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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Kratos Defense and Security Solutions Inc | NASDAQ:KTOS | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.66 | 3.07% | 22.13 | 22.05 | 22.32 | 22.11 | 21.62 | 21.67 | 1,022,011 | 01:00:00 |
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(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 29, 2019
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
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Delaware
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13-3818604
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.001 par value
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KTOS
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The NASDAQ Global Select Market
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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Unmanned aerial drone, unmanned ground and unmanned seaborne systems and artificial intelligence
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Satellite communications and radio frequency interference detection location and mitigation
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Microwave electronics supporting warfare, missile, radar and communication systems
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Electronic warfare, attack, missile, and radar systems
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Intelligence, surveillance and reconnaissance
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Ballistic missile defense and hypersonic systems
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C5ISR systems
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Cyber security and information assurance
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Specialized training systems and operational readiness
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In 2017, we successfully advanced to Phase II of the Gremlins program, awarded by DARPA, the U.S. Government’s leader in breakthrough technologies for national security, teamed with our partner company, Dynetics. In 2018, as part of the Dynetics led team, we were selected for award on Phase III of the Gremlins program to demonstrate safe and reliable launch and aerial recovery of multiple unmanned drone system aircraft, capable of employing and recovering diverse distributed payloads in volley quantities. In January 2020, DARPA and Dynetics announced that the successful first flight of the X-61A Gremlins Air Vehicle was completed on November 23, 2019.
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In 2016, we were awarded the AFRL Low Cost Attritable Strike Demonstration (“LCASD”) UCAS single-award cost share contract. The LCASD, or Valkyrie, is an approximately 30 foot by 22 foot unmanned strike aerial drone system. During 2019, the Company announced that the Kratos/AFRL team successfully completed three flights for the Valkyrie, or the XQ-58A. In January 2020, the Company completed its fourth demonstration flight, including the successful deployment of its parachutes, and landed normally, validating the design changes incorporated for the test flight airbag system following the third flight in 2019.
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In 2019, the Kratos XQ-58A Valkyrie was awarded Aviation Week’s Laureate Award for Defense Technology and Innovation.
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We have redeveloped our Air Force Subscale Aerial Target BQM-167 into what we believe to be the highest performance unmanned aircraft in the world, the U.S. Navy Sub-Sonic Aerial Target (“SSAT”) Drone BQM-177A, with low rate initial production awarded to Kratos in June 2017. In 2018, delivery of the first production aerial targets was made to the U.S. Navy, and achievement of Initial Operational Capability (IOC) was reported by the U.S. Navy in February 2019. In 2019, the Company was awarded a $25.4 million contract for Lot 3 of low rate initial production for 34 BQM-177A aerial targets. To date, the Company has been awarded production orders for 105 BQM-177A aerial targets. We expect the SSAT program to become one of the largest and most important to Kratos in the near term.
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In 2018, we received a single award $109 million maximum value three year production contract for Air Force Subscale Aerial Target BQM-167A, with $27 million being initially obligated at the time of award for 30 Lot 14 BQM-167A aerial targets and production support, and an additional $31.9 million being obligated for 35 Lot 15 BQM-167A targets in 2019.
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In 2018, we received a ten-year, sole source, single award framework contract from QinetiQ UK for Kratos’ MQM-178 Firejet aerial targets, spares, ground support equipment, technical services, and training. In 2018, we were awarded a prime contract for the Aerial Target Systems 2 (ATS-2), Multiple Award Indefinite Delivery Indefinite Quantity (“IDIQ”) Contract with a ceiling value of $93.3 million, and a five year period of performance.
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In 2018, we received a sole source, single award multi-year IDIQ contract from the Swedish Defence Materiel Administration for our MQM-178 Firejet aerial target aircraft and associated ground support equipment, spares, payloads, components, expendables and support services. The first order under the three-year IDIQ contract was received in the first half of 2019. Additionally, there are two three-year exercisable option periods for a total potential contract performance term of nine years.
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In 2019, the Company produced its first MQM-178 Firejet target drones at its new production facility in Oklahoma City.
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We invested in internally funded research, development and capital expenditures to build our own UTAP-22 (Mako) UAS from 2012 to 2015, and demonstrated the capabilities of the UTAP-22 Mako in a flight demonstration in the fall of 2015 where Kratos Mako drones flew as an unmanned wingman to manned tactical fighter jet aircraft. As a result of these successful flights and capabilities demonstrations, we were awarded an initial $12.6 million prime contract from the DIUx for sensor integration and flight demonstration of our UTAP-22 Mako unmanned aerial system the following year. Under this effort, we integrated certain sensors into our
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We received a $40.8 million single award, cost-share contract from the AFRL for the LCASD. Under the LCASD contract award, we are designing, developing, and will deliver, demonstrate and test a technical baseline for a high-speed long-range, low-cost limited life-strike UAS. For our investment, we will retain hard (including two LCASD aircraft) and other assets, and important intellectual property, software, data, platform and system rights, which we believe will be critically important and valuable over the expected long-term life of this platform, including with respect to future production opportunities. During 2019, the Company announced that the Kratos/AFRL team successfully completed three flights for the Valkyrie, or the XQ-58A. In January 2020, the Company completed its fourth demonstration flight, including the successful deployment of its parachutes, and landed nominally, validating the design changes incorporated for the test flight airbag system following the third flight in 2019.
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We were awarded one of four prime contract awards from DARPA for the Gremlins program. Under the Gremlins program, DARPA envisions a swarm of approximately 20 high performance unmanned aerial vehicles that are deployed by an inflight aircraft, and are later recovered, inflight, by an aircraft. The approximate $3.9 million Phase I contracts were awarded to four competing companies, with the intent to ultimately down select to one finalist company over a period of approximately 36 months. In 2017, we successfully advanced to Phase II of the Gremlin’s program, teamed with our partner company Dynetics. In 2018, as part of the Dynetics-led team, we were selected for award on Phase III of the Gremlins program to demonstrate safe and reliable launch and aerial recovery of multiple unmanned drone system aircraft, capable of employing and recovering diverse distributed payloads in volley quantities. In January 2020, DARPA and Dynetics announced that the successful first flight of the X-61A Gremlins Air Vehicle was completed on November 23, 2019. Kratos is a key subcontractor to Dynetics on the Gremlins program.
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the Federal Acquisition Regulations and supplemental agency regulations, which comprehensively regulate the formation, administration, and performance under government contracts;
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the Truthful Cost or Pricing Data Statute (formerly the Truth in Negotiations Act), which requires certification and disclosure of all cost and pricing data in connection with contract negotiations;
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the Cost Accounting Standards, which impose accounting requirements that govern our right to reimbursement under cost-based government contracts;
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the Foreign Corrupt Practices Act, which prohibits U.S. companies from providing anything of value to a foreign official to help obtain, retain or direct business, or obtain any unfair advantages;
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the False Claims Act and the False Statements Act, which, respectively, impose penalties for payments made on the basis of false facts provided to the government and impose penalties on the basis of false statements, even if they do not result in a payment; and
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laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.
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divert sales from us by winning very large‑scale government contracts, a risk that is enhanced by the recent trend in government procurement practices to bundle services into larger contracts and the recent trend of making award determinations on a LPTA basis;
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divert sales from us by the award of government contracts to our competitors who may be willing to bid at substantially lower prices;
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force us to charge lower prices; or
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adversely affect our relationships with current customers, including our ability to continue to win competitively awarded engagements in which we are the incumbent.
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customer satisfaction with these types of systems as solutions;
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the cost, performance and reliability of our products and products offered by our competitors;
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customer perceptions regarding the effectiveness and value of these types of systems;
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limitations on our ability to market our US products and services outside the U.S. due to U.S.
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marketing efforts and publicity regarding these types of systems.
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terminate our existing contracts;
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reduce potential future income from our existing contracts;
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modify some of the terms and conditions in our existing contracts;
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suspend or permanently prohibit us from doing business with the U.S. Government or with any specific government agency;
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impose fines and penalties;
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subject us to criminal prosecution;
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suspend work under existing multiple year contracts and related task orders if the necessary funds are not appropriated by Congress;
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decline to exercise an option to extend an existing multiple year contract; and
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claim rights in technologies and systems invented, developed or produced by us.
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lose revenue due to adverse customer reaction;
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be required to provide additional services to a customer at no charge;
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cause customers to postpone, cancel or fail to renew contracts;
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receive negative publicity, which could damage our reputation and adversely affect our ability to attract or retain customers; and
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suffer claims for substantial damages.
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the terms of customer contracts that affect the timing of revenue recognition;
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variability in demand for our services and solutions;
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commencement, completion or termination of contracts during any particular quarter;
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timing of shipments and product deliveries;
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timing of award or performance incentive fee notices;
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timing of significant bid and proposal costs;
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the costs of remediating unknown defects, errors or performance problems of our product offerings;
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variable purchasing patterns under GSA contracts, GWACs, blanket purchase agreements and other IDIQ contracts;
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restrictions on and delays related to the export of defense articles and services;
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costs related to government inquiries;
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strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs and joint ventures;
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strategic investments or changes in business strategy;
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changes in the extent to which we use subcontractors;
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seasonal fluctuations in our staff utilization rates;
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changes in our effective tax rate, including changes in our judgment as to the necessity of the valuation allowance recorded against our deferred tax assets; and
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the length of sales cycles.
