Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 26, 2017 | Apr. 28, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | KRATOS DEFENSE & SECURITY SOLUTIONS, INC. | |
Entity Central Index Key | 1,069,258 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 26, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 86,446,084 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Millions | Mar. 26, 2017 | Dec. 25, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 73.4 | $ 69.1 |
Restricted cash | 0.5 | 0.5 |
Accounts receivable, net | 227.9 | 229.4 |
Inventoried costs | 64.8 | 55.4 |
Prepaid expenses | 8.9 | 8.9 |
Other current assets | 11.8 | 9.8 |
Total current assets | 387.3 | 373.1 |
Property, plant and equipment, net | 50.8 | 49.8 |
Goodwill | 485.4 | 485.4 |
Intangible assets, net | 29.9 | 32.6 |
Other assets | 8.2 | 7.7 |
Total assets | 961.6 | 948.6 |
Current liabilities: | ||
Accounts payable | 51.8 | 52.7 |
Accrued expenses | 49.8 | 50 |
Accrued compensation | 35.2 | 39.1 |
Accrued interest | 9.6 | 3.6 |
Billings in excess of costs and earnings on uncompleted contracts | 41.8 | 41.8 |
Other current liabilities | 6.4 | 7.7 |
Current liabilities of discontinued operations | 1.4 | 1.6 |
Total current liabilities | 196 | 196.5 |
Long-term debt principal, net of current portion | 369.3 | 431 |
Other long-term liabilities | 41.2 | 41 |
Non-current liabilities of discontinued operations | 3.7 | 3.7 |
Total liabilities | 610.2 | 672.2 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, 0 shares outstanding at March 26, 2017 and December 25, 2016 | 0 | 0 |
Common stock, $0.001 par value, 195,000,000 shares authorized; 86,439,842 and 73,945,533 shares issued and outstanding at March 26, 2017 and December 25, 2016, respectively | 0 | 0 |
Additional paid-in capital | 1,041 | 956.2 |
Accumulated other comprehensive loss | (1.6) | (1.7) |
Accumulated deficit | (688) | (678.1) |
Total stockholders’ equity | 351.4 | 276.4 |
Total liabilities and stockholders’ equity | $ 961.6 | $ 948.6 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 26, 2017 | Dec. 25, 2016 |
Preferred Stock: | ||
Par value (in dollars per share) | $ 0.001 | $ 0.001 |
Shares authorized (in shares) | 5,000,000 | 5,000,000 |
Shares outstanding (in shares) | 0 | 0 |
Common Stock: | ||
Par value (in dollars per share) | $ 0.001 | $ 0.001 |
Shares authorized (in shares) | 195,000,000 | 195,000,000 |
Shares issued (in shares) | 86,439,842 | 73,945,533 |
Shares outstanding (in shares) | 86,439,842 | 73,945,533 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Income Statement [Abstract] | ||
Service revenues | $ 85 | $ 82.6 |
Product sales | 82.8 | 70.4 |
Total revenues | 167.8 | 153 |
Cost of service revenues | 61.8 | 60.3 |
Cost of product sales | 60.9 | 56.8 |
Total costs | 122.7 | 117.1 |
Gross profit | 45.1 | 35.9 |
Selling, general and administrative expenses | 38.7 | 37.7 |
Research and development expenses | 4.4 | 2.9 |
Unused office space, restructuring expenses, and other | 0.3 | 5.5 |
Operating income (loss) from continuing operations | 1.7 | (10.2) |
Other income (expense): | ||
Interest expense, net | (8.2) | (8.7) |
Loss on extinguishment of debt | (2.1) | 0 |
Other income, net | 0.2 | 0.3 |
Total other expense, net | (10.1) | (8.4) |
Loss from continuing operations before income taxes | (8.4) | (18.6) |
Provision for income taxes from continuing operations | 1.5 | 3.6 |
Loss from continuing operations | (9.9) | (22.2) |
Discontinued operations | ||
Loss from operations of discontinued component | (0.1) | 0 |
Income tax expense | 0 | 0 |
Loss from discontinued operations | (0.1) | 0 |
Net loss | $ (10) | $ (22.2) |
Basic and diluted loss per common share: | ||
Net loss from continuing operations (in dollars per share) | $ (0.13) | $ (0.37) |
Net loss from discontinued operations (in dollars per share) | 0 | 0 |
Net loss per common share (in dollars per share) | $ (0.13) | $ (0.37) |
Weighted average common shares outstanding: | ||
Basic and diluted weighted average shares outstanding (shares) | 77.3 | 59.6 |
Comprehensive Loss | ||
Net loss | $ (10) | $ (22.2) |
Change in cumulative translation adjustment | 0.1 | 0 |
Comprehensive loss | $ (9.9) | $ (22.2) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Operating activities: | ||
Net loss | $ (10) | $ (22.2) |
Less: Loss from discontinued operations | (0.1) | 0 |
Loss from continuing operations | (9.9) | (22.2) |
Adjustments to reconcile loss from continuing operations to net cash used in operating activities from continuing operations: | ||
Depreciation and amortization | 5.6 | 6.1 |
Stock-based compensation | 2.1 | 1.5 |
Deferred income taxes | 0.8 | 1.2 |
Amortization of deferred financing costs | 0.4 | 0.4 |
Amortization of discount on Senior Secured Notes | 0.2 | 0.2 |
Loss on extinguishment of debt | 2.1 | 0 |
Provision for doubtful accounts | 0 | 0.3 |
Litigation related charges | 0 | 1.7 |
Provision for non-cash restructuring charges | 0 | 3 |
Changes in assets and liabilities, net of acquisitions: | ||
Accounts receivable | 1.5 | (4) |
Inventoried costs | (10.1) | (1.6) |
Prepaid expenses and other assets | (3.8) | 0.1 |
Accounts payable | 0.4 | (8.8) |
Accrued compensation | (4) | (4.2) |
Accrued expenses | (0.3) | (3.1) |
Advance payments received on contracts | 0.7 | 1.5 |
Accrued interest | 6 | 7.9 |
Billings in excess of costs and earnings on uncompleted contracts | 0 | 6.7 |
Income tax receivable and payable | 0.5 | 0.4 |
Other liabilities | (0.9) | 1.4 |
Net cash used in operating activities from continuing operations | (8.7) | (11.5) |
Investing activities: | ||
Capital expenditures | (5.2) | (2.1) |
Net cash used in investing activities from continuing operations | (5.2) | (2.1) |
Financing activities: | ||
Extinguishment of long-term debt | (64) | 0 |
Proceeds from the issuance of common stock | 81.9 | 0 |
Repayment of debt | (0.3) | (0.3) |
Proceeds from exercise of restricted stock units, employee stock options, and employee stock purchase plan | 0.8 | 1.2 |
Net cash provided by financing activities from continuing operations | 18.4 | 0.9 |
Net cash flows of continuing operations | 4.5 | (12.7) |
Net operating cash flows of discontinued operations | 0 | (0.4) |
Net investing cash flows of discontinued operations | (0.2) | 4.7 |
Net increase (decrease) in cash and cash equivalents | 4.3 | (8.4) |
Cash and cash equivalents at beginning of period | 69.1 | 28.5 |
Cash and cash equivalents at end of period | $ 73.4 | $ 20.1 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 26, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies All references to the “Company” and “Kratos” refer to Kratos Defense & Security Solutions, Inc., a Delaware corporation, and its subsidiaries. (a) Basis of Presentation The information as of March 26, 2017 and for the three months ended March 26, 2017 and March 27, 2016 is unaudited. The condensed consolidated balance sheet as of December 25, 2016 was derived from the Company’s audited consolidated financial statements at that date. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods presented. The results have been prepared in accordance with the instructions to Form 10-Q and do not necessarily include all information and footnotes necessary for presentation in accordance with accounting principles generally accepted in the U.S. