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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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ý
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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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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June 30, 2019
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||||
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(Unaudited)
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December 30, 2018
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||||
Assets
|
|
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Current assets:
|
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|
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Cash and cash equivalents
|
$
|
176.2
|
|
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$
|
182.7
|
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Restricted cash
|
—
|
|
|
0.3
|
|
||
Accounts receivable, net
|
67.8
|
|
|
64.6
|
|
||
Unbilled receivables, net
|
169.1
|
|
|
172.8
|
|
||
Inventoried costs
|
75.4
|
|
|
46.8
|
|
||
Prepaid expenses
|
10.3
|
|
|
8.9
|
|
||
Other current assets
|
11.9
|
|
|
10.3
|
|
||
Current assets of discontinued operations
|
5.3
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|
|
8.3
|
|
||
Total current assets
|
516.0
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|
|
494.7
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|
||
Property, plant and equipment, net
|
115.5
|
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67.1
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|
||
Operating lease right-of-use assets
|
43.8
|
|
|
—
|
|
||
Goodwill
|
459.4
|
|
|
425.7
|
|
||
Intangible assets, net
|
32.4
|
|
|
16.1
|
|
||
Other assets
|
6.5
|
|
|
6.5
|
|
||
Total assets
|
$
|
1,173.6
|
|
|
$
|
1,010.1
|
|
Liabilities and Stockholders’ Equity
|
|
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|
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Current liabilities:
|
|
|
|
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|
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Accounts payable
|
$
|
52.7
|
|
|
$
|
46.6
|
|
Accrued expenses
|
39.2
|
|
|
38.1
|
|
||
Accrued compensation
|
32.1
|
|
|
33.5
|
|
||
Accrued interest
|
1.6
|
|
|
1.6
|
|
||
Billings in excess of costs and earnings on uncompleted contracts
|
38.8
|
|
|
34.9
|
|
||
Current portion of operating lease liabilities
|
12.1
|
|
|
—
|
|
||
Other current liabilities
|
8.9
|
|
|
4.7
|
|
||
Current liabilities of discontinued operations
|
3.5
|
|
|
5.3
|
|
||
Total current liabilities
|
188.9
|
|
|
164.7
|
|
||
Long-term debt principal, net of current portion
|
294.6
|
|
|
294.2
|
|
||
Operating lease liabilities, net of current portion
|
37.8
|
|
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—
|
|
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Other long-term liabilities
|
74.6
|
|
|
25.5
|
|
||
Long-term liabilities of discontinued operations
|
2.8
|
|
|
6.4
|
|
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Total liabilities
|
598.7
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|
|
490.8
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Redeemable noncontrolling interest (Note 12)
|
15.4
|
|
|
—
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, 0 shares outstanding at June 30, 2019 and December 30, 2018
|
—
|
|
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—
|
|
||