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our inability to achieve the operating synergies anticipated in the acquisitions;
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diversion of management attention from ongoing business concerns to integration matters;
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difficulties in consolidating and rationalizing IT platforms and administrative infrastructures;
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complexities associated with managing the geographic separation of the combined businesses and consolidating multiple physical locations where management may determine consolidation is desirable;
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difficulties in integrating personnel from different corporate cultures while maintaining focus on providing consistent, high quality customer service;
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difficulties or delays in transitioning U.S. Government contracts pursuant to federal acquisition regulations;
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challenges in demonstrating to customers of Kratos and to customers of acquired businesses that the acquisition will not result in adverse changes in customer service standards or business focus;
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possible cash flow interruption or loss of revenue as a result of change of ownership transitional matters; and
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inability to generate sufficient revenue to offset acquisition costs.
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foreign currency exchange rate fluctuations, potentially reducing the U.S. dollars we receive for sales denominated in foreign currency;
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the possibility that unfriendly nations or groups could boycott our solutions;
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political conditions in the markets in which we operate;
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potential increased costs associated with overlapping tax structures;
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import-export control;
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the ability to obtain required U.S. government agency issued export licenses to ship our product overseas;
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more limited protection for intellectual property rights in some countries;
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difficulties and costs associated with staffing and managing foreign operations;
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unexpected changes in regulatory requirements;
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the difficulties of compliance with a wide variety of foreign laws and regulations;
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longer accounts receivable cycles in certain foreign countries, whether due to cultural differences, exchange rate fluctuation or other factors;
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technology transfer restrictions;
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changes to our distribution networks;
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our employees; and
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war and terrorist events, including impacts to our international operations such as Microwave Electronics, which is headquartered in Israel.
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it may limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;
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it may require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;
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it may restrict us from making strategic acquisitions or exploiting business opportunities;
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it may place us at a competitive disadvantage compared to our competitors that have less debt;
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it may limit our ability to borrow additional funds;
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it may prevent us from raising the funds necessary to repurchase our outstanding 6.5% Notes (as defined below) tendered to us if there is a change of control, which would constitute a default under the Indenture (as defined below) governing our 6.5% Notes and under our Credit Agreement; and
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it may decrease our ability to compete effectively or operate successfully under adverse economic and industry conditions.
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Square feet (in thousands)
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Owned
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Leased
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Total
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Kratos Government Solutions
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417
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814
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1,231
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Unmanned Systems
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20
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388
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408
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Corporate (includes San Diego, operations of KGS and US segments)
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—
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26
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26
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Total
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437
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1,228
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1,665
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COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
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Among Kratos Defense & Security Solutions, Inc., the Russell 2000 Index,
and Peer Group
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*$100 invested on 12/31/14 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31. |
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2019
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2018
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$ Change
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% Change
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Kratos Government Solutions
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Service revenues
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$
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272.6
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$
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200.7
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$
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71.9
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35.8
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%
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Product sales
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283.5
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284.4
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(0.9
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)
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(0.3
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)%
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Total Kratos Government Solutions
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556.1
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485.1
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71.0
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14.6
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%
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Unmanned Systems - product sales
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161.4
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132.9
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28.5
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21.4
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%
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Total revenues
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$
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717.5
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$
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618.0
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$
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99.5
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16.1
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%
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Total service revenues
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$
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272.6
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$
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200.7
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$
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71.9
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35.8
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%
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Total product sales
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444.9
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417.3
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27.6
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6.6
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%
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Total revenues
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$
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717.5
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$
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618.0
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$
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99.5
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16.1
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%
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Year Ended
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||||||
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December 29, 2019
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December 30, 2018
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Net cash provided by operating activities from continuing operations
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$
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28.9
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$
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18.1
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Year Ended
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||||||
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December 29, 2019
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December 30, 2018
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Investing activities:
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Cash paid for acquisitions, net of cash acquired
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$
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(17.7
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)
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$
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(2.9
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)
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Proceeds from sale of assets
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0.3
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66.0
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Capital expenditures
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(26.3
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)
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(22.6
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)
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Net cash provided by (used in) investing activities from continuing operations
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$
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(43.7
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)
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$
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40.5
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Year Ended
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December 29, 2019
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December 30, 2018
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Financing activities:
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Expenses from the issuance of common stock
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$
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—
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$
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(1.1
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)
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Repayment under credit facility and debt
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—
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(0.8
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)
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Debt issuance costs
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—
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(0.1
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)
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Payments under finance leases
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(0.5
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)
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—
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Proceeds from exercise of restricted stock units, employee stock options, and employee stock purchase plan
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4.0
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3.7
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Net cash provided by financing activities from continuing operations
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$
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3.5
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$
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1.7
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Year Ended
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||||||
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December 29, 2019
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December 30, 2018
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Net operating cash flows of discontinued operations
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$
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1.1
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$
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(7.7
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)
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Payments Due/Forecast by Period
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Total
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2020
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2021 - 2022
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2023 - 2024
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2025 and After
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Debt, net of interest(1)
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$
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300.0
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$
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—
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$
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—
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$
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—
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$
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300.0
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Estimated interest on debt(2)
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136.5
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19.5
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39.0
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39.0
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39.0
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|||||
Purchase orders(3)
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153.1
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112.4
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40.6
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0.1
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—
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Operating leases(4)
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57.2
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|
12.6
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18.6
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14.4
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|
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11.6
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Finance leases(4)
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70.2
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3.1
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6.5
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|
6.6
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|
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54.0
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|
|||||
Unrecognized tax benefits, including interest and penalties(5)
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—
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|
|
—
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|
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—
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|
|
—
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|
|
—
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|
|||||
Total commitments and recorded liabilities
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$
|
717.0
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|
|
$
|
147.6
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|
|
$
|
104.7
|
|
|
$
|
60.1
|
|
|
$
|
404.6
|
|
(1)
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The 6.5% Notes in the aggregate outstanding principal amount of $300.0 million are due November 30, 2025. See Note 5 in the Notes to Consolidated Financial Statements contained within this Annual Report for further details.
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(2)
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Includes interest payments on the 6.5% Notes. See Note 5 in the Notes to Consolidated Financial Statements contained within in this Annual Report for further details.
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(3)
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Purchase orders include commitments in which a written purchase order has been issued to a vendor, but the goods have not been received or services have not been performed.
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(4)
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We have entered into or acquired various non-cancelable operating and finance lease agreements that expire on various dates through 2038. See Note 6 in the Notes to Consolidated Financial Statements contained within this Annual Report for further details.
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(5)
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As of December 29, 2019, we have a $15.7 million noncurrent liability for uncertain tax positions and a $2.8 million guarantor liability, all of which may result in cash payments. The future payments related to uncertain tax positions have not been presented in the table above due to the uncertainty of the amounts and timing of cash settlements with the taxing authorities.
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significant underperformance relative to expected historical or projected future operating results;
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significant changes in the manner of our use of the acquired assets or the strategy for our overall business;
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significant negative industry or economic trends;
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significant decline in our stock price for a sustained period; and
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our market capitalization relative to net book value.
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The timing of future cash flows within our DCF analysis is based on our most recent forecasts and other estimates. Our historical growth rates and operating results are not indicative of our projected growth rates and operating results as a consequence of our acquisitions and divestitures.
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The terminal growth rate is used to calculate the value of cash flows beyond the last projected period in our DCF analysis and reflects our best estimates for stable, perpetual growth of our reporting units.
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We use estimates of market participant weighted average cost of capital (“WACC”) as a basis for determining the discount rates to apply to our reporting units’ future expected cash flows. The significant assumptions within our WACC are: (a) equity risk premium, (b) beta, (c) size premium adjustments, (d) cost of debt and (e) capital structure assumptions. In addition, we use a company specific risk adjustment which is a subjective adjustment that, by its very nature does not include market related data, but instead examines the prospects of the reporting unit relative to the broader industry to determine if there are specific factors, which may make it more “risky” relative to the industry.
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Recent historical market multiples are used to estimate future market pricing.
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a decline in our stock price and resulting market capitalization, if we determine the decline is sustained and is indicative of a reduction in the fair value below the carrying value of our reporting units;
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a decrease in available government funding, including budgetary constraints affecting U.S. Government spending generally, or specific departments or agencies;
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changes in U.S. Government programs or requirements, including the increased use of small business providers;
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our failure to reach our internal forecasts could impact our ability to achieve our forecasted levels of cash flows and reduce the estimated discounted value of our reporting units;
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volatility in equity and debt markets resulting in higher discount rates; and
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market and political factors that could impact the success of new products, especially related to new unmanned systems platforms.
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(a)(1)
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Financial Statements
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(a)(2)
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Financial Statement Schedules
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Incorporated by
Reference
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Exhibit
Number
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Exhibit Description
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Form
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Filing Date (File No.)