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s audited annual consolidated financial statements for the fiscal year ended December 25, 2016 , included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 27, 2017 (the “Form 10-K”). Interim operating results are not necessarily indicative of operating results expected in subsequent periods or for the year as a whole. (b) Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its 100% owned subsidiaries for which all inter-company transactions have been eliminated in consolidation. (c) Fiscal Year The Company has a 52/53 week fiscal year ending on the last Sunday of the calendar year, with interim fiscal periods ending on the last Sunday of each calendar quarter. The three month periods ended March 26, 2017 and March 27, 2016 consisted of 13-week periods. There are 53 calendar weeks in the fiscal year ending on December 31, 2017 and 52 calendar weeks in the fiscal year ending on December 25, 2016 . (d) Accounting Estimates There have been no significant changes in the Company’s accounting estimates for the three months ended March 26, 2017 as compared to the accounting estimates described in the Form 10-K. (e) Accounting Standards Updates In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04 (“ASU 2017-04”), Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . ASU 2017-04 amends the guidance to simplify the subsequent measurement of goodwill by removing Step 2 of the goodwill impairment test. Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of the new guidance and timing of adoption, but does not expect that the standard will have a material impact on its Consolidated Financial Statements. In October 2016, the FASB issued ASU 2016-16 (“ASU 2016-16”), Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 requires that entities recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than when the asset is sold to an outside party. ASU 2016-16 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period (as of the first interim period if an entity issues interim financial statements). ASU 2016-16 requires adoption on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company early adopted this standard on December 26, 2016. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. In August 2016, the FASB issued ASU 2016-15 (“ASU 2016-15”), Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The objective of ASU 2016-15 is to reduce existing diversity in practice by addressing eight specific cash flow issues related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. If early adopted, an entity must adopt all of the amendments in the same period. The Company does not believe that the adoption of this guidance will have a material impact on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09 (“ASU 2016-09”), Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies several aspects of the accounting for employee share-based payments, including accounting for income taxes, forfeitures, statutory tax withholding requirements, and classification on the statement of cash flows. The amendments in this ASU are effective for annual periods beginning after December 15, 2016. Early adoption was permitted. The Company early adopted this standard in the quarter ended December 25, 2016, which did not have a material impact on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 (“ASU 2016-02”), Leases . ASU 2016-02 requires that lessees recognize assets and liabilities for the rights and obligations for leases with a lease term of more than one year. The amendments in this ASU are effective for annual periods ending after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers . ASU 2014-09 establishes a broad principle that would require an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity identifies the contract with a customer, identifies the separate performance obligations in the contract, determines the transaction price, allocates the transaction price to the separate performance obligations and recognizes revenue when each separate performance obligation is satisfied. ASU 2014-09 was further updated in March, April, May, and December 2016 to provide clarification on a number of specific issues as well as requiring additional disclosures. ASU 2014-09 may be applied either retrospectively or through the use of a modified-retrospective method. The full retrospective method requires companies to recast each prior reporting period presented as if the new guidance had always existed. Under the modified retrospective method, companies would recognize the cumulative effect of initially applying the standard as an adjustment to opening retained earnings at the date of initial application. On July 9, 2015, the FASB approved a one year deferral of the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017. The Company plans to adopt the new revenue standard effective January 1, 2018. While the Company has not yet completed its evaluation of the impact of ASU 2014-09 upon adoption, based upon an assessment of material active contracts, the Company does not expect the impact on the results of operations or cash flows in the periods after adoption to be material. Under ASU 2014-09, revenue is recognized as control transfers to the customer. As such, revenue for the Company’s contracts will generally be recognized over time using the cost-to-cost method, which is consistent with the revenue recognition model currently in use for the majority of contracts. For those contracts where revenue is currently recognized as units are delivered, in most cases the accounting for those contracts will change under ASU 2014-09 such that revenue will be recognized as costs are incurred. This change will generally result in an acceleration of revenue as compared with the current revenue recognition method for those contracts. The Company expects to adopt the new standard using the modified retrospective method. There have been no changes in the Company’s significant accounting policies for the three months ended March 26, 2017 as compared to the significant accounting policies described in the Form 10-K. (f) Fair Value of Financial Instruments The carrying amounts and the related estimated fair values of the Company’s long-term debt financial instruments not measured at fair value on a recurring basis at March 26, 2017 and December 25, 2016 are presented in Note 7. The carrying value of all other financial instruments, including cash equivalents, accounts receivable, accounts payable, accrued expenses, billings in excess of cost and earnings on uncompleted contracts, income taxes payable and short-term debt, approximated their estimated fair values at March 26, 2017 and December 25, 2016 due to the short-term nature of these instruments. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 26, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets (a) Goodwill The carrying amounts of goodwill as of March 26, 2017 and December 25, 2016 by reportable segment are as follows (in millions): Kratos Government Solutions Public Safety & Security Unmanned Systems Total Gross value $ 567.8 $ 53.9 $ 111.1 $ 732.8 Less accumulated impairment 215.3 18.3 13.8 247.4 Net $ 352.5 $ 35.6 $ 97.3 $ 485.4 (b) Purchased Intangible Assets The following table sets forth information for finite-lived and indefinite-lived intangible assets (in millions): As of March 26, 2017 As of December 25, 2016 Gross Accumulated Net Gross Accumulated Net Acquired finite-lived intangible assets: Customer relationships $ 53.7 $ (46.2 ) $ 7.5 $ 53.7 $ (44.9 ) $ 8.8 Contracts and backlog 30.8 (24.2 ) 6.6 30.8 (23.7 ) 7.1 Developed technology and technical know-how 25.2 (16.5 ) 8.7 25.2 (15.7 ) 9.5 Trade names 1.4 (1.2 ) 0.2 1.4 (1.1 ) 0.3 Total finite-lived intangible assets 111.1 (88.1 ) 23.0 111.1 (85.4 ) 25.7 Indefinite-lived trade names 6.9 — 6.9 6.9 — 6.9 Total intangible assets $ 118.0 $ (88.1 ) $ 29.9 $ 118.0 $ (85.4 ) $ 32.6 Consolidated amortization expense related to intangible assets subject to amortization was $2.7 million and $2.7 million for the three months ended March 26, 2017 and March 27, 2016 , respectively. |
Inventoried Costs
Inventoried Costs | 3 Months Ended |
Mar. 26, 2017 | |
Inventory Disclosure [Abstract] | |
