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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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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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Large accelerated filer
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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Emerging growth company
o
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September 30, 2018
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December 31, 2017
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||||
Assets
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Current assets:
|
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Cash and cash equivalents
|
$
|
187.2
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$
|
130.5
|
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Restricted cash
|
0.3
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0.4
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|
||
Accounts receivable, net
|
60.1
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|
74.2
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|
||
Unbilled receivables, net
|
166.1
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138.1
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||
Inventoried costs
|
48.6
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49.0
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||
Prepaid expenses
|
14.2
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11.1
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Other current assets
|
11.9
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9.5
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Current assets of discontinued operations
|
8.2
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58.6
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Total current assets
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496.6
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471.4
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Property, plant and equipment, net
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65.2
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58.0
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Goodwill
|
425.7
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425.7
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Intangible assets, net
|
17.5
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22.0
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Other assets
|
6.9
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|
8.1
|
|
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Non-current assets of discontinued operations
|
—
|
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|
38.8
|
|
||
Total assets
|
$
|
1,011.9
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$
|
1,024.0
|
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Liabilities and Stockholders
’
Equity
|
|
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Current liabilities:
|
|
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|
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|
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Accounts payable
|
$
|
41.8
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|
$
|
34.7
|
|
Accrued expenses
|
38.7
|
|
|
40.9
|
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||
Accrued compensation
|
32.2
|
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|
30.2
|
|
||
Accrued interest
|
6.5
|
|
|
1.7
|
|
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Billings in excess of costs and earnings on uncompleted contracts
|
40.5
