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Item 1. Financial Statements

2022-05-10 compared with 2021-11-09 · 187 added, 240 removed, 403 unchanged (51% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three Months Ended Nine Months Ended

October 1, October 2, October 1, October 2,

Three Months Ended

April 1, April 2,

(In thousands, except per share data) 2022 2021

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The accompanying notes are an integral part of these financial statements.

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VECTRUS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

Three Months Ended Nine Months Ended

October 1, October 2, October 1, October 2,

Three Months Ended

April 1, April 2,

(In thousands) 2022 2021

10 unchanged sentences

The accompanying notes are an integral part of these financial statements.

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VECTRUS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

October 1, December 31,

(In thousands, except share information) 2021 2020

April 1, December 31,

(In thousands, except per share information) 2022 2021

Current assets

Cash and cash equivalents $ 22,999 $ 38,513

Restricted cash — 1,778

Receivables 377,571 348,605

Prepaid expenses 25,923 21,160

Other current assets 11,083 15,062

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Deferred tax liability 32,620 32,214

Operating lease liability 33,167 34,536

Other non-current liabilities 11,643 20,128

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100,000 shares authorized;

11,726,707 and 11,624,717 shares issued and outstanding as of October 1, 2021 and December 31, 2020, respectively

11,805 and 11,738 shares issued and outstanding as of April 1, 2022 and December 31, 2021, respectively

Additional paid in capital 89,590 88,116

4 unchanged sentences

The accompanying notes are an integral part of these financial statements.

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VECTRUS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended

October 1, October 2,

Three Months Ended

April 1, April 2,

(In thousands) 2022 2021

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Amortization of intangible assets 2,301 2,450

Loss on disposal of property, plant, and equipment 65 63

(Gain) Loss on disposal of property, plant, and equipment ( 16 ) 43

Stock-based compensation 2,558 2,622

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Receivables ( 29,898 ) ( 46,544 )

Prepaid expenses ( 4,849 ) ( 3,137 )

Other assets 4,520 ( 648 )

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Other liabilities ( 7,202 ) ( 12,295 )

Net cash provided by operating activities 53,378 37,655

Net cash used in operating activities ( 26,381 ) ( 21,729 )

Investing activities

Purchases of capital assets and intangibles ( 7,650 ) ( 3,348 )

Purchases of capital assets ( 2,195 ) ( 2,611 )

Proceeds from the disposition of assets 17 —

Business acquisition purchase price adjustment 262 —

Contribution to joint venture ( 2,496 ) —

Net cash used in investing activities ( 2,178 ) ( 2,611 )

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Payments of employee withholding taxes on share-based compensation ( 1,626 ) ( 2,184 )

Net cash used in financing activities ( 53,221 ) ( 6,359 )

Net cash provided by (used in) financing activities 12,316 ( 4,071 )

Exchange rate effect on cash 729 ( 191 )

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Interest paid $ 1,513 $ 1,371

Income taxes paid $ 9,068 $ 12,570

Income taxes paid (refunded) $ 66 $ ( 97 )

Purchase of capital assets on account $ 5 $ ( 132 )

The accompanying notes are an integral part of these financial statements.

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VECTRUS, INC.

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Balance at April 2, 2021 11,700 $ 117 $ 82,735 $ 234,074 $ ( 2,460 ) $ 314,466

Net income 1,111 1,111

Foreign currency translation adjustments 2,470 2,470

Unrealized gain on cash flow hedge 357 357

Employee stock awards and stock options 32 — 58 58

Taxes withheld on restricted stock unit compensation awards ( 86 ) ( 86 )

Stock-based compensation 1,282 1,282

Balance at July 3, 2020 11,620 $ 116 $ 79,944 $ 194,854 $ ( 5,479 ) $ 269,435

Net income 10,391 10,391

Foreign currency translation adjustments 2,042 2,042

Unrealized gain on cash flow hedge 292 292

Employee stock awards and stock options 2 — — —

Conversion of liability-based stock compensation awards to equity-based stock compensation awards 405 405

Taxes withheld on restricted stock unit compensation awards ( 44 ) ( 44 )

Stock-based compensation 1,284 1,284

Balance at October 2, 2020 11,622 $ 116 $ 81,589 $ 205,245 $ ( 3,145 ) $ 283,805

Balance at December 31, 2021 11,738 $ 117 $ 88,116 $ 267,754 $ ( 5,900 ) $ 350,087

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Foreign currency translation adjustments ( 616 ) ( 616 )

Unrealized loss on cash flow hedge ( 77 ) ( 77 )

Unrealized gain on cash flow hedge 374 374

Employee stock awards and stock options 67 1 — 1

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Balance at April 1, 2022 11,805 $ 118 $ 89,590 $ 270,609 $ ( 6,142 ) $ 354,175

Net income 15,934 15,934

Foreign currency translation adjustments 430 430

Unrealized loss on cash flow hedge 79 79

Employee stock awards and stock options 24 — — —

Taxes withheld on restricted stock unit compensation awards ( 88 ) ( 88 )

Stock-based compensation 2,003 2,003

Balance at July 2, 2021 11,724 $ 117 $ 84,650 $ 250,008 $ ( 1,951 ) $ 332,824

Net income 10,258 10,258

Foreign currency translation adjustments ( 3,093 ) ( 3,093 )

Unrealized loss on cash flow hedge 177 177

Employee stock awards and stock options 3 — — —

Taxes withheld on stock compensation awards ( 45 ) ( 45 )

Stock-based compensation 1,680 1,680

Balance at October 1, 2021 11,727 $ 117 $ 86,285 $ 260,266 $ ( 4,867 ) $ 341,801

The accompanying notes are an integral part of these financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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The Company operates as one segment and provides the following services and offerings:

facility and base operations, supply chain and logistics services, information technology mission support, and engineering and digital integration services, including integration, security, maintenance, repair and overhaul.

facility and base operations, supply chain and logistics services, information technology mission support, and engineering and digital integration services.

Vectrus was incorporated in the State of Indiana in February 2014.

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References in these notes to "Exelis" or "Former Parent" refer to Exelis Inc., an Indiana corporation, and its consolidated subsidiaries (other than Vectrus).