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Exhibit
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Filed-
Furnished
Herewith
|
2.1+*
|
|
|
10-Q
|
|
08/06/2015
(001-34460)
|
|
2.4
|
|
|
|
2.2+
|
|
|
10-Q
|
|
5/10/2018
(001-34460)
|
|
2.2
|
|
|
|
2.3+**
|
|
|
10-Q
|
|
5/08/2019
(001-34460)
|
|
2.3
|
|
|
|
3.1
|
|
|
10-K
|
|
2/27/2017
(001-34460)
|
|
3.1
|
|
|
|
3.2
|
|
|
10-K
|
|
2/27/2017
(001-34460)
|
|
3.2
|
|
|
|
4.1
|
|
|
10-K
|
|
2/27/2017
(001-34460)
|
|
4.1
|
|
|
|
4.2
|
|
|
8-K
|
|
11/21/2017
(001-34460)
|
|
4.1
|
|
|
|
4.3
|
|
|
10-K
|
|
02/28/2018
(001-34460)
|
|
4.5
|
|
|
|
4.4
|
|
|
|
|
|
|
|
|
|
*
|
10.1#
|
|
|
10-Q
|
|
08/04/2011
(001-34460)
|
|
10.8
|
|
|
|
10.2#
|
|
|
S-8
|
|
07/31/2017
(001-34460)
|
|
99.1
|
|
|
|
10.3#
|
|
|
10-Q
|
|
11/14/2000
(000-27231)
|
|
10.2
|
|
|
|
10.4#
|
|
|
10-Q
|
|
11/14/2000
(000-27231)
|
|
10.3
|
|
|
|
10.5#
|
|
|
S-8
|
|
08/01/2005
(333-127060)
|
|
99.2
|
|
|
|
10.6#
|
|
|
S-8
|
|
08/01/2005
(333-127060)
|
|
99.1
|
|
|
10.7#
|
|
|
8-K
|
|
01/17/2007
(000-27231)
|
|
99.3
|
|
|
|
10.8#
|
|
|
S-8
|
|
04/08/2011
(333-173383)
|
|
4.11
|
|
|
|
10.9#
|
|
|
S-8
|
|
04/08/2011
(333-173383)
|
|
4.13
|
|
|
|
10.10#
|
|
|
S-8
|
|
04/08/2011
(333-173383)
|
|
4.14
|
|
|
|
10.11#
|
|
|
S-8
|
|
04/08/2011
(333-173383)
|
|
4.15
|
|
|
|
10.12#
|
|
|
DEF 14A
|
|
04/15/2011
(001-34460)
|
|
n/a
|
|
|
|
10.13#
|
|
|
8-K
|
|
11/18/2011
(001-34460)
|
|
10.2
|
|
|
|
10.14#
|
|
|
S-8
|
|
07/31/2017
(001-34460)
|
|
99.2
|
|
|
|
10.15#
|
|
|
|
|
|
|
|
|
*
|
|
10.16#
|
|
|
10-Q
|
|
08/04/2011
(001-34460)
|
|
10.3
|
|
|
|
10.17#
|
|
|
10-Q
|
|
08/04/2011
(001-34460)
|
|
10.4
|
|
|
|
10.18
|
|
|
10-K
|
|
03/11/2010
(001-34460)
|
|
10.26
|
|
|
|
10.19#
|
|
|
S-8
|
|
03/08/2012
(333-179977)
|
|
4.10
|
|
|
|
10.20#
|
|
|
S-8
|
|
03/08/2012
(333-179977)
|
|
4.11
|
|
|
|
10.21#
|
|
|
S-8
|
|
07/27/2012
(333-182910)
|
|
4.12
|
|
|
|
10.22#
|
|
|
8-K
|
|
03/12/2015
(001-34460)
|
|
10.1
|
|
|
10.23#
|
|
|
8-K
|
|
06/02/2015
(001-34460)
|
|
10.1
|
|
|
|
10.24#
|
|
|
8-K
|
|
12/08/2016
(001-34460)
|
|
10.1
|
|
|
|
10.25
|
|
|
8-K
|
|
11/21/2017
(001-34460)
|
|
10.1
|
|
|
|
10.26
|
|
|
8-K
|
|
06/13/2018
(001-34460)
|
|
10.1
|
|
|
|
10.27
|
|
|
10-Q
|
|
05/04/2017
(001-34460)
|
|
10.2
|
|
|
|
10.28
|
|
|
10-K
|
|
02/28/2019
(001-34460)
|
|
10.34
|
|
|
|
10.29
|
|
|
10-Q
|
|
05/08/2019
(001-34460)
|
|
10.2
|
|
|
|
10.30#
|
|
|
|
10-Q
|
|
07/31/2019
(001-34460)
|
|
10.1
|
|
|
21.1
|
|
|
|
|
|
|
|
|
*
|
|
23.1
|
|
|
|
|
|
|
|
|
*
|
|
31.1
|
|
|
|
|
|
|
|
|
*
|
|
31.2
|
|
|
|
|
|
|
|
|
*
|
|
32.1
|
|
|
|
|
|
|
|
|
*
|
|
32.2
|
|
|
|
|
|
|
|
|
*
|
101
|
|
Financial statements from the Annual Report on Form 10-K of Kratos Defense & Security Solutions, Inc. for the year ended December 29, 2019, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statement of Comprehensive Loss, (iv) the Consolidated Statements of Cash Flows, (v) the Notes to the Consolidated Financial Statements.
|
|
|
|
|
|
|
|
*
|
104
|
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
|
|
|
|
|
|
|
*
|
|
|
Kratos Defense & Security Solutions, Inc.
|
|
|
|
|
|
By:
|
/s/ Eric M. DeMarco
|
|
|
Eric M. DeMarco
President and Chief Executive Officer (Principal
Executive Officer)
|
Signature
|
Title
|
Date
|
|||||||||||
|
|
|
|||||||||||
/s/ Eric M. DeMarco
Eric M. DeMarco
|
President, Chief Executive Officer and Director (Principal Executive Officer)
|
February 24, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Deanna H. Lund
Deanna H. Lund
|
Executive Vice President, Chief Financial Officer (Principal Financial Officer)
|
February 24, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Maria Cervantes de Burgreen
Maria Cervantes de Burgreen
|
Vice President and Corporate Controller
(Principal Accounting Officer)
|
February 24, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Scott Anderson
Scott Anderson
|
Director
|
February 24, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ William Hoglund
William Hoglund
|
Director
|
February 24, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Scot Jarvis
Scot Jarvis
|
Director
|
February 24, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Jane E. Judd
Jane E. Judd
|
Director
|
February 24, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Sam Liberatore
Sam Liberatore
|
Director
|
February 24, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Amy Zegart
Amy Zegart
|
Director
|
February 24, 2020
|
|
||
|
||
|
||
|
||
|
||
|
||
|
•
|
We tested the effectiveness of internal controls over the development of cost estimates, including the underlying assumptions and key inputs into the development of the estimated cost at completion.
|
•
|
We selected certain contracts for testing and performed the following procedures:
|
•
|
We performed retrospective reviews on selected contracts, comparing actual performance to estimated performance, when evaluating management’s ability to estimate costs.