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|
42.8
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|
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Other current liabilities
|
5.4
|
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|
9.4
|
|
||
Current liabilities of discontinued operations
|
7.0
|
|
|
29.2
|
|
||
Total current liabilities
|
172.1
|
|
|
188.9
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|
||
Long-term debt principal, net of current portion
|
294.0
|
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|
293.5
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Other long-term liabilities
|
27.6
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|
24.1
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|
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Non-current liabilities of discontinued operations
|
6.3
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6.0
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Total liabilities
|
500.0
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|
|
512.5
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Commitments and contingencies
|
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Stockholders
’
equity:
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Preferred stock, $0.001 par value, 5,000,000 shares authorized, 0 shares outstanding at September 30, 2018 and December 31, 2017
|
—
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—
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Common stock, $0.001 par value, 195,000,000 shares authorized; 103,752,514 and 103,297,525 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively
|
—
|
|
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—
|
|
||
Additional paid-in capital
|
1,242.4
|
|
|
1,233.7
|
|
||
Accumulated other comprehensive loss
|
(1.3
|
)
|
|
(1.4
|
)
|
||
Accumulated deficit
|
(729.2
|
)
|
|
(720.8
|
)
|
||
Total stockholders
’
equity
|
511.9
|
|
|
511.5
|
|
||
Total liabilities and stockholders
’
equity
|
$
|
1,011.9
|
|
|
$
|
1,024.0
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2018
|
|
October 1, 2017
|
|
September 30, 2018
|
|
October 1, 2017
|
||||||||
Service revenues
|
$
|
54.9
|
|
|
$
|
47.6
|
|
|
$
|
147.9
|
|
|
$
|
150.6
|
|
Product sales
|
104.5
|
|
|
109.5
|
|
|
305.7
|
|
|
286.4
|
|
||||
Total revenues
|
159.4
|
|
|
157.1
|
|
|
453.6
|
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|
437.0
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|
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Cost of service revenues
|
34.3
|
|
|
32.7
|
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|
100.4
|
|
|
106.8
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|
||||
Cost of product sales
|
81.0
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|
87.2
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|
229.0
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|
219.4
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|
||||
Total costs
|
115.3
|
|
|
119.9
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|
329.4
|
|
|
326.2
|
|
||||
Gross profit
|
44.1
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|
|
37.2
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|
|
124.2
|
|
|
110.8
|
|
||||
Selling, general and administrative expenses
|
29.5
|
|
|
32.9
|
|
|
89.4
|
|
|
94.8
|
|
||||
Research and development expenses
|
4.4
|
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4.2
|
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|
11.6
|
|
|
12.7
|
|
||||
Restructuring expenses and other
|
0.1
|
|
|
—
|
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|
3.5
|
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|
0.3
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|
