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
|
August 8, 2013 Press Release by Kratos Defense & Security Solutions, Inc.
|
Kratos Defense & Security Solutions, Inc.
|
||||
Date: August 8, 2013
|
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
|
Six Months Ended
|
|||||
June 30,
|
June 24,
|
June 30,
|
June 24,
|
|||
2013
|
2012
|
2013
|
2012
|
|||
Service revenues
|
|
$ 110.2
|
$ 112.1
|
$ 226.2
|
$ 214.2
|
|
Product sales
|
125.0
|
107.7
|
262.3
|
215.1
|
||
Total revenues
|
235.2
|
219.8
|
488.5
|
429.3
|
||
Cost of service revenues
|
83.3
|
86.7
|
171.9
|
166.5
|
||
Cost of product sales
|
91.5
|
75.4
|
190.4
|
147.7
|
||
Total costs
|
174.8
|
162.1
|
362.3
|
314.2
|
||
Gross profit - services
|
26.9
|
25.4
|
54.3
|
47.7
|
||
Gross profit - products
|
33.5
|
32.3
|
71.9
|
67.4
|
||
Total gross profit
|
60.4
|
57.7
|
126.2
|
115.1
|
||
|
|
|
|
|||
Selling, general and administrative expenses
|
37.8
|
32.5
|
76.6
|
64.6
|
||
Restructuring and acquisition related items and other
|
(1.3)
|
1.5
|
(0.9)
|
2.4
|
||
Research and development expenses
|
4.8
|
4.8
|
9.7
|
8.4
|
||
Unused office space expense and other
|
-
|
1.4
|
-
|
1.4
|
||
Depreciation
|
1.2
|
1.2
|
2.2
|
2.4
|
||
Amortization of intangible assets
|
9.0
|
8.9
|
18.3
|
19.4
|
||
Operating income
|
8.9
|
7.4
|
20.3
|
16.5
|
||
Interest expense, net
|
(16.3)
|
(16.2)
|
(32.5)
|
(32.3)
|
||
Other income (expense), net
|
0.2
|
0.5
|
(0.6)
|
0.9
|
||
Loss from continuing operations before income taxes
|
(7.2)
|
(8.3)
|
(12.8)
|
(14.9)
|
||
Provision (benefit) for income taxes
|
(0.1)
|
6.6
|
2.7
|
2.5
|
||
Loss from continuing operations
|
(7.1)
|
(14.9)
|
(15.5)
|
(17.4)
|
||
Loss from discontinued operations, net of taxes
|
(2.5)
|
(2.3)
|
(4.4)
|
(2.8)
|
||
Net loss
|
$ (9.6)
|
$ (17.2)
|
$ (19.9)
|
$ (20.2)
|
||
|
|
|
|
|||
Basic loss per common share:
|
|
|
|
|
||
Loss from continuing operations
|
$ (0.12)
|
$ (0.36)
|
$ (0.27)
|
$ (0.47)
|
||
Loss from discontinued operations, net of taxes
|
$ (0.05)
|
(0.05)
|
(0.08)
|
(0.07)
|
||
Net loss
|
$ (0.17)
|
$ (0.41)
|
$ (0.35)
|
$ (0.54)
|
||
|
|
|
|
|||
Diluted loss per common share:
|
|
|
|
|
||
Loss from continuing operations
|
$ (0.12)
|
$ (0.36)
|
$ (0.27)
|
$ (0.47)
|
||
Loss from discontinued operations, net of taxes
|
$ (0.05)
|
(0.05)
|
(0.08)
|
(0.07)
|
||
Net loss
|
$ (0.17)
|
$ (0.41)
|
$ (0.35)
|
$ (0.54)
|
||
|
|
|
|
|||
Weighted average common shares outstanding
|
|
|
|
|
||
Basic
|
56.6
|
41.7
|
56.6
|
37.1
|
||
Diluted
|
56.6
|
41.7
|
56.6
|
37.1