Common stock, $0.001 par value, 195,000,000 shares authorized; 105,914,292 and 103,766,899 shares issued and outstanding at June 30, 2019 and December 30, 2018, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,277.8
|
|
|
1,244.5
|
|
||
Accumulated other comprehensive loss
|
(0.8
|
)
|
|
(0.7
|
)
|
||
Accumulated deficit
|
(717.5
|
)
|
|
(724.5
|
)
|
||
Total stockholders’ equity
|
559.5
|
|
|
519.3
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,173.6
|
|
|
$
|
1,010.1
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
Service revenues
|
$
|
73.7
|
|
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$
|
47.0
|
|
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$
|
136.3
|
|
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$
|
93.0
|
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Product sales
|
114.2
|
|
|
104.2
|
|
|
212.0
|
|
|
201.2
|
|
||||
Total revenues
|
187.9
|
|
|
151.2
|
|
|
348.3
|
|
|
294.2
|
|
||||
Cost of service revenues
|
50.6
|
|
|
33.2
|
|
|
92.6
|
|
|
66.1
|
|
||||
Cost of product sales
|
89.2
|
|
|
78.7
|
|
|
162.7
|
|
|
148.0
|
|
||||
Total costs
|
139.8
|
|
|
111.9
|
|
|
255.3
|
|
|
214.1
|
|
||||
Gross profit
|
48.1
|
|
|
39.3
|
|
|
93.0
|
|
|
80.1
|
|
||||
Selling, general and administrative expenses
|
33.7
|
|
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30.1
|
|
|
65.2
|
|
|
59.9
|
|
||||
Merger and acquisition expenses
|
0.6
|
|
|
—
|
|
|
1.8
|
|
|
—
|
|
||||
Research and development expenses
|
4.5
|
|
|
3.6
|
|
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8.4
|
|
|
7.2
|
|
||||
Restructuring expenses and other
|
0.3
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|
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3.0
|
|
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0.4
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|
|
3.4
|
|
||||
Operating income from continuing operations
|
9.0
|
|
|
2.6
|
|
|
17.2
|
|
|
9.6
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
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|
||||
Interest expense, net
|
(5.3
|
)
|
|
(5.7
|
)
|
|
(10.8
|
)
|
|
(10.8
|
)
|
||||
Other income (expense), net
|
0.1
|
|
|
(0.6
|
)
|
|
(0.4
|
)
|
|
(0.3
|
)
|
||||
Total other expense, net
|
(5.2
|
)
|
|
(6.3
|
)
|
|
(11.2
|
)
|
|
(11.1
|
)
|
||||
Income (loss) from continuing operations before income taxes
|
3.8
|
|
|
(3.7
|
)
|
|
6.0
|
|
|
(1.5
|
)
|
||||
Provision for income taxes from continuing operations
|
2.5
|
|
|
0.1
|
|
|
1.0
|
|
|
1.0
|
|
||||
Income (loss) from continuing operations
|
1.3
|
|
|
(3.8
|
)
|
|
5.0
|
|
|
(2.5
|
)
|
||||
Discontinued operations
|
|
|
|
|
|
|
|
||||||||
Income (loss) from operations of discontinued component
|
2.9
|
|
|
(5.7
|
)
|
|
2.4
|
|
|
(9.6
|
)
|
||||
Income tax benefit
|
0.1
|
|
|
1.8
|
|
|
—
|
|
|
2.2
|
|
||||
Income (loss) from discontinued operations
|
3.0
|
|
|
(3.9
|
)
|
|
2.4
|
|
|
(7.4
|
)
|
||||
Net income (loss)
|
4.3
|
|
|
(7.7
|
)
|
|
7.4
|
|
|
(9.9
|
)
|
||||
Less: Net income attributable to noncontrolling interest
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
||||
Net income (loss) attributable to Kratos
|
$
|
3.9
|
|
|
$
|
(7.7
|
)
|
|
$
|
7.0
|
|
|
$
|
(9.9
|
)
|
Basic income (loss) per common share attributable to Kratos:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from continuing operations
|
$
|
0.01
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.02
|
)
|
Income (loss) from discontinued operations
|
0.03
|
|
|
(0.03
|
)
|
|
0.02
|
|
|
(0.08
|
)
|
||||
Net income (loss) per common share
|
$
|
0.04
|
|
|
$
|
(0.07
|
)
|
|
$
|
0.06
|
|
|
$
|
(0.10
|
)
|
Diluted income (loss) per common share attributable to Kratos:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
