Delaware
|
||
(State or other jurisdiction of incorporation)
|
||
001-34460
|
13-3818604
|
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
|
4820 Eastgate Mall, Suite 200, San Diego, CA
|
92121
|
|
(address of principal executive offices)
|
(Zip Code)
|
|
(858) 812-7300
|
||
(Registrant’s telephone number, including area code)
|
o
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
o
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
o
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
o
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Exhibit
No.
|
Description
|
|
99.1
|
May 7, 2015 Press Release by Kratos Defense & Security Solutions, Inc.
|
Kratos Defense & Security Solutions, Inc.
|
||||
Date: May 7, 2015
|
By:
|
/s/ Deanna H. Lund
|
||
Deanna H. Lund
|
||||
Executive Vice President, Chief Financial Officer
|
FOR IMMEDIATE RELEASE
|
Press Contact:
Yolanda White
858-812-7302 Direct
Investor Information:
877-934-4687
investor@kratosdefense.com
|
Kratos Defense & Security Solutions
|
|||
Unaudited Condensed Consolidated Statements of Operations
|
|||
(in millions, except per share data)
|
|||
Three Months Ended
|
|||
March 29
|
March 30
|
||
2015
|
2014
|
||
Service revenues
|
|
$ 87.4
|
$ 100.6
|
Product sales
|
95.1
|
99.5
|
|
Total revenues
|
182.5
|
200.1
|
|
Cost of service revenues
|
66.0
|
74.1
|
|
Cost of product sales
|
69.6
|
73.4
|
|
Total costs
|
135.6
|
147.5
|
|
Gross profit - services
|
21.4
|
26.5
|
|
Gross profit - products
|
25.5
|
26.1
|
|
Total gross profit
|
46.9
|
52.6
|
|
|
|
||
Selling, general and administrative expenses
|
37.2
|
37.0
|
|
Acquisition and restructuring related items and other
|
1.0
|
0.5
|
|
Research and development expenses
|
4.8
|
5.2
|
|
Unused office space expense and other
|
-
|
0.2
|
|
Depreciation
|
0.8
|
0.8
|
|
Amortization of intangible assets
|
4.6
|
5.6
|
|
Operating income (loss)
|
(1.5)
|
3.3
|
|
Interest expense, net
|
(12.2)
|
(16.1)
|
|
Other income (expense), net
|
(0.4)
|
0.2
|
|
Loss from continuing operations before income taxes
|
(14.1)
|
(12.6)
|
|
Provision for income taxes
|
2.4
|
2.3
|
|
Loss from continuing operations
|
(16.5)
|
(14.9)
|
|
Income (loss) from discontinued operations, net of taxes
|
0.2
|
(0.1)
|
|
Net loss
|
$ (16.3)
|
$ (15.0)
|
|
|
|
||
Basic and diluted loss per common share:
|
|
|
|
Loss from continuing operations
|
$ (0.28)
|
$ (0.26)
|
|
Loss from discontinued operations, net of taxes
|
-
|
-
|
|
Net loss
|
$ (0.28)
|
$ (0.26)
|
|
|
|
||
Weighted average common shares outstanding
|
|
|
|
Basic and diluted
|
58.3
|
57.4
|
|
Adjusted EBITDA (1)
|
$ 11.6
|
$ 16.9
|
|
|
|||
Note: (1) Adjusted EBITDA is a non-GAAP measure defined as GAAP net income (loss) plus (income) loss from discontinued operations,
|
|||
interest expense, net, income taxes, depreciation and amortization, stock compensation, amortization of intangible assets,
|
|||
contract design retrofit costs, transaction gain (loss), transaction and litigation related costs and restructuring and acquisition related items and other.
|
Adjusted EBITDA as calculated by us may be calculated differently than EBITDA for other companies. We have provided Adjusted
|
|||
EBITDA because we believe it is a commonly used measure of financial performance in comparable companies and is provided to help
|
|||
investors evaluate companies on a consistent basis, as well as to enhance an understanding of our operating results. Adjusted
|
|||
EBITDA should not be construed as either an alternative to net income or as an indicator of our operating performance or an alternative
|
|||
to cash flows as a measure of liquidity. Please refer to the following table that reconciles GAAP net loss to Adjusted EBITDA:
|
|||
Reconciliation of Net loss to Adjusted EBITDA is as follows:
|
|||
Three Months Ended
|
|||
March 29
|
March 30
|
||
2015
|
2014
|
||
Net loss
|
$ (16.3)
|
$ (15.0)
|
|
Income (loss) from discontinued operations
|
(0.2)
|
0.1
|
|
Interest expense, net
|
12.2
|
16.1
|
|
Provision (benefit) for income taxes
|
2.4
|
2.3
|
|
Depreciation *
|
3.9
|
4.0
|
|
Stock compensation
|
2.0
|
1.8
|
|
Foreign transaction (gain)/loss
|
0.4
|
(0.2)
|
|
Unused office space expense and other
|
-
|
0.2
|
|
Amortization of intangible assets
|
4.6
|
5.6
|
|
Acquisition and restructuring related items, excess capacity and other
|
1.9
|
1.0
|
|
Contract design retrofit and contract conversion adjustment
|
0.7
|
1.0
|
|
Adjusted EBITDA
|
$ 11.6
|
$ 16.9
|
|
* Includes depreciation reported in cost of service revenues and product sales.