|
||
Adjusted EBITDA (1)
|
$ 24.6
|
$ 24.3
|
$ 51.7
|
$ 49.4
|
||
|
||||||
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, 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
|
Six Months Ended
|
|||||
June 30,
|
June 24,
|
June 30,
|
June 24,
|
|||
2013
|
2012
|
2013
|
2012
|
|||
Net loss
|
$ (9.6)
|
$ (17.2)
|
$ (19.9)
|
$ (20.2)
|
||
Loss from discontinued operations
|
2.5
|
2.3
|
4.4
|
2.8
|
||
Restructuring and acquisition related items and other
|
(0.1)
|
1.5
|
0.3
|
2.4
|
||
Interest expense, net
|
16.3
|
16.2
|
32.5
|
32.3
|
||
Provision (benefit) for income taxes
|
(0.1)
|
6.6
|
2.7
|
2.5
|
||
Depreciation *
|
4.6
|
3.4
|
9.5
|
6.5
|
||
Stock compensation
|
2.0
|
1.2
|
3.9
|
2.3
|
||
Unused office space expense and other
|
-
|
1.4
|
-
|
1.4
|
||
Amortization of intangible assets
|
9.0
|
8.9
|
18.3
|
19.4
|
||
Adjusted EBITDA
|
$ 24.6
|
$ 24.3
|
$ 51.7
|
$ 49.4
|
||
* Includes depreciation reported in cost of service revenues and product sales.
|
||||||
Reconciliation of restructuring and acquisition related items and other:
|
||||||
Three Months Ended
|
Six Months Ended
|
|||||
June 30,
|
June 24,
|
June 30,
|
June 24,
|
|||
2013
|
2012
|
2013
|
2012
|
|||
Acquisition related expenses
|
$ 0.1
|
$ 1.5
|
$ 0.2
|
$ 2.4
|
||
Excess capacity and restructuring costs
|
1.9
|
-
|
2.2
|
-
|
||
Non-recurring audit fees
|
0.6
|
-
|
0.6
|
-
|
||
Litigation related costs and accrual
|
(2.7)
|
-
|
(2.7)
|
-
|
||
$ (0.1)
|
$ 1.5
|
$ 0.3
|
$ 2.4
|
|||
Kratos Defense & Security Solutions
|
||||||
Unaudited Segment Data
|
||||||
(in millions)
|
||||||
Three Months Ended
|
Six Months Ended
|
|||||
June 30,
|
June 24,
|
June 30,
|
June 24,
|
|||
2013
|
2012
|
2013
|
2012
|
|||
Revenues:
|
||||||
Government Solutions
|
$ 183.5
|
$ 175.8
|
$ 386.2
|
$ 344.7
|
||
Public Safety & Security
|
51.7
|
44.0
|
102.3
|
84.6
|
||
Total revenues
|
$ 235.2
|
$ 219.8
|
$ 488.5
|
$ 429.3
|
||
Operating income (loss) from continuing operations:
|
||||||
Government Solutions
|
$ 5.3
|
$ 8.8
|
$ 17.4
|
$ 18.4
|
||
Public Safety & Security
|
2.7
|
2.8
|
3.9
|
4.0
|
||
Other activities
|
0.9
|
(4.2)
|
(1.0)
|
(5.9)
|
||
Total operating income from continuing operations
|
$ 8.9
|
$ 7.4
|
$ 20.3
|
$ 16.5
|
||
Note: Other activities in the three months ended June 30, 2013 and June 24, 2012 include acquisition expenses of $0.1 million and $1.5 million,
|
||||||
respectively, and for the six months ended June 30, 2013 and June 24, 2012 include acquisition expenses of $0.2 million and $2.4 million, respectively.
