Hedging Activities.
+Added: Deferral of the Sunset Date of Topic 848 which extended the sunset date from December 31, 2022 to December 31, 2024.
+Added: The Company completed its adoption of the provisions of ASU 2020-04 during the second quarter of 2023 upon amendment of its last interest rate swap from LIBOR-based to SOFR-based pricing.
+Added: The adoption did not have a material impact on the Company's consolidated financial statements.
+Added: Accounting Pronouncements Not Yet Adopted
+Added: Segment Reporting
+Added: In November 2023, the FASB issued ASU 2023-07:
+Added: Improvements to Reportable Segment Disclosures, that required additional segment disclosures for public entities currently required under the Segment Reporting (Topic 280) of the Accounting Standards Codification (“ASC”).
+Added: ASU 2023-07 enhances the current segment reporting disclosures of Topic 280 by requiring significant segment expenses that are regularly provided to the Chief Operating Decision Maker (the “CODM”), the amount and description of other segment items, and interim disclosures of reportable segment's profit or loss and assets.
+Added: ASU 2023-07 also requires public entities that have a single reportable segment to provide all the disclosures required in Topic 280, as amended.
+Added: The ASU is effective for the Company for the 2024 fiscal year and interim periods within the 2025 fiscal year on a retrospective basis, with early adoption permitted.
+Added: The Company is currently evaluating the impact of the adoption of ASU 2023-07 but does not expect the adoption to have a material impact, if any, on the consolidated financial statements.
+Added: In December 2023, the FASB issued ASU 2023-09, Income Taxes:
+Added: Improvements to Income Tax Disclosures, that require greater disaggregation of income tax rate and amounts paid by entities.
+Added: ASU 2023-09 specifically requires all entities to disclose, on an annual basis, disaggregated domestic and foreign pre-tax income or loss from continuing operations and the disaggregated income tax expense or benefit by federal, state, and foreign components, and a tabular rate reconciliation, using both percentages and reporting currency amounts, of eight specific categories as well as any individual reconciling items that are equal to or greater than 5% of a threshold computed by multiplying pretax income or loss from continuing operations by the applicable federal rate.
+Added: Additionally, the amendments also require disclosure of income taxes paid disaggregated by federal, state, and foreign jurisdictions as well as any individual jurisdictions over 5% of the total income taxes paid.
+Added: ASU 2023-09 is effective for the Company for the 2025 fiscal year, with early adoption permitted.
+Added: The amendments may be adopted on a prospective or retrospective basis.
+Added: The Company is currently evaluating the impact of the adoption of ASU 2023-09 but does not expect the adoption to have a material impact, if any, on the consolidated financial statements.
NOTE 3 - RESTRICTED CASH
6 unchanged sentences
Because the Company receives the advance payments from the customer, which must be refunded to the customer or remitted to a third party, the cash receipts are treated as liabilities rather than receipts for the provision of goods or services.
−Removed: Therefore, these cash receipts are presented in the consolidated statements of cash flows as financing cash inflows, “Receipt of restricted contract funds,”
−Removed: with the subsequent payments classified as financing cash outflows, “Payment of restricted contract funds.”
−Removed: See Note 9 - Accrued Expenses and Other Current Liabilities for the corresponding liability.
+Added: Therefore, these cash receipts are presented in the consolidated statements of cash flows as financing cash inflows, “Receipt of restricted contract funds,” with the subsequent payments classified as financing cash outflows, “Payment of restricted contract funds.”
NOTE 4 - CONTRACT RECEIVABLES, NET
Contract receivables, net consisted of the following as of December 31:
−Removed: Billed receivables
+Added: Billed and billable
Allowance for expected credit losses
Contract receivables, net
−Removed: On December 23, 2022, the Company entered into a Master Receivables Purchase Agreement (the “MRPA”) with MUFG Bank, Ltd.
−Removed: (“MUFG”) for the sale of certain eligible billed receivables from time to time.
−Removed: The purchase price of the receivables is equal to the net invoice amount minus a discount.
+Added: On December 23, 2022, the Company entered into a Master Receivables Purchase Agreement (the “MRPA”) with MUFG Bank, Ltd.
+Added: (“MUFG”) for the sale from time to time of certain eligible billed receivables.
The receivables are sold without recourse and the Company does not retain any ongoing financial interest in the transferred receivables other than providing servicing activities.
−Removed: The Company accounts for the transfers as sales under ASC 860, Transfers and Servicing, derecognizes the receivables from its consolidated balance sheets at the date of the
−Removed: sale, and includes the cash received from MUFG as part of cash flows from operating activities on its consolidated statement of cash flows.
−Removed: During the year ended December 31, 2022, the Company sold $ 10.0 million in billed receivables.
−Removed: For the year ended December 31, 2022, the discount on the sale of receivables under the MRPA totaled less than $ 0.1 million and is included as part of “indirect and selling expenses”
−Removed: on the consolidated statements of comprehensive income.
+Added: The Company accounts for the transfers as sales under ASC 860, Transfers and Servicing, derecognizes the receivables from its consolidated balance sheets at the date of the sale, and includes the cash received from MUFG as part of cash flows from operating activities on its consolidated statement of cash flows.
+Added: During the years ended December 31, 2023 and 2022, the Company received $ 309.4 million and $ 10.0 million under the MRPA, of which $ 28.7 million and $ 6.2 million , respectively, was collected but not remitted to MUFG.
+Added: For the years ended December 31, 2023 and 2022, the discount on the sale of receivables under the MRPA totaled $ 1.1 million and less than $ 0.1 million, respectively, and is included as part of “indirect and selling expenses” on the consolidated statements of comprehensive income.
NOTE 5 - PROPERTY AND EQUIPMENT
1 unchanged sentence
Leasehold improvements
−Removed: Furniture and equipment
+Added: Furniture and office equipment
+Added: Computer equipment
Accumulated depreciation and amortization
Total property and equipment, net
−Removed: Depreciation and amortization expense for the years ended December 31, 2022, 2021, and 2020, was approximately $ 21.5 million , $ 19.5 million , and $ 20.4 million , respectively.
+Added: Depreciation and amortization expense for the years ended December 31, 2023, 2022, and 2021 totaled $ 25.3 million , $ 21.5 million , and $ 19.5 million , respectively.
NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS
1 unchanged sentence
Balance as of January 1, 2023
−Removed: Goodwill resulting from business combination - ESAC
−Removed: Goodwill resulting from business combination - Creative Systems and Consulting
−Removed: Goodwill resulting from business combination - SemanticBits, LLC
−Removed: Goodwill resulting from business combination - Blanton & Associates
+Added: Goodwill resulting from business combinations
+Added: Goodwill resulting from business divestitures
Effect of foreign currency translation
Balance as of December 31, 2023
+Added: See “Note 16 – Acquisitions and Divestitures” for the details of the business combination and divestiture resulting in the changes in goodwill.
Other Intangible Assets
19 unchanged sentences
Year ending December 31,
−Removed: NOTE 7 –
+Added: NOTE 7 – LEASES
The Company has operating and finance leases for facilities and equipment which have remaining terms ranging from 1 to 15 years .
3 unchanged sentences
The change in lease cost resulting from changes in these indices was included within variable lease cost.
−Removed: The Company’s lease cost is recognized on a straight-line basis over the lease term and is primarily included within indirect and selling expenses on the consolidated statements of comprehensive income.
+Added: The Company’s lease cost is recognized on a straight-line basis over the lease term and is primarily included within indirect and selling expenses on the consolidated statements of comprehensive income.
Lease cost consisted of the following:
14 unchanged sentences
Total future minimum lease payments
−Removed: Total operating lease liabilities
−Removed: December 31, 2022
−Removed: December 31, 2021
−Removed: Operating lease liabilities - current
−Removed: Operating lease liabilities - non-current
−Removed: Total operating lease liabilities
−Removed: Finance lease liabilities - current
−Removed: Finance lease liabilities - non-current
−Removed: Total finance lease liabilities
Other information related to operating and finance leases is as follows:
11 unchanged sentences
The change in operating lease right-of-use assets and lease liabilities are presented within cash flows from operating activities on the consolidated statements of cash flows.
+Added: During the years ended December 31, 2023 and 2022 , the Company ceased use of office facilities and recorded impairment of $ 6.8 million and $ 8.4 million, respectively, related to operating lease right-of-use asset and leasehold improvement, and accrued other future lease-related expenses of $ 3.2 million and $ 4.9 million, respectively.
+Added: The amounts are included as part of indirect and selling expenses on the Company's consolidated statements of comprehensive income.