0.01
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.02
|
)
|
Income (loss) from discontinued operations
|
0.03
|
|
|
(0.03
|
)
|
|
0.02
|
|
|
(0.08
|
)
|
||||
Net income (loss) per common share
|
$
|
0.04
|
|
|
$
|
(0.07
|
)
|
|
$
|
0.06
|
|
|
$
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
106.1
|
|
|
103.7
|
|
|
105.5
|
|
|
103.7
|
|
||||
Diluted
|
109.4
|
|
|
103.7
|
|
|
108.6
|
|
|
103.7
|
|
||||
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
||||||||
Net income (loss) (from above)
|
$
|
4.3
|
|
|
$
|
(7.7
|
)
|
|
$
|
7.4
|
|
|
$
|
(9.9
|
)
|
Change in cumulative translation adjustment
|
(0.1
|
)
|
|
0.1
|
|
|
(0.1
|
)
|
|
—
|
|
||||
Comprehensive income (loss)
|
4.2
|
|
|
(7.6
|
)
|
|
7.3
|
|
|
(9.9
|
)
|
||||
Less: Comprehensive income attributable to noncontrolling interest
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
||||
Comprehensive income (loss) attributable to Kratos
|
$
|
3.8
|
|
|
$
|
(7.6
|
)
|
|
$
|
6.9
|
|
|
$
|
(9.9
|
)
|
|
|
Redeemable Noncontrolling Interest
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Other Comprehensive Loss
|
|
Accumulated Deficit
|
|
Total Stockholders’ Equity
|
|||||||||||||||
|
|
|
Shares
|
|
Amounts
|
|
|
|
|
||||||||||||||||||
Balance, December 31, 2017
|
|
$
|
—
|
|
|
103.3
|
|
|
$
|
—
|
|
|
$
|
1,233.7
|
|
|
$
|
(1.4
|
)
|
|
$
|
(720.8
|
)
|
|
$
|
511.5
|
|
Impact from the adoption of ASC 606
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
||||||
Issuance of common stock for employee stock purchase plan, options and warrants
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
|
(2.2
|
)
|
||||||
Other comprehensive income (loss), net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
||||||
Balance April 1, 2018
|
|
$
|
—
|
|
|
103.5
|
|
|
$
|
—
|
|
|
$
|
1,237.2
|
|
|
$
|
(1.5
|
)
|
|
$
|
(723.2
|
)
|
|
$
|
512.5
|
|
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
||||||
Restricted stock issued and related taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.7
|
)
|
|
(7.7
|
)
|
||||||
Other comprehensive income (loss), net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||||
Balance, July 1, 2018
|
|
$
|
—
|
|
|
103.5
|
|
|
$
|
—
|
|
|
$
|
1,238.8
|
|
|
$
|
(1.4
|
)
|
|
$
|
(730.9
|
)
|
|
$
|
506.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable Noncontrolling Interest
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Other Comprehensive Loss
|
|
Accumulated Deficit
|
|
Total Stockholders’ Equity
|
|||||||||||||||
|
|
|
Shares
|
|
Amounts
|
|
|
|
|
||||||||||||||||||
Balance, December 30, 2018
|
|
$
|
—
|
|
|
103.8
|
|
|
$
|
—
|
|
|
$
|
1,244.5
|
|
|
$
|
(0.7
|
)
|
|
$
|
(724.5
|
)
|
|
$
|
519.3
|
|
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
||||||
Issuance of common stock for employee stock purchase plan, options and warrants
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
||||||
Restricted stock issued and related taxes
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
||||||
Issuance of common stock for acquisitions
|
|
—
|
|
|
1.8
|
|
|
—
|
|
|
27.0
|
|
|
—
|
|
|
—
|
|
|
27.0
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.1
|
|
|
3.1
|
|
||||||
Other comprehensive income (loss), net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Changes in noncontrolling interest
|
|
15.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, March 31, 2019
|
|
$
|
15.0
|
|
|
105.9
|
|
|
$
|
—
|
|
|
$
|
1,275.0
|
|
|
$
|
(0.7
|
)
|
|
$
|
(721.4
|
)
|
|
$
|
552.9
|
|
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
||||||
Net income
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.9