|
||||||
Reconciliation of consolidated Adjusted EBITDA to Adjusted EBITDA by segment is as follows:
|
||||||
Three Months Ended
|
Six Months Ended
|
|||||
June 30,
|
June 24,
|
June 30,
|
June 24,
|
|||
2013
|
2012
|
2013
|
2012
|
|||
KGS
|
$ 20.4
|
$ 20.6
|
$ 45.2
|
$ 43.7
|
||
% of revenue
|
11.1%
|
11.7%
|
11.7%
|
12.7%
|
||
PSS
|
4.2
|
3.7
|
6.5
|
5.7
|
||
% of revenue
|
8.1%
|
8.4%
|
6.4%
|
6.7%
|
||
Total
|
$ 24.6
|
$ 24.3
|
$ 51.7
|
$ 49.4
|
||
% of revenue
|
10.5%
|
11.1%
|
10.6%
|
11.5%
|
||
Kratos Defense & Security Solutions
|
||||||
Unaudited Condensed Consolidated Balance Sheet
|
||||||
(in millions)
|
||||||
As of
|
||||||
June 30,
|
December 30,
|
|||||
2013
|
2012
|
|||||
Assets
|
||||||
Current assets:
|
||||||
Cash and cash equivalents
|
$ 49.7
|
$ 49.0
|
||||
Restricted cash
|
5.2
|
5.5
|
||||
Accounts receivable, net
|
253.6
|
271.9
|
||||
Inventoried costs
|
85.3
|
94.3
|
||||
Prepaid expenses
|
18.4
|
17.4
|
||||
Other current assets
|
5.6
|
17.3
|
||||
Total current assets
|
417.8
|
455.4
|
||||
Property, plant and equipment, net
|
83.5
|
85.6
|
||||
Goodwill
|
596.4
|
596.4
|
||||
Intangible assets, net
|
87.8
|
106.1
|
||||
Other assets
|
36.8
|
40.4
|
||||
Total assets
|
$ 1,222.3
|
$ 1,283.9
|
||||
Liabilities and Stockholders’ Equity
|
||||||
Current liabilities:
|
||||||
Accounts payable
|
$ 64.9
|
$ 83.6
|
||||
Accrued expenses
|
39.1
|
46.4
|
||||
Accrued compensation
|
39.8
|
47.8
|
||||
Accrued interest
|
6.1
|
6.3
|
||||
Billings in excess of costs and earnings on uncompleted contracts
|
45.6
|
43.7
|
||||
Deferred income tax liability
|
29.0
|
28.9
|
||||
Other current liabilities
|
14.1
|
22.1
|
||||
Total current liabilities
|
238.6
|
278.8
|
||||
Long-term debt principal, net of current portion
|
631.0
|
629.7
|
||||
Long-term debt premium
|
14.9
|
18.7
|
||||
Other long-term liabilities
|
29.7
|
32.6
|
||||
Total liabilities
|
914.2
|
959.8
|
||||
Commitments and contingencies
|
||||||
Stockholders’ equity:
|
||||||
Preferred stock, 5,000,000 shares authorized, $0.001 par value, no shares outstanding at June 30, 2013 and December 30, 2012.
|
-
|
-
|
||||
Common stock, $0.001 par value, 195,000,000 shares authorized; 56,675,080 and 56,613,024 shares issued and outstanding at June 30, 2013 and December 30, 2012, respectively.
|
-
|
-
|
||||
Additional paid-in capital
|
850.9
|
847.1
|
||||
Accumulated other comprehensive loss
|
(0.7)
|
(0.8)
|
||||
Accumulated deficit
|
(542.1)
|
(522.2)
|
||||
Total stockholders’ equity
|
308.1
|
324.1
|
||||
Total liabilities and stockholders’ equity
|
$ 1,222.3
|
$ 1,283.9
|
||||
Kratos Defense & Security Solutions
|
||||||
Unaudited Condensed Consolidated Statement of Cash Flows
|
||||||
(in millions)
|
||||||
Six Months Ended
|
||||||
June 30,
|
June 24,
|
|||||
2013
|
2012
|
|||||
Operating activities:
|
||||||
Net loss
|
$ (19.9)
|
$ (20.2)
|
||||
Less: Loss from discontinued operations
|
(4.4)
|
(2.8)
|
||||
Loss from continuing operations
|
(15.5)
|
(17.4)
|
||||
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities from continuing operations:
|
||||||
Depreciation and amortization
|
27.8
|
25.9
|
||||
Deferred income taxes