||||
Operating income from continuing operations
|
10.1
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|
0.1
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19.7
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3.0
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|
||||
Other income (expense):
|
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||||||
Interest expense, net
|
(5.0
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)
|
|
(7.7
|
)
|
|
(15.8
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)
|
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(23.1
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
||||
Other income (expense), net
|
(0.3
|
)
|
|
0.6
|
|
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(0.6
|
)
|
|
0.9
|
|
||||
Total other expense, net
|
(5.3
|
)
|
|
(7.1
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)
|
|
(16.4
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)
|
|
(24.3
|
)
|
||||
Income (loss) from continuing operations before income taxes
|
4.8
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|
(7.0
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)
|
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3.3
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|
(21.3
|
)
|
||||
Provision (benefit) for income taxes from continuing operations
|
3.4
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|
(1.1
|
)
|
|
4.4
|
|
|
1.6
|
|
||||
Income (loss) from continuing operations
|
1.4
|
|
|
(5.9
|
)
|
|
(1.1
|
)
|
|
(22.9
|
)
|
||||
Discontinued operations
|
|
|
|
|
|
|
|
||||||||
Income (loss) from operations of discontinued components
|
0.5
|
|
|
2.9
|
|
|
(9.1
|
)
|
|
4.5
|
|
||||
Income tax benefit (expense)
|
(0.2
|
)
|
|
(1.3
|
)
|
|
2.0
|
|
|
(2.1
|
)
|
||||
Income (loss) from discontinued operations
|
0.3
|
|
|
1.6
|
|
|
(7.1
|
)
|
|
2.4
|
|
||||
Net income (loss)
|
$
|
1.7
|
|
|
$
|
(4.3
|
)
|
|
$
|
(8.2
|
)
|
|
$
|
(20.5
|
)
|
Basic income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
$
|
0.01
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.27
|
)
|
Income (loss) from discontinued operations
|
0.01
|
|
|
0.02
|
|
|
(0.07
|
)
|
|
0.03
|
|
||||
Net income (loss) per common share
|
$
|
0.02
|
|
|
$
|
(0.05
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.24
|
)
|
Diluted income (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
0.01
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.27
|
)
|
Income (loss) from discontinued operations
|
0.01
|
|
|
0.02
|
|
|
(0.07
|
)
|
|
0.03
|
|
||||
Net income (loss) per common share
|
$
|
0.02
|
|
|
$
|
(0.05
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.24
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
103.9
|
|
|
90.5
|
|
|
103.8
|
|
|
85.0
|
|
||||
Diluted
|
106.4
|
|
|
90.5
|
|
|
103.8
|
|
|
85.0
|
|
||||
Comprehensive Income (loss)
|
|
|
|
|
|
|
|
||||||||
Net income (loss) (from above)
|
$
|
1.7
|
|
|
$
|
(4.3
|
)
|
|
$
|
(8.2
|
)
|
|
$
|
(20.5
|
)
|
Change in cumulative translation adjustment
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.1
|
)
|
||||
Comprehensive income (loss)
|
$
|
1.7
|
|
|
$
|
(4.5
|
)
|
|
$
|
(8.2
|
)
|
|
$
|
(20.6
|
)
|
|
Nine Months Ended
|
||||||
|
September 30, 2018
|
|
October 1, 2017
|
||||
Operating activities:
|
|
|
|
|
|||
Net loss
|
$
|
(8.2
|
)
|
|
$
|
(20.5
|
)
|
Loss (income) from discontinued operations
|
7.1
|
|
|
(2.4
|
)
|
||
Loss from continuing operations
|
(1.1
|
)
|
|
(22.9
|
)
|
||
Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities from continuing operations:
|
|
|
|
|
|
||
Depreciation and amortization
|
13.6
|
|
|
16.8
|
|
||
Stock-based compensation
|
5.1
|
|
|
6.8
|
|
||
Deferred income taxes
|
0.5
|
|
|
1.8
|
|
||