NOTE 8 - ACCRUED SALARIES AND BENEFITS
2 unchanged sentences
Paid time off and leave
−Removed: Social security tax deferral
Payroll taxes and withholdings
7 unchanged sentences
Professional services
−Removed: Contingent and contractual liabilities from acquisitions
−Removed: Interest rate swap liability - current
Cash collected not yet remitted to purchaser of billed receivables
3 unchanged sentences
On May 6, 2022, the Company entered into the Restated Credit Agreement with a group of lenders with (a) PNC Bank, National Association as the Administrative Agent and (b) PNC Capital Markets LLC, BOFA Securities, Inc., TD Securities (USA) LLC, Wells Fargo Securities, LLC and Citizens Bank, N.A., as joint lead arrangers.
−Removed: The various facilities under the Restated Credit Agreement are referred to as the “Credit Facility”.
−Removed: The Restated Credit Agreement amended and restated the Company’s prior credit agreement (the “Existing Credit Agreement”) to, among other things:
+Added: The various facilities under the Restated Credit Agreement are referred to as the “Credit Facility”.
+Added: The Restated Credit Agreement amended and restated the Company’s prior credit agreement (the “Existing Credit Agreement”) to, among other things:
(a) maintain the existing $ 600 million revolving credit facility (together and inclusive of a $ 75 million swing line sublimit and $ 100 million sublimit for letters of credit);
11 unchanged sentences
The Base Rate is a fluctuating rate of interest equal to the highest of (a) the Overnight Bank Funding Rate (as defined in the Restated Credit Agreement), plus 0.5 %, (b) the Prime Rate (as defined in the Restated Credit Agreement) and (c) the Daily Simple SOFR Rate (as defined in the Restated Credit Agreement) plus 1 %, all as then adjusted to include the Applicable Margin (as defined in the Restated Credit Agreement) as then in effect (and as determined pursuant to the then-current Consolidated Leverage Ratio).
+Added: For the years ended December 31, 2023 and 2022, the average interest rate on borrowings under the Credit Facility was 6.7 % and 3.3 % , respectively.
+Added: Inclusive of the impact of floating-to-fixed interest rate swaps (see “Note 12 – Derivative Instruments and Hedging Activities”), the average interest rate was 5.6 % and 3.7 % for the years ended December 31, 2023 and 2022, respectively.
The Credit Facility is collateralized by substantially all the assets of the Company and its material domestic subsidiaries and requires that the Company remain in compliance with certain financial and non-financial covenants including, but not limited to the Consolidated Leverage Ratio and the Consolidated Interest Coverage Ratio.
1 unchanged sentence
The Credit Facility also includes other terms and conditions, covenants, and other provisions of the Restated Credit Agreement that are materially consistent with the Existing Credit Agreement.
−Removed: As of December 31, 2022 , the Company had $ 561.4 million of long-term debt outstanding from the Credit Facility, unused delayed draw term loan facility of $ 180.0 million (available through May 6, 2023, with an additional six-month extension upon request by the Company), and unused borrowing capacity of $ 545.4 million from the available $ 600.0 million revolving line of credit under the Credit Facility.
−Removed: The unused borrowing capacity is inclusive of six outstanding letters of credit totaling $ 2.0 million .
+Added: As of December 31, 2023, the Company had $ 430.4 million (net of unamortized debt issuance costs) of long-term debt outstanding from the Credit Facility, unused delayed draw term loan facility of $ 180.0 million (available through January 5, 2024), and unused borrowing capacity of $ 591.9 million from the available $ 600.0 million revolving line of credit under the Credit Facility.
+Added: The unused borrowing capacity is inclusive of five outstanding letters of credit totaling $ 1.8 million .
Considering the financial, performance-based limitations, available borrowing capacity was $ 575.5 million as of December 31, 2023.
10 unchanged sentences
Long-term debt - non-current
−Removed: Future scheduled repayments of term loan principal are as follows:
+Added: Future scheduled repayments of debt principal are as follows:
Payments due by
5 unchanged sentences
December 31, 2027
−Removed: December 31, 2027
Debt Issuance Cost
−Removed: The Company’s debt issuance costs are amortized over the term of indebtedness.
−Removed: The balance of net debt issuance costs at December 31, 2022 and 2021 are as follows:
−Removed: Amortizable debt issuance costs
−Removed: Accumulated amortization
−Removed: Net debt issuance costs
+Added: The Company’s debt issuance costs are amortized over the term of indebtedness.
+Added: The balance of net debt issuance costs at December 31, 2023 and 2022 were $ 3.7 million and $ 5.0 million , respectively.
Amortization of debt issuance costs totaling $ 2.0 million , $ 1.3 million , and $ 0.6 million was recorded for each of the years ended December 31, 2023, 2022, and 2021 , respectively, and was included as part of interest expense.
−Removed: NOTE 11 –
−Removed: REVENUE RECOGNITION
+Added: NOTE 11 – REVENUE RECOGNITION
Disaggregation of Revenue
−Removed: The Company disaggregates revenue from clients, most of which is earned over time, into categories that depict how the nature, amount and uncertainty of revenue and cash flows are affected by economic and business factors.
+Added: The Company disaggregates revenue from clients into categories that depict how the nature, amount, and uncertainty of revenue and cash flows are affected by economic and business factors.
Those categories are client market, client type, and contract mix.
−Removed: Client markets provide insight into the breadth of the Company’s expertise.
−Removed: In classifying revenue by client market, the Company attributes revenue from a client to the market that the Company believes is the client’s primary market.
+Added: Client markets provide insight into the breadth of the Company’s expertise.
+Added: In classifying revenue by client market, the Company attributes revenue from a client to the market that the Company believes is the client’s primary market.
The Company also classifies revenue by the type of client for which it does business, which is an indicator of the diversity of its client base.
2 unchanged sentences
Fixed-price contracts are considered to provide the highest amount of performance risk as the Company is required to deliver a scope of work or level of effort for a negotiated fixed price.
−Removed: Time-and-materials contracts require the Company to provide skilled employees on contracts for negotiated fixed hourly rates.
+Added: Time-and-materials contracts require the Company to provide skilled employees for negotiated fixed hourly rates.
Since the Company is not required to deliver a scope of work, but merely skilled employees, it considers these contracts to be less risky than a fixed-price agreement.
Cost-based contracts are considered to provide the lowest amount of performance risk since the Company is generally reimbursed for all contract costs incurred in performance of contract deliverables with only the amount of incentive or award fees (if applicable) dependent on the achievement of negotiated performance requirements.
+Added: The Company's revenue by client markets, type, and contract mix are in the following tables.
+Added: Certain immaterial revenue amounts in the prior years have been reclassified due to minor adjustments and reclassification.
Year ended December 31,
Client Markets:
−Removed: Energy, environment, and infrastructure
−Removed: Health, education, and social programs
−Removed: Safety and security
−Removed: Consumer and financial
+Added: Energy, environment, infrastructure, and disaster recovery
+Added: Health and social programs
+Added: Security and other civilian & commercial
Year ended December 31,
2 unchanged sentences
International government
+Added: Total Government
Year ended December 31,
1 unchanged sentence
Time-and-materials
−Removed: Contract Balances:
−Removed: Contract assets consist primarily of unbilled amounts resulting from long-term contracts when revenue recognized exceeds the amount billed often due to billing schedule timing.
−Removed: Contract liabilities result from advance payments received on a contract or from billings in excess of revenue recognized on long-term contracts due to billing schedule timing.
+Added: Contract Assets and Liabilities:
+Added: Contract assets consist of unbilled receivables on contracts where revenue recognized exceeds the amount billed.
+Added: Contract liabilities result from advance payments received on a contract or from billings in excess of revenue recognized on long-term contracts.
The following table summarizes the contract balances as of December 31, 2023 and December 31, 2022:
7 unchanged sentences
During the years ended December 31, 2023 and 2022, the Company recognized $ 17.8 million and $ 27.4 million in revenue related to the contract liabilities balance at December 31, 2022 and 2021, respectively.
−Removed: Performance Obligations:
−Removed: The Company had $ 1.5 billion in unfulfilled performance obligations as of December 31, 2022 , which primarily reflects the future delivery of services for which revenue will be recognized over time.
−Removed: The unperformed obligations relate to continued or additional services required on contracts, including those that are either non-cancellable or those that are cancellable but the Company has determined to have substantive termination penalties, and were generally valued using an estimated cost-plus margin approach, with variable consideration being estimated at the most likely amount.
−Removed: The amounts exclude marketing offers, which are negotiated but unexercised contract options and indefinite delivery/indefinite quantity (IDIQ) and similar arrangements that provided a framework for customers to issue specific tasks, delivery, or purchase orders in the future.
−Removed: The Company expects to satisfy these performance obligations in approximately two years .
+Added: Unfulfilled Performance Obligations:
+Added: The Company had $ 1.4 billion in remaining unfulfilled performance obligations (“UPO”) as of December 31, 2023.