Inventoried Costs | Inventoried Costs Inventoried costs consisted of the following components (in millions): March 26, December 25, Raw materials $ 32.3 $ 31.9 Work in process 30.3 22.1 Finished goods 1.7 1.4 Supplies and other 3.0 1.8 Subtotal inventoried costs 67.3 57.2 Less: Customer advances and progress payments (2.5 ) (1.8 ) Total inventoried costs $ 64.8 $ 55.4 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 26, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity A summary of the changes in stockholders’ equity is provided below (in millions): For the Three Months Ended March 26, 2017 March 27, 2016 Stockholders’ equity at beginning of period $ 276.4 $ 254.2 Comprehensive loss: Net loss (10.0 ) (22.2 ) Change in cumulative translation adjustment 0.1 — Total comprehensive loss (9.9 ) (22.2 ) Stock-based compensation 2.1 1.5 Issuance of common stock for cash 81.9 — Issuance of common stock for employee stock purchase plan 1.4 1.3 Restricted stock units exchanged for taxes (0.5 ) (0.1 ) Stockholders’ equity at end of period $ 351.4 $ 234.7 The components of accumulated other comprehensive loss are as follows (in millions): March 26, 2017 March 27, 2016 Cumulative translation adjustment $ (1.0 ) $ (0.6 ) Post-retirement benefit reserve adjustment net of tax expense (0.6 ) (0.8 ) Total accumulated other comprehensive loss $ (1.6 ) $ (1.4 ) There were no reclassifications from accumulated other comprehensive loss to net loss for the three months ended March 26, 2017 and March 27, 2016 . Common stock issued by the Company for the three months ended March 26, 2017 and March 27, 2016 was as follows (in millions): For the Three Months Ended March 26, 2017 March 27, 2016 Shares outstanding at beginning of the period 73.9 59.1 Stock issued for cash 11.9 — Stock issued for employee stock purchase plan, stock options and restricted stock units exercised 0.6 0.5 Shares outstanding at end of the period 86.4 59.6 |
Net Loss Per Common Share
Net Loss Per Common Share | 3 Months Ended |
Mar. 26, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | Net Loss Per Common Share The Company calculates net loss per share in accordance with FASB Accounting Standards Codification Topic 260, Earnings per Share (Topic 260). Under Topic 260, basic net loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the reporting period. Diluted net loss per common share reflects the effects of potentially dilutive securities. Shares from stock options and awards, excluded from the calculation of diluted net loss per share because their inclusion would have been anti-dilutive, were 0.2 million and 2.5 million for the three months ended March 26, 2017 and March 27, 2016 , respectively. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 26, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes A reconciliation of the income tax benefit from continuing operations computed by applying the statutory federal income tax rate of 35% to loss from continuing operations before income taxes to the income tax provision for the three months ended March 26, 2017 and March 27, 2016 was as follows (in millions): March 26, March 27, Income tax benefit at federal statutory rate $ (2.9 ) $ (6.5 ) State and foreign taxes, net of federal tax benefit and valuation allowance 0.2 0.4 Nondeductible expenses and other 0.4 0.4 Impact of deferred tax liabilities for indefinite-lived assets 1.2 1.5 Increase in reserves for uncertain tax positions 0.1 1.7 Increase in federal valuation allowance 2.5 6.1 Total income tax provision $ 1.5 $ 3.6 In assessing the Company’s ability to realize deferred tax assets, management considers, on a periodic basis, whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. As such, management has determined that it is appropriate to maintain a full valuation allowance against the Company’s U.S. federal, combined state and certain foreign deferred tax assets, with the exception of an amount equal to its deferred tax liabilities, which can be expected to reverse over a definite life. Federal and state income tax laws impose restrictions on the utilization of net operating losses (“NOLs”) and tax credit carryforwards in the event that an “ownership change” occurs for tax purposes, as defined by Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”). In general, an ownership change occurs when shareholders owning 5% or more of a “loss corporation” (a corporation entitled to use NOLs or other loss carryovers) have increased their ownership of stock in such corporation by more than 50 percentage points during any three-year period. The annual base Section 382 limitation is calculated by multiplying the loss corporation’s value at the time of the ownership change by the greater of the long-term tax-exempt rate determined by the Internal Revenue Service in the month of the ownership change or the two preceding months. This base limitation is subject to adjustments, including an increase for built-in gains recognized in the five -year period after the ownership change. In March 2010, an “ownership change” occurred that will limit the utilization of NOL carryforwards. In July 2011, another “ownership change” occurred. The March 2010 ownership change limitation is more restrictive. In prior years, the Company acquired corporations with NOL carryforwards at the date of acquisition (“Acquired NOLs”). The Acquired NOLs are subject to separate limitations that may further restrict the use of Acquired NOLs. As a result, the Company’s federal annual utilization of NOL carryforwards was limited to at least $27.0 million a year for the five years succeeding the March 2010 ownership change and at least $11.6 million for each year thereafter subject to separate limitations for Acquired NOLs. If the entire limitation amount is not utilized in a year, the excess can be carried forward and utilized in future years. For the three months ended March 26, 2017 , there was no impact of such limitations on the income tax provision, since the amount of taxable income did not exceed the annual limitation amount. However, future equity offerings or acquisitions that have equity as a component of the purchase price could also cause an “ownership change.” If and when any other “ownership change” occurs, utilization of the NOLs or other tax attributes may be further limited. As discussed elsewhere, deferred tax assets relating to the NOL and credit carryforwards are offset by a full valuation allowance. In addition, utilization of state tax loss carryforwards is dependent upon sufficient taxable income apportioned to the states. The Company is subject to taxation in the U.S. and various state and foreign tax jurisdictions. The Company’s tax years for 2000 and later are subject to examination by the U.S. and state tax authorities due to the existence of the NOL carryforwards. Generally, the Company’s tax years for 2002 and later are subject to examination by various foreign tax authorities as well. As of December 25, 2016 , the Company had $18.6 million of unrecognized tax benefits that, if recognized, would impact the effective income tax rate, subject to possible offset by an increase in the deferred tax asset valuation allowance. During the three months ended March 26, 2017 , unrecognized tax benefits remained unchanged. The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. For the three months ended March 26, 2017 and March 27, 2016 , a $0.1 million expense and $0.6 million expense, respectively, were recorded related to interest and penalties related to unrecognized tax benefits. For the three months ended March 26, 2017 and March 27, 2016, there was no material benefit recorded related to the removal of interest and penalties. The Company believes that it is reasonably possible that as much as $1.1 million of the liabilities for uncertain tax positions will expire within twelve months of March 26, 2017 due to the expiration of various applicable statutes of limitations. |
Debt
Debt | 3 Months Ended |