Exelis was acquired by Harris Corporation in May 2015.

Exelis was acquired by a predecessor entity of L3Harris Technologies, Inc.

Equity Investments

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government contracts.

We account for our investments in HDSS and J&J under the equity method as we have the ability to exercise significant influence, but do not hold a controlling interest.

We record our proportionate 40 % and 50 % shares, respectively, of income or losses from HDSS and J&J in selling, general and administrative expenses in the Consolidated Statements of Income.

Income or losses from HDSS and J&J are insignificant.

Our joint venture investment in HDSS and J&J is recorded in other non-current assets in the Consolidated Balance Sheets.

In 2020, we entered into a joint venture agreement with Kuwait Resources House for Human Resources Management a nd Services Company (KRH) .

Pursuant to the joint venture agreement, ServCore Resources and Services Solutions, LLC.

(ServCore) was established to operate and manage labor and life support services outside of the continental United States at designated locations serviced by Vectrus and others around the world.

We account for our investments in HDSS, J&J, and ServCore under the equity method as we have the ability to exercise significant influence, but do not hold a controlling interest.

We record our proportionate 40 %, 50 %, and 40 % shares, respectively, of income or losses from HDSS, J&J, and ServCore in selling, general and administrative expenses in the Condensed Consolidated Statements of Income.

Our investment in these joint ventures is recorded in other non-current assets in the Condensed Consolidated Balance Sheets.

When we receive cash distributions from our equity method investments, the cash distribution is compared to cumulative earnings and cumulative cash distributions.

Cash distributions received are recorded as a return on investment in operating cash flows within the Consolidated Statements of Cash Flows to the extent cumulative cash distributions are less than cumulative earnings.

Any cash distributions in excess of cumulative earnings are recorded as a return of investment in investing cash flows within the Consolidated Statements of Cash Flows.

During the nine months ended October 1, 2021, Vectrus made cash contributions of $ 2.5 million to our joint ventures.

As of October 1, 2021 and December 31, 2020 our joint venture investment balance was $ 4.2 million and $ 1.4 million, respectively.

Cash distributions received are recorded as a return on investment in operating cash flows within the Condensed Consolidated Statements of Cash Flows to the extent cumulative cash distributions are less than cumulative earnings.

Any cash distributions in excess of cumulative earnings are recorded as a return of investment in investing cash flows within the Condensed Consolidated Statements of Cash Flows.

During the three months ended April 1, 2022, Vectrus received a $ 0.8 million distribution, representing a return on investment from our joint ventures.

As of April 1, 2022 and December 31, 2021 our joint venture investment balance was $ 4.6 million and $ 5.4 million, respectively.

Our proportionate share of income from the HDSS, J&J, an d ServCore joint ventures was immaterial for the first quarters of 2022 and 2021.

Basis of Presentation

Our quarterly financial periods end on the Friday closest to the last day of the calendar quarter (October 1, 2021 for the third quarter of 2021 and October 2, 2020 for the third quarter of 2020), except for the last quarter of the fiscal year, which ends on December 31.

Our quarterly financial periods end on the Friday closest to the last day of the calendar quarter (April 1, 2022 for the first quarter of 2022 and April 2, 2021 for the first quarter of 2021), except for the last quarter of the fiscal year, which ends on December 31.

For ease of presentation, the quarterly financial statements included herein are described as three months ended.

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Revenue and net income for any interim period are not necessarily indicative of future or annual results.

Deferred Compensation Plan

During the first quarter of 2021, the Company established a non-qualified deferred compensation plan under which participants are eligible to defer a portion of their compensation on a tax deferred basis.

The assets in the plan are held in a Rabbi trust.

Plan investments and obligations were recorded in other non-current assets and other non-current liabilities, respectively, in the condensed consolidated balance sheets, representing the fair value related to the deferred compensation plan.

Adjustments to the fair value of the plan investments and obligations are recorded in operating expenses.

The plan assets and liabilities as of October 1, 2021 and operating expenses for the three and nine months ended October 1, 2021 were not material.

RECENT ACCOUNTING STANDARDS UPDATE

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RECENT AC COUNTING STANDARDS UPDATE

Accounting Standards Issued but Not Yet Effective

There were no accounting standards issued during the first nine months of 2021 that are expected to have a material impact on the Company's financial statements.

In October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08).

The amendment requires contract assets and contract liabilities acquired in a business combination to be recognized and measured in accordance with ASC 606, Revenue from Contracts with Customers, as if the acquirer had originated the contract.

The amendment also provides certain practical expedients when applying the guidance.

2021-08 is effective for interim and annual periods beginning after December 15, 2022, on a prospective basis, with early adoption permitted.

The Company is currently evaluating the potential impact of ASU 2021-08 to its consolidated financial statements and expects to early adopt ASU 2021-08 during 2022 in conjunction with the proposed merger discussed below.

Accounting Standards That Were Adopted

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes (ASU 2019-12).

The objectives of ASU 2019-12 are (i) to simplify the accounting for income taxes by removing certain exceptions, (ii) to update certain requirements to simplify the accounting for income taxes, and (iii) to make minor codification improvements for income taxes.

The Company adopted the standard as of January 1, 2021 and it did not have a material impact on the Company’s financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04).

To ease the burden in accounting for reference rate reform on financial reporting, the ASU provides companies with optional expedients and exceptions for applying accounting guidance to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform.

The Company adopted the standard during the first quarter of 2022.

It did not have a material impact on the Company's financial statements.

PROPOSED MERGER WITH VERTEX AEROSPACE

On March 7, 2022, the Company, including its newly incorporated subsidiaries Andor M erger Sub LLC (Merger Sub LLC) and Andor Merger Sub Inc.

(Merger Sub Inc.), and Vertex Aerospace Services Holding Corp.

(Vertex), entered into an agreement and plan of merger (the Merger Agreement) proposing that Merger Sub Inc.

merge with and into Vertex (the First Merger), and immediately thereafter, Vertex, as the surviving company of the First Merger, merge with and into Merger Sub LLC (the Second Merger), with Merger Sub LLC surviving the Second Merger as a direct, wholly owned subsidiary of the Company (the Proposed Transaction).