|
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
172.6
|
|
|
$
|
182.7
|
|
Restricted cash
|
—
|
|
|
0.3
|
|
||
Accounts receivable, net
|
85.0
|
|
|
64.6
|
|
||
Unbilled receivables, net
|
179.4
|
|
|
172.8
|
|
||
Inventoried costs
|
61.1
|
|
|
46.8
|
|
||
Prepaid expenses
|
9.4
|
|
|
8.9
|
|
||
Other current assets
|
11.4
|
|
|
10.3
|
|
||
Current assets of discontinued operations
|
3.3
|
|
|
8.3
|
|
||
Total current assets
|
522.2
|
|
|
494.7
|
|
||
Property, plant and equipment, net
|
116.9
|
|
|
67.1
|
|
||
Operating lease right-of-use assets
|
42.1
|
|
|
—
|
|
||
Goodwill
|
455.6
|
|
|
425.7
|
|
||
Intangible assets, net
|
39.5
|
|
|
16.1
|
|
||
Other assets
|
9.7
|
|
|
6.5
|
|
||
Total assets
|
$
|
1,186.0
|
|
|
$
|
1,010.1
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
53.8
|
|
|
$
|
46.6
|
|
Accrued expenses
|
32.7
|
|
|
38.1
|
|
||
Accrued compensation
|
37.1
|
|
|
33.5
|
|
||
Accrued interest
|
1.6
|
|
|
1.6
|
|
||
Billings in excess of costs and earnings on uncompleted contracts
|
34.3
|
|
|
34.9
|
|
||
Current portion of operating lease liabilities
|
9.9
|
|
|
—
|
|
||
Other current liabilities
|
10.0
|
|
|
4.7
|
|
||
Current liabilities of discontinued operations
|
3.3
|
|
|
5.3
|
|
||
Total current liabilities
|
182.7
|
|
|
164.7
|
|
||
Long-term debt
|
295.1
|
|
|
294.2
|
|
||
Operating lease liabilities, net of current portion
|
37.6
|
|
|
—
|
|
||
Other long-term liabilities
|
78.7
|
|
|
25.5
|
|
||
Long-term liabilities of discontinued operations
|
2.8
|
|
|
6.4
|
|
||
Total liabilities
|
596.9
|
|
|
490.8
|
|
||
Commitments and contingencies (Note 15)
|
|
|
|
|
|
||
Redeemable noncontrolling interest
|
15.0
|
|
|
—
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock, $0.001 par value, 5,000,000 authorized, 0 shares outstanding at December 29, 2019 and December 30, 2018
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value, 195,000,000 shares authorized; 106,635,508 and 103,766,899 shares issued and outstanding at December 29, 2019 and December 30, 2018, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,286.5
|
|
|
1,244.5
|
|
||
Accumulated other comprehensive loss
|
(0.4
|
)
|
|
(0.7
|
)
|
||
Accumulated deficit
|
(712.0
|
)
|
|
(724.5
|
)
|
||
Total stockholders’ equity
|
574.1
|
|
|
519.3
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,186.0
|
|
|
$
|
1,010.1
|
|
|
|
|
|
|
|
||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Service revenues
|
$
|
272.6
|
|
|
$
|
200.7
|
|
|
$
|
197.8
|
|
Product sales
|
444.9
|
|
|
417.3
|
|
|
405.5
|
|
|||
Total revenues
|
717.5
|
|
|
618.0
|
|
|
603.3
|
|
|||
Cost of service revenues
|
192.0
|
|
|
137.8
|
|
|
138.6
|
|
|||
Cost of product sales
|
335.5
|
|
|
310.5
|
|
|
307.1
|
|
|||
Total costs
|
527.5
|
|
|
448.3
|
|
|
445.7
|
|
|||
Gross profit
|
190.0
|
|
|
169.7
|
|
|
157.6
|
|
|||
Selling, general and administrative expenses
|
130.8
|
|
|
119.8
|
|
|
127.3
|
|
|||
Merger and acquisition related items
|
2.3
|
|
|
—
|
|
|
—
|
|
|||
Research and development expenses
|
18.0
|
|
|
15.6
|
|
|
17.8
|
|
|||
Impairment of goodwill
|
—
|
|
|
—
|
|
|
24.2
|
|
|||
Restructuring expenses and other
|
0.9
|
|
|
3.8
|
|
|
0.3
|
|
|||
Operating income (loss)
|
38.0
|
|
|
30.5
|
|
|
(12.0
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense, net
|
(21.6
|
)
|
|
(20.8
|
)
|
|
(28.6
|
)
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
(17.3
|
)
|
|||
Other income (expense), net
|
(0.7
|
)
|
|
(1.0
|
)
|
|
0.8
|
|
|||
Total other expense, net
|
(22.3
|
)
|
|
(21.8
|
)
|
|
(45.1
|
)
|
|||
Income (loss) from continuing operations before income taxes
|
15.7
|
|
|
8.7
|
|
|
(57.1
|
)
|
|||
Provision (benefit) for income taxes from continuing operations
|
4.8
|
|
|
4.6
|
|
|
(10.2
|
)
|
|||
Income (loss) from continuing operations
|
10.9
|
|
|
4.1
|
|
|
(46.9
|
)
|
|||
Discontinued operations
|
|
|
|
|
|
||||||
Income (loss) from operations of discontinued component (including gain on disposal of $0.0 million for the year ended December 30, 2018)
|
1.9
|
|
|
(9.4
|
)
|
|
6.3
|
|
|||
Income tax expense (benefit)
|
0.2
|
|
|
(1.8
|
)
|
|
2.1
|
|
|||
Income (loss) from discontinued operations
|
1.7
|
|
|
(7.6
|
)
|
|
4.2
|
|
|||
Net income (loss)
|
$
|
12.6
|
|
|
$
|
(3.5
|
)
|
|
$
|
(42.7
|
)
|
Less: Net income attributable to noncontrolling interest
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Net income (loss) attributable to Kratos
|
$
|
12.5
|
|
|
$
|
(3.5
|
)
|
|
$
|
(42.7
|
)
|
Basic income and (loss) per common share attributable to Kratos:
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
$
|
0.10
|
|
|
$
|
0.04
|
|
|
$
|
(0.52
|
)
|
Income (loss) from discontinued operations
|
0.02
|
|
|
(0.07
|
)
|
|
0.04
|
|
|||
Net income (loss) per common share
|
$
|
0.12
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.48
|
)
|
Diluted income and (loss) per common share attributable to Kratos:
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
$
|
0.10
|
|
|
$
|
0.04
|
|
|
$
|
(0.52
|
)
|
Income (loss) from discontinued operations
|
0.01
|
|
|
(0.07
|
)
|
|
0.04
|
|
|||
Net income (loss) per common share
|
$
|
0.11
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.48
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
106.0
|
|
|
103.8
|
|
|
89.5
|
|
|||
Diluted
|
109.2
|
|
|
106.1
|
|
|
89.5
|
|
|
|
|
|
|
|
||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income (loss)
|
$
|
12.6
|
|
|
$
|
(3.5
|
)
|
|
$
|
(42.7
|
)
|
Other comprehensive income:
|
|
|
|
|
|
||||||
Change in cumulative translation adjustment
|
0.1
|
|
|
0.4
|
|
|
0.1
|
|
|||
Postretirement benefit reserve adjustment net of tax expense
|
0.2
|
|
|
0.3
|
|
|
0.2
|
|
|||
Other comprehensive income, net of tax
|
0.3
|
|
|
0.7
|
|
|
0.3
|
|
|||
Comprehensive income (loss)
|
12.9
|
|
|
(2.8
|
)
|
|
(42.4
|
)
|
|||
Less: Comprehensive income attributable to noncontrolling interest
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Comprehensive income (loss) attributable to Kratos
|
$
|
12.8
|
|
|
$
|
(2.8
|
)
|
|
$
|
(42.4
|
)
|
|
|
|
|
|
|
|
|
Redeemable Noncontrolling Interest
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Other Comprehensive Loss
|
|
Accumulated Deficit
|
|
Total Stockholders’ Equity
|
||||||||||||||
|
|
|
Shares
|
|
Amounts
|
|
|
|
|
|||||||||||||||||
Balance, December 25, 2016
|
|
—
|
|
|
73.9
|
|
|
$
|
—
|
|
|
$
|
956.2
|
|
|
$
|
(1.7
|
)
|
|
$
|
(678.1
|
)
|
|
$
|
276.4
|
|
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.8
|
|
|
—
|
|
|
—
|
|
|
7.8
|
|
|||||
Issuance of common stock for cash
|
|
—
|
|
|
28.0
|
|
|
|
|
268.2
|
|
|
|
|
|
|
268.2
|
|
||||||||
Issuance of common stock for employee stock purchase plan, options and warrants
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
3.5
|
|
|
—
|
|
|
—
|
|
|
3.5
|
|
|||||
Restricted stock issued and related taxes
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42.7
|
)
|
|
(42.7
|
)
|
|||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|||||
Balance, December 31, 2017
|
|
—
|
|
|
103.3
|
|
|
—
|
|
|
1,233.7
|
|
|
(1.4
|
)
|
|
(720.8
|
)
|
|
511.5
|
|
|||||