Mar. 26, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt (a) Issuance of 7.00% Senior Secured Notes due 2019 In May 2014, the Company refinanced its $625.0 million 10% Senior Secured Notes due in 2017 (the “ 10% Notes ”) with $625.0 million of newly issued 7.00% Senior Secured Notes due in 2019 (the “7% Notes”). The net proceeds from the issuance of the 7% Notes was $618.5 million after an original issue discount of $6.5 million . The Company incurred debt issuance costs of $8.8 million associated with the 7% Notes. The Company utilized the net proceeds from the issuance of the 7% Notes, a $41.0 million draw on its Credit Agreement (as defined below), as well as cash from operations to extinguish the 10% Notes . The total reacquisition price of the 10% Notes was $661.5 million including a $31.2 million early termination fee, the write-off of $15.5 million of unamortized issue costs, $12.9 million of unamortized premium, along with $5.3 million of additional interest while in escrow, which resulted in a loss on extinguishment of debt of $39.1 million . The Company completed the offering of the 7% Notes in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Act”). On October 16, 2014, the Company exchanged the outstanding 7% Notes for an equal amount of new 7.00% Senior Secured Notes due in 2019 (the “Notes”) that had been registered under the Act. The terms of the Notes issued in the exchange offer were identical in all material respects to the terms of the 7% Notes, except the Notes issued in the exchange offer had been registered under the Act. The Notes are governed by an Indenture, dated May 14, 2014 (the “Indenture”), among the Company, certain of the Company’s subsidiaries (the “Subsidiary Guarantors”) and Wilmington Trust, National Association, as Trustee and Collateral Agent. A Subsidiary Guarantor can be released from its Guarantee (as defined in the Indenture) if (a) all of the capital stock issued by such Subsidiary Guarantor or all or substantially all of the assets of such Subsidiary Guarantor are sold or otherwise disposed of; (b) the Company designates such Subsidiary Guarantor as an Unrestricted Subsidiary (as defined in the Indenture); (c) if the Company exercises its legal defeasance option or its covenant defeasance option; or (d) upon satisfaction and discharge of the Indenture or payment in full in cash of the principal of, premium, if any, and accrued and unpaid interest on the Notes. The holders of the Notes have a first priority lien on substantially all of the Company’s assets and the assets of the Subsidiary Guarantors, except with respect to accounts receivable, inventory, deposit accounts, securities accounts, cash, securities and general intangibles (other than intellectual property), on which the holders of the Notes have a second priority lien to the $110.0 million Credit Agreement. The Company pays interest on the Notes semi-annually, in arrears, on May 15 and November 15 of each year. The Notes include customary covenants and events of default as well as a consolidated fixed charge ratio of 2.0 :1 for the incurrence of additional indebtedness. Negative covenants include, among other things, limitations on additional debt, liens, negative pledges, investments, dividends, stock repurchases, asset sales and affiliate transactions. Events of default include, among other events, non-performance of covenants, breach of representations, cross-default to other material debt, bankruptcy, insolvency, material judgments and changes in control. As of March 26, 2017 , the Company was in compliance with the covenants contained in the Indenture governing the Notes. The Company may redeem some or all of the Notes at 105.25% of the aggregate principal amount of such Notes through May 15, 2017, 102.625% of the aggregate principal amount of such Notes if redeemed on or after May 16, 2017 but on or before May 15, 2018 and 100% of the aggregate principal amount of such Notes if redeemed on or after May 16, 2018, plus accrued and unpaid interest to the date of redemption. The terms of the Indenture require that the net cash proceeds from asset dispositions be utilized to (i) repay or prepay amounts outstanding under the Credit Agreement unless such amounts are reinvested in similar collateral, (ii) make an investment in assets that replace the collateral of the Notes or (iii) a combination of both clauses (i) and (ii). To the extent there are any remaining net proceeds from the asset disposition after application of clauses (i) and (ii), such amounts are required to be utilized to repurchase Notes at par after 360 days following the asset disposition. Following the sale of its U.S. and U.K. Electronic Products Divisions (the “Herley Entities”) the Company paid down $41.0 million outstanding under the Credit Agreement and repurchased $175.0 million of the Notes at par, in accordance with the terms of the Indenture. The total reacquisition price of the Notes was $178.4 million including the write off of $1.8 million of unamortized issue costs, $1.4 million of unamortized discount, along with $0.2 million of legal fees, which resulted in a loss on extinguishment of debt of $3.4 million . The Company reinvested all net proceeds remaining after the repurchase of the $175.0 million of Notes in replacement collateral under the Indenture within 360 days following the asset disposition, in accordance with the terms of the Indenture. During the quarter ended December 25, 2016, the Company repurchased and extinguished $14.5 million of the outstanding Notes, which resulted in a gain of $0.4 million offset by $0.1 million of unamortized issuance cost and $0.1 million of unamortized discount resulting in a gain on extinguishment of debt of $0.2 million . During the quarter ended March 26, 2017, the Company repurchased and extinguished $62.7 million of the outstanding Notes, which resulted in a loss of $1.4 million and the realization of $0.4 million of unamortized issuance cost and $0.3 million of unamortized discount resulting in a loss on extinguishment of debt of $2.1 million . As of March 26, 2017 , there was $372.8 million in Notes outstanding. (b) Other Indebtedness $110.0 Million Credit Agreement On May 14, 2014, the Company entered into a $110.0 million Credit and Security Agreement, dated May 14, 2014 (the “Credit Agreement”), with the lenders from time to time party thereto, SunTrust Bank, as Agent (the “Agent”), PNC Bank, National Association, as Joint Lead Arranger and Documentation Agent, and SunTrust Robinson Humphrey, Inc., as Joint Lead Arranger and Sole Book Runner. The Credit Agreement established a five -year senior secured revolving credit facility in the maximum amount of $110.0 million (subject to a potential increase of the maximum principal amount to $135.0 million , subject to the Agent’s and applicable lenders’ approval as described therein), consisting of a subline for letters of credit in an amount not to exceed $50.0 million , as well as a swingline loan in an aggregate principal amount at any time outstanding not to exceed $10.0 million . The obligations under the Credit Agreement are secured by a first priority lien on the Company’s accounts receivable, inventory, deposit accounts, securities accounts, cash, securities and general intangibles (other than intellectual property). The obligations under the Credit Agreement are secured by a second priority lien, junior to the lien securing the Notes, on all of the Company’s other assets. The Credit Agreement contains certain covenants, which include, but are not limited to, restrictions on indebtedness, liens, and investments, and limits on other various payments, as well as a financial covenant relating to a minimum fixed charge coverage ratio of 1.15 :1 (as modified per the Third Amendment and the Fourth Amendment, as defined and discussed below). Events of default under the terms of the Credit Agreement include, but are not limited to: failure of the Company to pay any principal of any loans