+Added: The Company expects to recognize the remaining UPO as revenue of approximately 57 % by December 31, 2024, 77 % by December 31, 2025, and the remaining thereafter .
NOTE 12 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
−Removed: The Company uses interest rate swap arrangements (the “Swaps”) to manage or hedge its variable interest rate risk under the Credit Facility.
−Removed: Notwithstanding the terms of the Swaps, the Company is ultimately obligated for all amounts due and payable under the Credit Facility.
+Added: The Company uses interest rate swap agreements (the “Swaps”) to manage its variable interest rate risk associated with its borrowings under the Credit Facility.
The Company does not use such instruments for speculative or trading purposes.
−Removed: The Company designated the Swaps as cash flow hedges.
−Removed: Derivative instruments are recorded on the consolidated balance sheets at fair value.
−Removed: Unrealized gains and losses on derivatives designated as cash flow hedges are reported in other comprehensive income (loss) (“AOCI”) and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions.
−Removed: Management intends that the Swaps remain effective and, on a quarterly basis, evaluates them to determine their effectiveness or ineffectiveness and records the change in fair value as an adjustment to other comprehensive income or loss.
−Removed: A summary of Swaps designated as cash flow hedges as of December 31, 2022 are as follows:
−Removed: Dates of Effected Cash Flows
−Removed: Date of Interest Rate Swap Agreement
−Removed: Notional Amount
−Removed: Interest Rate%
−Removed: September 30, 2016 (1)
−Removed: January 31, 2018
−Removed: January 31, 2023
−Removed: August 31, 2017 (2)
−Removed: August 31, 2018
−Removed: August 31, 2023
−Removed: August 8, 2018 (3)
−Removed: August 31, 2018
−Removed: August 31, 2023
−Removed: August 8, 2018
−Removed: August 31, 2018
−Removed: August 31, 2023
−Removed: February 20, 2020 (4)
−Removed: February 28, 2020
−Removed: February 28, 2025
−Removed: ( 1) On December 1, 2016, the Company sold the interest rate hedge agreement.
−Removed: The fair value of the interest rate hedge, as of the date of the sale, was recorded in other comprehensive income, net of tax.
−Removed: The gain from the sale will be recognized into earnings when earnings are impacted by the cash flows of the previously hedged variable interest rate.
−Removed: (2) On September 15, 2022, the Company amended the interest rate hedge agreement to change the benchmark from LIBOR with a fixed interest rate of 1.8475 % to a term SOFR fixed interest rate of 1.795 %.
−Removed: (3) On August 25, 2022, the Company amended the interest rate hedge agreement to change the benchmark from LIBOR with a fixed interest rate of 2.854 % to a term SOFR fixed interest rate of 2.736 %.
−Removed: (4) On August 25, 2022, the Company amended the interest rate hedge agreement to change the benchmark from LIBOR with a fixed interest rate of 1.294 % to a term SOFR fixed interest rate of 1.191 %.
−Removed: For the years ended December 31, 2022 and 2021, the effect of the Swaps on the Company’s financial statements are as follows:
+Added: At December 31, 2023 , the Company had floating-to-fixed interest rate swaps for an aggregate notional amount of $ 275.0 million, of which $ 100.0 million will mature on February 28, 2025 , $ 75.0 million will mature on February 28, 2028 , and $ 100.0 million will mature on June 27, 2028 .
+Added: The Company has designated the Swaps as cash flow hedges.
+Added: For the years ended December 31, 2023 and 2022, the effect of the Swaps on the Company’s financial statements are as follows:
Cash Flow Hedging Derivatives
−Removed: Total Gain Recorded to
+Added: Total Gain (Loss) Recorded to AOCI
Amount of (Gain) or Loss
Reclassified from AOCI into
+Added: Year Ended December 31,
Interest Rate Swaps
−Removed: As of December 31, 2022 , the net amount of realized losses from the hedge agreements expected to be reclassified from AOCI into earnings within the next 12 months is $ 5.1 million .
+Added: As of December 31, 2023 , the net amount of realized losses from the hedge agreements expected to be reclassified from AOCI into earnings within the next twelve months is $ 4.8 million .
NOTE 13 - INCOME TAXES
10 unchanged sentences
Accrued paid time off
−Removed: Foreign net operating loss (NOL) carryforward
−Removed: State net operating loss (NOL) carryforward
−Removed: Stock option compensation
−Removed: Deferred rent
+Added: Foreign net operating loss carryforward
+Added: State net operating loss carryforward
+Added: Stock-based compensation
Deferred compensation
Foreign tax credits
−Removed: State tax credits
+Added: Federal and state tax credits
Foreign exchange
1 unchanged sentence
Accrued bonus
+Added: Facilities impairment
+Added: Capitalized research expenses
Accrued liabilities and other
+Added: Lease liabilities
Valuation Allowance
5 unchanged sentences
Deferred gain and other
+Added: Lease assets - Right-of-Use
Total Deferred Tax Liabilities
1 unchanged sentence
The Company measures certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is 27.0 %.
+Added: On December 20, 2017, the U.S.
+Added: Congress passed the Tax Cuts and Job Act of 2017 (the “TCJA”) which was signed into law on December 22, 2017, and was generally effective beginning January 1, 2018.
+Added: The TCJA changed the provision for deduction of allowable research and development costs under the Internal Revenue Code (the “IRC”).
+Added: Effective for tax years beginning after January 1, 2022, research and development costs are required to be capitalized and amortized over a period of five years for domestic and fifteen years for foreign research and development for income tax purposes.
+Added: As a result of the capitalization, the Company recognized an increase of $ 28.1 million in deferred tax asset for the year ended December 31, 2023.
As of December 31, 2023 , the cumulative foreign tax credit carryforward balance increased by approximately $ 0.8 million and the valuation allowance required increased by approximately $ 0.8 million.
1 unchanged sentence
No additional deferred income taxes have been provided for the $ 4.9 million of additional unfavorable outside basis differences inherent in these foreign entities as of December 31, 2023 because these amounts continue to be permanently reinvested in foreign operations.
−Removed: As of December 31, 2022, the Company had approximately $ 0.7 million of foreign operating loss carryforward for income taxes which may be carried forward indefinitely.
−Removed: As of December 31, 2022, the Company has NOL carryforwards for state income tax purposes of approximately $ 6.8 million , which expire in 2034 .
+Added: As of December 31, 2023 , the Company has net operating loss (“NOL”) carryforwards for state income tax purposes of approximately $ 6.5 million, which expire in 2034 .
The Company acquired these NOLs as a result of its purchase of a business in November 2014.
−Removed: Internal Revenue Code Section 382 imposes an annual limitation on the use of a corporation’s NOLs, tax credits and other carryovers after an “ownership change”
+Added: IRC Section 382 imposes an annual limitation on the use of a corporation’s NOLs, tax credits and other carryovers after an “ownership change” occurs.
Section 382 imposes an annual limitation on the amount of post-ownership change taxable income a corporation may offset with pre-ownership change NOLs and credits.
−Removed: In general, the annual limitation is determined by multiplying the value of the corporation’s stock immediately before the ownership change (subject to certain adjustments) by the applicable long-term tax-exempt rate.
−Removed: Any unused portion of the annual limitation is available for use in future years until such NOLs are scheduled to expire (in general, NOLs may be carried forward 20 years).
+Added: In general, the annual limitation is determined by multiplying the value of the corporation’s stock immediately before the ownership change (subject to certain adjustments) by the applicable long-term tax-exempt rate.
+Added: Any unused portion of the annual limitation is available for use in future years until such NOLs are scheduled to expire (in general, NOLs may be carried forward 15 to 20 years).
The Company established a valuation allowance of approximately $ 0.5 million against the portion of the deferred tax asset which it is more-likely-than-not that it will not be recoverable (e.g.
expiration of the statute of limitations, etc.)
−Removed: As of December 31, 2022, the Company had gross state income tax credit carryforwards of approximately $ 0.4 million , which expire between 2024 and 2034 .
+Added: As of December 31, 2023 , the Company had gross federal and state income tax credit carryforwards of approximately $ 0.7 million, which expire between 2024 and 2034 .
A deferred tax asset of approximately $ 0.7 million , net of federal benefit, has been established related to these state income tax credit carryforwards as of December 31, 2023.
4 unchanged sentences
The total amount of unrecognized tax benefits as of December 31, 2023 and 2022 was $ 24.1 million and $ 0.1 million, respectively, which includes $ 9.0 million and $ 0.1 million, respectively, of tax positions that, if recognized, would impact the effective rate.
+Added: The unrecognized tax benefits and the related accrued interest are part of other long-term liabilities on the Company’s consolidated balance sheets.