Impact from the adoption of ASC 606 (Note 1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.2
|
|
|
—
|
|
|
—
|
|
|
7.2
|
|
|||||
Issuance of common stock for employee stock purchase plan, options and warrants
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
3.7
|
|
|
—
|
|
|
—
|
|
|
3.7
|
|
|||||
Restricted stock issued and related taxes
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.5
|
)
|
|
(3.5
|
)
|
|||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
0.7
|
|
|||||
Balance, December 30, 2018
|
|
—
|
|
|
103.8
|
|
|
—
|
|
|
1,244.5
|
|
|
(0.7
|
)
|
|
(724.5
|
)
|
|
519.3
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.0
|
|
|
—
|
|
|
—
|
|
|
11.0
|
|
|||||
Issuance of common stock for employee stock purchase plan, options and warrants
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
4.9
|
|
|
—
|
|
|
—
|
|
|
4.9
|
|
|||||
Restricted stock issued and related taxes
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|||||
Issuance of common stock for acquisitions
|
|
—
|
|
|
1.8
|
|
|
—
|
|
|
27.0
|
|
|
—
|
|
|
—
|
|
|
27.0
|
|
|||||
Net income
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12.5
|
|
|
12.5
|
|
|||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|||||
Changes in noncontrolling interest
|
|
14.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance, December 29, 2019
|
|
15.0
|
|
|
106.6
|
|
|
$
|
—
|
|
|
$
|
1,286.5
|
|
|
$
|
(0.4
|
)
|
|
$
|
(712.0
|
)
|
|
$
|
574.1
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Operating activities:
|
|
|
|
|
|
|
|
||||
Net income (loss)
|
$
|
12.6
|
|
|
$
|
(3.5
|
)
|
|
$
|
(42.7
|
)
|
Income (loss) from discontinued operations
|
1.7
|
|
|
(7.6
|
)
|
|
4.2
|
|
|||
Income (loss) from continuing operations
|
10.9
|
|
|
4.1
|
|
|
(46.9
|
)
|
|||
Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities from continuing operations:
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
23.4
|
|
|
17.9
|
|
|
22.2
|
|
|||
Deferred income taxes
|
(4.9
|
)
|
|
(0.4
|
)
|
|
(9.5
|
)
|
|||
Amortization of lease right-of-use assets
|
11.7
|
|
|
—
|
|
|
—
|
|
|||
Stock-based compensation
|
11.0
|
|
|
7.2
|
|
|
7.8
|
|
|||
Goodwill impairment charge
|
—
|
|
|
—
|
|
|
24.2
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
17.3
|
|
|||
Amortization of deferred financing costs
|
1.0
|
|
|
1.0
|
|
|
1.3
|
|
|||
Amortization of premium and discount on Senior Secured Notes
|
—
|
|
|
—
|
|
|
0.7
|
|
|||
Provision for doubtful accounts
|
(0.2
|
)
|
|
1.8
|
|
|
—
|
|
|||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
||||
Accounts receivable
|
(11.6
|
)
|
|
8.2
|
|
|
0.5
|
|
|||
Unbilled receivables
|
(1.6
|
)
|
|
(35.9
|
)
|
|
(35.2
|
)
|
|||
Inventoried costs
|
(4.6
|
)
|
|
2.0
|
|
|
7.2
|
|
|||
Prepaid expenses
|
0.3
|
|
|
2.2
|
|
|
(3.0
|
)
|
|||
Other assets
|
(0.9
|
)
|
|
1.2
|
|
|
(2.7
|
)
|
|||
Operating lease liabilities
|
(6.3
|
)
|
|
—
|
|
|
—
|
|
|||
Accounts payable
|
4.8
|
|
|
12.2
|
|
|
(8.3
|
)
|
|||
Accrued expenses
|
(6.4
|
)
|
|
(1.7
|
)
|
|
(3.8
|
)
|
|||
Accrued compensation
|
1.7
|
|
|
3.3
|
|
|
(2.9
|
)
|
|||
Accrued interest
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(1.9
|
)
|
|||
Billings in excess of costs and earnings on uncompleted contracts
|
(2.4
|
)
|
|
(6.9
|
)
|
|
6.3
|
|
|||
Income tax receivable and payable
|
1.8
|
|
|
0.2
|
|
|
1.4
|
|
|||
Other liabilities
|
1.3
|
|
|
1.8
|
|
|
(1.6
|
)
|
|||
Net cash provided by (used in) operating activities from continuing operations
|
28.9
|
|
|
18.1
|
|
|
(26.9
|
)
|
|||
Investing activities:
|
|
|
|
|
|
|
|
||||
Cash paid for acquisitions, net of cash acquired
|
(17.7
|
)
|
|
(2.9
|
)
|
|
—
|
|
|||
Proceeds from sale of assets
|
0.3
|
|
|
66.0
|
|
|
0.7
|
|
|||
Capital expenditures
|
(26.3
|
)
|
|
(22.6
|
)
|
|
(26.1
|
)
|
|||
Net cash provided by (used in) investing activities from continuing operations
|
(43.7
|
)
|
|
40.5
|
|
|
(25.4
|
)
|
|||
Financing activities:
|
|
|
|
|
|
|
|
||||
Proceeds from the issuance of long-term debt
|
—
|
|
|
—
|
|
|
300.0
|
|
|||
Extinguishment of long-term debt
|
—
|
|
|
—
|
|
|
(448.8
|
)
|
|||
Proceeds (expenses) from the issuance of common stock
|
—
|
|
|
(1.1
|
)
|
|
269.1
|
|
|||
Repayment under credit facility and debt
|
—
|
|
|
(0.8
|
)
|
|
(1.0
|
)
|
|||
Debt issuance costs
|
—
|
|
|
(0.1
|
)
|
|
(6.6
|
)
|
|||
Payments under finance leases
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from exercise of restricted stock units, employee stock options, and employee stock purchase plan
|
4.0
|
|
|
3.7
|
|
|
1.5
|
|
|||
Other
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|||
Net cash provided by financing activities from continuing operations
|
3.5
|
|
|
1.7
|
|
|
113.4
|
|
|||
Net cash flows of continuing operations
|
(11.3
|
)
|
|
60.3
|
|
|
61.1
|
|
|||
Net operating cash flows of discontinued operations
|
1.1
|
|
|
(7.7
|
)
|
|
(0.8
|
)
|
|||
Net investing cash flows of discontinued operations
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(0.2
|
)
|
|
(0.5
|
)
|
|
0.5
|
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(10.4
|
)
|
|
52.1
|
|
|
60.2
|
|
|||
Cash, cash equivalents and restricted cash at beginning of year
|
183.0
|
|
|
130.9
|
|
|
70.7
|
|
|||
Cash, cash equivalents and restricted cash at end of year
|
$
|
172.6
|
|
|
$
|
183.0
|
|
|
$
|
130.9
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid during the year for interest
|
$
|
19.9
|
|
|
$
|
20.5
|
|
|
$
|
28.3
|
|
Net cash paid during the year for income taxes
|
$
|
0.6
|
|
|
$
|
1.5
|
|
|
$
|
(0.6
|
)
|
Non-cash financing and investing activities:
|
|
|
|
|
|
||||||
Capital expenditures included in accounts payable and accrued expenses
|
$
|
1.4
|
|
|
$
|
1.3
|
|
|
$
|
1.6
|
|
Liability for contingent consideration and goodwill related to acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.9
|
|
(a)
|
Description of Business
|
(b)
|
Principles of Consolidation and Basis of Presentation
|
(d)
|
Use of Estimates
|
(e)
|
Revenue Recognition
|
|
December 29, 2019
|
|
December 30, 2018
|
|
Net Change
|
||||||
Contract assets
|
$
|
179.4
|
|
|
$
|
172.8
|
|
|
$
|
6.6
|
|
Contract liabilities
|
$
|
34.3
|
|
|
$
|
37.0
|
|
|
$
|
(2.7
|
)
|
Net contract assets
|
$
|
145.1
|
|
|
$
|
135.8
|
|
|
$
|
9.3
|
|
|
Year Ended December 29, 2019
|
|
Year Ended December 30, 2018
|
||||
Kratos Government Solutions
|
|
|
|
||||
Fixed price
|
$
|
469.4
|
|
|
$
|
424.9
|
|
Cost plus fee
|
54.3
|
|
|
32.6
|
|
||
Time and materials
|
32.4
|
|
|
27.6
|
|
||
Total Kratos Government Solutions
|
556.1
|
|
|
485.1
|
|
||
Unmanned Systems
|
|
|
|
||||
Fixed price
|
126.2
|
|
|
104.8
|
|
||
Cost plus fee
|
33.8
|
|
|
26.5
|
|
||
Time and materials
|
1.4
|
|
|
1.6
|
|
||
Total Unmanned Systems
|
161.4
|
|
|
132.9
|
|
||
Total Revenues
|
$
|
717.5
|
|
|
$
|
618.0
|
|
|
Year Ended December 29, 2019
|
|
Year Ended December 30, 2018
|
||||
Kratos Government Solutions
|
|
|
|
||||
U.S. Government (1)
|
$
|
368.6
|
|
|
$
|
333.5
|
|
International (2)
|
111.4
|
|
|
96.0
|
|
||
U.S. Commercial and other customers
|
76.1
|
|
|
55.6
|
|
||
Total Kratos Government Solutions
|
556.1