|
|
|
3.9
|
|
||||||
Other comprehensive income (loss), net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
||||||
Balance, June 30, 2019
|
|
$
|
15.4
|
|
|
105.9
|
|
|
$
|
—
|
|
|
$
|
1,277.8
|
|
|
$
|
(0.8
|
)
|
|
$
|
(717.5
|
)
|
|
$
|
559.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
||||||
|
June 30, 2019
|
|
July 1, 2018
|
||||
Operating activities:
|
|
|
|
|
|||
Net income (loss)
|
$
|
7.4
|
|
|
$
|
(9.9
|
)
|
Income (loss) from discontinued operations
|
2.4
|
|
|
(7.4
|
)
|
||
Income (loss) from continuing operations
|
5.0
|
|
|
(2.5
|
)
|
||
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities from continuing operations:
|
|
|
|
|
|
||
Depreciation and amortization
|
11.1
|
|
|
9.2
|
|
||
Amortization of lease right-of-use assets
|
5.4
|
|
|
—
|
|
||
Stock-based compensation
|
5.4
|
|
|
3.4
|
|
||
Deferred income taxes
|
(3.1
|
)
|
|
(0.7
|
)
|
||
Amortization of deferred financing costs
|
0.5
|
|
|
0.5
|
|
||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||
Accounts receivable
|
4.4
|
|
|
8.1
|
|
||
Unbilled receivables
|
8.6
|
|
|
(23.7
|
)
|
||
Inventoried costs
|
(16.3
|
)
|
|
0.5
|
|
||
Prepaid expenses and other assets
|
(0.4
|
)
|
|
3.2
|
|
||
Operating lease liabilities
|
0.8
|
|
|
—
|
|
||
Accounts payable
|
3.6
|
|
|
6.0
|
|
||
Accrued expenses
|
—
|
|
|
(1.4
|
)
|
||
Accrued compensation
|
(2.1
|
)
|
|
3.9
|
|
||
Advance payments received on contracts
|
0.1
|
|
|
(0.6
|
)
|
||
Billings in excess of costs and earnings on uncompleted contracts
|
2.0
|
|
|
(8.9
|
)
|
||
Income tax receivable and payable
|
1.2
|
|
|
(1.0
|
)
|
||
Other liabilities
|
(6.2
|
)
|
|
5.4
|
|
||
Net cash provided by operating activities from continuing operations
|
20.0
|
|
|
1.4
|
|
||
Investing activities:
|
|
|
|
|
|
||
Cash paid for acquisitions, net of cash acquired
|
(17.6
|
)
|
|
—
|
|
||
Capital expenditures
|
(9.8
|
)
|
|
(11.0
|
)
|
||
Proceeds from sale of assets
|
—
|
|
|
67.9
|
|
||
Net cash provided by (used in) investing activities from continuing operations
|
(27.4
|
)
|
|
56.9
|
|
||
Financing activities:
|
|
|
|
|
|||
Debt issuance costs
|
—
|
|
|
(0.1
|
)
|
||
Expenses from the issuance of common stock
|
—
|
|
|
(1.1
|
)
|
||
Repayment of debt
|
—
|
|
|
(0.5
|
)
|
||
Payments under finance leases
|
(0.2
|
)
|
|
—
|
|
||
Proceeds from exercise of restricted stock units, employee stock options, and employee stock purchase plan
|
0.9
|
|
|
1.8
|
|
||
Net cash provided by financing activities from continuing operations
|
0.7
|
|
|
0.1
|
|
||
Net cash flows of continuing operations
|
(6.7
|
)
|
|
58.4
|
|
||
Net operating cash flows of discontinued operations
|
—
|
|
|
(6.1
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(0.1
|
)
|
|
(0.1
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(6.8
|
)
|
|
52.2
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
183.0
|
|
|
130.9
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
176.2
|
|
|
$
|
183.1
|
|
(a)
|
Basis of Presentation
|
(b)
|
Principles of Consolidation
|
(c)
|
Fiscal Year
|
(f)
|
Fair Value of Financial Instruments
|
Accounts receivable
|
|
$
|
7.3
|
|
Unbilled receivables
|
|
4.9
|
|
|
Inventoried costs
|
|
11.7
|
|
|
Other current assets
|
|
1.3
|
|
|
Property and equipment
|
|
9.7
|
|
|
Intangible assets
|
|
19.8
|
|
|
Goodwill
|
|
29.3
|
|
|
Total identifiable net assets acquired
|
|
84.0
|
|
|
Total identifiable net liabilities assumed
|
|
(9.0
|
)
|
|
Net assets before noncontrolling interest
|
|
75.0
|
|
|
Noncontrolling interest
|
|
(15.0
|
)
|
|
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
|