+Added: The components of unrecognized tax benefits, excluding penalty and interest, are as follows at December 31:
+Added: transfer pricing
+Added: India transfer pricing
+Added: Section 41 tax credit
+Added: Section 174 expense capitalization
The unrecognized tax benefit reconciliation, excluding penalty and interest, is as follows:
Unrecognized tax benefits at January 1, 2021
−Removed: Increase attributable to tax positions taken during a prior period
−Removed: Unrecognized tax benefits at December 31, 2020
Decrease attributable to tax positions taken during the current period
2 unchanged sentences
Unrecognized tax benefits at December 31, 2022
−Removed: The Company’s 2019 to 2021 tax years remain subject to examination by the Internal Revenue Service for federal tax purposes.
+Added: Increase attributable to tax positions taken during a prior period
+Added: Increase attributable to tax positions taken during the current period
+Added: Unrecognized tax benefits at December 31, 2023
+Added: The Company’s 2020 through 2022 tax years remain subject to examination by the Internal Revenue Service for federal tax purposes.
Certain significant state and foreign tax jurisdictions are also either currently under examination or remain open under the statutes of limitation and subject to examination for the tax years from 2019 to 2022 .
−Removed: Although the Company believes it has adequately provided for all uncertain tax positions, amounts asserted by taxing authorities could be greater than the Company’s accrued position.
+Added: Although the Company believes it has adequately provided for all uncertain tax positions, amounts asserted by taxing authorities could be greater than the Company’s accrued position.
Accordingly, additional provisions on federal, state, and foreign income tax related matters could be recorded in the future as revised estimates are made or the underlying matters are effectively settled or otherwise resolved.
Conversely, the Company could settle positions with the tax authorities for amounts lower than have been accrued.
−Removed: The Company believes it is reasonably possible that, during the next 12 months, the Company’s liability for uncertain tax positions may not change.
−Removed: The Company’s provision for income taxes differs from the federal statutory rate.
−Removed: The differences between the statutory rate and the Company’s provision are as follows:
+Added: The Company believes it is reasonably possible that, during the next 12 months, the Company’s liability for uncertain tax positions may not change.
+Added: The Company’s provision for income taxes differs from the federal statutory rate.
+Added: The differences between the statutory rate and the Company’s provision are as follows for the years ended December 31:
Taxes at statutory rate
3 unchanged sentences
Other permanent differences
+Added: Global intangible low-taxed income (GILTI)
Prior year tax adjustments
5 unchanged sentences
Taxes at effective rate
+Added: During 2023, the Company restructured the ownership of its Canadian entities for tax purposes resulting in a 3.8 % decrease in the Company’s effective income tax rate for the year ended December 31, 2023.
+Added: During 2023, the Company liquidated one of its U.K.
+Added: subsidiaries as part of the wind-down of its commercial marketing business resulting in a reduction in the Company’s effective income tax rate of 5.1 % for the year ended December 31, 2023.
+Added: During 2023, the Company completed its annual true-up of the prior year income tax provision in connection with the filing of its U.S.
+Added: federal & state income tax returns.
+Added: As a result of that process, the Company recorded a change in the estimate of certain tax credits it is eligible to claim with its income tax return filings that resulted in a 7.0 % decrease in the Company’s effective income tax rate for the year ended December 31, 2023 .
NOTE 14 - ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
−Removed: Accumulated other comprehensive loss included the following:
+Added: Accumulated other comprehensive (loss) income included the following:
Gain on Sale of
9 unchanged sentences
Accumulated other comprehensive (loss) income at December 31, 2021
−Removed: Current period other comprehensive (loss) income:
+Added: Current period other comprehensive income (loss):
Other comprehensive (loss) income before reclassifications
1 unchanged sentence
Effect of taxes (3)
−Removed: Total current period other comprehensive (loss) income
+Added: Total current period other comprehensive income (loss)
Accumulated other comprehensive (loss) income at December 31, 2022
−Removed: Current period other comprehensive (loss) income:
−Removed: Other comprehensive (loss) income before reclassifications
+Added: Current period other comprehensive income (loss):
+Added: Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive (loss) income (4)
Effect of taxes (3)
−Removed: Total current period other comprehensive (loss) income
+Added: Total current period other comprehensive income (loss)
Accumulated other comprehensive (loss) income at December 31, 2023
2 unchanged sentences
(2) Represents the change in fair value of interest rate hedge agreements designated as a cash flow hedges.
−Removed: The fair value of the interest rate hedge agreements was recorded in other comprehensive income, net of tax, and will be reclassified to earnings when earnings are impacted by the hedged items, as interest payments are made on the Credit Facility from August 31, 2018 to February 28, 2025.
+Added: The fair value of the interest rate hedge agreements was recorded in other comprehensive income, net of tax, and will be reclassified to earnings when earnings are impacted by the hedged items, as interest payments are made on the Credit Facility from through June 27, 2028.
See additional details of the hedge agreements in Note 12 - Derivative Instruments and Hedging Activities.
−Removed: (3) The Company’s effective tax rate for the years ended December 31, 2022, 2021, and 2020 was 23.5 % , 28.9 % , and 26.4 % , respectively.
−Removed: (4) The Company expects to reclassify $ 0.1 million related to the Gain on Sale of Interest Rate Hedge Agreement, and $ 5.1 million in unrealized gains related to the Change in Fair Value of Interest Rate Hedge Agreement from accumulated other comprehensive loss into earnings during the next 12 months.
−Removed: (5) The fair value of the interest rate hedge agreements is included in other current and other long-term liabilities on the consolidated balance sheets.
+Added: (3) The Company’s effective tax rate for the years ended December 31, 2023, 2022, and 2021 was 14.4 % , 23.5 % , and 28.9 % , respectively.
+Added: (4) The Company expects to reclassify $ 4.8 million in unrealized gains related to the Change in Fair Value of Interest Rate Hedge Agreement from accumulated other comprehensive loss into earnings during the next 12 months.
+Added: (5) The fair value of the interest rate hedge agreements is included in other current and other long-term assets and liabilities on the consolidated balance sheets.
+Added: See “Note 19 - Fair Value” for additional details.
NOTE 15 - ACCOUNTING FOR STOCK-BASED COMPENSATION
Stock Incentive Plans
−Removed: On April 4, 2018, the Company’s board of directors approved the 2018 Omnibus Incentive Plan (the “2018 Omnibus Plan”), which was subsequently approved by the stockholders and became effective on May 31, 2018 (the “Effective Date”).
−Removed: Omnibus Plan replaced the previous 2010 Omnibus Incentive Plan (the “Prior Plan”).
+Added: On April 4, 2018, the Board approved the 2018 Omnibus Incentive Plan (the “2018 Omnibus Plan”), which was subsequently approved by the stockholders and became effective on May 31, 2018 (the “Effective Date”).
+Added: The 2018 Omnibus Plan replaced the previous 2010 Omnibus Incentive Plan (the “Prior Plan”).
The 2018 Omnibus Plan was amended on May 28, 2020 to increase the number of shares available for issuance.
−Removed: The 2018 Omnibus Plan, as amended, allows the Company to grant up to 1,600,000 shares using stock options, stock appreciation rights, restricted stock, RSUs, performance units and PSAs, cash-based awards, and other stock-based awards to all key officers, key employees, and non-employee directors of the Company.
+Added: On June 1, 2023, the Company’s stockholders approved an amendment and restatement of the 2018 Omnibus Plan (the “2018 A&R Omnibus Plan”) which further increased the number of shares available for issuance, incorporated compensation recovery provisions consistent with new SEC and NASDAQ requirements and made certain other clarifying changes.
+Added: The A&R 2018 Omnibus Plan, as amended, allows the Company to grant up to 2,050,000 shares using stock options, stock appreciation rights, restricted stock, RSUs, performance units and PSAs, cash-based awards, and other stock-based awards to all key officers, key employees, and non-employee directors of the Company.
Outstanding shares granted under the Prior Plan, totaling 2,631 , as of December 31, 2023, remain subject to its terms and conditions, and additional awards from the Prior Plan are prohibited after the Effective Date.
−Removed: As of December 31, 2022, the Company had approximately 775,252 shares available for grant under the 2018 Omnibus Plan.
−Removed: CSRSUs have no impact on the shares available for grant under the Omnibus Plan, nor on the calculated shares used in earnings per share (“EPS”) calculations.
+Added: As of December 31, 2023, the Company had approximately 1,119,446 shares available for grant under the A&R 2018 Omnibus Plan.
+Added: CSRSUs have no impact on the shares available for grant under the A&R 2018 Omnibus Plan, nor on the calculated shares used in earnings per share (“EPS”) calculations.