The Proposed Transaction is structured so that the existing stockholders of Vertex will own approximately 62.25 % of the issued and outstanding Company common shares following the consummation of the Proposed Transaction, and the existing shareholders of the Company will own approximately 37.75 %.

The consummation of the Proposed Transaction is subject to the satisfaction of certain conditions, including, among others, the expiration or termination of antitrust waiting periods and receipt of certain other regulatory approvals, absence of injunctions or restraints prohibiting consummation of the Proposed Transaction, the Vectrus shareholder approval being obtained, the shares issued to Vertex being approved for listing on the New York Stock Exchange and the execution and delivery of a shareholder rights and registration rights agreements.

The obligation of each party to consummate the Proposed Transaction is also conditioned on the other party’s representations and warranties being true and correct, the other party having performed in all material respects its obligations under the Merger Agreement, and the absence of any material adverse effect after the date of the Merger Agreement.

The Merger Agreement provides certain termination rights for both the Company and Vertex, and further provides that a termination fee equal to $ 16.6 million will be payable by the Company to Vertex upon termination of the Merger Agreement under certain circumstances, including, among others, (i) as a result of the termination of the Merger Agreement by the Company to accept a Parent Superior Proposal (as defined in the Merger Agreement), (ii) the Company having Willfully Breached (as defined in the Merger Agreement) any of its obligations under the no solicitation provisions of the Merger Agreement, or (iii) the Board having changed its recommendation to shareholders.

Performance Obligations

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The vast majority of our contracts have a single performance obligation.

Unexercised contract options and indefinite delivery and indefinite quantity (IDIQ) contracts are considered to be separate performance obligations when the option or IDIQ task order is exercised or awarded.

Contract modifications are routine in the performance of our contracts.

Contracts are often modified to account for changes in contract specifications or requirements.

In most instances, contract modifications are for goods or services that are not distinct, and therefore, are accounted for as part of the existing contract.

Modifications to exercise option years create new enforceable rights and obligations and therefore are treated as separate performance obligations.

Unexercised contract options and indefinite delivery and indefinite quantity (IDIQ) contracts are considered to be separate performance obligations when the option or IDIQ task

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order is exercised or awarded.

Contracts are often modified to account for changes in contract specifications and requirements.

If the modification either creates new enforceable rights and obligations or changes the existing enforceable rights and obligations, the modification will be treated as a separate contract.

Our contract modifications, except for those to exercise option years, have historically not been distinct from the existing contract and have been accounted for as if they were part of that existing contract.

The Company's performance obligations are satisfied over time as services are provided throughout the contract term.

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Our over time recognition is reinforced by the fact that our customers simultaneously receive and consume the benefits of our services as they are performed.

For most U.S.

government contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work in process.

This continuous transfer of control requires that we track progress towards completion of performance obligations in order to measure and recognize revenue.

Determining progress on performance obligations requires us to make judgments that affect the timing of revenue recognition.

Remaining performance obligations represent firm orders by the customer and excludes potential orders under IDIQ contracts, unexercised contract options, and contracts awarded to us that are being protested by competitors with the U.S.

Government Accountability Office (GAO) or in the U.S.

Court of Federal Claims.

The level of order activity related to contracts can be affected by the timing of U.S.

government funding authorizations and their project evaluation cycles.

Year-over-year comparisons could, at times, be impacted by these factors, among others.

The Company's contracts are multi-year contracts and typically include an initial period of one year or less with annual one-year or less option periods .

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Substantially all of our contracts have terms that would permit us to recover all or a portion of our incurred costs and fees for work performed in the event of a termination for convenience.

Remaining performance obligations as of October 1, 2021 and December 31, 2020 are presented in the following table:

October 1, December 31,

Remaining performance obligations as of April 1, 2022 and December 31, 2021 are presented in the following table:

April 1, December 31,

(In millions) 2022 2021

Performance Obligations $ 1,288 $ 1,398

We expect to recognize approximately 24 % of the remaining performance obligations as of October 1, 2021 as revenue in 2021 and the remaining 76 % during 2022.

We expect to recognize approximately 64 % of the remaining performance obligations as of April 1, 2022 as revenue in 2022 and the remaining 36 % during 2023.

Contract Estimates

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the performance of subcontractors;

and the availability and timing of funding from the customer.

and negotiations with the customer on contract modifications.

When the estimates of total costs to be incurred on a contract exceed total estimates of the transaction price, a provision for the entire loss is determined at a contract level and is recognized in the period in which the loss was determined.

The impact of adjustments in contract estimates on our operating income can be reflected in either revenue or cost of revenue.

Cumulative catch-up adjustments for the three and nine months ended October 1, 2021 increased operating income by $ 2.6 million and decreased operating income by $ 0.4 million, respectively.

For the three and nine months ended October 2, 2020, the adjustments increased operating income by less than $ 0.1 million and decreased operating income by $ 3.8 million, respectively.

For the three and nine months ended October 1, 2021, the cumulative catch-up adjustments to operating income increased revenue by $ 3.0 million and $ 1.4 million, respectively.

For the three and nine months ended October 2, 2020, the cumulative catch-up adjustments to operating income decreased revenue by $ 1.1 million and $ 0.5 million, respectively.

Cumulative catch-up adjustments for the three months ended April 1, 2022 and April 2, 2021 increased operating income by $ 0.6 million and decreased operating income by $ 1.3 million, respectively.

For the three months ended April 1, 2022 and April 2, 2021, the cumulative catch-up adjustments to operating income increased revenue by $ 0.6 million and decreased revenue by $ 1.9 million, respectively.

Revenue by Category

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Typically, these costs do not bear fees.

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On a firm-fixed-price type contract, we agree to perform the contractual statement of work for a predetermined contract price.

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The following tables present our revenue disaggregated by several categories.