Amortization of deferred financing costs
|
0.7
|
|
|
1.0
|
|
||
Amortization of discount on Senior Secured Notes
|
—
|
|
|
0.6
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
2.1
|
|
||
Provision for doubtful accounts
|
0.4
|
|
|
0.1
|
|
||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||
Accounts receivable
|
13.8
|
|
|
10.4
|
|
||
Unbilled receivables
|
(29.2
|
)
|
|
(24.8
|
)
|
||
Inventoried costs
|
0.9
|
|
|
(4.7
|
)
|
||
Prepaid expenses and other assets
|
(4.2
|
)
|
|
(5.3
|
)
|
||
Accounts payable
|
8.2
|
|
|
(4.0
|
)
|
||
Accrued expenses
|
(1.0
|
)
|
|
(7.8
|
)
|
||
Accrued compensation
|
2.0
|
|
|
(4.2
|
)
|
||
Advance payments received on contracts
|
(0.6
|
)
|
|
(0.6
|
)
|
||
Accrued interest
|
4.8
|
|
|
6.5
|
|
||
Billings in excess of costs and earnings on uncompleted contracts
|
(1.3
|
)
|
|
10.7
|
|
||
Income tax receivable and payable
|
(0.8
|
)
|
|
1.3
|
|
||
Other liabilities
|
3.6
|
|
|
(0.7
|
)
|
||
Net cash provided by (used in) operating activities from continuing operations
|
15.4
|
|
|
(16.9
|
)
|
||
Investing activities:
|
|
|
|
|
|
||
Cash paid for acquisitions, net of cash acquired
|
(2.9
|
)
|
|
0.2
|
|
||
Capital expenditures
|
(17.9
|
)
|
|
(18.7
|
)
|
||
Proceeds from sale of assets
|
67.0
|
|
|
0.7
|
|
||
Net cash provided by (used in) investing activities from continuing operations
|
46.2
|
|
|
(17.8
|
)
|
||
Financing activities:
|
|
|
|
|
|||
Extinguishment of long-term debt
|
—
|
|
|
(64.0
|
)
|
||
Debt issuance costs
|
(0.1
|
)
|
|
—
|
|
||
Proceeds from the issuance of common stock
|
(1.1
|
)
|
|
268.0
|
|
||
Repayment of debt
|
(0.8
|
)
|
|
(0.8
|
)
|
||
Proceeds from exercise of restricted stock units, employee stock options, and employee stock purchase plan
|
3.7
|
|
|
1.5
|
|
||
Net cash provided by financing activities from continuing operations
|
1.7
|
|
|
204.7
|
|
||
Net cash flows of continuing operations
|
63.3
|
|
|
170.0
|
|
||
Net operating cash flows of discontinued operations
|
(6.4
|
)
|
|
(0.5
|
)
|
||
Net investing cash flows of discontinued operations
|
—
|
|
|
(0.6
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(0.3
|
)
|
|
0.5
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
56.6
|
|
|
169.4
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
130.9
|
|
|
70.7
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
187.5
|
|
|
$
|
240.1
|
|
(a)
|
Basis of Presentation
|
(b)
|
Principles of Consolidation
|
(c)
|
Fiscal Year
|
|
Balance at January 1, 2018
|
|
ASC 606 Adjustment
|
|
Adjusted Balance at January 1, 2018
|
||||||
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
||||||
Unbilled receivables, net
|
$
|
138.1
|
|
|
$
|
1.3
|
|
|
$
|
139.4
|
|
Inventoried costs
|
49.0
|
|
|
(0.3
|
)
|
|
48.7
|
|
|||
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Accrued expenses
|
$
|
40.9
|
|
|
$
|
(0.6
|
)
|
|
$
|
40.3
|
|
Billings in excess of costs and earnings on uncompleted contracts
|
42.8
|
|
|
1.8
|
|
|
44.6
|
|
|||
|
|
|
|
|
|
||||||
Stockholders’ Equity
|
|
|
|
|
|
||||||
Accumulated deficit
|
$
|
(720.8
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
(721.0
|
)
|
|
Three Months Ended
September 30, 2018 |
|
Nine Months Ended
September 30, 2018 |
||||||||||||||||||||
|
|
|
Balances Without Adoption of ASC 606
|
|
Effect of Change Higher/(Lower)
|
|
|
|
Balances Without Adoption of ASC 606
|
|
Effect of Change Higher/(Lower)
|
||||||||||||
|
As Reported
|
|
|
|
As Reported
|
|
|
||||||||||||||||
Service revenues
|
$
|
54.9
|
|
|
$
|
54.9
|
|
|
$
|
—
|
|
|
$
|
147.9
|
|
|
$
|
147.9
|
|
|
$
|
—
|
|
Product sales
|
104.5
|
|
|
99.2
|
|
|
5.3
|
|
|
305.7
|
|
|
284.7
|
|
|
21.0
|
|
||||||
Total revenues
|
159.4
|
|
|
154.1
|
|
|
5.3
|
|
|
453.6
|
|
|
432.6
|
|
|
21.0
|
|
||||||