Stock-based compensation expense is included as part of direct costs and indirect and selling expenses on the consolidated statements of comprehensive income.
7 unchanged sentences
Performance Shares
−Removed: The assumptions of employment termination forfeiture rates used in the determination of fair value of stock awards during the 2022 calendar year were based on the Company’s historical average of actual forfeitures from the previous 10 years preceding the reporting period.
−Removed: The expected annualized forfeiture rates used during the 2022 calendar year varied from 0 % to 19.61 % , and the Company does not expect these termination rates to vary significantly in the future.
+Added: The assumptions of employment termination forfeiture rates used in the determination of fair value of stock awards during the 2023 calendar year were based on the Company’s historical average of actual forfeitures from the previous 10 years preceding the reporting period.
+Added: The expected annualized forfeiture rates used during the 2023 calendar year varied from 0 % to 21.59 % .
Stock Options
−Removed: Option awards are granted with an exercise price equal to the market value of the Company’s common stock on the date of grant.
−Removed: There were no option awards granted during 2022, 2021, and 2020.
+Added: Stock options are granted with an exercise price equal to the market value of the Company’s common stock on the date of grant.
+Added: There were no stock options granted during 2023, 2022, and 2021.
The following table summarizes the changes in outstanding stock options:
9 unchanged sentences
Exercisable at December 31, 2023
−Removed: The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $ 99.05 as of December 31, 2022.
+Added: The aggregate intrinsic value is based on the Company’s closing stock price of $ 134.09 as of December 31, 2023.
The total intrinsic value of options exercised was $ 0.9 million , $ 1.9 million , and $ 0.8 million for the years ended December 31, 2023, 2022, and 2021, respectively.
−Removed: All options have vested as of December 31, 2022, and the weighted-average remaining contractual term for options vested was 0.8 years and for exercisable options was 0.8 years.
+Added: All options have vested as of December 31, 2023, and the weighted-average remaining contractual term for options vested and exercisable was 0.2 years.
Information regarding stock options outstanding as of December 31, 2023 is summarized below:
5 unchanged sentences
$ 40.68 to $ 40.68
−Removed: $ 40.68 to $ 40.68
−Removed: $ 27.03 to $ 40.68
Restricted Stock Units
2 unchanged sentences
The fair value of shares vested was $ 7.3 million , $ 10.8 million , and $ 7.9 million for the years ended December 31, 2023, 2022, and 2021, respectively.
−Removed: A summary of the Company’s RSUs is presented below.
+Added: A summary of the Company’s RSUs is presented below.
Non-vested RSUs at January 1, 2021
3 unchanged sentences
RSUs expected to vest in the future
−Removed: The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $ 99.05 per share as of December 31, 2022.
+Added: The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $ 134.09 per share as of December 31, 2023.
Cash-Settled Restricted Stock Units
1 unchanged sentence
The fair value of CSRSUs vested and settled in cash for the years ended December 31, 2023, 2022, and 2021 was $ 7.9 million , $ 6.6 million and $ 8.7 million , respectively.
−Removed: A summary of the Company’s CSRSUs is presented below.
+Added: A summary of the Company’s CSRSUs is presented below.
Non-vested CSRSUs at January 1, 2021
3 unchanged sentences
CSRSUs expected to vest in the future
−Removed: The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $ 99.05 per share as of December 31, 2022.
+Added: The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $ 134.09 per share as of December 31, 2023.
Non-Employee Director Awards
−Removed: Beginning on July 2, 2018, the Company granted awards of registered shares to its non-employee directors on an annual basis under the Omnibus Plan.
+Added: The Company grants awards of registered shares to its non-employee directors on an annual basis under the A&R Omnibus Plan.
A summary of the non-employee director awards is presented below:
5 unchanged sentences
RSUs expected to vest in the future
−Removed: The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $ 99.05 per share as of December 31, 2022.
+Added: The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $ 134.09 per share as of December 31, 2023.
Performance Share Awards
−Removed: In 2015, the Company’s Board of Directors approved a performance-based share program (the “Program”) that provides for the issuance of PSAs to its senior management.
−Removed: Under the Program, the number of PSAs that the participant will receive depends on the Company’s achievement of two performance goals during two performance periods.
−Removed: The performance goals under the Program are
−Removed: based on (i) the Company’s compounded annual growth rate in EPS during a two-year performance period (the “Initial Period”) and (ii) the Company’s cumulative total shareholder return relative to its peer group (“rTSR”) during a performance period from the first day of the performance period (typically January 1 of the year awarded) to the last day of the third year of the performance period (typically December 31).
+Added: In 2015, the Board approved a performance-based share program (the “Program”) that provides for the issuance of PSAs to its senior management.
+Added: Under the Program, the number of PSAs that the participant will receive depends on the Company’s achievement of two performance goals during two performance periods.
+Added: The performance goals under the Program are based on (i) the Company’s compounded annual growth rate in EPS (adjusted to exclude certain items specified in the award's Agreement) during a two-year performance period (the “Initial Period”) and (ii) the Company’s cumulative total shareholder return relative to its peer group (“rTSR”) during a performance period from the first day of the performance period (typically January 1 of the year awarded) to the last day of the third year of the performance period (typically December 31).
The PSAs will only be eligible to vest following the expiration of the three-year performance period.
1 unchanged sentence
The final number of shares of common stock that will be issued to each participant at the end of the applicable performance period will be determined by multiplying the award by the product of two percentages:
−Removed: the first based on the Company’s EPS performance and the second based on the Company’s rTSR performance, subject to a minimum and maximum performance level.
+Added: the first based on the Company’s EPS performance and the second based on the Company’s rTSR performance, subject to a minimum and maximum performance level.
As of December 31, 2023 , shares granted during 2021, 2022, and 2023 are within year three , two , and one of the performance periods, respectively, and therefore have not fully vested.
1 unchanged sentence
As of December 31, 2023, a total of 69,650 shares granted in 2021 and 2022 are expected to vest in the future based on estimated financial measures achieved in the Initial Period and rTSR performance.
−Removed: A summary of the Company’s PSAs is presented below.
+Added: A summary of the Company’s PSAs is presented below.
Average Grant
5 unchanged sentences
PSAs expected to vest in the future
−Removed: The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $ 99.05 per share as of December 31, 2022 .
+Added: The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $ 134.09 per share as of December 31, 2023.
The fair value of the awards is estimated on the grant date using a Monte Carlo simulation model due to the market condition for the rTSR component.
3 unchanged sentences
Risk-Free Rate of Returns
−Removed: NOTE 16 –
−Removed: BUSINESS COMBINATIONS
+Added: NOTE 16 – ACQUISITIONS AND DIVESTITURES
+Added: CMY Solutions, LLC
+Added: On May 1, 2023 , the Company acquired CMY Solutions, LLC (“CMY”), a privately-held company that provides engineering and automation solutions to utilities and organizations, for $ 32.6 million in cash.
+Added: The acquisition enhances the Company’s offerings in the field of power and energy advisory services.
+Added: As part of the allocation of purchase consideration, the Company recorded $ 10.3 million of intangible assets, $ 1.2 million in net working capital, and $ 21.1 million of goodwill.
+Added: The goodwill is deductible for income tax purposes.
+Added: Intangible assets consist of $ 10.2 million related to existing customer relationships and $ 0.1 million related to trade names and trademarks.
+Added: The pro-forma impact of the acquisition is not material to the Company’s results of operations.
Blanton & Associates
−Removed: On September 1, 2022, the Company completed the acquisition of Blanton & Associates (“Blanton”), an environmental consulting, planning, and project management firm headquartered in Austin, Texas.
−Removed: Blanton brings proven domain expertise in environmental regulatory compliance and permitting for the transportation, renewable energy, water, and resource management sectors and adds technically strong and specialized staff in all aspects of environmental services to the Company.
−Removed: The Company recorded net working capital of $ 4.6 million and property and equipment of $ 0.2 million at their fair value at the acquisition date except for contract assets and contract liabilities which were measured in accordance with ASC 606, Revenue Recognition, deferred income tax liabilities of $ 3.0 million, and also allocated $ 9.7 million to goodwill and $ 11.4 million to intangible assets.
+Added: On September 1, 2022, the Company completed the acquisition of Blanton & Associates (“Blanton”), an environmental consulting, planning, and project management firm headquartered in Austin, Texas, for $ 22.9 million.
+Added: Blanton brings domain expertise in environmental regulatory compliance and permitting for the transportation, renewable energy, water, and resource management sectors and adds technically specialized staff in all aspects of environmental services to the Company.
+Added: As part of the allocation of the purchase consideration, the Company recorded net working capital of $ 4.6 million, property and equipment of $ 0.2 million , deferred income tax liabilities of $ 3.0 million, $ 11.4 million to intangible assets, and $ 9.7 million to goodwill.