|
-
|
1.3
|
||||
Stock‑based compensation
|
3.9
|
2.3
|
||||
Amortization of deferred financing costs
|
2.6
|
2.5
|
||||
Amortization of premium on Senior Secured Notes
|
(2.1)
|
(2.1)
|
||||
Provision for doubtful accounts
|
0.2
|
0.3
|
||||
Changes in assets and liabilities, net of acquisitions:
|
||||||
Accounts receivable
|
18.2
|
11.6
|
||||
Inventoried costs
|
9.2
|
(9.6)
|
||||
Prepaid expenses and other assets
|
(0.1)
|
(3.7)
|
||||
Accounts payable
|
(18.9)
|
9.4
|
||||
Accrued compensation
|
(8.1)
|
(6.6)
|
||||
Accrued expenses
|
(7.8)
|
0.3
|
||||
Accrued interest payable
|
(0.3)
|
-
|
||||
Billings in excess of costs and earnings on uncompleted contracts
|
1.9
|
(2.3)
|
||||
Income tax receivable and payable
|
4.1
|
(1.5)
|
||||
Other liabilities
|
(6.7)
|
(0.6)
|
||||
Net cash provided by operating activities from continuing operations
|
8.4
|
9.8
|
||||
Investing activities:
|
||||||
Cash paid for acquisitions, net of cash acquired
|
1.2
|
(21.5)
|
||||
Decrease in restricted cash
|
0.2
|
0.3
|
||||
Proceeds from the disposition of discontinued operations
|
0.4
|
-
|
||||
Capital expenditures
|
(7.3)
|
(6.2)
|
||||
Net cash used in investing activities from continuing operations
|
(5.5)
|
(27.4)
|
||||
Financing activities:
|
||||||
Proceeds from the issuance of common stock
|
-
|
97.0
|
||||
Cash paid for contingent acquisition consideration
|
(2.1)
|
(2.5)
|
||||
Repayment of debt
|
(0.5)
|
(0.5)
|
||||
Debt issuance costs
|
-
|
(1.0)
|
||||
Other
|
(0.3)
|
(0.3)
|
||||
Net cash used in financing activities from continuing operations
|
(2.9)
|
92.7
|
||||
Net cash flows from continuing operations
|
-
|
75.1
|
||||
Net operating cash flows from discontinued operations
|
0.8
|
1.3
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(0.1)
|
(0.3)
|
||||
Net increase in cash and cash equivalents
|
0.7
|
76.1
|
||||
Cash and cash equivalents at beginning of period
|
49.0
|
69.6
|
||||
Cash and cash equivalents at end of period
|
$ 49.7
|
$ 145.7
|
||||
Kratos Defense & Security Solutions
|
||||||
Unaudited Non-GAAP Measures
|
||||||
Adjusted Earnings Before Amortization and Acquisition Related Expenses
|
||||||
(in millions, except per share data)
|
||||||
Three Months Ended
|
Six Months Ended
|
|||||
June 30,
|
June 24,
|
June 30,
|
June 24,
|
|||
2013
|
2012
|
2013
|
2012
|
|||
Loss from continuing operations before taxes
|
$ (7.2)
|
$ (8.3)
|
$ (12.8)
|
$ (14.9)
|
||
Add: Amortization of intangible assets
|
9.0
|
8.9
|
18.3
|
19.4
|
||
Add: Unused office space expense and other
|
-
|
1.4
|
-
|
1.4
|
||
Add: Restructuring and acquisition related items and other
|
(0.1)
|
1.5
|
0.3
|
2.4
|
||
Adjusted income from continuing operations before income taxes
|
$ 1.7
|
$ 3.5
|
$ 5.8
|
$ 8.3
|
||
Estimated cash tax provision
|
0.8
|
1.2
|
1.6
|
2.4
|
||
Adjusted income from continuing operations before acquisition and amortization expenses
|
$ 0.9
|
$ 2.3
|
$ 4.2
|
$ 5.9
|
||
Diluted income per common share:
|
||||||
Adjusted income from continuing operations
|
$ 0.02
|
$ 0.06
|
$ 0.07
|
$ 0.16
|
||
Weighted average common shares outstanding
|
||||||
Diluted
|
56.6
|
41.7
|
56.6
|
37.1
|
||
-end-
|