|
|||
Reconciliation of acquisition and restructuring related items and other included in Adjusted EBITDA:
|
|||
Three Months Ended
|
|||
March 29
|
March 30
|
||
2015
|
2014
|
||
Excess capacity and restructuring costs
|
$ 1.5
|
$ 1.0
|
|
Transaction and litigation related items
|
0.1
|
-
|
|
Costs related to pending customer change orders
|
0.3
|
-
|
|
$ 1.9
|
$ 1.0
|
||
Kratos Defense & Security Solutions
|
|||
Unaudited Segment Data
|
|||
(in millions)
|
|||
Three Months Ended
|
|||
March 29
|
March 30
|
||
2015
|
2014
|
||
Revenues:
|
|||
Unmanned Systems
|
$ 12.4
|
$ 19.7
|
|
Government Solutions
|
132.5
|
131.5
|
|
Public Safety & Security
|
37.6
|
48.9
|
|
Total revenues
|
$ 182.5
|
$ 200.1
|
|
Operating income (loss) from continuing operations:
|
|||
Unmanned Systems
|
$ (4.1)
|
$ (1.8)
|
|
Government Solutions
|
4.7
|
5.9
|
|
Public Safety & Security
|
0.1
|
1.0
|
|
Other activities
|
(2.2)
|
(1.8)
|
|
Total operating income (loss) from continuing operations
|
$ (1.5)
|
$ 3.3
|
|
Note: Other activities in the three months ended March 29, 2015 and March 30, 2014 include restructuring, excess capacity, costs related to pending customer change orders and contract modification adjustments, non-cash impairment and other of $1.9 million and $1.0 million, respectively.
|
|||
Reconciliation of consolidated Adjusted EBITDA to Adjusted EBITDA by segment is as follows:
|
|||
Three Months Ended
|
|||
March 29
|
March 30
|
||
2015
|
2014
|
||
Unmanned Systems
|
$ (0.9)
|
$ 1.3
|
|
% of revenue
|
-7.3%
|
6.6%
|
|
Government Solutions
|
11.8
|
13.9
|
|
% of revenue
|
8.9%
|
10.6%
|
|
Public Safety & Security
|
0.7
|
1.7
|
|
% of revenue
|
1.9%
|
3.5%
|
|
Total
|
$ 11.6
|
$ 16.9
|
|
% of revenue
|
6.4%
|
8.4%
|
|
Kratos Defense & Security Solutions
|
|||
Unaudited Condensed Consolidated Balance Sheet
|
|||
(in millions)
|
|||
As of
|
|||
March 29
|
December 28,
|
||
2015
|
2014
|
||
Assets
|
|||
Current assets:
|
|||
Cash and cash equivalents
|
$ 34.4
|
$ 34.7
|
|
Restricted cash
|
1.6
|
5.4
|
|
Accounts receivable, net
|
238.6
|
248.2
|
|
Inventoried costs
|
72.1
|
68.0
|
|
Prepaid expenses
|
8.4
|
8.5
|
|
Other current assets
|
11.1
|
10.1
|
|
Total current assets
|
366.2
|
374.9
|
|
Property, plant and equipment, net
|
81.5
|
82.6
|
|
Goodwill
|
596.4
|
596.4
|
|
Intangible assets, net
|
47.7
|
52.3
|
|
Other assets
|
30.8
|
32.6
|
|
Total assets
|
$ 1,122.6
|
$ 1,138.8
|
|
Liabilities and Stockholders’ Equity
|
|||
Current liabilities:
|
|||
Accounts payable
|
$ 42.5
|
$ 48.4
|
|
Accrued expenses
|
31.5
|
34.2
|
|
Accrued compensation
|
39.2
|
46.4
|
|
Accrued interest
|
16.5
|
5.6
|
|
Billings in excess of costs and earnings on uncompleted contracts
|
56.5
|
52.1
|
|
Deferred income tax liability
|
30.2
|
30.3
|
|
Other current liabilities
|
6.6
|
9.1
|
|
Total current liabilities
|
223.0
|
226.1
|
|
Long-term debt principal, net of current portion
|
622.0
|
622.0
|
|
Line of credit
|
41.0
|
41.0
|
|
Other long-term liabilities
|
25.1
|
25.4
|
|
Total liabilities
|
911.1
|
914.5
|
|
Commitments and contingencies
|
|||
Stockholders’ equity:
|
|||
Common stock
|
-
|
-
|
|
Additional paid-in capital
|
867.1
|
863.4
|
|
Accumulated other comprehensive loss
|
(1.9)
|
(1.7)
|
|
Accumulated deficit
|
(653.7)
|
(637.4)
|
|
Total stockholders’ equity
|
211.5
|
224.3
|
|
Total liabilities and stockholders’ equity
|
$ 1,122.6
|
$ 1,138.8
|
|
Kratos Defense & Security Solutions
