Description of Business and Summary of Significant Accounting Policies
 3 Months Ended
Apr. 03, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Description of Business and Summary of Significant Accounting Policies
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business and Basis of Presentation
Our Business
Vectrus, Inc. is a leading provider of services to the United States Government (U.S. Government) worldwide. The Company operates as one segment and provides the following services and offerings: facility and logistics services, information technology and network communications services, and operational technologies and converged solutions.
Vectrus was incorporated in the State of Indiana on February 4, 2014. On September 27, 2014, Exelis Inc. (Exelis) completed a spin-off (the Spin-off) of Vectrus, and Vectrus became an independent, publicly traded company. Unless the context otherwise requires, references in these notes to "Vectrus", "we," "us," "our," "the Company" and "our Company" refer to Vectrus, Inc. References in these notes to Exelis or "Former Parent" refer to Exelis Inc. and its consolidated subsidiaries (other than Vectrus).
Basis of Presentation
Our quarterly financial periods end on the Friday closest to the last day of the calendar quarter (April 3, 2020 for the first quarter of 2020 and March 29, 2019 for the first quarter of 2019), 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.
The unaudited interim Condensed Consolidated Financial Statements of Vectrus have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the U.S. (GAAP) have been omitted. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.
It is management’s opinion that these financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial position and operating results. Revenue and net income for any interim period are not necessarily indicative of future or annual results.
Immaterial Restatement of Prior Period Balances
Subsequent to the issuance of our Annual Report on Form 10-K for the year ended December 31, 2019, we identified an error in our historical financial statements related to estimated contract costs for the year ended December 31, 2019 as well as an error in our historical financial statements related to overbilling for a separate contract dating back to 2013, prior to the Spin-off. In the first instance, management determined that additional subcontractor costs should have been included as part of estimated contract costs, resulting in a misstatement in other accrued liabilities and cost of revenue as well as revenue and accounts receivable to a lesser extent. In the second instance, management identified that certain contract costs were incorrectly included in customer billings for one contract, resulting in a misstatement in revenue and other accrued liabilities.
The cumulative impact of the errors was a $2.5 million decrease in retained earnings as of December 31, 2019. The impact of the errors on net income for the year ended December 31, 2019 is $1.5 million. The impact on diluted earnings per share is a decrease of $0.13 for the year ended December 31, 2019. The impact to diluted earnings per share in the second, third, and fourth quarters of 2019 is a decrease of $0.00, $0.13, and $0.00, respectively. The impact on diluted earnings per share is a decrease of $0.02 and $0.01 for the years ended December 31, 2018 and 2017, respectively. 
Accordingly, the Company is restating the relevant financial statements and related footnotes for all applicable periods for these errors and related tax effect and will correct the respective financial statements as they appear in future filings. Management has evaluated the materiality of these misstatements and concluded they were not material to prior periods.

The effects of the corrections to each of the individual affected line items in our Condensed Consolidated Statements of Income were as follows:
 
 
Three Months Ended March 29, 2019
(In thousands, except per share data)
 
As Previously Reported
 
Correction
 
As Corrected
Revenue
 
$
325,928

 
$
(22
)
 
$
325,906

Operating income
 
10,413

 
(22
)
 
10,391

Income from operations before income taxes
 
8,838

 
(22
)
 
8,816

Income tax expense
 
1,747

 
(5
)
 
1,742

Net income
 
$
7,091

 
$
(17
)
 
$
7,074

 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
                 Basic
 
$
0.63

 
$
—

 
$
0.63

                 Diluted
 
$
0.62

 
$
—

 
$
0.62

The effects of the corrections to each of the individual affected line items on our Condensed Consolidated Statements of Comprehensive Income were as follows:
 
 
Three months ended March 29, 2019
(In thousands)
 
As Previously Reported
 
Correction
 
As Corrected
Net income
 
$
7,091

 
$
(17
)
 
$
7,074

Total comprehensive income
 
$
5,649

 
$
(17
)
 
$
5,632

The effects of the corrections to each of the individual affected line items on our Condensed Consolidated Balance Sheet were as follows:
 
 
December 31, 2019
(In thousands)
 
As Previously Reported
 
Correction
 
As Corrected
Receivables
 
$
269,239

 
$
(95
)
 
$
269,144

Total current assets
 
320,711

 
(95
)
 
320,616

Total Assets
 
636,484

 
(95
)
 
636,389

Other accrued liabilities
 
34,587

 
2,822

 
37,409

Total current liabilities
 
242,257

 
2,822

 
245,079

Deferred tax liability
 
49,808

 
(401
)
 
49,407

Total non-current liabilities
 
132,846

 
(401
)
 
132,445

Total Liabilities
 
375,103

 
2,421

 
377,524

Retained earnings
 
187,591

 
(2,516
)
 
185,075

Total shareholders' equity
 
261,381

 
(2,516
)
 
258,865

Total Liabilities and Shareholders' Equity
 
$
636,484

 
$
(95
)
 
$
636,389

    
The effects of the corrections to each of the individual affected line items on our Condensed Consolidated Statements of Cash Flows were as follows:
 
 
Three months ended March 29, 2019
(In thousands)
 
As Previously Reported
 
Correction
 
As Corrected
Net income
 
$
7,091

 
$
(17
)
 
$
7,074

Changes in other liabilities
 
1,892

 
17

 
1,909

Net cash used in operating activities
 
$
(6,386
)
 
$
—

 
$
(6,386
)

The effects of the corrections to each of the individual affected line items on our Condensed Consolidated Statements of Changes in Shareholders' Equity were as follows:


Three months ended March 29, 2019


Retained Earnings

Total Shareholders' Equity
(In thousands)

As Previously Reported

Correction

As Corrected

As Previously Reported

Correction

As Corrected
Balance at December 31, 2018

$
152,616


$
(976
)

$
151,640


$
221,300


$
(976
)

$
220,324

Net income

7,091


(17
)

7,074


7,091


(17
)

7,074

Balance at March 29, 2019

$
159,966


$
(993
)

$
158,973


$
228,244


$
(993
)

$
227,251