Revenue by contract type for the three and nine months ended October 1, 2021 and October 2, 2020 is as follows:

Three Months Ended Nine Months Ended

October 1, October 2, % October 1, October 2, %

(In thousands) 2021 2020 Change 2021 2020 Change

Revenue by contract type for the three months ended April 1, 2022 and April 2, 2021 is as follows:

Three Months Ended

April 1, April 2, %

(In thousands) 2022 2021 Change

Cost-plus and cost-reimbursable $ 311,094 $ 290,230 7.2 %

Firm-fixed-price 128,004 128,757 ( 0.6 ) %

Time and material 17,373 15,017 15.7 %

Total revenue $ 456,471 $ 434,004

¹ Includes time and material contracts

Revenue by geographic region in which the contract is performed for the three and nine months ended October 1, 2021 and October 2, 2020 is as follows:

Three Months Ended Nine Months Ended

October 1, October 2, % October 1, October 2, %

(In thousands) 2021 2020 Change 2021 2020 Change

Revenue by geographic region in which the contract is performed for the three months ended April 1, 2022 and April 2, 2021 is as follows:

Three Months Ended

April 1, April 2, %

(In thousands) 2022 2021 Change

Middle East $ 235,754 $ 240,013 ( 1.8 ) %

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Total revenue $ 456,471 $ 434,004

Revenue by contract relationship for the three and nine months ended October 1, 2021 and October 2, 2020 is as follows:

Three Months Ended Nine Months Ended

October 1, October 2, % October 1, October 2, %

(In thousands) 2021 2020 Change 2021 2020 Change

Revenue by contract relationship for the three months ended April 1, 2022 and April 2, 2021 is as follows:

Three Months Ended

April 1, April 2, %

(In thousands) 2022 2021 Change

Prime contractor $ 427,093 $ 403,262 5.9 %

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Total revenue $ 456,471 $ 434,004

Revenue by customer for the three and nine months ended October 1, 2021 and October 2, 2020 is as follows:

Three Months Ended Nine Months Ended

October 1, October 2, % October 1, October 2, %

(In thousands) 2021 2020 Change 2021 2020 Change

Revenue by customer for the three months ended April 1, 2022 and April 2, 2021 is as follows:

Three Months Ended

April 1, April 2, %

(In thousands) 2022 2021 Change

Army $ 280,113 $ 257,349 8.8 %

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Generally, billing occurs subsequent to revenue recognition, resulting in contract assets.

However, we may receive advances or deposits from our customers, before revenue is recognized, resulting in contract liabilities.

These advance billings and payments are not considered significant financing components because they are frequently intended to ensure that both parties are in conformance with the primary contract terms.

However, we may

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receive advances or deposits from our customers, before revenue is recognized, resulting in contract liabilities.

These advance billings and payments are not considered significant financing components because they are frequently intended to fund current operating expenses under the contract.

These assets and liabilities are reported on the Condensed Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period.

As of October 1, 2021 and December 31, 2020, we had contract assets of $ 249.3 million and $ 203.1 million, respectively.

As of April 1, 2022 and December 31, 2021, we had contract assets of $ 235.3 million and $ 240.0 million, respectively.

Contract assets primarily consist of unbilled receivables which represent rights to consideration for work completed but not billed as of the reporting date.

The balance of unbilled receivables consists of costs and fees that are:

(i) billable immediately;

(ii) billable on contract completion;

or (iii) billable upon other specified events, such as the resolution of a request for equitable adjustment.

Refer to Note 5, "Receivables" for additional information regarding the composition of our receivable balances.

As of both October 1, 2021 and December 31, 2020, our contract liabilities were insignificant.

On December 31, 2020, we acquired Zenetex, LLC (Zenetex) a leading provider of technical and strategic solutions focused on enabling mission readiness, performance, and enhanced protection for defense and national security clients globally.

The total net consideration paid for the acquisition was approximately $ 117.6 million, consisting of the purchase price of $ 122.8 million, net of cash acquired, less $ 5.2 million for a working capital shortfall compared with the working capital requirement agreed upon in the stock purchase agreement.

The acquisition was funded by utilizing available capacity from our Amended Revolver (as defined in Note 7, “Debt”) and cash on hand.

A breakdown of the preliminary purchase price allocation, net of cash acquired, is as follows:

(In thousands) Allocation of Purchase Price

Receivables $ 40,343

Deferred taxes 88

Other current assets 1,261

Property, plant and equipment 1,108

Goodwill 48,959

Intangible assets 57,100

Right-of-use assets 7,930

Accounts payable ( 7,381 )

Other current liabilities ( 11,385 )

Accrued compensation ( 12,087 )

Lease liabilities ( 8,275 )

Other non-current liabilities ( 55 )

Purchase price, net of cash acquired $ 117,606

Adjustments to the initial purchase accounting for the acquired net assets will be completed, as needed, up to one year from the acquisition date as we obtain additional information regarding facts and circumstances that existed as of the acquisition date.

The Condensed Consolidated Statement of Income for the first nine months of 2021 was not impacted by any such adjustments.

The Company recognized customer related intangible assets arising from the acquisition.

The fair value was $ 57.1 million with an amortization period of 11.8 years.

Additionally, the Company recognized goodwill of $ 49.0 million arising from the acquisition, which relates primarily to acquired services strengthening our position as a leading fully-integrated provider in the converged infrastructure market, as well as extending our operations and maintenance services to increase content and scope at client installations.

Goodwill also includes other intangibles that do not qualify for separate recognition.

The goodwill recognized for the Zenetex acquisition is fully deductible for income tax purposes.

Zenetex's results of operations have been included in our Condensed Consolidated Statements of Income for the periods subsequent to acquisition on December 31, 2020.

For the three and nine months ended October 1, 2021, Zenetex recognized revenue of $ 57.4 million and $ 183.0 million, respectively.

For the three and nine months ended October 1, 2021, income from operations before income taxes was $ 2.5 million and $ 7.0 million, respectively.

For the three and nine months ended October 2, 2020, on a pro forma basis, the acquired business would have recognized revenue of $ 62.6 million and $ 177.5 million, respectively and an insignificant amount of income from operations before income taxes after pro forma adjustments.

On December 31, 2020, we acquired Higgins, Hermansen, Banikas, LLC (HHB).

HHB is a leading provider of high-end solutions for facilities management, logistics, engineering, enterprise operations and asset management solutions for supporting Intelligence Community (IC) projects.

The total net consideration paid for the acquisition was approximately $ 15.5 million.

The acquisition was funded by utilizing available capacity from our Amended Revolver (as defined in Note 7, “Debt”) and cash on hand.