Cost of service revenue
|
34.3
|
|
|
34.3
|
|
|
—
|
|
|
100.4
|
|
|
100.4
|
|
|
—
|
|
||||||
Cost of product sales
|
81.0
|
|
|
77.2
|
|
|
3.8
|
|
|
229.0
|
|
|
213.5
|
|
|
15.5
|
|
||||||
Total costs
|
115.3
|
|
|
111.5
|
|
|
3.8
|
|
|
329.4
|
|
|
313.9
|
|
|
15.5
|
|
||||||
Gross profit
|
44.1
|
|
|
42.6
|
|
|
1.5
|
|
|
124.2
|
|
|
118.7
|
|
|
5.5
|
|
||||||
Selling, general and administrative expenses
|
29.5
|
|
|
29.5
|
|
|
—
|
|
|
89.4
|
|
|
89.4
|
|
|
—
|
|
||||||
Operating income from continuing operations
|
$
|
10.1
|
|
|
$
|
8.6
|
|
|
$
|
1.5
|
|
|
$
|
19.7
|
|
|
$
|
14.2
|
|
|
$
|
5.5
|
|
|
September 30, 2018
|
||||||||||
|
|
|
Balances Without Adoption of ASC 606
|
|
Effect of Change Higher/(Lower)
|
||||||
|
As Reported
|
|
|
||||||||
Assets
|
|
|
|
|
|
||||||
Accounts receivable, net
|
$
|
60.1
|
|
|
$
|
59.6
|
|
|
$
|
0.5
|
|
Unbilled receivables, net
|
166.1
|
|
|
148.3
|
|
|
17.8
|
|
|||
Inventoried costs
|
48.6
|
|
|
64.1
|
|
|
(15.5
|
)
|
|||
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Billings in excess of costs and earnings on uncompleted contracts
|
40.5
|
|
|
43.2
|
|
|
(2.7
|
)
|
|||
|
|
|
|
|
|
||||||
Stockholders’ Equity
|
|
|
|
|
|
||||||
Accumulated deficit
|
$
|
(729.2
|
)
|
|
$
|
(734.7
|
)
|
|
$
|
5.5
|
|
(f)
|
Fair Value of Financial Instruments
|
|
September 30, 2018
|
|
January 1, 2018
|
|
Net Change
|
||||||
Contract assets
|
$
|
166.1
|
|
|
$
|
139.4
|
|
|
$
|
26.7
|
|
Contract liabilities
|
$
|
42.8
|
|
|
$
|
46.8
|
|
|
$
|
(4.0
|
)
|
Net contract assets
|
$
|
123.3
|
|
|
$
|
92.6
|
|
|
$
|
30.7
|
|
|
Three Months Ended
September 30, 2018 |
|
Nine Months Ended
September 30, 2018 |
||||
Kratos Government Solutions
|
|
|
|
||||
Fixed price
|
$
|
108.5
|
|
|
$
|
311.8
|
|
Cost plus fee
|
10.3
|
|
|
24.7
|
|
||
Time and materials
|
7.3
|
|
|
20.4
|
|
||
Total Kratos Government Solutions
|
126.1
|
|
|
356.9
|
|
||
Unmanned Systems
|
|
|
|
||||
Fixed price
|
25.9
|
|
|
76.9
|
|
||
Cost plus fee
|
7.1
|
|
|
18.5
|
|
||
Time and materials
|
0.3
|
|
|
1.3
|
|
||
Total Unmanned Systems
|
33.3
|
|
|
96.7
|
|
||
Total Revenues
|
$
|
159.4
|
|
|
$
|
453.6
|
|
|
Three Months Ended
September 30, 2018 |
|
Nine Months Ended
September 30, 2018 |
||||
Kratos Government Solutions
|
|
|
|
||||
U.S. Government
(1)
|
$
|
90.8
|
|
|
$
|
245.3
|
|
International
(2)
|
22.3
|
|
|
66.7
|
|
||
U.S. Commercial and other customers
|
13.0
|
|
|
44.9
|
|
||
Total Kratos Government Solutions
|
126.1
|
|
|
356.9
|
|
||
Unmanned Systems
|
|
|
|
||||
U.S. Government
(1)
|
30.0
|
|
|
83.0
|
|
||
International
(2)
|
2.7
|
|
|
13.0
|
|
||
U.S. Commercial and other customers
|
0.6
|
|
|
0.7
|
|
||
Total Unmanned Systems
|
33.3
|
|
|
96.7
|
|
||
Total Revenues
|
$
|
159.4
|
|
|
$
|
453.6
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2018
|
|
October 1, 2017
|
|
September 30, 2018
|
|
October 1, 2017
|
||||||||
Revenue
|
$
|
0.9
|
|
|
$
|
39.2
|
|
|
$
|
44.0
|
|
|
$
|
113.9
|
|
Cost of sales
|
0.4
|
|
|
28.1
|
|
|
33.8
|
|
|
83.9
|
|
||||
Selling, general and administrative expenses
|
—
|
|
|
8.2
|
|
|
16.6
|
|
|
25.6
|
|
||||
Other (income) expense, net
|
—
|
|
|
—
|
|
|
2.7
|
|
|
(0.1
|
)
|
||||
Income (loss) from discontinued operations before income taxes
|
0.5
|
|
|
2.9
|
|
|
(9.1
|
)
|
|
4.5
|
|
||||
Gain on disposal of discontinued operations before income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total gain (loss) on discontinued operations before income taxes
|
0.5
|
|
|
2.9
|
|
|
(9.1
|
)
|
|
4.5
|
|
||||
Income tax benefit (expense)
|
(0.2
|
)
|
|
(1.3
|
)
|
|
2.0
|
|
|
(2.1
|
)
|
||||
Income (loss) from discontinued operations
|
$
|
0.3
|
|
|
$
|
1.6
|
|
|
$
|
(7.1
|
)
|
|
$
|
2.4
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
(0.9