$
|
356.4
|
|
Pro forma net income before tax
|
$
|
5.1
|
|
Pro forma net income
|
$
|
6.5
|
|
Pro forma net income attributable to Kratos
|
$
|
6.3
|
|
|
|
||
Basic pro forma income per share attributable to Kratos
|
$
|
0.06
|
|
Diluted pro forma income per share attributable to Kratos
|
$
|
0.06
|
|
|
|
|
June 30, 2019
|
|
December 30, 2018
|
|
Net Change
|
||||||
Contract assets
|
$
|
169.1
|
|
|
$
|
172.8
|
|
|
$
|
(3.7
|
)
|
Contract liabilities
|
$
|
40.6
|
|
|
$
|
37.0
|
|
|
$
|
3.6
|
|
Net contract assets
|
$
|
128.5
|
|
|
$
|
135.8
|
|
|
$
|
(7.3
|
)
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
Revenues
|
|
|
|
|
|
|
||||||||
Kratos Government Solutions
|
|
|
|
|
|
|
||||||||
Fixed price
|
$
|
122.5
|
|
|
$
|
101.5
|
|
$
|
231.6
|
|
|
$
|
203.3
|
|
Cost plus fee
|
14.3
|
|
|
7.2
|
|
23.5
|
|
|
14.4
|
|
||||
Time and materials
|
8.6
|
|
|
6.9
|
|
15.8
|
|
|
13.1
|
|
||||
Total Kratos Government Solutions
|
145.4
|
|
|
115.6
|
|
270.9
|
|
|
230.8
|
|
||||
Unmanned Systems
|
|
|
|
|
|
|
||||||||
Fixed price
|
34.0
|
|
|
29.1
|
|
61.2
|
|
|
51.0
|
|
||||
Cost plus fee
|
8.1
|
|
|
5.9
|
|
15.5
|
|
|
11.4
|
|
||||
Time and materials
|
0.4
|
|
|
0.6
|
|
0.7
|
|
|
1.0
|
|
||||
Total Unmanned Systems
|
42.5
|
|
|
35.6
|
|
77.4
|
|
|
63.4
|
|
||||
Total Revenues
|
$
|
187.9
|
|
|
$
|
151.2
|
|
$
|
348.3
|
|
|
$
|
294.2
|
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
Kratos Government Solutions
|
|
|
|
|
|
|
||||||||
U.S. Government (1)
|
$
|
96.3
|
|
|
$
|
77.7
|
|
$
|
183.1
|
|
|
$
|
154.5
|
|
International (2)
|
28.4
|
|
|
23.4
|
|
53.3
|
|
|
44.4
|
|
||||
U.S. Commercial and other customers
|
20.7
|
|
|
14.5
|
|
34.5
|
|
|
31.9
|
|
||||
Total Kratos Government Solutions
|
145.4
|
|
|
115.6
|
|
270.9
|
|
|
230.8
|
|
||||
Unmanned Systems
|
|
|
|
|
|
|
||||||||
U.S. Government (1)
|
37.6
|
|
|
28.9
|
|
67.7
|
|
|
53.0
|
|
||||
International (2)
|
4.5
|
|
|
6.6
|
|
9.0
|
|
|
10.3
|
|
||||
U.S. Commercial and other customers
|
0.4
|
|
|
0.1
|
|
0.7
|
|
|
0.1
|
|
||||
Total Unmanned Systems
|
42.5
|
|
|
35.6
|
|
77.4
|
|
|
63.4
|
|
||||
Total Revenues
|
$
|
187.9
|
|
|
$
|
151.2
|
|
$
|
348.3
|
|
|
$
|
294.2
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
Revenue
|
$
|
—
|
|
|
$
|
19.2
|
|
|
$
|
0.1
|
|
|
$
|
43.1
|
|
Cost of sales
|
0.2
|
|
|
14.5
|
|
|
0.7
|
|
|
33.4
|
|
||||
Selling, general and administrative expenses
|
0.5
|
|
|
8.5
|
|
|
0.6
|
|
|
16.6
|
|
||||
Other (income) expense
|
(3.6
|
)
|
|
1.9
|
|
|
(3.6
|
)
|
|
2.7
|
|
||||
Income (loss) from discontinued operations before income taxes
|
2.9
|
|
|
(5.7
|
)
|
|
2.4
|
|
|
(9.6
|
)
|
||||
Income tax benefit
|
0.1
|
|
|
1.8
|
|
|
—
|
|
|
2.2
|
|
||||
Income (loss) from discontinued operations
|
$
|
3.0
|
|
|
$
|
(3.9
|
)
|
|
$
|
2.4
|
|
|
$
|
(7.4
|
)
|
|
June 30, 2019
|
|
December 30, 2018
|
||||
Accounts receivable, net and unbilled receivables, net
|
$
|
5.2
|
|
|
$
|
8.2
|
|
Other current assets
|
0.1
|
|
|
0.1
|
|
||
Current assets of discontinued operations
|
$
|
5.3
|
|
|
$
|
8.3
|
|
|
|
|
|
||||
Accounts payable
|
$
|
0.3
|
|
|
$
|
0.3
|
|
Accrued expenses
|
0.2
|
|
|
0.4
|
|
||
Other current liabilities
|
3.0
|
|
|
4.6
|
|
||
Current liabilities of discontinued operations
|
$
|
3.5
|
|
|
$
|
5.3
|
|
Other long-term liabilities of discontinued operations
|
$
|
2.8
|
|
|
$
|
6.4
|
|
(a)
|
Goodwill
|
|
As of June 30, 2019
|
||||||||||
|
Kratos Government Solutions
|
|
Unmanned Systems
|
|
Total
|
||||||
Gross value
|
$
|
601.6
|
|
|
$
|
111.1
|
|
|
$
|
712.7
|
|
Less accumulated impairment
|
239.5
|
|
|
13.8
|
|
|
253.3
|
|
|||
Net
|
$
|
362.1
|
|
|
$
|