+Added: The goodwill is not deductible for income tax purposes.
Intangible assets consisted of $ 10.9 million related to existing customer relationships, $ 0.5 million related to contract backlog, and $ 0.1 million related to trade names and trademarks.
−Removed: The acquisition of Blanton is not material to the Company’s results of operations.
+Added: The pro-forma impact of the acquisition is not material to the Company’s results of operations.
SemanticBits, LLC
−Removed: On July 13, 2022, the Company completed the acquisition of SemanticBits, LLC (“SemanticBits”), a 450-person Virginia limited liability company.
−Removed: SemanticBits is a premier partner to U.S.
−Removed: federal health agencies for mission-critical digital modernization solutions and provides a full suite of scalable digital modernization services using open-source frameworks, including end-to-end agile scale development capabilities, cloud-native solutions, data analytics and human-centered designs.
+Added: On July 13, 2022, the Company completed the acquisition of SemanticBits, LLC (“SemanticBits”), a 450-person Virginia limited liability company.
+Added: SemanticBits is a partner to U.S.
+Added: federal health agencies for mission-critical digital modernization solutions and provides a suite of scalable digital modernization services using open-source frameworks, including end-to-end agile scale development capabilities, cloud-native solutions, data analytics and human-centered designs.
The acquisition provides synergies and scalabilities to support federal agencies with advanced IT solutions, digital modernization, and health expertise to solve complex customer challenges.
−Removed: As a result of the acquisition, SemanticBits became a wholly owned subsidiary of the Company.
−Removed: The acquisition was accounted for as a business combination under ASC 805, Business Combination.
−Removed: The preliminary purchase price was $ 220.0 million in cash, subject to post-closing working capital adjustments, and was funded by the existing Credit Facility.
−Removed: The purchase price was initially allocated to the tangible and intangible assets acquired and liabilities assumed based on the fair value on the acquisition date, with the exception of contract assets and contract liabilities which were measured in accordance with ASC 606, Revenue Recognition.
−Removed: The Company also engaged an independent valuation firm to assist management in the allocation of the purchase price to goodwill and other acquired intangible assets.
−Removed: The purchase price allocation is summarized as follows:
+Added: The purchase price was $ 216.0 million in cash and was funded by the existing Credit Facility.
+Added: T he final purchase price allocation is summarized as follows:
Contract receivables
8 unchanged sentences
Purchase consideration
−Removed: The Company allocated $ 63.0 million related to existing customer relationships and $ 1.1 million related to trade names and trademarks intangible assets, respectively, and $ 159.7 million to goodwill.
Goodwill is reflective of the existing workforce of SemanticBits and the expected synergies created with the Company as part of the acquisition.
−Removed: The amortization periods for the amount allocated to customer-related intangible asset and trade names and trademarks are 4.0 years and 0.7 years from the acquisition date, respectively.
+Added: The useful lives associated with the customer-related intangible asset and trade names and trademarks are 4.0 years and 0.7 years, respectively.
The goodwill and intangible assets are not deductible for income tax purposes.
−Removed: Acquisition-related costs and integration costs totaled $ 4.3 million and are included as part of indirect and selling expenses in the Company’s consolidated statements of comprehensive income.
−Removed: The results of SemanticBits’
−Removed: operations have been included in the Company’s consolidated financial statements from the date of its acquisition.
+Added: Acquisition-related costs and integration costs totaled $ 4.3 million and are included as part of indirect and selling expenses in the Company’s consolidated statements of comprehensive income.
For the year ended December 31, 2022, SemanticBits contributed revenues of $ 64.3 million and gross profit of $ 26.7 million.
−Removed: Computation of an earnings measure other than gross profit is impracticable due to SemanticBits’
−Removed: operations and financial systems being integrated with those of the Company.
+Added: Computation of an earnings measure other than gross profit is impracticable due to SemanticBits’ operations and financial systems being integrated with those of the Company.
The following unaudited condensed pro forma information presents combined financial information as if the acquisition of SemanticBits had been effective at January 1, 2021, the beginning of the 2021 fiscal year.
As a result, fiscal year 2022 represents the pro forma results for year two of the acquisition.
−Removed: The pro forma information includes alignment of SemanticBits’
−Removed: revenue recognition policy, corrections of employee-related expenses, and adjustments reflecting changes in the amortization of intangibles, acquisition-related costs, interest expense, and records income tax effects as if SemanticBits had been included in the Company’s results of operations.
+Added: The pro forma information includes alignment of SemanticBits’ revenue recognition policy, corrections of employee-related expenses, and adjustments reflecting changes in the amortization of intangibles, acquisition-related costs, interest expense, and records income tax effects as if SemanticBits had been included in the Company’s results of operations.
The pro forma information is not intended to reflect the actual combined results of operations that would have occurred if the acquisition was completed on January 1, 2021, nor is it indicative of future operating results after the acquisition date of July 13, 2022.
1 unchanged sentence
Creative Systems and Consulting
−Removed: On December 31, 2021 , the Company acquired Creative Systems, a premier provider of IT modernization and digital transformation solutions to federal agencies, for a cash purchase price of approximately $ 159.5 million, subject to working capital adjustments of $ 2.9 million, for a final purchase price of $ 156.6 million.
−Removed: The Company recognized fair value of the assets acquired and liabilities assumed and allocated $ 128.1 million to goodwill and $ 28.9 million to intangible assets.
−Removed: Intangible assets consisted of $ 24.5 million in customer relationships, $ 3.7 million related to developed technology, $ 0.6 million related to trade names and
−Removed: trademarks, and $ 0.1 million related to non-compete agreements.
−Removed: The customer-related and technology related intangibles are being amortized straight-line over 4 years and 10 years, respectively, from the date of acquisition, while trade names and trademarks and non-compete agreements will be amortized in less than one year from the acquisition date.
+Added: On December 31, 2021 , the Company acquired Creative Systems, a provider of IT modernization and digital transformation solutions to federal agencies, for cash purchase price of $ 156.6 million.
+Added: The Company recognized fair value of the assets acquired and liabilities assumed, and allocated $ 128.1 million and $ 28.9 million of the purchase price to intangible assets and goodwill.
+Added: The goodwill is deductible for income tax purposes.
+Added: Intangible assets consisted of $ 24.5 million in customer relationships, $ 3.7 million related to developed technology, $ 0.6 million related to trade names and trademarks, and $ 0.1 million related to non-compete agreements.
+Added: The customer-related and technology-related intangibles are being amortized on a straight-line basis over 4 years and 10 years , respectively, while trade names and trademarks and non-compete agreements will be amortized in less than one year from the acquisition date.
Goodwill is reflective of the existing workforce at Creative Systems and the expected synergies created with the Company as a result of the acquisition.
−Removed: The pro-forma impact of the acquisition is not material to the Company’s results of operations.
−Removed: On November 1, 2021, the Company completed the acquisition of ESAC, one of the leading specialized providers of advanced health analytics, research data management and bioinformatics solutions to U.S.
−Removed: federal health agencies, for a cash purchase price of approximately $ 17.3 million, subject to working capital adjustments.
−Removed: In addition to working capital acquired of $ 2.6 million, the Company recognized fair value of the assets acquired and liabilities assumed and allocated of $ 11.3 million to goodwill and $ 3.4 million to intangible assets.
−Removed: Intangible assets included $ 3.1 million related to customer relationships and $ 0.3 million related to technology and other intangibles, and are amortized over 3 years and less than 1 year , respectively.
−Removed: The pro-forma impact of the acquisition is not material to the Company’s results of operations.
+Added: The pro-forma impact of the acquisition is not material to the Company’s results of operations.
+Added: On November 1, 2021, the Company completed the acquisition of ESAC, which specializes in providing advanced health analytics, research data management and bioinformatics solutions to U.S.
+Added: federal health agencies, for a cash purchase price of $ 17.3 million.
+Added: In addition to working capital acquired of $ 2.6 million, the Company recognized fair value of the assets acquired and liabilities assumed and allocated $ 11.3 million to goodwill and $ 3.4 million to intangible assets.
+Added: The goodwill is deductible for income tax purposes.
+Added: Intangible assets included $ 3.1 million related to customer relationships and $ 0.3 million related to technology and other intangibles, which are amortized over 3 years and less than 1 year , respectively.
+Added: The pro-forma impact of the acquisition is not material to the Company’s results of operations.
+Added: Commercial Marketing
+Added: On July 21, 2023, the Company entered into an Asset Purchase Agreement to sell its U.S.
+Added: commercial marketing business, including certain assets of the business, for initial cash considerations of $ 49.5 million before final net working capital adjustments.