|
)
|
Accounts receivable, net and unbilled receivables, net
|
7.9
|
|
|
56.0
|
|
||
Inventoried costs
|
—
|
|
|
1.5
|
|
||
Other current assets
|
0.3
|
|
|
2.0
|
|
||
Current assets of discontinued operations
|
$
|
8.2
|
|
|
$
|
58.6
|
|
|
|
|
|
||||
Property, plant and equipment, net
|
$
|
—
|
|
|
$
|
3.0
|
|
Goodwill
|
—
|
|
|
35.6
|
|
||
Other assets
|
—
|
|
|
0.2
|
|
||
Non-current assets of discontinued operations
|
$
|
—
|
|
|
$
|
38.8
|
|
|
|
|
|
||||
Accounts payable
|
$
|
0.3
|
|
|
$
|
14.2
|
|
Accrued expenses
|
1.1
|
|
|
4.7
|
|
||
Accrued compensation
|
—
|
|
|
4.6
|
|
||
Billings in excess of cost and earnings on uncompleted contracts
|
—
|
|
|
4.3
|
|
||
Other current liabilities
|
5.6
|
|
|
1.4
|
|
||
Current liabilities of discontinued operations
|
$
|
7.0
|
|
|
$
|
29.2
|
|
|
|
|
|
||||
Non-current liabilities of discontinued operations
|
$
|
6.3
|
|
|
$
|
6.0
|
|
(a)
|
Goodwill
|
|
Kratos Government Solutions
|
|
|
Unmanned Systems
|
|
Total
|
||||||
Gross value
|
$
|
567.9
|
|
|
|
$
|
111.1
|
|
|
$
|
679.0
|
|
Less accumulated impairment
|
239.5
|
|
|
|
13.8
|
|
|
253.3
|
|
|||
Net
|
$
|
328.4
|
|
|
|
$
|
97.3
|
|
|
$
|
425.7
|
|
|
As of September 30, 2018
|
|
As of December 31, 2017
|
||||||||||||||||||||
|
Gross
Value |
|
Accumulated
Amortization |
|
Net
Value |
|
Gross
Value |
|
Accumulated
Amortization |
|
Net
Value |
||||||||||||
Acquired finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Customer relationships
|
$
|
52.6
|
|
|
$
|
(50.2
|
)
|
|
$
|
2.4
|
|
|
$
|
52.6
|
|
|
$
|
(49.1
|
)
|
|
$
|
3.5
|
|
Contracts and backlog
|
29.9
|
|
|
(26.0
|
)
|
|
3.9
|
|
|
29.9
|
|
|
(24.8
|
)
|
|
5.1
|
|
||||||
Developed technology and technical know-how
|
25.0
|
|
|
(20.7
|
)
|
|
4.3
|
|
|
25.0
|
|
|
(18.6
|
)
|
|
6.4
|
|
||||||
Trade names
|
1.4
|
|
|
(1.4
|
)
|
|
—
|
|
|
1.4
|
|
|
(1.3
|
)
|
|
0.1
|
|
||||||
Total finite-lived intangible assets
|
108.9
|
|
|
(98.3
|
)
|
|
10.6
|
|
|
108.9
|
|
|
(93.8
|
)
|
|
15.1
|
|
||||||
Indefinite-lived trade names
|
6.9
|
|
|
—
|
|
|
6.9
|
|
|
6.9
|
|
|
—
|
|
|
6.9
|
|
||||||
Total intangible assets
|
$
|
115.8
|
|
|
$
|
(98.3
|
)
|
|
$
|
17.5
|
|
|
$
|
115.8
|
|
|
$
|
(93.8
|
)
|
|
$
|
22.0
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Raw materials
|
$
|
33.7
|
|
|
$
|
35.9
|
|
Work in process
|
13.1
|
|
|
11.4
|
|
||
Finished goods
|
1.8
|
|
|
2.3
|
|
||
Subtotal inventoried costs
|
48.6
|
|
|
49.6
|
|
||
Less: Customer advances and progress payments
|
—
|
|
|
(0.6
|
)
|
||
Total inventoried costs
|
$
|
48.6
|
|
|
$
|
49.0
|
|
|
For the Nine Months Ended
|
||||||
|
September 30, 2018
|
|
October 1, 2017
|
||||
Stockholders’ equity at beginning of period
|
$
|
511.5
|
|
|
$
|
276.4
|
|
Impact from the adoption of ASC 606 (Note 1)
|
(0.2
|
)
|
|
—
|
|
||
Comprehensive loss:
|
|
|
|
|
|
||
Net loss
|
(8.2
|
)
|
|
(20.5
|
)
|
||
Change in cumulative translation adjustment
|
—
|
|
|
(0.1
|
)
|
||
Total comprehensive loss
|
(8.2
|
)
|
|
(20.6
|
)
|
||
Exercise of stock options and warrants
|
0.1
|
|
|
0.4
|
|
||
Stock-based compensation
|
5.1
|
|
|
6.8
|
|
||
Issuance of common stock for cash
|
—
|
|
|
267.8
|
|
||
Issuance of common stock for employee stock purchase plan
|
3.7
|
|
|
3.1
|
|
||
Restricted stock units traded for taxes
|
(0.1
|
)
|
|
(2.0
|
)
|
||
Stockholders’ equity at end of period
|
$
|
511.9
|
|
|
$
|
531.9
|
|
|
For the Nine Months Ended
|
||||||
|
September 30, 2018
|
|
October 1, 2017
|
||||
Cumulative translation adjustment
|
$
|
(0.9
|
)
|
|
$
|
(1.2
|
)
|
Post-retirement benefit reserve adjustment net of tax expense
|
(0.4
|
)
|
|
(0.6
|
)
|
||
Accumulated other comprehensive loss
|
$
|
(1.3
|
)
|
|
$
|
(1.8
|
)
|
|
For the Nine Months Ended
|
||||
|
September 30, 2018
|
|
October 1, 2017