The Company recognized customer related intangible assets arising from the acquisition.

The fair value was $ 8.6 million with an amortization period of 7.4 years.

Additionally, the Company recognized goodwill of $ 6.1 million arising from the acquisition, which relates primarily to growth opportunities in the IC as a converged infrastructure provider.

Goodwill also includes other intangibles that do not qualify for separate recognition.

The goodwill recognized for the HHB acquisition is fully deductible for income tax purposes.

The remainder of the preliminary purchase price allocation was primarily working capital.

The Condensed Consolidated Statement of Income for the first nine months of 2021 was not impacted by any such adjustments.

As of both April 1, 2022 and December 31, 2021, our contract liabilities were insignificant.

Receivables were comprised of the following:

(In thousands) October 1, 2021 December 31, 2020

(In thousands) April 1, 2022 December 31, 2021

Billed receivables $ 136,287 $ 104,074

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Total receivables $ 377,571 $ 348,605

As of October 1, 2021 and December 31, 2020, substantially all billed receivables are due from the U.S.

As of April 1, 2022 and December 31, 2021, substantially all billed receivables are due from the U.S.

government, either directly as prime contractor to the U.S.

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Unbilled receivables are contract assets that represent revenue recognized on long-term contracts in excess of amounts billed as of the balance sheet date.

We expect to bill customers for the majority of the October 1, 2021 contract assets during the next twelve months.

We expect to bill customers for the majority of the April 1, 2022 contract assets during 2022.

C hanges in the balance of receivables are primarily due to the timing differences between our performance and customers' payments.

GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the nine months ended October 1, 2021 are as follows:

(In thousands)

Balance at December 31, 2020 $ 339,702

Adjustments to preliminary purchase price allocation of Zenetex ( 18,140 )

Adjustments to preliminary purchase price allocation of HHB ( 4,584 )

Balance at October 1, 2021 $ 316,978

As of April 1, 2022 and December 31, 2021 the carrying amount of goodwill was $ 321.7 million.

The Company tests goodwill for impairment on the first day of the Company's fourth fiscal quarter each year, or more frequently should circumstances change or events occur that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Identifiable intangible assets consist of the following:

October 1, 2021 December 31, 2020

April 1, 2022 December 31, 2021

(In thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount

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Balance $ 85,749 $ ( 21,468 ) $ 64,281 $ 85,749 $ ( 19,167 ) $ 66,582

Identifiable intangible asset amortization expense was $ 2.6 million and $ 7.5 million for the three and nine months ended October 1, 2021, respectively.

Intangible amortization for the three and nine months ended October 2, 2020 was $ 1.0 million and $ 3.0 million, respectively.

As of October 1, 2021, the remaining average intangible asset amortization period was 9.7 years.

Identifiable intangible asset amortization expense was $ 2.3 million and $ 2.5 million for the three months ended April 1, 2022 and April 2, 2021, respectively.

As of April 1, 2022, the remaining average intangible asset amortization period was 9.2 years.

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Future estimated amortization expense is as follows (in thousands):

Period Amortization

2021 (excluding the nine months ended October 1, 2021) $ 2,507

2022 (remainder of the year) $ 6,365

After 2026 $ 29,357

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In September 2014, we and our wholly-owned subsidiary, Vectrus Systems Corporation (VSC), entered into a credit agreement.

The credit agreement was subsequently amended, with the most recent amendment occurring on December 24, 2020 and is collectively referred to as the Amended Agreement.

The credit agreement consists of a term loan (Amended Term Loan) and a $ 270.0 million revolving credit facility (Amended Revolver) as of October 1, 2021.

Additionally, the Amendment Agreement includes an accordion feature that allows the Company to draw up to an additional $ 100.0 million, subject to the lender's consent on the same terms and conditions as the existing commitments.

The credit agreement was subsequently amended on December 24, 2020 and January 24, 2022 and is collectively referred to as the Amended Agreement.

The credit agreement consists of a term loan (Amended Term Loan) and a $ 270.0 million revolving credit facility (Amended Revolver) as of April 1, 2022.

The Amendment Agreement includes an accordion feature that allows the Company to draw up to an additional $ 100.0 million, subject to the lender's consent on the same terms and conditions as the existing commitments.

The Amendment Agreement also permits the Company to borrow up to $ 75.0 million in unsecured debt as long as the aggregated sum of both the unsecured debt and the accordion does not exceed $ 100.0 million.

The Amended Term Loan amortizes in an amount equal to $ 2.6 million for the fiscal quarters ending December 31, 2021 through September 30, 2022, with the balance of $ 47.6 million due on November 15, 2022.

The Amended Term Loan amortizes in an amount equal to $ 2.6 million for the fiscal quarters ending July 1, 2022 through September 30, 2023, with the balance of $ 37.2 million due on November 15, 2023.

Amounts borrowed under the Amended Term Loan that are repaid or prepaid may not be re-borrowed.

Any unpaid amounts must be repaid by the maturity dates.

As of October 1, 2021, the balance outstanding under the Amended Term Loan was $ 58.0 million.

As of April 1, 2022, the balance outstanding under the Amended Term Loan was $ 52.8 million.

The Amended Revolver is available for working capital, capital expenditures and other general corporate purposes.

There were $ 67.0 million of outstanding borrowings under the Amended Revolver at April 1, 2022.

Up to $ 25.0 million of the Amended Revolver is available for the issuance of letters of credit.

As of October 1, 2021, there were two letters of credit outstanding in the aggregate amount of $ 2.7 million, and $ 70.0 million outstanding borrowings under the Amended Revolver resulting in borrowing capacity of $ 197.3 million under the Amended Revolver.

The outstanding borrowings under the Amended Revolver have been reduced by $ 45.0 million in the first nine months of 2021 from an outstanding balance of $ 115.0 million as of December 31, 2020.

As of April 1, 2022, there were two letters of credit outstanding in the aggregate amount of $ 2.7 million which reduced our borrowing availability under the Amended Revolver to $ 200.3 million.

At December 31, 2021, there were $ 50.0 million of outstanding borrowings under the Amended Revolver.

The Amended Revolver will mature and the commitments thereunder will terminate on November 15, 2023 .