|
|
|
485.1
|
|
||
Unmanned Systems
|
|
|
|
||||
U.S. Government (1)
|
138.8
|
|
|
113.5
|
|
||
International (2)
|
21.1
|
|
|
18.3
|
|
||
U.S. Commercial and other customers
|
1.5
|
|
|
1.1
|
|
||
Total Unmanned Systems
|
161.4
|
|
|
132.9
|
|
||
Total Revenues
|
$
|
717.5
|
|
|
$
|
618.0
|
|
(f)
|
Inventoried costs
|
(h)
|
Income Taxes
|
(i)
|
Stock-Based Compensation
|
|
Year ended December 29, 2019
|
|
Year ended December 30, 2018
|
|
Year ended December 31, 2017
|
||||||
Selling, general and administrative expenses
|
$
|
11.0
|
|
|
$
|
7.2
|
|
|
$
|
7.8
|
|
Total cost of employee stock-based compensation included in operating income (loss) from continuing operations
|
$
|
11.0
|
|
|
$
|
7.2
|
|
|
$
|
7.8
|
|
(j)
|
Allowance for Doubtful Accounts
|
Allowance for Doubtful Accounts
|
Balance at Beginning of Year
|
|
Provisions
|
|
Write-offs/Recoveries
|
|
Balance at End of Year
|
||||||||
Year ended December 31, 2017
|
$
|
1.5
|
|
|
$
|
—
|
|
|
$
|
(1.0
|
)
|
|
$
|
0.5
|
|
Year ended December 30, 2018
|
$
|
0.5
|
|
|
$
|
1.8
|
|
|
$
|
—
|
|
|
$
|
2.3
|
|
Year ended December 29, 2019
|
$
|
2.3
|
|
|
$
|
(0.2
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
1.9
|
|
(k)
|
Cash and Cash Equivalents
|
(l)
|
Property and Equipment, Net
|
|
Years
|
Buildings and improvements
|
15 – 39
|
Machinery and equipment
|
3 – 10
|
Computer equipment and software
|
1 – 10
|
Vehicles, furniture, and office equipment
|
5
|
Leasehold improvements
|
Shorter of useful life or length of lease
|
(m)
|
Leases
|
(n)
|
Goodwill and Other Intangible Assets, Net
|
(p)
|
Fair Value of Financial Instruments
|
(q)
|
Concentrations and Uncertainties
|
(s)
|
Interest Expense, Net
|
|
Year ended December 29, 2019
|
|
Year ended December 30, 2018
|
|
Year ended December 31, 2017
|
||||||
Interest expense incurred primarily on the Senior Secured Notes
|
$
|
(23.5
|
)
|
|
$
|
(21.6
|
)
|
|
$
|
(29.1
|
)
|
Miscellaneous interest income
|
1.9
|
|
|
0.8
|
|
|
0.5
|
|
|||
Interest expense, net
|
$
|
(21.6
|
)
|
|
$
|
(20.8
|
)
|
|
$
|
(28.6
|
)
|
(t)
|
Foreign Currency
|
Accounts receivable
|
|
$
|
8.1
|
|
Unbilled receivables
|
|
4.9
|
|
|
Inventoried costs
|
|
7.8
|
|
|
Other current assets
|
|
2.1
|
|
|
Property and equipment
|
|
5.7
|
|
|
Intangible assets
|
|
30.8
|
|
|
Goodwill
|
|
23.0
|
|
|
Total identifiable net assets acquired
|
|
82.4
|
|
|
Total identifiable net liabilities assumed
|
|
(7.5
|
)
|
|
Net assets before noncontrolling interest
|
|
74.9
|
|
|
Noncontrolling interest
|
|
(14.9
|
)
|
|
Net assets acquired, excluding cash
|
|
$
|
60.0
|
|
|
|
|
Cash paid
|
|
$
|
20.7
|
|
Deferred purchase consideration
|
|
15.3
|
|
|
Common stock issued
|
|
27.0
|
|
|
|
|
63.0
|
|
|
Less: Cash acquired
|
|
(3.0
|
)
|
|
Total consideration
|
|
$
|
60.0
|
|
|
|
|
Pro forma revenues
|
$
|
725.6
|
|
Pro forma net income before tax
|
$
|
14.8
|
|
Pro forma net income
|
$
|
11.7
|
|
Pro forma net income attributable to Kratos
|
$
|
11.8
|
|
|
|
||
Basic pro forma income per share attributable to Kratos
|
$
|
0.11
|
|
Diluted pro forma income per share attributable to Kratos
|
$
|
0.11
|
|
|
|
(a)
|
Goodwill
|
|
As of December 29, 2019
|
||||||||||
|
US
|
|
KGS
|
|
Total
|
||||||
Gross value
|
$
|
111.1
|
|
|
$
|
597.8
|
|
|
$
|
708.9
|
|
Less accumulated impairment
|
13.8
|
|
|
239.5
|
|
|
253.3
|
|
|||
Net
|
$
|
97.3
|
|
|
$
|
358.3
|
|
|
$
|
455.6
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
As of December 30, 2018
|
||||||||||
|
US
|
|
KGS
|
|
Total
|
||||||
Gross value
|
$
|
111.1
|
|
|
$
|
567.9
|
|
|
$
|
679.0
|
|
Less accumulated impairment
|
13.8
|
|
|
239.5
|
|
|
253.3
|
|
|||
Net
|
$
|
97.3
|
|
|
$
|
328.4
|
|
|
$
|
425.7
|
|
(b)
|
Purchased Intangible Assets
|
|
As of December 29, 2019
|
|
As of December 30, 2018
|
||||||||||||||||||||
|
Gross
Value
|
|
Accumulated
Amortization
|
|
Net
Value
|
|
Gross
Value
|
|
Accumulated
Amortization
|
|
Net
Value
|
||||||||||||
Acquired finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Customer relationships
|
$
|
72.3
|
|
|
$
|
(53.3
|
)
|
|
$
|
19.0
|
|
|
$
|
52.6
|
|
|
$
|
(50.6
|
)
|
|
$
|
2.0
|
|
Contracts and backlog
|
32.0
|
|
|
(28.4
|
)
|
|
3.6
|
|
|
29.9
|
|
|
(26.4
|
)
|
|
3.5
|
|
||||||
Developed technology and technical know-how
|
25.0
|
|
|
(23.8
|
)
|
|
1.2
|
|
|
25.0
|
|
|
(21.3
|
)
|
|
3.7
|
|
||||||
Trade names
|
1.9
|
|
|
(1.6
|
)
|
|
0.3
|
|
|
1.4
|
|
|
(1.4
|
)
|
|
—
|
|
||||||
In-process research and development
|
8.5
|
|
|
—
|
|
|
8.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total finite-lived intangible assets
|
139.7
|
|
|
(107.1
|
)
|
|
32.6
|
|
|
108.9
|
|
|
(99.7
|
)
|
|
9.2
|
|
||||||
Indefinite-lived trade names
|
6.9
|
|
|
—
|
|
|
6.9
|
|
|
6.9
|
|
|
—
|
|
|
6.9
|
|
||||||
Total intangible assets
|
$
|
146.6
|
|
|
$
|
(107.1
|
)
|
|
$
|
39.5
|
|
|
$
|
115.8
|
|
|
$
|
(99.7
|
)
|
|
$
|
16.1
|
|
Fiscal Year
|
Amount
|
||
2020
|
5.8
|
|
|
2021
|
3.7
|
|
|
2022
|
2.4
|
|
|
2023
|
2.4
|
|
|
2024
|
2.4
|
|
|
Thereafter
|
15.9
|
|
|
Total
|
$
|
32.6
|
|
|
December 29, 2019
|
|
December 30, 2018
|
||||
Billed, current
|
$
|
86.6
|
|
|
$
|
66.5
|
|
Unbilled, current
|
179.7
|
|
|
173.2
|
|
||
Total current accounts receivable
|
266.3
|
|
|
239.7
|
|
||
Allowance for doubtful accounts
|
(1.9
|
)
|
|
(2.3
|
)
|
||
Total accounts receivable and unbilled receivables, net
|
$
|
264.4
|
|
|
$
|
237.4
|
|
|
December 29, 2019
|
|
December 30, 2018
|
||||
Billed
|
$
|
16.6
|
|
|
$
|
16.5
|
|
Unbilled
|
86.4
|
|
|
83.1
|
|
||
Total U.S. Government contract receivables
|
$
|
103.0
|
|
|
$
|
99.6
|
|
|
December 29,
2019 |
|
December 30,
2018 |
||||
Raw materials
|
$
|
39.1
|
|
|
$
|
34.7
|
|
Work in process
|
20.3
|
|
|
10.3
|
|
||
Finished goods
|
1.7
|
|
|
1.8
|
|
||
Total inventoried costs
|
$
|
61.1
|
|
|
$
|
46.8
|
|
|
December 29, 2019
|
|
December 30, 2018
|
||||
Finance lease right of use assets
|
$
|
39.6
|
|
|
$
|
—
|
|
Land and buildings
|
$
|
12.2
|
|
|
$
|
11.9
|
|
Computer equipment and software
|
32.7
|
|
|
28.3
|
|
||
Machinery and equipment
|
78.7
|
|
|
56.8
|
|
||
Furniture and office equipment
|
7.1
|
|
|
6.3
|
|
||
Leasehold improvements
|
12.3
|
|
|
10.9
|
|
||
Construction in progress
|
16.0
|
|
|
21.5
|
|
||
Property and equipment
|
198.6
|
|
|
135.7
|
|
||
Accumulated depreciation and amortization
|
(81.7
|
)
|
|
(68.6
|
)
|
||
Total property and equipment, net
|
$
|
116.9
|
|
|
$
|
67.1
|
|
|
As of December 29, 2019
|
|
As of December 30, 2018
|
||||||||||||||||||||
$ in millions
|
Principal
|
|
Carrying
Amount
|
|
Fair Value
|
|
Principal
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||||||
Long-term debt
|
$
|
300.0
|
|
|
$
|
295.1
|
|
|
$
|
322.1
|
|
|
$
|
300.0
|
|
|
$
|
294.2
|
|
|
$
|
305.3
|
|
Amortization of right of use assets - finance leases
|
|
|
$
|
2.0
|
|
Interest expense on lease liabilities - finance leases
|
|
|
2.5
|
|
|
Operating lease cost (expense resulting from amortization of total lease payments)
|
|
|
13.2
|
|
|
Short-term lease cost
|
|
|
0.6
|
|
|
Variable lease cost (cost excluded from lease payments)
|
|
|
0.1
|
|
|
Sublease income
|
|