|
||
Shares outstanding at beginning of the period
|
103.3
|
|
|
73.9
|
|
Stock issued for cash
|
—
|
|
|
28.0
|
|
Stock issued for employee stock purchase plan, stock options and restricted stock units exercised
|
0.5
|
|
|
1.4
|
|
Shares outstanding at end of the period
|
103.8
|
|
|
103.3
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
||||||||||||
|
September 30,
2018 |
|
October 1,
2017 |
|
September 30,
2018 |
|
October 1,
2017 |
||||||||
Income tax benefit at federal statutory rate
|
$
|
1.0
|
|
|
$
|
(2.5
|
)
|
|
$
|
0.7
|
|
|
$
|
(7.5
|
)
|
State and foreign taxes, net of federal tax benefit and valuation allowance
|
0.3
|
|
|
—
|
|
|
0.4
|
|
|
0.4
|
|
||||
Nondeductible expenses and other
|
0.3
|
|
|
(0.5
|
)
|
|
0.2
|
|
|
0.5
|
|
||||
Impact of deferred tax liabilities for indefinite-lived assets
|
1.1
|
|
|
(0.6
|
)
|
|
0.7
|
|
|
2.2
|
|
||||
Increase (decrease) in reserves for uncertain tax positions
|
2.0
|
|
|
0.5
|
|
|
3.3
|
|
|
0.6
|
|
||||
Increase in federal valuation allowance
|
(1.3
|
)
|
|
2.0
|
|
|
(0.9
|
)
|
|
5.4
|
|
||||
Total income tax provision
|
$
|
3.4
|
|
|
$
|
(1.1
|
)
|
|
$
|
4.4
|
|
|
$
|
1.6
|
|
(b)
|
Issuance of
7.00%
Senior Secured Notes due 2019
|
|
|
As of September 30, 2018
|
|
As of December 31, 2017
|
||||||||||||||||||||
$ in millions
|
|
Principal
|
|
Carrying
Amount |
|
Fair Value
|
|
Principal
|
|
Carrying
Amount |
|
Fair Value
|
||||||||||||
Total long-term debt including current portion
|
|
$
|
300.0
|
|
|
$
|
294.0
|
|
|
$
|
309.0
|
|
|
$
|
300.8
|
|
|
$
|
294.3
|
|
|
$
|
312.7
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2018
|
|
October 1, 2017
|
|
September 30, 2018
|
|
October 1, 2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Kratos Government Solutions
|
|
|
|
|
|
|
|
||||||||
Service revenues
|
$
|
54.9
|
|
|
$
|
47.6
|
|
|
$
|
147.9
|
|
|
$
|
150.6
|
|
Product sales
|
71.2
|
|
|
67.9
|
|
|
209.0
|
|
|
207.0
|
|
||||
Total Kratos Government Solutions
|
126.1
|
|
|
115.5
|
|
|
356.9
|
|
|
357.6
|
|
||||
Unmanned Systems product sales
|
33.3
|
|
|
41.6
|
|
|
96.7
|
|
|
79.4
|
|
||||
Total revenues
|
$
|
159.4
|
|
|
$
|
157.1
|
|
|
$
|
453.6
|
|
|
$
|
437.0
|
|
Depreciation & amortization:
|
|
|
|
|
|
|
|
||||||||
Kratos Government Solutions
|
$
|
3.3
|
|
|
$
|
3.5
|
|
|
$
|
10.2
|
|
|
$
|
10.8
|
|
Unmanned Systems
|
1.1
|
|
|
2.4
|
|
|
3.4
|
|
|
6.0
|
|
||||
Total depreciation and amortization
|
$
|
4.4
|
|
|
$
|
5.9
|
|
|
$
|
13.6
|
|
|
$
|
16.8
|
|
Operating income from continuing operations:
|
|
|
|
|
|
|
|
|
|
||||||
Kratos Government Solutions
|
$
|
11.0
|
|
|
$
|
1.4
|
|
|
$
|
23.9
|
|
|
$
|
15.7
|
|
Unmanned Systems
|
1.0
|
|
|
1.5
|
|
|
3.8
|
|
|
(5.4
|
)
|
||||
Unallocated corporate expense, net
|
(1.9
|
)
|
|
(2.8
|
)
|
|
(8.0
|
)
|
|
(7.3
|
)
|
||||
Operating income from continuing operations
|
$
|
10.1
|
|
|
$
|
0.1
|
|
|
$
|
19.7
|
|
|
$
|
3.0
|
|
1.
|
spending limits created by the Budget Control Act of 2011 will be increased by approximately $300 billion over the next two years;
|
2.
|
defense spending will be increased by $80 billion in the current fiscal year (“FY18”) and by $85 billion next fiscal year (FY19), to approximately $700 billion and $705 billion, respectively;
|
3.
|
domestic spending will be increased by $63 billion this year and by $68 billion next year; and
|
4.
|
Congress will suspend the debt limit through March 2019, putting the next debt limit vote past the 2018 midterm elections.
|
|
September 30, 2018
|
|
October 1, 2017
|
|
$ change
|
|
% change
|
|||||||
Kratos Government Solutions
|
|
|
|
|
|
|
|
|||||||
Service revenues
|
$
|
54.9
|
|
|
$
|
47.6
|
|
|
$
|
7.3
|
|
|
15.3
|
%
|
Product sales
|
71.2
|
|
|
67.9
|
|
|
3.3
|
|
|
4.9
|
%
|
|||