|
|||
Unaudited Condensed Consolidated Statement of Cash Flows
|
|||
(in millions)
|
|||
Three Months Ended
|
|||
March 29
|
March 30
|
||
2015
|
2014
|
||
Operating activities:
|
|||
Net loss
|
$ (16.3)
|
$ (15.0)
|
|
Less: Loss (income) from discontinued operations
|
0.2
|
(0.1)
|
|
Loss from continuing operations
|
(16.5)
|
(14.9)
|
|
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities from continuing operations:
|
|||
Depreciation and amortization
|
8.5
|
9.6
|
|
Deferred income taxes
|
1.8
|
-
|
|
Stock‑based compensation
|
2.0
|
1.8
|
|
Change in unused office space accrual
|
-
|
0.2
|
|
Amortization of deferred financing costs
|
0.5
|
1.3
|
|
Amortization of premium on Senior Secured Notes
|
0.3
|
(1.0)
|
|
Provision for doubtful accounts
|
0.1
|
0.1
|
|
Changes in assets and liabilities, net of acquisitions:
|
|||
Accounts receivable
|
9.6
|
17.8
|
|
Inventoried costs
|
(6.0)
|
(6.7)
|
|
Customer advances & progress payments
|
1.7
|
-
|
|
Prepaid expenses and other assets
|
(1.4)
|
2.2
|
|
Accounts payable
|
(6.4)
|
(13.7)
|
|
Accrued compensation
|
(7.2)
|
(6.3)
|
|
Accrued expenses
|
(2.8)
|
(5.2)
|
|
Accrued interest payable
|
10.9
|
15.6
|
|
Billings in excess of costs and earnings on uncompleted contracts
|
4.4
|
(0.1)
|
|
Income tax receivable and payable
|
(0.1)
|
1.8
|
|
Other liabilities
|
(2.3)
|
(0.8)
|
|
Net cash provided by (used in) operating activities from continuing operations
|
(2.9)
|
1.7
|
|
Investing activities:
|
|||
Cash paid for acquisitions, net of cash acquired
|
-
|
(1.6)
|
|
Decrease in restricted cash
|
3.8
|
-
|
|
Capital expenditures
|
(2.2)
|
(3.1)
|
|
Net cash provided by (used in) investing activities from continuing operations
|
1.6
|
(4.7)
|
|
Financing activities:
|
|||
Repayment of debt
|
(0.2)
|
(0.2)
|
|
Other
|
1.7
|
1.6
|
|
Net cash provided by financing activities from continuing operations
|
1.5
|
1.4
|
|
Net cash flows from continuing operations
|
0.2
|
(1.6)
|
|
Net operating cash flows from discontinued operations
|
(0.2)
|
(0.5)
|
|
Effect of exchange rate changes on cash and cash equivalents
|
(0.3)
|
-
|
|
Net decrease in cash and cash equivalents
|
(0.3)
|
(2.1)
|
|
Cash and cash equivalents at beginning of period
|
34.7
|
55.7
|
|
Cash and cash equivalents at end of period
|
$ 34.4
|
$ 53.6
|
|
Kratos Defense & Security Solutions
|
|||
Unaudited Non-GAAP Measures
|
|||
Computation of Adjusted Earnings Per Share
|
|||
(in millions, except per share data)
|
|||
Three Months Ended
|
|||
March 29
|
March 30
|
||
2015
|
2014
|
||
Loss from continuing operations before taxes
|
$ (14.1)
|
$ (12.6)
|
|
Add: Amortization of intangible assets
|
4.6
|
5.6
|
|
Add: Stock compensation
|
2.0
|
1.8
|
|
Add: Unused office space expense and other
|
-
|
0.2
|
|
Add: Foreign transaction (gain)/loss
|
0.4
|
(0.2)
|
|
Add: Contract design retrofit costs and contract conversion adjustment
|
0.7
|
1.0
|
|
Add: Restructuring and acquisition related items and other
|
1.9
|
1.0
|
|
Adjusted loss from continuing operations before income taxes
|
(4.5)
|
(3.2)
|
|
Estimated cash tax provision
|
0.7
|
0.7
|
|
Adjusted loss from continuing operations
|
$ (5.2)
|
$ (3.9)
|
|
Diluted income per common share:
|
|||
Adjusted loss from continuing operations
|
$ (0.09)
|
$ (0.07)
|
|
Weighted average common shares outstanding
|
|||
Diluted
|
58.3
|
57.4
|
|
-end-
|
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