The aggregate scheduled maturities of the Amended Term Loan and Amended Revolver as of October 1, 2021, are as follows:

The aggregate scheduled maturities of the Amended Term Loan and Amended Revolver as of April 1, 2022, are as follows:

(In thousands) Payments due

2021 (excluding the nine months ended October 1, 2021) $ 2,600

2022 (remainder of the year) $ 7,800

Total $ 119,800

Guarantees and Collateral.

The indebtedness and other obligations under the Amended Agreement are unconditionally guaranteed jointly and severally on a senior secured basis by us and certain of our restricted subsidiaries and are secured, subject to permitted liens and other exceptions, by a first-priority lien on substantially all of our tangible assets and those of each domestic guarantor.

Voluntary Prepayments.

We may voluntarily prepay the Amended Term Loan in whole or in part at any time without premium or penalty, subject to the payment of customary breakage costs under certain conditions.

Amounts borrowed under the Amended Term Loan that are repaid or prepaid may not be re-borrowed.

The Amended Credit Facilities contain customary covenants, including covenants that, under certain circumstances and subject to certain qualifications and exceptions:

Voluntary prepayments of the Amended Term Loan will be applied to the remaining installments thereof as directed by us.

We may reduce commitments under the Amended Revolver in whole or in part at any time without premium or penalty.

The Amended Agreement contain customary covenants, including covenants that, under certain circumstances and subject to certain qualifications and exceptions:

limit or restrict our ability to incur additional indebtedness;

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and enter into certain restrictive agreements.

In addition, we are required to comply with (a) a maximum ratio of total consolidated indebtedness to consolidated earnings before interest, tax, depreciation and amortization (EBITDA) of 3.00 to 1.00 ( 3.50 to 1.00 for the 12 months following a qualified acquisition), and (b) a minimum ratio of consolidated EBITDA to consolidated interest expense (net of cash interest income) of 4.50 to 1.00.

As of October 1, 2021, we had a ratio of total consolidated indebtedness to EBITDA of 1.33 to 1.00 and a ratio of consolidated EBITDA to consolidated interest expense of 15.55 to 1.00.

We were in compliance with all covenants related to the Amended Credit Facilities as of October 1, 2021.

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income) of 4.50 to 1.00.

As of April 1, 2022, we had a ratio of total consolidated indebtedness to EBITDA of 1.40 to 1.00 and a ratio of consolidated EBITDA to consolidated interest expense of 12.32 to 1.00.

We were in compliance with all covenants related to the Amended Credit Facilities as of April 1, 2022.

Interest Rates and Fees.

Outstanding borrowings under the Amended Credit Facilities accrue interest, at our option, at a per annum rate of (i) LIBOR plus the applicable margin, which ranges from 1.75 % to 2.50 % depending on the leverage ratio, or (ii) a base rate plus the applicable margin, which ranges from 0.75 % to 1.50 % depending on the leverage ratio.

The interest rate under the Amended Credit Facilities at October 1, 2021 was 2.34 %.

Outstanding borrowings under the Amended Agreement accrue interest, at our option, at a per annum rate of (i) SOFR p lus the applicable margin, which ranges from 1.85 % to 2.60 % depending on the leverage ratio, or (ii) a base rate plus the applicable margin, which ranges from 0.75 % to 1.50 % depending on the leverage ratio.

The interest rate under the Amended Credit Facilities at April 1, 2022 was 2.41 %.

We pay a commitment fee on the undrawn portion of the Amended Revolver ranging from 0.30 % to 0.45 %, depending on the leverage ratio.

Carrying Value and Fair Value.

As of October 1, 2021 and December 31, 2020, the fair value of the Amended Credit Facilities approximated the carrying value because the debt bears interest at a floating rate of interest.

As of April 1, 2022 and December 31, 2021, the fair value of the Amended Credit Facilities approximated the carrying value because the debt bears interest at a floating rate of interest.

The fair value is based on observable inputs of interest rates that are currently available to us for debt with similar terms and maturities for non-public debt.

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Our interest rate swaps are designated and qualify as effective cash flow hedges.

The contracts, with expiration dates through November 2022 and notional amounts totaling $ 43.7 million at October 1, 2021, are recorded at fair value.

The following table summarizes the amount at fair value and location of the derivative instruments in our balance sheet for our interest rate hedges in the Condensed Consolidated Balance Sheets as of October 1, 2021:

The contracts, with expiration dates through November 2022 and notional amounts totaling $ 39.8 million at April 1, 2022, are recorded at fair value.

(In thousands) Fair Value

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Interest rate swap designated as cash flow hedge Other accrued liabilities $ 227

Interest rate swap designated as cash flow hedge Other non-current liabilities $ 95

The following table summarizes the amount at fair value and location of the derivative instruments used for our interest rate hedges in the Condensed Consolidated Balance Sheets as of December 31, 2021:

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Interest rate swap designated as cash flow hedge Other accrued liabilities $ 666

Interest rate swap designated as cash flow hedge Other non-current liabilities $ 750

We regularly assess the creditworthiness of the counterparty.

As of October 1, 2021, the counterparty to the interest rate swaps had performed in accordance with its contractual obligations.

As of April 1, 2022, the counterparty to the interest rate swaps had performed in accordance with its contractual obligations.

Both the counterparty credit risk and our credit risk were considered in the fair value determination.

Net interest rate derivative losses of $ 0.8 million and $ 0.7 million were recognized in interest expense, net, in our Condensed Consolidated Statements of Income during the first nine months of 2021 and 2020, respectively.

We expect $ 0.9 million of existing interest rate swap losses reported in accumulated other comprehensive loss as of October 1, 2021 to be recognized in earnings within the next 12 months.

Net interest rate derivative losses of $ 0.2 million and $ 0.3 million were recognized in interest expense, net, in our Condensed Consolidated Statements of Income during the first three months of 2022 and 2021, respectively.

We expect $ 0.2 million of existing interest rate swap losses reported in accumulated other comprehensive loss as of April 1, 2022 to be recognized in earnings within the next 12 months.