|
(3.3
|
)
|
|
Total lease cost
|
|
|
$
|
15.1
|
|
|
|
|
|
|
December 29, 2019
|
||
Operating Leases:
|
|
||
Operating lease right-of-use assets
|
$
|
42.1
|
|
Current portion of operating lease liabilities
|
$
|
9.9
|
|
Operating lease liabilities, net of current portion
|
$
|
37.6
|
|
Finance leases:
|
|
||
Property, plant and equipment, net
|
$
|
38.1
|
|
Other current liabilities
|
$
|
0.6
|
|
Other long-term liabilities
|
$
|
38.4
|
|
Finance lease - cash paid for interest
|
|
|
$
|
2.5
|
|
Finance lease - financing cash flows
|
|
|
$
|
0.5
|
|
Operating lease - operating cash flows (fixed payments)
|
|
|
$
|
14.8
|
|
|
Operating Leases
|
|
Finance Leases
|
||||
2020
|
$
|
12.6
|
|
|
$
|
3.1
|
|
2021
|
10.0
|
|
|
3.2
|
|
||
2022
|
8.6
|
|
|
3.3
|
|
||
2023
|
8.2
|
|
|
3.3
|
|
||
2024
|
6.2
|
|
|
3.3
|
|
||
Thereafter
|
11.6
|
|
|
54.0
|
|
||
Total lease payments
|
57.2
|
|
|
70.2
|
|
||
Less: imputed interest
|
(9.6
|
)
|
|
(31.2
|
)
|
||
Total present value of lease liabilities
|
$
|
47.6
|
|
|
$
|
39.0
|
|
|
|
|
|
Year
|
Operating Leases
|
||
2019
|
$
|
16.5
|
|
2020
|
12.0
|
|
|
2021
|
9.6
|
|
|
2022
|
8.1
|
|
|
2023
|
7.9
|
|
|
Thereafter
|
63.1
|
|
|
Total minimum lease payments
|
$
|
117.2
|
|
|
Year Ended
|
|||||||
|
December 29, 2019
|
|
December 30, 2018
|
|
December 31, 2017
|
|||
Shares from stock options and awards
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
December 29, 2019
|
|
December 30, 2018
|
|
December 31, 2017
|
||||||
Domestic
|
$
|
6.8
|
|
|
$
|
2.2
|
|
|
$
|
(60.5
|
)
|
Foreign
|
8.9
|
|
|
6.5
|
|
|
3.4
|
|
|||
Total
|
$
|
15.7
|
|
|
$
|
8.7
|
|
|
$
|
(57.1
|
)
|
|
Year Ended
|
||||||||||
|
December 29, 2019
|
|
December 30, 2018
|
|
December 31, 2017
|
||||||
Federal income taxes:
|
|
|
|
|
|
||||||
Current
|
$
|
(0.2
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(2.9
|
)
|
Deferred
|
(3.9
|
)
|
|
(1.8
|
)
|
|
(9.0
|
)
|
|||
Total Federal
|
(4.1
|
)
|
|
(2.2
|
)
|
|
(11.9
|
)
|
|||
State and local income taxes:
|
|
|
|
|
|
||||||
Current
|
1.0
|
|
|
0.4
|
|
|
0.5
|
|
|||
Deferred
|
(0.9
|
)
|
|
1.4
|
|
|
(0.3
|
)
|
|||
Total State and local
|
0.1
|
|
|
1.8
|
|
|
0.2
|
|
|||
Foreign income taxes:
|
|
|
|
|
|
||||||
Current
|
9.0
|
|
|
4.8
|
|
|
2.0
|
|
|||
Deferred
|
(0.2
|
)
|
|
0.2
|
|
|
(0.5
|
)
|
|||
Total Foreign
|
8.8
|
|
|
5.0
|
|
|
1.5
|
|
|||
Total
|
$
|
4.8
|
|
|
$
|
4.6
|
|
|
$
|
(10.2
|
)
|
|
Year Ended
|
||||||||||
|
December 29, 2019
|
|
December 30, 2018
|
|
December 31, 2017
|
||||||
Income tax (benefit) at federal statutory rate
|
$
|
3.3
|
|
|
$
|
1.8
|
|
|
$
|
(20.0
|
)
|
State taxes, net of federal tax benefit and valuation allowance
|
0.6
|
|
|
0.9
|
|
|
0.5
|
|
|||
Difference in tax rates between U.S. and foreign
|
1.9
|
|
|
0.7
|
|
|
—
|
|
|||
Increase (decrease) in valuation allowance
|
(3.3
|
)
|
|
4.7
|
|
|
(45.6
|
)
|
|||
Nondeductible expense
|
1.0
|
|
|
0.6
|
|
|
1.1
|
|
|||
Increase in reserve for uncertain tax positions
|
7.7
|
|
|
4.0
|
|
|
1.3
|
|
|||
Changes to indefinite life items and separate state deferred taxes
|
0.4
|
|
|
(0.7
|
)
|
|
(1.8
|
)
|
|||
One-time transition tax on previously undistributed foreign earnings
|
—
|
|
|
2.2
|
|
|
6.2
|
|
|||
Goodwill impairment
|
—
|
|
|
—
|
|
|
8.1
|
|
|||
Decrease in deferred taxes related to disposition
|
—
|
|
|
(9.6
|
)
|
|
—
|
|
|||
Impact related to the 2017 Tax Cuts and Jobs Act
|
—
|
|
|
—
|
|
|
40.0
|
|
|||
Release of valuation allowance due to FTT acquisition
|
(5.2
|
)
|
|
—
|
|
|
—
|
|
|||
Stock-based compensation
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
4.8
|
|
|
$
|
4.6
|
|
|
$
|
(10.2
|
)
|
|
December 29, 2019
|
|
December 30, 2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Allowance for doubtful accounts
|
$
|
0.6
|
|
|
$
|
0.6
|
|
Sundry accruals
|
2.3
|
|
|
1.1
|
|
||
Vacation accrual
|
3.0
|
|
|
2.7
|
|
||
Stock-based compensation
|
5.3
|
|
|
4.2
|
|
||
Payroll related accruals
|
6.2
|
|
|
2.4
|
|
||
Lease accruals
|
22.1
|
|
|
2.0
|
|
||
Investments
|
1.3
|
|
|
1.3
|
|
||
Net operating loss carryforwards
|
75.1
|
|
|
81.7
|
|
||
Capital loss carryforwards
|
1.3
|
|
|
1.9
|
|
||
Tax credit carryforwards
|
11.2
|
|
|
9.9
|
|
||
Deferred revenue
|
1.1
|
|
|
1.5
|
|
||
Reserves and other
|
13.6
|
|
|
10.8
|
|
||
|
143.1
|
|
|
120.1
|
|
||
Valuation allowance
|
(88.6
|
)
|
|
(92.2
|
)
|
||
Total deferred tax assets, net of valuation allowance
|
54.5
|
|
|
27.9
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Unearned revenue
|
(19.0
|
)
|
|
(23.9
|
)
|
||
Operating lease right-of-use assets
|
(20.2
|
)
|
|
|
|||
Other intangibles
|
(21.0
|
)
|
|
(8.9
|
)
|
||
Property and equipment, principally due to differences in depreciation
|
(2.0
|
)
|
|
(0.9
|
)
|
||
Other
|
(1.3
|
)
|
|
(1.2
|
)
|
||
Total deferred tax liabilities
|
(63.5
|
)
|
|
(34.9
|
)
|
||
Net deferred tax liability
|
$
|
(9.0
|
)
|
|
$
|
(7.0
|
)
|
Balance as of December 25, 2016
|
$
|
18.6
|
|
Increases related to prior periods
|
0.4
|
|
|
Increases related to current year tax positions
|
1.1
|
|
|
Expiration of applicable statutes of limitations
|
(0.6
|
)
|
|
Decrease in federal tax rate
|
(3.9
|
)
|
|
Balance as of December 31, 2017
|
15.6
|
|
|
Increases related to prior periods
|
0.5
|
|
|
Increases related to current year tax positions
|
4.0
|
|
|
Expiration of applicable statutes of limitations
|
(0.4
|
)
|
|
Decreases related to prior year tax positions
|
(0.3
|
)
|
|
Decreases related to disposition
|
(1.7
|
)
|
|
Balance as of December 30, 2018
|
17.7
|
|
|
Increases related to prior periods
|
0.2
|
|
|
Increases related to current year tax positions
|
6.3
|
|
|
Expiration of applicable statutes of limitations
|
(0.1
|
)
|
|
Decreases related to settlement with tax authorities
|
(0.1
|
)
|
|
Balance as of December 29, 2019
|
$
|
24.0
|
|
|
Year ended December 29, 2019
|
|
Year ended December 30, 2018
|
|
Year ended December 31, 2017
|
||||||
Revenue
|
$
|
0.3
|
|
|
$
|
44.2
|
|
|
$
|
149.9
|
|
Cost of sales
|
0.9
|
|
|
34.2
|
|
|
110.1
|
|
|||
Selling, general and administrative expenses
|
1.1
|
|
|
16.7
|
|
|
33.6
|
|
|||
Other (income) expense items that are not major
|
(3.6
|
)
|
|
2.7
|
|
|
(0.1
|
)
|
|||
Income (loss) from discontinued operations before income taxes
|
1.9
|
|
|
(9.4
|
)
|
|
6.3
|
|
|||
Gain on disposal of discontinued operations before income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total gain (loss) of discontinued operations before income taxes
|
1.9
|
|
|
(9.4
|
)
|
|
6.3
|
|
|||
Income tax (benefit) expense
|
0.2
|
|
|
(1.8
|
)
|
|
2.1
|
|
|||
Income (loss) from discontinued operations
|
$
|
1.7
|
|
|
$
|
(7.6
|
)
|
|
$
|
4.2
|
|
|
December 29, 2019
|
|
December 30, 2018
|
||||
Accounts receivable, net
|
3.3
|
|
|
8.2
|
|
||
Other current assets
|
—
|
|
|
0.1
|
|
||
Current assets of discontinued operations
|
$
|
3.3
|
|
|
$
|
8.3
|
|
Accounts payable
|
$
|
0.2
|
|
|
$
|
0.3
|
|
Accrued expenses
|
0.3
|
|
|
0.4
|
|
||
Other current liabilities
|
2.8
|
|
|
4.6
|
|
||
Current liabilities of discontinued operations
|
$
|
3.3
|
|
|
$
|
5.3
|
|
Other long-term liabilities of discontinued operations