97.3
|
|
|
$
|
459.4
|
|
|
|
|
|
|
|
|
As of December 30, 2018
|
||||||||||
|
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 June 30, 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
|
$
|
63.8
|
|
|
$
|
(51.7
|
)
|
|
$
|
12.1
|
|
|
$
|
52.6
|
|
|
$
|
(50.6
|
)
|
|
$
|
2.0
|
|
Contracts and backlog
|
32.1
|
|
|
(27.3
|
)
|
|
4.8
|
|
|
29.9
|
|
|
(26.4
|
)
|
|
3.5
|
|
||||||
Developed technology and technical know-how
|
25.0
|
|
|
(22.6
|
)
|
|
2.4
|
|
|
25.0
|
|
|
(21.3
|
)
|
|
3.7
|
|
||||||
Trade names
|
1.8
|
|
|
(1.6
|
)
|
|
0.2
|
|
|
1.4
|
|
|
(1.4
|
)
|
|
—
|
|
||||||
In-process research and development
|
6.0
|
|
|
—
|
|
|
6.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total finite-lived intangible assets
|
128.7
|
|
|
(103.2
|
)
|
|
25.5
|
|
|
108.9
|
|
|
(99.7
|
)
|
|
9.2
|
|
||||||
Indefinite-lived trade names
|
6.9
|
|
|
—
|
|
|
6.9
|
|
|
6.9
|
|
|
—
|
|
|
6.9
|
|
||||||
Total intangible assets
|
$
|
135.6
|
|
|
$
|
(103.2
|
)
|
|
$
|
32.4
|
|
|
$
|
115.8
|
|
|
$
|
(99.7
|
)
|
|
$
|
16.1
|
|
|
June 30, 2019
|
|
December 30, 2018
|
||||
Raw materials
|
$
|
45.9
|
|
|
$
|
34.7
|
|
Work in process
|
25.5
|
|
|
10.3
|
|
||
Finished goods
|
4.1
|
|
|
1.8
|
|
||
Subtotal inventoried costs
|
75.5
|
|
|
46.8
|
|
||
Less: Customer advances and progress payments
|
(0.1
|
)
|
|
—
|
|
||
Total inventoried costs
|
$
|
75.4
|
|
|
$
|
46.8
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
June 30, 2019
|
|
June 30, 2019
|
||||
Amortization of right of use assets - finance leases
|
$
|
0.5
|
|
|
$
|
1.0
|
|
Interest on lease liabilities - finance leases
|
0.6
|
|
|
1.2
|
|
||
Operating lease cost (cost resulting from lease payments)
|
3.7
|
|
|
6.7
|
|
||
Short-term lease cost
|
0.2
|
|
|
0.4
|
|
||
Variable lease cost (cost excluded from lease payments)
|
0.1
|
|
|
0.1
|
|
||
Sublease income
|
(0.8
|
)
|
|
(1.6
|
)
|
||
Total lease cost
|
$
|
4.3
|
|
|
$
|
7.8
|
|
|
|
|
|
|
June 30, 2019
|
||
Operating Leases:
|
|
||
Operating lease right-of-use assets
|
$
|
43.8
|
|
Current portion of operating lease liabilities
|
$
|
12.1
|
|
Operating lease liabilities, net of current portion
|
$
|
37.8
|
|
Finance leases:
|
|
||
Property, plant and equipment, net
|
$
|
38.6
|
|
Other current liabilities
|
$
|
0.6
|
|
Other long-term liabilities
|
$
|
38.7
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
June 30, 2019
|
|
June 30, 2019
|
||||
Finance lease - cash paid for interest
|
$
|
0.6
|
|
|
$
|
1.2
|
|
Finance lease - financing cash flows
|
$
|
0.1
|
|
|
$
|
0.2
|
|
Operating lease - operating cash flows (fixed payments)
|
$
|
4.0
|
|
|
$
|
7.3
|
|
Operating lease liabilities arising from obtaining right-of-use assets, including impact of ASC 842 adoption
|
$
|
8.5
|
|
|
$
|
55.7
|
|
Finance lease liabilities arising from obtaining right-of-use assets, including impact of ASC 842 adoption
|
$
|
—
|
|
|
$
|
39.6
|
|
|
|
|
|
||||
Weighted-average remaining lease term (in years):
|
|
|
|
||||
Operating leases
|
|
|
5.6
|
|
|||
Finance leases
|
|
|
19.4
|
|
|||
|
|
|
|
||||
Weighted-average discount rate:
|
|
|
|
||||
Operating leases
|
|
|
6.55
|
%
|
|||
Finance leases
|
|
|
6.53
|
%
|
|
Operating Leases
|
|
Finance Leases
|
||||
2019 (1)
|
$
|
7.9
|
|
|
$
|
1.5
|
|
2020
|
11.9
|
|
|
3.2
|
|
||
2021
|
9.3
|
|
|
3.2
|
|
||
2022
|
7.8
|
|
|
3.3
|
|
||
2023
|
7.4
|
|
|
3.3
|
|
||
Thereafter
|
15.7
|
|
|
57.3
|
|
||
Total lease payments
|
60.0
|
|
|
71.8
|
|
||
Less: imputed interest
|
(10.1
|
)
|
|
(32.5
|
)
|
||
Total present value of lease liabilities
|
$
|
49.9
|
|
|
$
|
39.3
|
|
(1) Excludes the six months ended June 30, 2019.