Foreign Currency Derivative Instruments

The following table summarizes the amount at fair value and location of the derivative instruments used for our forward contract hedges in the Condensed Consolidated Balance Sheets as of October 1, 2021:

(In thousands) Fair Value

Balance sheet caption Amount

Foreign currency forward designated as cash flow hedge Other accrued liabilities $ 153

(In thousands) Fair Value

Balance sheet caption Amount

Foreign currency forward designated as cash flow hedge Other current assets $ 404

At October 1, 2021, we had outstanding foreign currency forward contracts, for the exchange of U.S.

dollars and Euros, with a notional amount of $ 3.4 million and expiration dates through January 2022.

Counterparty default risk is considered low because the forward contracts that we entered into are over-the-counter instruments transacted with highly-rated financial institutions.

We were not required to, and did not, post collateral as of October 1, 2021.

Net foreign currency derivative gains of $ 0.2 million and losses of $ 0.2 million were recognized in selling, general and administrative expenses during the first nine months of 2021 and 2020, respectively.

We expect $ 0.2 million of existing foreign currency forward contract losses reported in accumulated other comprehensive loss as of October 1, 2021 to be recognized in earnings within the next 12 months.

The Company had no outstanding foreign currency forward contracts at April 1, 2022 and outstanding forward contracts with a current liability value of less than $ 0.1 million at December 31, 2021.

Net foreign currency derivative gains and losses recognized in selling, general and administrative expenses during the first three months of 2022 and 2021 were immaterial.

We determine whether an arrangement contains a lease at inception.

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We do not separate lease components from non-lease components (e.g., common area maintenance, property taxes and insurance) but account for both components in a contract as a single lease component.

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The components of lease expense are as follows:

Three Months Ended Nine Months Ended

(In thousands) October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020

Three Months Ended

(In thousands) April 1, 2022 April 2, 2021

Operating lease expense $ 3,673 $ 1,825

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Supplemental balance sheet information related to our operating leases is as follows:

(In thousands) October 1, 2021 December 31, 2020

(In thousands) April 1, 2022 December 31, 2021

Right-of-use assets $ 42,074 $ 43,651

Current lease liabilities (recorded in Other accrued liabilities) $ 11,979 $ 11,983

Long-term lease liabilities (recorded in other non-current liabilities) 34,308 13,970

Long-term lease liabilities (recorded in Operating lease liability) 33,167 34,536

Total operating lease liabilities $ 45,146 $ 46,519

Additional right-of-use assets of $ 31.4 million were recognized as non-cash asset additions that resulted from new operating lease liabilities during the first nine months of 2021.

The weighted average remaining lease term and discount rate for our operating leases at October 1, 2021 was 5.3 years and 3.7 %, respectively.

Maturities of lease liabilities at October 1, 2021 were as follows:

Additional right-of-use assets of $ 1.9 million were recognized as non-cash asset additions that resulted from new operating lease liabilities during the first three months of 2022 .

The weighted average remaining lease term and discount rate for our operating leases at April 1, 2022 was 5.2 years and 3.7 %, respectively.

Maturities of lease liabilities at April 1, 2022 were as follows:

(In thousands) Payments due

2021 (excluding the nine months ended October 1, 2021) $ 3,300

2022 (remainder of the year) $ 9,842

After 2026 10,480

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Total operating lease liabilities $ 45,146

On September 30, 2021, the Company signed a forward-starting lease agreement in support of its contractual obligations under a task order issued under the Logistics Civil Augmentation Program (LOGCAP) V support services contract in support of the U.S.

The lease commencement date, which is anticipated in early 2022, is subject to the completion of certain documents and the receipt of related government regulatory and other third-party approvals.

The lease term consists of eight one-year extension options and one additional six month option period.

The annual rent obligations are $ 20 million per year, subject to a market adjustment beginning in the sixth year, and additional rent obligations for certain operating expenses.

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COMMITMENTS AND CONTINGENCIES

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Such assessments, along with any assessments regarding provisions for legal proceedings, are reviewed on a quarterly basis for sufficiency based on the most recent information available to us.

We have estimated and accrued $ 8.2 million and $ 11.7 million as of October 1, 2021 and December 31, 2020, respectively, in "Other accrued liabilities" in the Condensed Consolidated Balance Sheets for legal proceedings and for claims with respect to our U.S.

We have estimated and accrued $ 9.8 million and $ 9.6 million as of April 1, 2022 and December 31, 2021, respectively, in "Other accrued liabilities" in the Condensed Consolidated Balance Sheets for legal proceedings and for claims with respect to our U.S.

government contracts as discussed below, including years where the U.S.

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The ASBCA has granted Vectrus’ and the U.S.

government’s joint requests to stay proceedings in the appeal, most recently through November 12, 2021, to enable ongoing discussions regarding the matter between the parties.

government’s joint requests to stay proceedings in the appeal, most recently through May 23, 2022, to enable ongoing discussions regarding the matter between the parties.

government subsequently offered a settlement to reduce the costs to an insignificant amount to address errors and costs related to contracts novated to our Former Parent, which we are currently reviewing.

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The Company has observed, and continues to experience, some

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disruptions on its operations due to government and supply chain delays related to the global pandemic.

While the extent to which COVID-19 ultimately impacts the Company’s future results will depend on future developments, the pandemic and associated economic impacts, particularly with respect to newly issued vaccine mandates for government contractors and subcontractors, could result in a material impact to the Company’s future financial condition, results of operations and cash flows.

Contractual Commitment

On September 30, 2021, the Company signed a forward-starting agreement for warehouse space in support of its contractual obligations under a task order issued under the Logistics Civil Augmentation Program (LOGCAP) V support services contract in support of the U.S.

The agreement commencement date, which is anticipated in the second quarter 2022, is subject to the completion of certain documents and the receipt of related government regulatory and other third-party approvals.

The term of the agreement consists of eight one-year extension options and one additional six-month option period, consistent with our LOGCAP V contract with the U.S.

The annual obligations are $ 20 million per year, subject to a market adjustment beginning in the sixth year, and additional obligations for certain operating expenses.

STOCK-BASED COMPENSATION

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Stock-based compensation expense and the associated tax benefits impacting our Condensed Consolidated Statements of Income were as follows:

Three Months Ended Nine Months Ended

(In thousands) October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020

Three Months Ended

(In thousands) April 1, 2022 April 2, 2021

Compensation costs for equity-based awards $ 3,100 $ 1,983

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Liability-based awards are revalued at the end of each reporting period to reflect changes in fair value.