in full when due and payable; failure of the Company to pay any interest on any loan or any fee or other amount payable under the Credit Agreement within three business days after the date when due and payable; failure of the Company or any of its subsidiaries to comply with certain covenants and agreements, subject to applicable grace periods and/or notice requirements; any representation, warranty or statement made in or pursuant to the Credit Agreement or any related writing or any other material information furnished by the Company or any of its subsidiaries to the Agent or the lenders proving to be false or erroneous; and the occurrence of an event or condition having or reasonably likely to have a material adverse effect, which includes a material adverse effect on the business, operations, condition (financial or otherwise) or prospects of the Company or the ability of the Company to repay its obligations. Where an event of default arises from certain bankruptcy events, the commitments will automatically and immediately terminate and the principal of, and interest then outstanding on, all of the loans will become immediately due and payable. Subject to certain notice requirements and other conditions, upon the occurrence of an event of default, including the occurrence of a condition having or reasonably likely to have a material adverse effect, commitments may be terminated and the principal of, and interest then outstanding on, all of the loans may become immediately due and payable. As of March 26, 2017 , no event of default had occurred and the Company believes that events or conditions having a material adverse effect, giving rise to an acceleration of any amounts outstanding under the Credit Agreement, have not occurred and the likelihood of such events or conditions occurring is remote. Borrowings under the Credit Agreement may take the form of a base rate revolving loan, Eurodollar revolving loan or swingline loan. Base rate revolving loans and swingline loans will bear interest at a rate per annum equal to the sum of the applicable margin from time to time in effect plus the highest of (i) the Agent’s prime lending rate, as in effect at such time, (ii) the federal funds rate, as in effect at such time, plus 0.50% per annum, and (iii) the adjusted London Interbank Offered Rate (“LIBOR”) determined at such time for an interest period of one month, plus 1.00% per annum. Eurodollar revolving loans will bear interest at a rate per annum equal to the sum of the applicable margin from time to time in effect plus the adjusted LIBOR. The applicable margin varies between 1.50% and 2.00% for base rate revolving loans and swingline loans and 2.50% and 3.00% for Eurodollar loans, and is based on several factors including the Company’s then-existing borrowing base and the lender’s total commitment amount and revolving credit exposure. The calculation of the Company’s borrowing base takes into account several items relating to the Company and its subsidiaries, including, without limitation, amounts due and owing under billed and unbilled accounts receivables, then-held eligible raw materials inventory, work-in-process inventory, and applicable reserves. On May 31, 2015, the Company entered into a third amendment (the “Third Amendment”) to the Credit Agreement. Under the terms of the Third Amendment, the definitions of certain terms of the Credit Agreement were modified, the disposition of the Herley Entities was approved by the lenders, a minimum $175.0 million repurchase of the Notes by the Company was required and the payment in full of the outstanding balance of the Credit Agreement was required. Additionally, the measurement of the fixed charge coverage ratio of 1.15 :1 was modified as follows: (i) the fixed charge coverage ratio will not be measured as of the end of any quarterly reporting period ending after June 30, 2015, if on such date (a) there are no outstanding revolving loans or swingline loans and (b) the aggregate amount outstanding under letters of credit is less than or equal to $17.0 million , and (ii) as to any subsequent quarterly reporting period ending after June 30, 2015, and not covered by clause (i) above, a fixed charge coverage ratio of at least 1.05 :1 must be maintained if the percentage of (a) outstanding revolving loans plus the sum of the outstanding swingline loans and outstanding letters of credit that are in excess of $17.0 million , to (b) the revolving credit commitment, minus the Herley Disposition Proceeds Reinvestment Reserve (as defined below) is greater than 0.00% but less than 15.00% or a fixed charge coverage ratio of at least 1.10 :1 must be maintained if the aforementioned percentage is equal to or greater than 15.00% but less than 25.00% . In all other instances, a fixed charge coverage ratio of at least 1.15 :1 must be maintained. For purposes of computing the fixed charge coverage ratio, the associated reduction in consolidated interest expense in connection with the repurchase of Notes with proceeds from the sale of the Herley Entities shall be deemed to have occurred on the first day of the most recently completed four quarterly reporting periods prior to the sale. The terms of the Third Amendment also included the establishment of a reserve (the “Herley Disposition Proceeds Reinvestment Reserve”) that reduced the maximum $110.0 million total borrowing base on the Credit Agreement. With the sale of the Herley Entities, a $50.8 million reserve was established based upon the collateral carrying value under the Credit Agreement of the Herley Entities disposed. The reserve and therefore the maximum borrowing base were adjusted monthly for the subsequent cumulative reinvestment in similar collateral assets over a period not to have exceeded 360 days from the date of sale of the Herley Entities. As of March 26, 2017 , there was no reserve on the maximum borrowings, resulting from a cumulative reinvestment in similar collateral assets since the sale of the Herley Entities in excess of the $50.8 million reserve established at the date of the sale of the Herley Entities. The Company made investments in assets that replaced the collateral, which reinstated the maximum facility to the full $110.0 million as of the end of the first quarter of 2016. On August 20, 2015, the Company entered into a fourth amendment (the “Fourth Amendment”) to the Credit Agreement. Among other things, the Fourth Amendment provides for a modification of the Third Amendment as it relates to when the minimum fixed charge coverage ratio will be measured based upon the Company’s outstanding borrowings. Outstanding borrowings for purposes of computing the applicable minimum fixed charge coverage ratio exclude any letter of credit exposure outstanding of $17.0 million plus the amount of letters of credit outstanding for the divested Herley Entities for which a cash deposit has been placed in escrow by the Buyer to cover the amount of such outstanding letters of credit, should the letters of credit be pulled. As of March 26, 2017 , there were no borrowings outstanding on the Credit Agreement and $10.1 million outstanding on letters of credit, resulting in net borrowing base availability of $57.4 million . The Company was in compliance with the financial covenants of the Credit Agreement and its amendments as of March 26, 2017 . Debt Acquired in Acquisition The Company has a $10.0 million ten -year term loan with a bank in Israel entered into on September 16, 2008 in connection with the acquisition of one of its wholly owned subsidiaries. The balance under the term loan as of March 26, 2017 was $1.5 million , and the loan is payable in quarterly installments of $0.3 million plus interest at LIBOR plus a margin of 1.5% . The loan agreement governing the term loan contains various covenants, including a minimum net equity covenant as defined in the loan