|
$
|
2.8
|
|
|
$
|
6.4
|
|
|
2019
|
|
2018
|
|
2017
|
Stock Options
|
|
|
|
|
|
Expected life
|
10.0
|
|
10.0
|
|
10.0
|
Risk-free interest rate(1)
|
2.5% - 2.6%
|
|
2.9% - 3.2%
|
|
2.2% - 2.5%
|
Volatility(2)
|
47.5% - 49.1%
|
|
52.9% - 53.4%
|
|
53.8% - 55.0%
|
Forfeiture rate(3)
|
5.1%
|
|
5.1%
|
|
5.0%
|
Dividend yield(4)
|
—%
|
|
—%
|
|
—%
|
|
|
Number of
Shares Under Option
|
|
Weighted-Average Exercise Price per Share
|
|
Weighted-
Average
Remaining
Contractual
Term
(in years)
|
|
Aggregate Intrinsic Value
|
|||||
|
|
(000’s)
|
|
|
|
|
|
(000’s)
|
|||||
Options outstanding at December 30, 2018
|
|
768
|
|
|
$
|
5.17
|
|
|
4.2
|
|
$
|
6,587.5
|
|
Granted
|
|
2
|
|
|
$
|
16.81
|
|
|
|
|
|
||
Exercised
|
|
(619
|
)
|
|
$
|
5.23
|
|
|
|
|
|
||
Forfeited or expired
|
|
(5
|
)
|
|
$
|
7.87
|
|
|
|
|
|
||
Options outstanding at December 29, 2019
|
|
146
|
|
|
$
|
4.98
|
|
|
3.0
|
|
$
|
1,866.3
|
|
Options exercisable at December 29, 2019
|
|
146
|
|
|
$
|
4.98
|
|
|
3.0
|
|
$
|
1,866.3
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Weighted average grant date fair value of options granted
|
$
|
10.25
|
|
|
$
|
7.54
|
|
|
$
|
6.39
|
|
Total intrinsic value of options exercised (in thousands)
|
$
|
8,874.9
|
|
|
$
|
40.6
|
|
|
$
|
67.1
|
|
|
|
Restricted
Stock Units (000’s) |
|
Weighted-Average Grant Date Fair Value
|
|||
Nonvested balance at December 30, 2018
|
|
3,293
|
|
|
$
|
8.22
|
|
Grants
|
|
1,147
|
|
|
$
|
13.86
|
|
Vested
|
|
(228
|
)
|
|
$
|
15.22
|
|
Vested but not released
|
|
(163
|
)
|
|
$
|
9.29
|
|
Nonvested balance at December 29, 2019
|
|
4,049
|
|
|
$
|
9.38
|
|
(c)
|
Amended and Restated Employee Stock Purchase Plan
|
|
Offering
Periods
January 1 to
December 31
2019
|
|
Offering
Periods
January 1 to
December 31,
2018
|
|
Offering
Periods
January 1 to
December 31,
2017
|
Expected term (in years)(1)
|
0.5
|
|
0.5
|
|
0.5
|
Risk-free interest rate(2)
|
2.09% - 2.56%
|
|
1.53% - 2.11%
|
|
0.62% - 1.14%
|
Expected volatility(3)
|
37.22% - 43.70%
|
|
40.24% - 44.83%
|
|
44.38% - 53.70%
|
Expected dividend yield(4)
|
—%
|
|
—%
|
|
—%
|
Weighted average grant-date fair value per share
|
$4.74
|
|
$3.03
|
|
$2.51
|
(1)
|
The expected term is equivalent to the offering period.
|
(2)
|
The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant with a term equal to the expected term.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Kratos Government Solutions
|
|
|
|
|
|
||||||
Service revenues
|
$
|
272.6
|
|
|
$
|
200.7
|
|
|
$
|
197.8
|
|
Product sales
|
283.5
|
|
|
284.4
|
|
|
283.8
|
|
|||
Total Kratos Government Solutions
|
556.1
|
|
|
485.1
|
|
|
481.6
|
|
|||
Unmanned Systems
|
|
|
|
|
|
||||||
Service revenues
|
—
|
|
|
—
|
|
|
—
|
|
|||
Product sales
|
161.4
|
|
|
132.9
|
|
|
121.7
|
|
|||
Total Unmanned Systems
|
161.4
|
|
|
132.9
|
|
|
121.7
|
|
|||
Total revenues
|
$
|
717.5
|
|
|
$
|
618.0
|
|
|
$
|
603.3
|
|
Depreciation and amortization:
|
|
|
|
|
|
||||||
Kratos Government Solutions
|
$
|
18.2
|
|
|
$
|
13.2
|
|
|
$
|
14.4
|
|
Unmanned Systems
|
5.2
|
|
|
4.7
|
|
|
7.8
|
|
|||
Total depreciation and amortization
|
$
|
23.4
|
|
|
$
|
17.9
|
|
|
$
|
22.2
|
|
Operating income (loss):
|
|
|
|
|
|
||||||
Kratos Government Solutions
|
$
|
45.2
|
|
|
$
|
35.5
|
|
|
$
|
(0.1
|
)
|
Unmanned Systems
|
6.1
|
|
|
5.1
|
|
|
(3.6
|
)
|
|||
Corporate activities
|
(13.3
|
)
|
|
(10.1
|
)
|
|
(8.3
|
)
|
|||
Total operating income (loss)
|
$
|
38.0
|
|
|
$
|
30.5
|
|
|
$
|
(12.0
|
)
|
|
December 29, 2019
|
|
December 30, 2018
|
|
December 31, 2017
|
||||||
Assets:
|
|
|
|
|
|
||||||
Kratos Government Solutions
|
$
|
777.6
|
|
|
$
|
602.8
|
|
|
$
|
597.9
|
|
Unmanned Systems
|
246.3
|
|
|
220.9
|
|
|
201.9
|
|
|||
Discontinued operations
|
3.3
|
|
|
8.3
|
|
|
97.4
|
|
|||
Corporate activities
|
158.8
|
|
|
178.1
|
|
|
126.8
|
|
|||
Total assets
|
$
|
1,186.0
|
|
|
$
|
1,010.1
|
|
|
$
|
1,024.0
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Fiscal year 2019
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
160.4
|
|
|
$
|
187.9
|
|
|
$
|
184.1
|
|
|
$
|
185.1
|
|
Gross profit
|
44.9
|
|
|
48.1
|
|
|
48.6
|
|
|
48.4
|
|
||||
Operating income
|
8.2
|
|
|
9.0
|
|
|
11.5
|
|
|
9.3
|
|
||||
Provision (benefit) for income taxes
|
(1.5
|
)
|
|
2.5
|
|
|
2.8
|
|
|
1.0
|
|
||||
Income from continuing operations
|
3.7
|
|
|
1.3
|
|
|
2.6
|
|
|
3.3
|
|
||||
Income (loss) from discontinued operations
|
(0.6
|
)
|
|
3.0
|
|
|
—
|
|
|
(0.7
|
)
|
||||
Net income
|
$
|
3.1
|
|
|
$
|
4.3
|
|
|
$
|
2.6
|
|
|
$
|
2.6
|
|
Less: Net income (loss) attributable to noncontrolling interest
|
—
|
|
|
0.4
|
|
|
0.1
|
|
|
(0.4
|
)
|
||||
Net income attributable to Kratos
|
3.1
|
|
|
3.9
|
|
|
2.5
|
|
|
3.0
|
|
||||
Basic income (loss) per common share attributable to Kratos:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.04
|
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
0.03
|
|
Income (loss) from discontinued operations
|
$
|
(0.01
|
)
|
|
$
|
0.03
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net income per common share
|
$
|
0.03
|
|
|
$
|
0.04
|
|
|
$
|
0.02
|
|
|
$
|
0.03
|
|
Diluted income per common share attributable to Kratos:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.03
|
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
0.03
|
|
Income from discontinued operations
|
$
|
—
|
|
|
$
|
0.03
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net income per common share
|
$
|
0.03
|
|
|
$
|
0.04
|
|
|
$
|
0.02
|
|
|
$
|
0.03
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Fiscal year 2018
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
143.0
|
|
|
$
|
151.2
|
|
|
$
|
159.4
|
|
|
$
|
164.4
|
|
Gross profit
|
40.8
|
|
|
39.3
|
|
|
44.1
|
|
|
45.5
|
|
||||
Operating income
|
7.0
|
|
|
2.6
|
|
|
10.1
|
|
|
10.8
|
|
||||
Provision for income taxes
|
0.9
|
|
|
0.1
|
|
|
3.4
|
|
|
0.2
|
|
||||
Income (loss) from continuing operations
|
1.3
|
|
|
(3.8
|
)
|
|
1.4
|
|
|
5.2
|
|
||||
Income (loss) from discontinued operations
|
(3.5
|
)
|
|
(3.9
|
)
|
|
0.3
|
|
|
(0.5
|
)
|
||||
Net income (loss)
|
$
|
(2.2
|
)
|
|
$
|
(7.7
|
)
|
|
$
|
1.7
|
|
|
$
|
4.7
|
|
Basic income (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
0.01
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.01
|
|
|
$
|
0.05
|
|
Income (loss) from discontinued operations
|
$
|
(0.03
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
0.01
|
|
|
$
|
—
|
|
Net income (loss) per common share
|
$
|
(0.02
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
0.02
|
|
|
$
|
0.05
|
|
Diluted income (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
0.01
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.01
|
|
|
$
|
0.05
|
|
Income (loss) from discontinued operations
|
$
|
(0.03
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.01
|
)
|
Net income (loss) per common share
|
$
|
(0.02
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
0.02
|
|
|
$
|
0.04
|
|
1 Year Kratos Defense and Secur... Chart |
1 Month Kratos Defense and Secur... Chart |
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