Total Kratos Government Solutions
|
126.1
|
|
|
115.5
|
|
|
10.6
|
|
|
9.2
|
%
|
|||
Unmanned Systems product sales
|
33.3
|
|
|
41.6
|
|
|
(8.3
|
)
|
|
(20.0
|
)%
|
|||
Total revenues
|
$
|
159.4
|
|
|
$
|
157.1
|
|
|
$
|
2.3
|
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|||||||
Total service revenues
|
$
|
54.9
|
|
|
$
|
47.6
|
|
|
$
|
7.3
|
|
|
15.3
|
%
|
Total product sales
|
104.5
|
|
|
109.5
|
|
|
(5.0
|
)
|
|
(4.6
|
)%
|
|||
Total revenues
|
$
|
159.4
|
|
|
$
|
157.1
|
|
|
$
|
2.3
|
|
|
1.5
|
%
|
|
September 30, 2018
|
|
October 1, 2017
|
|
$ change
|
|
% change
|
|||||||
Kratos Government Solutions
|
|
|
|
|
|
|
|
|||||||
Service revenues
|
$
|
147.9
|
|
|
$
|
150.6
|
|
|
$
|
(2.7
|
)
|
|
(1.8
|
)%
|
Product sales
|
209.0
|
|
|
207.0
|
|
|
2.0
|
|
|
1.0
|
%
|
|||
Total Kratos Government Solutions
|
356.9
|
|
|
357.6
|
|
|
(0.7
|
)
|
|
(0.2
|
)%
|
|||
Unmanned Systems product sales
|
96.7
|
|
|
79.4
|
|
|
17.3
|
|
|
21.8
|
%
|
|||
Total revenues
|
$
|
453.6
|
|
|
$
|
437.0
|
|
|
$
|
16.6
|
|
|
3.8
|
%
|
|
|
|
|
|
|
|
|
|||||||
Total service revenues
|
$
|
147.9
|
|
|
$
|
150.6
|
|
|
$
|
(2.7
|
)
|
|
(1.8
|
)%
|
Total product sales
|
305.7
|
|
|
286.4
|
|
|
19.3
|
|
|
6.7
|
%
|
|||
Total revenues
|
$
|
453.6
|
|
|
$
|
437.0
|
|
|
$
|
16.6
|
|
|
3.8
|
%
|
|
Nine Months Ended
|
||||||
|
September 30, 2018
|
|
October 1, 2017
|
||||
Net cash provided by (used in) operating activities from continuing operations
|
$
|
15.4
|
|
|
$
|
(16.9
|
)
|
Net cash provided by (used in) investing activities from continuing operations
|
46.2
|
|
|
(17.8
|
)
|
||
Net cash provided by financing activities from continuing operations
|
1.7
|
|
|
204.7
|
|
||
Net operating cash flows of discontinued operations
|
(6.4
|
)
|
|
(0.5
|
)
|
||
Net investing cash flows of discontinued operations
|
—
|
|
|
(0.6
|
)
|
|
|
|
|
Incorporated by
Reference
|
|
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
Filing Date/
Period End
Date
|
|
Exhibit
|
|
Filed-
Furnished
Herewith
|
2.1#†
|
|
|
10-Q
|
|
08/06/2015
(001-34460)
|
|
2.4
|
|
|
|
2.2#
|
|
|
10-Q
|
|
05/10/2018
(001-34460)
|
|
2.2
|
|
|
|
3.1
|
|
|
10-K
|
|
02/27/2017
(001-34460)
|
|
3.1
|
|
|
|
3.2
|
|
|
10-K
|
|
02/27/2017
(001-34460)
|
|
3.2
|
|
|
|
4.1
|
|
|
10-K
|
|
02/27/2017
(001-34460)
|
|
4.1
|
|
|
|
4.2
|
|
|
8-K
|
|
05/15/2014
(001-34460)
|
|
4.1
|
|
|
|
4.3
|
|
|
8-K
|
|
05/15/2014
(001-34460)
|
|
10.1
|
|
|
|
4.4
|
|
|
8-K
|
|
11/21/2017
(001-34460)
|
|
4.1
|
|
|
|
4.5
|
|
|
10-K
|
|
02/28/2018
(001-34460)
|
|
4.5
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
*
|
|
31.2
|
|
|
|
|
|
|
|
|
*
|
|
32.1
|
|
|
|
|
|
|
|
|
*
|
|
32.2
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Incorporated by
Reference
|
|
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
Filing Date/
Period End
Date
|
|
Exhibit
|
|
Filed-
Furnished
Herewith
|
101
|
|
Financial statements from the Quarterly Report on Form 10-Q of Kratos Defense & Security Solutions, Inc. for the quarter ended September 30, 2018 formatted in XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Notes to the Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
|
*
|
|
|
|
KRATOS DEFENSE & SECURITY SOLUTIONS, INC.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ ERIC M. DEMARCO
|
|
|
|
Eric M. DeMarco
|
|
|
|
Chief Executive Officer, President
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ DEANNA H. LUND, CPA
|
|
|
|
Deanna H. Lund
|
|
|
|
Executive Vice President, Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ MARIA CERVANTES DE BURGREEN, CPA
|
|
|
|
Maria Cervantes de Burgreen
|
|
|
|
Vice President and Corporate Controller
|
|
|
|
(Principal Accounting Officer)
|
Date:
|
November 6, 2018
|
|
|
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