agreement. The Company was in compliance with all covenants contained in the loan agreement as of March 26, 2017 . Fair Value of Long-term Debt Carrying amounts and the related estimated fair values of the Company’s long-term debt financial instruments not measured at fair value on a recurring basis at March 26, 2017 and December 25, 2016 are presented in the following table: As of March 26, 2017 As of December 25, 2016 $ in millions Principal Carrying Fair Value Principal Carrying Fair Value Total long-term debt including current portion $ 374.3 $ 370.3 $ 374.3 $ 437.3 $ 432.0 $ 423.6 The fair value of the Company’s long-term debt was based upon actual trading activity (Level 1, Observable inputs -quoted prices in active markets). As of March 26, 2017 , the difference between the carrying amount of $370.3 million and the principal amount of $374.3 million presented in the table above is the net unamortized original issue discount of $1.8 million and the unamortized debt issuance costs of $2.2 million , which are being accreted to interest expense over the term of the related debt. As of December 25, 2016, the difference between the carrying amount of $432.0 million and the principal amount of $437.3 million presented in the table above is the net unamortized original issue discount of $2.4 million and the unamortized debt issuance costs of $2.9 million , which are being accreted to interest expense over the term of the related debt. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 26, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company operates in three reportable segments. The Kratos Government Solutions (“KGS”) reportable segment is comprised of an aggregation of KGS operating segments, including the microwave electronic products, satellite communications, modular systems and defense and rocket support services operating segments. The Unmanned Systems (“US”) reportable segment consists of its unmanned aerial system and unmanned ground and seaborne system businesses. The KGS and US segments provide products, solutions and services for mission critical national security programs. KGS and US customers primarily include national security related agencies, the U.S. Department of Defense (the “DoD”), intelligence agencies and classified agencies, and to a lesser degree, international government agencies and domestic and international commercial customers. The Public Safety & Security (“PSS”) reportable segment provides independent integrated solutions for advanced homeland security, public safety, critical infrastructure, and security and surveillance systems for government and commercial applications. PSS customers include those in the critical infrastructure, power generation, power transport, nuclear energy, financial, IT, healthcare, education, transportation and petro-chemical industries, as well as certain government and military customers. The Company organizes its reportable segments based on the nature of the products, solutions and services offered. Transactions between segments are generally negotiated and accounted for under terms and conditions similar to other government and commercial contracts. This presentation is consistent with the Company’s operating structure. In the following table total operating income (loss) from continuing operations of the reportable business segments is reconciled to the corresponding consolidated amount. The reconciling item “unallocated corporate expense, net” includes costs for certain stock-based compensation programs (including stock-based compensation costs for stock options, employee stock purchase plan and restricted stock units), the effects of items not considered part of management’s evaluation of segment operating performance, merger and acquisition expenses, corporate costs not allocated to the segments, and other miscellaneous corporate activities. During the three months ended March 27, 2016, the PSS reportable segment recorded a $1.9 million charge related to a litigation settlement of a contract dispute and the KGS reportable segment recorded a $3.0 million impairment charge of the carrying value of inventories as a result of the decision to close one of its manufacturing facilities and the exit of certain lower margin product business lines. Revenues, depreciation and amortization, and operating income (loss) generated by the Company’s reportable segments for the three month periods ended March 26, 2017 and March 27, 2016 are as follows (in millions): Three Months Ended March 26, 2017 March 27, 2016 Revenues: Kratos Government Solutions Service revenues $ 48.2 $ 52.4 Product sales 67.2 56.2 Total Kratos Government Solutions 115.4 108.6 Public Safety & Security Service revenues 36.8 30.2 Product sales — — Total Public Safety & Security 36.8 30.2 Unmanned Systems Service revenues — — Product sales 15.6 14.2 Total Unmanned Systems 15.6 14.2 Total revenues $ 167.8 $ 153.0 Depreciation & amortization: Kratos Government Solutions $ 3.7 $ 4.1 Public Safety & Security 0.1 0.1 Unmanned Systems 1.8 1.9 Total depreciation and amortization $ 5.6 $ 6.1 Operating income (loss) from continuing operations: Kratos Government Solutions $ 9.6 $ (1.8 ) Public Safety & Security (0.2 ) (2.7 ) Unmanned Systems (5.0 ) (4.2 ) Total segment operating income (loss) 4.4 (8.7 ) Unallocated corporate expense, net (2.7 ) (1.5 ) Total operating income (loss) from continuing operations $ 1.7 $ (10.2 ) |
Significant Customers
Significant Customers | 3 Months Ended |
Mar. 26, 2017 | |
Segment Reporting [Abstract] | |
Significant Customers | Significant Customers Revenue from the U.S. Government, which includes foreign military sales, includes revenue from contracts for which the Company is the prime contractor as well as those for which the Company is a subcontractor and the ultimate customer is the U.S. Government. The KGS and US segments have substantial revenue from the U.S. Government. Sales to the U.S. Government amounted to approximately $96.3 million and $95.4 million , or 57% and 62% of total Kratos revenue, for the three months ended March 26, 2017 and March 27, 2016 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 26, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In addition to commitments and obligations in the ordinary course of business, the Company is subject to various claims, pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of the Company’s business. The Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its condensed consolidated financial statements. An estimated loss contingency is accrued in the Company’s condensed consolidated financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing litigation contingencies is highly subjective and requires judgments about future events. When evaluating contingencies, the Company may be unable to provide a meaningful estimate due to a number of factors, including but not limited to the procedural status of the matter in question, the presence of complex or novel legal theories, and the ongoing discovery and development of information important to the matters. In addition, damage amounts claimed in litigation against it may be unsupported, exaggerated or unrelated to possible outcomes and, as such, are not meaningful indicators of its potential liability. The Company regularly reviews contingencies to determine the adequacy of its accruals and related disclosures. The amount of ultimate loss may differ from these estimates. It is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies. Whether any losses finally determined in any claim, action, investigation or proceeding could reasonably have a material effect on the Company’s business, financial condition, results of operations or cash flows will depend on a number of variables, including the timing and amount of such losses; the structure and type of any remedies; the monetary significance any such losses, damages