As of October 1, 2021, total unrecognized compensation costs related to equity-based awards and liability-based awards were $ 7.2 million and $ 2.7 million, respectively, which are expected to be recognized ratably over a weighted average period of 1.79 years and 1.71 years, respectively.

The following table provides a summary of the activities for NQOs and RSUs for the nine months ended October 1, 2021:

As of April 1, 2022, total unrecognized compensation costs related to equity-based awards and liability-based awards were $ 9.3 million and $ 2.6 million, respectively, which are expected to be recognized ratably over a weighted average period of 2.25 years and 2.36 years, respectively.

The following table provides a summary of the activities for NQOs and RSUs for the three months ended April 1, 2022:

(In thousands, except per share data) Shares Weighted Average Exercise Price Per Share Shares Weighted Average Grant Date Fair Value Per Share

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Forfeited or expired — $ — ( 10 ) $ 43.13

Outstanding at October 1, 2021 69 $ 23.59 248 $ 51.05

During the nine months ended October 1, 2021, we granted long term incentive awards to employees consisting of 134,442 RSUs with a weighted average grant date fair value per share of $ 57.15 and to our directors consisting of 21,020 RSUs with a weighted average grant date fair value per share of $ 51.86 .

Outstanding at April 1, 2022 59 $ 23.19 342 $ 43.44

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For employee RSUs, one-third of the award vests on each of the three anniversary dates following the grant date.

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Any payments earned are made in cash following completion of the performance period according to the achievement of specified performance goals.

During the nine months ended October 1, 2021, we granted TSR awards with an outstanding aggregate target TSR value of $ 2.4 million.

During the three months ended April 1, 2022, we granted TSR awards with an outstanding aggregate target TSR value of $ 2.8 million.

The fair value of TSR awards is measured quarterly and is based on the Company’s performance relative to the performance of the Aerospace and Defense Companies in the S&P 1500 Index.

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The computation of the estimated effective income tax rate at each interim period requires certain estimates and judgment including, but not limited to, forecasted operating income for the year, projections of the income earned and taxed in various jurisdictions, newly enacted tax rate and legislative changes, permanent and temporary differences, and the likelihood of recovering deferred tax assets generated in the current year.

For the three months ended October 1, 2021 and October 2, 2020, we recorded an income tax provision of $ 0.7 million and $ 3.5 million, representing effective income tax rates of 6.2 % and 25.2 %, respectively.

For the nine months ended October 1, 2021 and October 2, 2020, we recorded income tax provisions of $ 7.6 million and $ 5.6 million, representing effective income tax rates of 16.6 % and 21.7 %, respectively.

The reduction in our effective tax rate is due to the utilization of tax credits on previously filed tax returns.

For the three months ended April 1, 2022 and April 2, 2021, we recorded an income tax provision of $ 0.7 million and $ 2.6 million, representing effective income tax rates of 19.7 % and 17.5 %, respectively.

The effective income tax rates vary from the federal statutory rate of 21.0% due to state and foreign taxes, required tax income exclusions, nondeductible expenses, available deductions not reflected in book income, and income tax credits.

Uncertain Tax Provisions

As of October 1, 2021 and December 31, 2020, unrecognized tax benefits from uncertain tax positions were $ 9.1 million and $ 7.4 million, respectively.

As of April 1, 2022 and December 31, 2021, unrecognized tax benefits from uncertain tax positions were $ 9.5 million and $ 9.3 million, respectively.

The increase in the uncertain tax positions was principally the result of the additional Foreign Derived Intangible Income (FDII) deduction as the Company reserves a portion of the FDII benefit claimed or expected to be claimed on its income tax return filings.

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EARNINGS PER SHARE

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Diluted EPS includes the dilutive effect of stock-based compensation outstanding after application of the treasury stock method.

Three Months Ended Nine Months Ended

October 1, October 2, October 1, October 2,

Three Months Ended

April 1, April 2,

(In thousands, except per share data) 2022 2021

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Diluted $ 0.24 $ 1.02

The following table provides a summary of securities that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented:

Three Months Ended Nine Months Ended

October 1, October 2, October 1, October 2,

The following table summarizes the weighted average of anti-dilutive securities excluded from the diluted earnings per share calculation.

Three Months Ended

April 1, April 2,

(In thousands) 2022 2021

Anti-dilutive restricted stock units 5 1

MULTIEMPLOYER PENSION PLANS

Certain Company employees that perform work on contracts within the continental United States participate in multiemployer pension plans of which the Company is not the sponsor.

Expense recognized for these plans was $ 0.2 million and $ 0.8 million for the three and nine months ended October 1, 2021, respectively, and $ 1.0 million and $ 3.1 million for the three and nine months ended October 2, 2020, respectively.

Contributions were made to one plan for the first nine months of 2021 and eight plans for the first nine months of 2020.

The decrease in expense and the amount of multiemployer pension plan participation by the Company is attributable to the completion of a subcontract in September 2020.

At the time the contract was completed, the individuals ceased being Vectrus employees.

Those employees were hired by the successor contractor who then inherited the contractual obligation to fund the related multiemployer pension plans on the individual's behalf.

DEFERRED EMPLOYEE COMPENSATION

The assets in the plan are held in a Rabbi trust.

Plan investments and obligations were recorded in other non-current assets and other non-current liabilities, respectively, in the consolidated balance sheets, representing the fair value related to the deferred compensation plan.

Adjustments to the fair value of the plan investments and obligations are recorded in selling, general, and administrative expenses.

The plan assets and liabilities were $ 0.8 million and $ 0.5 million as of April 1, 2022 and December 31, 2021, respectively.

MULTI-EMPLOYER PENSION PLAN

Certain Company employees who perform work on contracts within the continental United States participate in a multiemployer pension plan of which the Company is not the sponsor.

Expense recognized for this plan was $ 0.2 million for the three months ended April 1, 2022 and the three months ended April 2, 2021.

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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.

What changed 10-Q

Item 1. Financial Statements