+Added: On September 12, 2023 , the Company completed the divesture and received $ 47.1 million in cash, net of working capital adjustments and certain amounts held in escrow.
+Added: The disposal of the commercial marketing business was not a major strategic shift that was, or will be, significant to the Company’s operations and financial results.
+Added: In connection with the sale, the Company recorded a gross gain of $ 4.4 million and transactions fees of $ 1.9 million, for a total pre-tax gain of $ 2.5 million, that is included as part of other income on the Company’s consolidated statements of comprehensive income.
+Added: Mobile and SMS Messaging Aggregator Business
+Added: On July 24, 2023, the Company entered into an Asset Purchase Agreement to sell its mobile and Short Message Service (“SMS”) messaging aggregator business, including certain assets of the business, for the equivalent of $ 5.4 million in cash.
+Added: The sale was completed on November 1, 2023 .
+Added: The disposal of the mobile aggregation and SMS messaging aggregator business was not a major strategic shift that was, or will be, significant to the Company’s operations and financial results.
+Added: In connection with the sale, the Company recorded a pre-tax gain of $ 3.2 million that is included as part of other income on the Company’s consolidated statements of comprehensive income.
NOTE 17 - EARNINGS PER SHARE
−Removed: The Company’s EPS is computed by dividing reported net income by the weighted-average number of shares outstanding.
+Added: The Company’s EPS is computed by dividing reported net income by the weighted-average number of shares outstanding.
Diluted EPS considers the potential dilution that could occur if common stock equivalents of stock options, RSUs, and PSAs were exercised or converted into stock.
3 unchanged sentences
however, the PSAs granted during the year ended December 31, 2023 have not yet completed their initial two-year performance period and therefore were excluded in the calculation of diluted EPS.
−Removed: For the years ended December 31, 2022, 2021, and 2020, there were immaterial RSU shares that were excluded from the calculation of EPS because they were anti-dilutive.
The dilutive effect of stock options, RSUs, and performance shares for each period reported is summarized below:
6 unchanged sentences
In September 2017, the Board approved a share repurchase program that allows for share repurchases in the aggregate up to $ 100.0 million under approved share repurchase plans pursuant to Rules 10b5-1 and 10b-18 under the Exchange Act.
−Removed: In November 2021, the board amended and increased the limit under the previous authorization of $ 100.0 million to $ 200.0 million.
−Removed: The Restated Credit Agreement permits share repurchases provided the Company’s Consolidated Leverage Ratio, prior to and after giving effect to such repurchases, is 0.50 to 1.00 less than the then-applicable maximum Consolidated Leverage Ratio and subject to a net liquidity of $ 100.0 million.
−Removed: Notwithstanding the formula-based limit, the Company is permitted to make share repurchases up to $ 25.0 million per calendar year provided that it was not in default.
+Added: In November 2021, the Board amended and increased the previously authorized aggregate repurchase limit from $ 100.0 million to $ 200.0 million.
+Added: The Credit Facility (see Note 10 – Long-Term Debt) permits annual share repurchases of at least $ 25.0 million provided that the Company is not in default of its covenants, and higher amounts provided that the Company’s Consolidated Leverage Ratio, prior to and after giving effect to such repurchases, is 0.50 to 1.00 less than the then-applicable maximum Consolidated Leverage Ratio and subject to the Company having net liquidity of at least $ 100.0 million after giving effect to such repurchases.
Purchases under this program may be made from time to time at prevailing market prices in open market purchases or in privately negotiated transactions pursuant to Rule 10b-18 under the Exchange Act and in accordance with applicable insider trading and other securities laws and regulations.
The purchases are funded from existing cash balances and/or borrowings, and the repurchased shares are held in treasury.
−Removed: The timing and extent to which the Company repurchases its shares will depend on market conditions and other corporate considerations in the Company’s sole discretion.
−Removed: For the year ended December 31, 2022, the Company repurchased a combined 176,375 shares at an average price of $ 96.18 per share or a total cost of $ 17.0 million under this program.
−Removed: As of December 31, 2022, approximately $ 111.9 million remained available under the share repurchase plan.
+Added: The timing and extent to which the Company repurchases its shares will depend on market conditions and other corporate considerations in the Company’s sole discretion.
+Added: For the years ended December 31, 2023 and 2022, the Company used $ 18.1 million to repurchase 180,000 shares at an average price of $ 100.70 per share and $ 17.0 million to repurchase 176,375 shares at an average price of $ 96.18 per share, respectively, under this program.
+Added: As of December 31, 2023, approximately $ 93.7 million of authority remained available under the share repurchase plan.
NOTE 19 - FAIR VALUE
−Removed: The Company measures and reports certain financial assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures.
−Removed: Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.
−Removed: Generally, fair value is based on observable quoted market prices or derived from observable market data when such market prices or data are available.
−Removed: ASC 820 establishes a three-level hierarchy used to estimate fair value by which each level is categorized based on the priority of the inputs used to measure fair value:
−Removed: Quoted prices that are available in active markets for identical assets or liabilities;
−Removed: Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active;
−Removed: inputs other than quoted prices that are observable for the asset or liability (e.g.
−Removed: interest rates and yield curves that are observable at commonly quoted intervals, and implied volatilities);
−Removed: and inputs derived principally from or corroborated by observable market data by correlation or other means;
−Removed: Uses inputs that are unobservable and require the Company to make certain assumptions and require significant estimation and judgment from management to use in pricing the fair value of the assets and liabilities.
−Removed: Certain financial instruments, including cash and cash equivalents, contract receivables, and accounts payable are carried at cost, which, due to their short maturities, approximates their fair values at December 31, 2022 and 2021.
−Removed: The carrying value of other long-term liabilities related to capital expenditure obligations approximates their fair value at December 31, 2022 and 2021 based on the current rates offered to the Company for similar instruments with comparable maturities (Level 2).
−Removed: The Company believes the carrying value of its Credit Facility at December 31, 2022 and 2021 approximates the estimated fair value for debt with similar terms, interest rates, and remaining maturities currently available to companies with similar credit ratings (Level 2).
−Removed: The Company applies the provisions of ASC 820 to its assets and liabilities that are required to be measured at fair value pursuant to other accounting standards, including assets and liabilities resulting from the Company’s nonqualified deferred compensation plan, interest rate swap agreement (see Note 12 –
−Removed: Derivative Instruments and Hedging Activities), and foreign currency forward contract agreements not eligible for hedge accounting.
Financial instruments measured at fair value on a recurring basis and their location within the accompanying consolidated financial statements are as follows:
4 unchanged sentences
Prepaid expenses and other assets
+Added: Foreign currency forward and swap contracts
+Added: Prepaid expenses and other assets
Interest rate swaps - long-term portion
−Removed: Deferred compensation investments in cash surrender life insurance
−Removed: Deferred compensation plan liabilities
+Added: Company-owned life insurance policies
+Added: Interest swaps - long-term portion
Other long-term liabilities
2 unchanged sentences
Location on Balance Sheet
−Removed: Forward contract agreements
−Removed: Prepaid expenses and other
−Removed: Deferred compensation investments in cash surrender life insurance
−Removed: Deferred compensation plan liabilities
−Removed: Other long-term liabilities
Interest rate swaps - current portion
−Removed: Accrued expenses and other current liabilities
+Added: Prepaid expenses and other
Interest rate swaps - long-term portion
−Removed: Other long-term liabilities
+Added: Company-owned life insurance policies
NOTE 20 - COMMITMENTS AND CONTINGENCIES
Letters of Credit and Guarantees
−Removed: At December 31, 2022 and 2021, the Company was contingently liable under open standby letters of credit of $ 2.0 million and $ 3.3 million , respectively, and guarantees of $ 9.2 million and $ 9.8 million issued by its banks.
−Removed: The letters of credits and guarantees were primarily for the Company's facility leases and contract performance obligations in the U.S.
−Removed: and Belgium, respectively.
−Removed: The open standby letters of credit reduces the Company's unused borrowing capacity under the Credit Facility.
+Added: At December 31, 2023 and 2022, the Company had open standby letters of credit totaling $ 1.8 million and $ 2.0 million , respectively, and guarantees of $ 7.9 million and $ 9.2 million issued by its banks.
+Added: The letters of credit and guarantees were primarily for the Company’s facility leases and contract performance obligations.
+Added: The open standby letters of credit reduce the Company’s unused borrowing capacity under its Credit Facility.
Litigation and Claims
The Company is involved in various legal matters and proceedings arising in the ordinary course of business.
−Removed: While these matters and proceedings cause it to incur costs, including, but not limited to, attorneys’
−Removed: fees, the Company currently believes that any ultimate liability arising out of these matters and proceedings will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.