|
|
|
|
Year ending December 30, 2018
|
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
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
||||||||||||
|
June 30,
2019 |
|
July 1,
2018 |
|
June 30,
2019 |
|
July 1,
2018 |
||||||||
Income tax expense (benefit) at federal statutory rate
|
$
|
0.8
|
|
|
$
|
(0.8
|
)
|
|
$
|
1.3
|
|
|
$
|
(0.3
|
)
|
State and foreign taxes, net of federal tax benefit and valuation allowance
|
1.0
|
|
|
(0.1
|
)
|
|
1.2
|
|
|
0.1
|
|
||||
Release of valuation allowance due to FTT acquisition
|
—
|
|
|
—
|
|
|
(3.4
|
)
|
|
—
|
|
||||
Global intangible low-taxed income
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
(0.2
|
)
|
||||
Nondeductible expenses and other
|
0.3
|
|
|
(0.3
|
)
|
|
0.4
|
|
|
(0.2
|
)
|
||||
Impact of deferred tax liabilities for indefinite-lived assets
|
0.2
|
|
|
(0.8
|
)
|
|
0.3
|
|
|
(0.4
|
)
|
||||
Increase in reserves for uncertain tax positions
|
1.3
|
|
|
1.1
|
|
|
2.9
|
|
|
1.4
|
|
||||
Increase (decrease) in federal valuation allowance
|
(1.1
|
)
|
|
1.3
|
|
|
(1.7
|
)
|
|
0.6
|
|
||||
Total income tax provision
|
$
|
2.5
|
|
|
$
|
0.1
|
|
|
$
|
1.0
|
|
|
$
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2019
|
|
As of December 30, 2018
|
||||||||||||||||||||
$ in millions
|
|
Principal
|
|
Carrying
Amount |
|
Fair Value
|
|
Principal
|
|
Carrying
Amount |
|
Fair Value
|
||||||||||||
Total long-term debt including current portion
|
|
$
|
300.0
|
|
|
$
|
294.6
|
|
|
$
|
322.5
|
|
|
$
|
300.0
|
|
|
$
|
294.2
|
|
|
$
|
305.3
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|||||
Kratos Government Solutions
|
|
|
|
|
|
|
|
||||||||
Service revenues
|
$
|
73.7
|
|
|
$
|
47.0
|
|
|
$
|
136.3
|
|
|
$
|
93.0
|
|
Product sales
|
71.7
|
|
|
68.6
|
|
|
134.6
|
|
|
137.8
|
|
||||
Total Kratos Government Solutions
|
145.4
|
|
|
115.6
|
|
|
270.9
|
|
|
230.8
|
|
||||
Unmanned Systems
|
|
|
|
|
|
|
|
||||||||
Service revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Product sales
|
42.5
|
|
|
35.6
|
|
|
77.4
|
|
|
63.4
|
|
||||
Total Unmanned Systems
|
42.5
|
|
|
35.6
|
|
|
77.4
|
|
|
63.4
|
|
||||
Total revenues
|
$
|
187.9
|
|
|
$
|
151.2
|
|
|
$
|
348.3
|
|
|
$
|
294.2
|
|
Depreciation & amortization:
|
|
|
|
|
|
|
|
||||||||
Kratos Government Solutions
|
$
|
4.8
|
|
|
$
|
3.3
|
|
|
$
|
8.7
|
|
|
$
|
6.9
|
|
Unmanned Systems
|
1.2
|
|
|
1.4
|
|
|
2.4
|
|
|
2.3
|
|
||||
Total depreciation and amortization
|
$
|
6.0
|
|
|
$
|
4.7
|
|
|
$
|
11.1
|
|
|
$
|
9.2
|
|
Operating income from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Kratos Government Solutions
|
$
|
10.7
|
|
|
$
|
5.0
|
|
|
$
|
22.1
|
|
|
$
|
12.9
|
|
Unmanned Systems
|
1.7
|
|
|
2.0
|
|
|
2.3
|
|
|
2.8
|
|
||||
Corporate Activities
|
(3.4
|
)
|
|
(4.4
|
)
|
|
(7.2
|
)
|
|
(6.1
|
)
|
||||
Total operating income from continuing operations
|
$
|
9.0
|
|
|
$
|
2.6
|
|
|
$
|
17.2
|
|
|
$
|
9.6
|
|
|
June 30, 2019
|
|
July 1, 2018
|
|
$ change
|
|
% change
|
|||||||
Kratos Government Solutions
|
|
|
|
|
|
|
|
|||||||
Service revenues
|
$
|
73.7
|
|
|
$
|
47.0
|
|
|
$
|
26.7
|
|
|
56.8
|
%
|
Product sales
|
71.7
|
|
|
68.6
|
|
|
3.1
|
|
|
4.5
|
%
|
|||
Total Kratos Government Solutions
|
145.4
|
|
|
115.6
|
|
|
29.8
|
|
|
25.8
|
%
|
|||
Unmanned Systems product sales
|
42.5
|
|
|
35.6
|
|
|
6.9
|
|
|
19.4
|
%
|
|||
Total revenues
|
$
|
187.9
|
|
|
$
|
151.2
|
|
|
$
|
36.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total service revenues
|
$
|
73.7
|
|
|
$
|
47.0
|
|
|
$
|
26.7
|
|
|
56.8
|
%
|
Total product sales
|
114.2
|
|
|
104.2
|
|
|
10.0
|
|
|
9.6
|
%
|
|||
Total revenues
|
$
|
187.9
|
|
|
$
|
151.2
|
|
|
$
|
36.7
|
|
|
24.3
|
%
|
|
June 30, 2019
|
|
July 1, 2018
|
|
$ change
|
|
% change
|
|||||||
Kratos Government Solutions
|
|
|
|
|
|
|
|
|||||||