or remedies may have on the Company’s condensed consolidated financial statements; and the unique facts and circumstances of the particular matter that may give rise to additional factors. Legal and Regulatory Matters U.S. Government Cost Claims. The Company’s contracts with the DoD are subject to audit by the Defense Contract Audit Agency (“DCAA”). As a result of these audits, from time to time the Company is advised of claims concerning potential disallowed, overstated or disputed costs. For example, during the course of recent audits of the Company’s contracts, the DCAA is closely examining and questioning certain of the established and disclosed practices that it had previously audited and accepted. The Company’s personnel regularly scrutinizes costs incurred and allocated to contracts with the U.S. Government for compliance with regulatory standards. On July 28, 2015, the Company received a determination letter from the Defense Contract Management Agency (“DCMA”) regarding what the DCMA believed were certain unallowable costs for one of the Company’s subsidiaries with respect to fiscal year 2007. In April 2016, the Company reached an agreement with the DCAA to settle matters related to unallowable costs for this subsidiary for fiscal years 2007 and 2008 for approximately $0.2 million . For those Company subsidiaries and fiscal years which have not yet been audited by the DCAA or for those audits which are in process which have not been completed by the DCAA, the Company cannot reasonably estimate the range of loss, if any, that may result from audits and reviews in which it is currently involved given the inherent difficulty in predicting regulatory action, fines and penalties, if any, and the various remedies and levels of judicial review available to the Company in the event of an adverse finding. As a result, the Company has not recorded any liability related to these matters. Other Litigation Matters. The Company is subject to normal and routine litigation arising from the ordinary course and conduct of business and, at times, as a result of acquisitions and dispositions. Such disputes include, for example, commercial, employment, intellectual property, environmental and securities matters. The aggregate amounts accrued related to these matters are not material to the total liabilities of the Company. The Company intends to defend itself in any such matters and does not currently believe that the outcome of any such matters will have a material adverse impact on the Company’s financial condition, results of operations or cash flows. In the first quarter of fiscal 2016, the Company recorded a charge of $1.9 million related to a litigation settlement of a contract dispute in the PSS segment. |
Condensed Consolidating Financi
Condensed Consolidating Financial Statements | 3 Months Ended |
Mar. 26, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Condensed Consolidating Financial Statements | Condensed Consolidating Financial Statements The Company has $372.8 million in outstanding Notes (see Note 7). The Notes are guaranteed by the Subsidiary Guarantors and are collateralized by the assets of all of the Company’s 100% owned subsidiaries. The Notes are fully and unconditionally guaranteed on a joint and several basis by each Subsidiary Guarantor and the Company. There are no contractual restrictions with respect to the Notes limiting cash transfers from Subsidiary Guarantors by dividends, loans or advances to the Company. The Notes are not guaranteed by the Company’s foreign subsidiaries (the “Non-Guarantor Subsidiaries”). The following tables present condensed consolidating financial statements for the parent company, the Subsidiary Guarantors and the Non-Guarantor Subsidiaries, respectively. The condensed consolidating financial information below follows the same accounting policies as described in the condensed consolidated financial statements, except for the use of the equity method of accounting to reflect ownership interests in 100% owned subsidiaries, which are eliminated upon consolidation. Condensed Consolidating Balance Sheet March 26, 2017 (Unaudited) (in millions) Parent Company Subsidiary Guarantors on a Combined Basis Non-Guarantors on a Combined Basis Eliminations Consolidated Assets Current Assets: Cash and cash equivalents $ 68.9 $ (1.1 ) $ 5.6 $ — $ 73.4 Accounts receivable, net — 198.1 29.8 — 227.9 Amounts due from affiliated companies 219.8 — — (219.8 ) — Inventoried costs — 45.9 18.9 — 64.8 Other current assets 4.7 13.8 2.7 — 21.2 Total current assets 293.4 256.7 57.0 (219.8 ) 387.3 Property, plant and equipment, net 1.5 42.8 6.5 — 50.8 Goodwill — 442.5 42.9 — 485.4 Intangible assets, net — 22.3 7.6 — 29.9 Investment in subsidiaries 460.6 67.2 — (527.8 ) — Other assets 0.3 7.9 — — 8.2 Total assets $ 755.8 $ 839.4 $ 114.0 $ (747.6 ) $ 961.6 Liabilities and Stockholders ’ Equity Current liabilities: Accounts payable $ 3.6 $ 43.1 $ 5.1 $ — $ 51.8 Accrued expenses 11.3 44.3 3.8 — 59.4 Accrued compensation 4.0 26.8 4.4 — 35.2 Billings in excess of costs and earnings on uncompleted contracts — 36.9 4.9 — 41.8 Amounts due to affiliated companies — 192.0 27.8 (219.8 ) — Other current liabilities 0.9 3.8 1.7 — 6.4 Current liabilities of discontinued operations 1.3 — 0.1 — 1.4 Total current liabilities 21.1 346.9 47.8 (219.8 ) 196.0 Long-term debt, net of current portion 368.8 — 0.5 — 369.3 Other long-term liabilities 10.8 19.9 10.5 — 41.2 Non-current liabilities of discontinued operations 3.7 — — — 3.7 Total liabilities 404.4 366.8 58.8 (219.8 ) 610.2 Total stockholders ’ equity 351.4 472.6 55.2 (527.8 ) 351.4 Total liabilities and stockholders ’ equity $ 755.8 $ 839.4 $ 114.0 $ (747.6 ) $ 961.6 Condensed Consolidating Balance Sheet December 25, 2016 (Unaudited) (in millions) Parent Company Subsidiary Guarantors on a Combined Basis Non-Guarantors on a Combined Basis Eliminations Consolidated Assets Current Assets: Cash and cash equivalents $ 67.2 $ (3.3 ) $ 5.2 $ — $ 69.1 Accounts receivable, net — 197.9 31.5 — 229.4 Amounts due from affiliated companies 204.6 — — (204.6 ) — Inventoried costs — 37.2 18.2 — 55.4 Other current assets 6.3 11.6 1.3 — 19.2 Total current assets 278.1 243.4 56.2 (204.6 ) 373.1 Property, plant and equipment, net 1.6 41.7 6.5 — 49.8 Goodwill — 442.5 42.9 — 485.4 Intangible assets, net — 24.5 8.1 — 32.6 Investment in subsidiaries 458.0 67.5 — (525.5 ) — Other assets 0.4 7.3 — — 7.7 Total assets $ 738.1 $ 826.9 $ 113.7 $ (730.1 ) $ 948.6 Liabilities and Stockholders ’ Equity Current liabilities: Accounts payable $ 4.5 $ 43.7 $ 4.5 $ — $ 52.7 Accrued expenses 5.6 44.5 3.5 — 53.6 Accrued compensation 4.0 31.2 3.9 — 39.1 Billings in excess of costs and earnings on uncompleted contracts — 38.9 2.9 — 41.8 Amounts due to affiliated companies — 174.6 30.0 (204.6 ) — Other current liabilities 1.4 4.1 2.2 — 7.7 Current liabilities of discontinued operations 1.5 — 0.1 — 1.6 Total current liabilities 17.0 337.0 47.1 (204.6 ) 196.5 Long-term debt, net of current portion 430.2 — 0.8 — 431.0 Other long-term liabilities 10.8 19.9 10.3 — 41.0 Non-current liabilities of discontinued operations 3.7 — — — 3.7 Total liabilities 461.7 356.9 58.2 (204.6 ) 672.2 Total stockholders ’ equity 276.4 470.0 55.5 (525.5 ) 276.4 Total liabilities and stockholders ’ equity $ 738.1 $ 826.9 $ 113.7 $ (730.1 ) $ 948.6 Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) Three Months Ended March 26, 2017 (Unaudited) (in millions) Parent Company Subsidiary Guarantors on a Combined Basis Non-Guarantors on a Combined Basis Eliminations Consolidated Service revenues $ — $ 82.4 $ 2.6 $ — $ 85.0 Product sales — 73.3 12.7 (3.2 ) 82.8 Total revenues — 155.7 15.3 (3.2 ) 167.8 Cost of service revenues — 59.9 1.9 — 61.8 Cost of product sales — 54.0 10.1 (3.2 ) 60.9 Total costs — 113.9 12.0 (3.2 ) 122.7 Gross profit — 41.8 3.3 — 45.1 Selling, general and administrative