−Removed: Road Home Contract
−Removed: On June 10, 2016, the Office of Community Development (the “OCD”) of the State of Louisiana filed a written administrative demand with the Louisiana Commissioner of Administration against ICF Emergency Management Services, L.L.C.
−Removed: (“ICF Emergency”), a subsidiary of the Company, in connection with ICF Emergency’s administration of the Road Home Program (“Program”).
−Removed: The Program contract was a three-year, $ 912 million contract awarded to the Company in 2006.
−Removed: The Program ended, as scheduled, in 2009.
−Removed: The Program was primarily intended to help homeowners and landlords of small rental properties affected by Hurricanes Rita and Katrina.
−Removed: In its administrative demand, the OCD sought approximately $ 200.8 million in alleged overpayments to the Program's grant recipients, and separately supplemented the amount of recovery it sought in total to approximately $ 220.2 million .
−Removed: The State of Louisiana, through the Division of Administration, also filed suit in Louisiana state court on June 10, 2016.
−Removed: The State of Louisiana broadly alleges, and sought recoupment for the same claim made in the administrative proceeding submission before the Louisiana Commissioner of Administration.
−Removed: On September 21, 2016, the Commissioner of the Division of Administration notified OCD and the Company of his decision to defer jurisdiction of the administrative demand filed by the OCD.
−Removed: In so doing, the Commissioner declined to reach a decision on the merits, stated that his deferral would not be deemed to grant or deny any portion of the OCD’s claim, and authorized the parties to proceed on the matter in the previously filed judicial proceeding.
−Removed: On February 17, 2023, the Company resolved all matters with the State of Louisiana related to the litigation and the Road Home program.
−Removed: The impact of this resolution was not material to the Company's consolidated financial statements.
+Added: While these matters and proceedings cause it to incur costs, including, but not limited to, attorneys’ fees, the Company currently believes it is not reasonably possible that any ultimate liability arising out of these matters and proceedings will have a material adverse effect on the Company’s financial position, results of operations, or cash flows.
NOTE 21 - EMPLOYEE BENEFIT PLANS
−Removed: Retirement Savings Plan
−Removed: Effective June 30, 1999, the Company established the ICF Consulting Group Retirement Savings Plan (the “Retirement Savings Plan”).
+Added: Defined Contribution Plan
+Added: Effective June 30, 1999, the Company established the ICF Consulting Group Retirement Savings Plan (the “Retirement Savings Plan”).
The Retirement Savings Plan is a defined contribution profit sharing plan with a cash or deferred arrangement under Section 401(k) of the Internal Revenue Code.
−Removed: Participants in the Retirement Savings Plan are able to elect to defer up to 70 % of their compensation, subject to statutory limitations, and are entitled to receive 100 % employer matching contributions for the first 3 % and 50 % for the next 2 % of their compensation.
−Removed: Contribution expense related to the Retirement Savings Plan for the years ended December 31, 2022, 2021, and 2020 was approximately $ 22.9 million , $ 19.0 million , and $ 18.1 million , respectively.
+Added: Participants are able to elect to defer up to 70 % of their compensation, subject to statutory limitations, and are entitled to receive 100 % employer matching contributions for the first 3 % and 50 % for the next 2 % of their compensation.
+Added: Contribution expense for the years ended December 31, 2023, 2022, and 2021 was $ 25.4 million , $ 22.9 million , and $ 19.0 million , respectively.
Deferred Compensation Plan
3 unchanged sentences
The Company funds its deferred compensation liabilities by making cash contributions to a Rabbi Trust at the time the salary or bonus being deferred would otherwise be payable to the employee.
−Removed: The liability to plan participants is materially funded at all times and the plan does not have a material net impact on the Company’s results of operations.
+Added: The liability to plan participants is materially funded at all times and the plan does not have a material net impact on the Company’s results of operations.
Employee Stock Purchase Plan
−Removed: The Company has a 2006 Employee Stock Purchase Plan (“ESPP”) under which one million shares have been authorized for issuance.
−Removed: The ESPP allows eligible employees to purchase shares of the Company’s common stock through payroll deductions up to $ 25,000 per calendar year over six-month offering periods at a discount not to exceed 5 % of the market value on the date of each purchase period, and therefore the Company does not recognize compensation expense related to the ESPP.
+Added: The Company has a Employee Stock Purchase Plan (“ESPP”) under which one million shares have been authorized for issuance.
+Added: The ESPP allows eligible employees to purchase shares of the Company’s common stock through payroll deductions up to $ 25,000 per calendar year over six-month offering periods at a discount not to exceed 5 % of the market value on the date of each purchase period, and therefore the Company does not recognize compensation expense related to the ESPP.
For the years ended December 31, 2023 and 2022, employees purchased a total of 36,140 and 34,844 shares at an average purchase price of $ 121.96 and $ 91.84 , respectively.
−Removed: At December 31, 2022 and 2021, there were 584,972 and 619,816 shares remaining available for future issuance.
+Added: At December 31, 2023 and 2022, there were 548,832 and 584,972 shares remaining available for future issuance under this plan.
NOTE 22 - EXIT ACTIVITIES
During the year ended December 31, 2022, the Company incurred charges related to:
−Removed: 1) the reduction and wind-down of certain non-core commercial marketing businesses, and 2) the reduction of facilities utilized by the remaining elements of the commercial marketing group.
−Removed: Specifically, these charges included the impairment of certain right-of-use operating leases and related assets associated with exited facilities of $ 8.2 million (see Note 2 - Summary of Significant Accounting Policies - Long-Lived Assets), $ 4.8 million in other facility costs, recorded within indirect and selling expenses, and retention and severance of $ 2.3 million primarily recorded within direct costs.
−Removed: During 2022, $ 1.3 million of retention and severance and none of facility costs were paid.
+Added: (i) the reduction and wind-down of certain non-core commercial marketing businesses, and (ii) the reduction of facilities utilized by the remaining elements of the commercial marketing group.
+Added: Specifically, these charges included the impairment of certain right-of-use operating leases and related assets associated with exited facilities of $ 8.2 million, $ 4.8 million in other facility costs recorded within indirect and selling expenses, and retention and severance of $ 2.3 million primarily recorded within direct costs.
+Added: Of the $ 2.3 million in retention and severance, $ 1.3 million was paid during the 2022 fiscal year and the remaining liability was paid during the 2023 fiscal year.
+Added: During the year ended December 31, 2023, the Company incurred and paid $ 2.5 million in retention and severance related to the wind-down of its non-core commercial marketing and communication businesses in the U.K.
+Added: The exit activity was completed as of December 31, 2023 .
+Added: During the year ended December 31, 2023, the Company completed the divestitures of its non-core U.S.
+Added: commercial marketing and Canadian mobile and SMS messaging aggregator businesses .
+Added: As a result of the divestitures, the Company incurred retention and severance of $ 1.9 million and $ 1.7 million for the years ended December 31, 2023 and 2022, respectively, which was primarily recorded within direct costs.
+Added: As part of the sale of the businesses, the Company incurred $ 0.6 million in related compensation expense which was recorded within indirect and selling expenses.
+Added: The retention and severance and compensation expenses were paid during the 2023 fiscal year.
+Added: As a result of these wind-down and divestitures that were completed during the year ended December 31, 2023, the Company recognized impairment losses of $ 0.9 million related to a prior acquisition, $ 3.0 million related to right-of-use operating leases, and $ 2.4 million in other facility costs.
NOTE 23 - SUBSEQUENT EVENTS
Share Buyback Program
−Removed: On November 15, 2022, the Company’s board of directors authorized and approved a plan to repurchase up to 180,000 shares of the Company's common stock pursuant to Rule 10b5-1 (the “Plan”) of the current repurchase program.
+Added: On November 14, 2023, the Board of directors authorized and approved a plan to repurchase up to 191,000 shares of the Company’s common stock pursuant to Rule 10b5-1 (the “Plan”) of the current repurchase program.
The Plan is effective January 2, 2024 through June 30, 2024 .
−Removed: As of February 10, 2023, the Company bought 180,000 shares at a total cost of $ 18.1 million, or $ 100.70 per share, and completed the Plan.
−Removed: Hedging Activities
−Removed: Effective February 28, 2023, the Company entered into new floating-to-fixed interest rate swap agreements for an aggregate notional amount of $ 75.0 million.
−Removed: These new swaps mature on February 28, 2028 .
−Removed: On February 28, 2023 , the Company’s board of directors approved a $ 0.14 per share cash dividend.
−Removed: The dividend will be paid on April 13, 2023 to shareholders of record as of the close of business on March 24, 2023 .
+Added: As of February 23, 2024, the Company repurchased 159,681 shares at a total cost of $ 21.9 million, or $ 136.94 per share under the plan.
NOTE 24 - SUPPLEMENTAL INFORMATION
11 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.