Service revenues
|
$
|
136.3
|
|
|
$
|
93.0
|
|
|
$
|
43.3
|
|
|
46.6
|
%
|
Product sales
|
134.6
|
|
|
137.8
|
|
|
(3.2
|
)
|
|
(2.3
|
)%
|
|||
Total Kratos Government Solutions
|
270.9
|
|
|
230.8
|
|
|
40.1
|
|
|
17.4
|
%
|
|||
Unmanned Systems product sales
|
77.4
|
|
|
63.4
|
|
|
14.0
|
|
|
22.1
|
%
|
|||
Total revenues
|
$
|
348.3
|
|
|
$
|
294.2
|
|
|
$
|
54.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total service revenues
|
$
|
136.3
|
|
|
$
|
93.0
|
|
|
$
|
43.3
|
|
|
46.6
|
%
|
Total product sales
|
212.0
|
|
|
201.2
|
|
|
10.8
|
|
|
5.4
|
%
|
|||
Total revenues
|
$
|
348.3
|
|
|
$
|
294.2
|
|
|
$
|
54.1
|
|
|
18.4
|
%
|
|
Six Months Ended
|
||||||
|
June 30, 2019
|
|
July 1, 2018
|
||||
Net cash provided by operating activities from continuing operations
|
$
|
20.0
|
|
|
$
|
1.4
|
|
Net cash provided by (used in) investing activities from continuing operations
|
(27.4
|
)
|
|
56.9
|
|
||
Net cash provided by financing activities from continuing operations
|
0.7
|
|
|
0.1
|
|
||
Net operating cash flows of discontinued operations
|
—
|
|
|
(6.1
|
)
|
||
|
|
|
|
|
|
|
|
Incorporated by
Reference
|
|
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
Filing Date/
Period End
Date
|
|
Exhibit
|
|
Filed-
Furnished
Herewith
|
2.1#
|
|
|
10-Q
|
|
05/10/2018
(001-34460)
|
|
2.2
|
|
|
|
2.2#*
|
|
|
10-Q
|
|
05/08/2019
(001-34460)
|
|
2.3
|
|
|
|
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
|
|
11/21/2017
(001-34460)
|
|
4.1
|
|
|
|
4.3
|
|
|
10-K
|
|
02/28/2018
(001-34460)
|
|
4.5
|
|
|
|
10.1
|
|
|
|
|
|
|
|
|
*
|
|
31.1
|
|
|
|
|
|
|
|
|
*
|
|
31.2
|
|
|
|
|
|
|
|
|
*
|
|
32.1
|
|
|
|
|
|
|
|
|
*
|
|
32.2
|
|
|
|
|
|
|
|
|
*
|
|
101.INS
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Incorporated by
Reference
|
|
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
Filing Date/
Period End
Date
|
|
Exhibit
|
|
Filed-
Furnished
Herewith
|
1.01.SCH
|
|
|
|
|
|
|
|
|
*
|
|
1.01.CAL
|
|
|
|
|
|
|
|
|
*
|
|
1.01.DEF
|
|
|
|
|
|
|
|
|
*
|
|
1.01.LAB
|
|
|
|
|
|
|
|
|
*
|
|
1.01.PRE
|
|
|
|
|
|
|
|
|
*
|
|
|
|
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:
|
July 31, 2019
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Kratos Defense & Security Solutions, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
KRATOS DEFENSE & SECURITY SOLUTIONS, INC.
|
|
|
|
/s/ ERIC M. DEMARCO
|
|
Eric M. DeMarco
|
|
Chief Executive Officer, President
|
|
(Principal Executive Officer)
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Kratos Defense & Security Solutions, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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KRATOS DEFENSE & SECURITY SOLUTIONS, INC.
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/s/ DEANNA H. LUND
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Deanna H. Lund
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Executive Vice President, Chief Financial Officer
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(Principal Financial Officer and Acting Principal Accounting Officer)
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ ERIC M. DEMARCO
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Eric M. DeMarco
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Chief Executive Officer, President
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(Principal Executive Officer)
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ DEANNA H. LUND
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Deanna H. Lund
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Executive Vice President, Chief Financial Officer
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(Principal Financial Officer and Acting Principal Accounting Officer)
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