expenses 2.1 33.8 3.1 — 39.0 Research and development expenses — 4.0 0.4 — 4.4 Operating income (loss) from continuing operations (2.1 ) 4.0 (0.2 ) — 1.7 Other income (expense): Interest income (expense), net (8.2 ) — — — (8.2 ) Loss on extinguishment of debt (2.1 ) — — — (2.1 ) Other income (expense), net — — 0.2 — 0.2 Total other income (expense), net (10.3 ) — 0.2 — (10.1 ) Income (loss) from continuing operations before income taxes (12.4 ) 4.0 — — (8.4 ) Provision for income taxes from continuing operations 0.1 1.1 0.3 — 1.5 Income (loss) from continuing operations (12.5 ) 2.9 (0.3 ) — (9.9 ) Loss from discontinued operations (0.1 ) — — — (0.1 ) Equity in net income (loss) of subsidiaries 2.6 (0.3 ) — (2.3 ) — Net income (loss) $ (10.0 ) $ 2.6 $ (0.3 ) $ (2.3 ) $ (10.0 ) Comprehensive income (loss) $ (9.9 ) $ 2.6 $ (0.2 ) $ (2.4 ) $ (9.9 ) Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) Three Months Ended March 27, 2016 (Unaudited) (in millions) Parent Company Subsidiary Guarantors on a Combined Basis Non-Guarantors on a Combined Basis Eliminations Consolidated Service revenues $ — $ 77.4 $ 5.2 $ — $ 82.6 Product sales — 59.0 13.1 (1.7 ) 70.4 Total revenues — 136.4 18.3 (1.7 ) 153.0 Cost of service revenues — 56.7 3.6 — 60.3 Cost of product sales — 48.0 10.5 (1.7 ) 56.8 Total costs — 104.7 14.1 (1.7 ) 117.1 Gross profit — 31.7 4.2 — 35.9 Selling, general and administrative expenses 1.3 39.6 2.3 — 43.2 Research and development expenses — 2.9 — — 2.9 Operating income (loss) from continuing operations (1.3 ) (10.8 ) 1.9 — (10.2 ) Other income (expense): Interest income (expense), net (8.6 ) (0.1 ) — — (8.7 ) Other income (expense), net — — 0.3 — 0.3 Total other income (expense), net (8.6 ) (0.1 ) 0.3 — (8.4 ) Income (loss) from continuing operations before income taxes (9.9 ) (10.9 ) 2.2 — (18.6 ) Provision (benefit) for income taxes from continuing operations 0.1 3.2 0.3 — 3.6 Income (loss) from continuing operations (10.0 ) (14.1 ) 1.9 — (22.2 ) Equity in net income (loss) of subsidiaries (12.2 ) 1.9 — 10.3 — Net income (loss) $ (22.2 ) $ (12.2 ) $ 1.9 $ 10.3 $ (22.2 ) Comprehensive income (loss) $ (22.2 ) $ (12.2 ) $ 1.9 $ 10.3 $ (22.2 ) Condensed Consolidating Statement of Cash Flows Three Months Ended March 26, 2017 (Unaudited) (in millions) Parent Company Subsidiary Guarantors on a Combined Basis Non-Guarantors on a Combined Basis Eliminations Consolidated Net cash provided by (used in) operating activities from continuing operations $ (1.8 ) $ (7.7 ) $ 0.8 $ — $ (8.7 ) Investing activities: Investment in affiliated companies (15.0 ) — — 15.0 — Capital expenditures — (5.0 ) (0.2 ) — (5.2 ) Net cash provided by (used in) investing activities from continuing operations (15.0 ) (5.0 ) (0.2 ) 15.0 (5.2 ) Financing activities: Extinguishment of long-term debt (64.0 ) — — — (64.0 ) Repayment of debt — — (0.3 ) — (0.3 ) Proceeds from the issuance of common stock 81.9 — — — 81.9 Proceeds from the sale of employee stock purchase plan shares 0.8 — — — 0.8 Financings from affiliated companies — 15.0 — (15.0 ) — Net cash provided by (used in) financing activities from continuing operations 18.7 15.0 (0.3 ) (15.0 ) 18.4 Net cash flows of continuing operations 1.9 2.3 0.3 — 4.5 Net investing cash flows from discontinued operations (0.2 ) — — — (0.2 ) Net increase in cash and cash equivalents $ 1.7 $ 2.3 $ 0.3 $ — $ 4.3 Condensed Consolidating Statement of Cash Flows Three Months Ended March 27, 2016 (Unaudited) (in millions) Parent Company Subsidiary Guarantors on a Combined Basis Non-Guarantors on a Combined Basis Eliminations Consolidated Net cash provided by (used in) operating activities from continuing operations $ 3.9 $ (15.3 ) $ (0.1 ) $ — $ (11.5 ) Investing activities: Investment in affiliated companies (15.8 ) — — 15.8 — Capital expenditures (0.3 ) (1.4 ) (0.4 ) — (2.1 ) Net cash provided by (used in) investing activities from continuing operations (16.1 ) (1.4 ) (0.4 ) 15.8 (2.1 ) Financing activities: Repayment of debt — — (0.3 ) — (0.3 ) Proceeds from the sale of employee stock purchase plan shares 1.2 — — — 1.2 Financing from affiliated companies — 15.8 — (15.8 ) — Net cash provided by (used in) financing activities from continuing operations 1.2 15.8 (0.3 ) (15.8 ) 0.9 Net cash flows of continuing operations (11.0 ) (0.9 ) (0.8 ) — (12.7 ) Net operating cash flows from discontinued operations (0.4 ) — — — (0.4 ) Net investing cash flows from discontinued operations 4.7 — — — 4.7 Net decrease in cash and cash equivalents $ (6.7 ) $ (0.9 ) $ (0.8 ) $ — $ (8.4 ) |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 26, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The information as of March 26, 2017 and for the three months ended March 26, 2017 and March 27, 2016 is unaudited. The condensed consolidated balance sheet as of December 25, 2016 was derived from the Company’s audited consolidated financial statements at that date. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods presented. The results have been prepared in accordance with the instructions to Form 10-Q and do not necessarily include all information and footnotes necessary for presentation in accordance with accounting principles generally accepted in the U.S. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s audited annual consolidated financial statements for the fiscal year ended December 25, 2016 , included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 27, 2017 (the “Form 10-K”). Interim operating results are not necessarily indicative of operating results expected in subsequent periods or for the year as a whole. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its 100% owned subsidiaries for which all inter-company transactions have been eliminated in consolidation. |
Fiscal Year | Fiscal Year The Company has a 52/53 week fiscal year ending on the last Sunday of the calendar year, with interim fiscal periods ending on the last Sunday of each calendar quarter. The three month periods ended March 26, 2017 and March 27, 2016 consisted of 13-week periods. There are 53 calendar weeks in the fiscal year ending on December 31, 2017 and 52 calendar weeks in the fiscal year ending on December 25, 2016 . |
Accounting Estimates | Accounting Estimates There have been no significant changes in the Company’s accounting estimates for the three months ended March 26, 2017 as compared to the accounting estimates described in the Form 10-K. |
Accounting Standards Updates | Accounting Standards Updates In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04 (“ASU 2017-04”), Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . ASU 2017-04 amends the guidance to simplify the subsequent measurement of goodwill by removing Step 2 of the goodwill impairment test. Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of the new guidance and timing of adoption, but does not expect that the standard will have a material impact on its Consolidated Financial Statements. In October 2016, the FASB issued ASU 2016-16 (“ASU 2016-16”), Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 requires that entities recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than when the asset is sold to an outside party. ASU 2016-16 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period (as of the first interim period if an entity issues interim financial statements). ASU 2016-16 requires adoption on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company early adopted this standard on December 26, 2016. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. In August 2016, the FASB issued ASU 2016-15 (“ASU 2016-15”), Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The objective of ASU 2016-15 is to reduce existing diversity in practice by addressing eight specific cash flow issues related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. If early adopted, an entity must adopt all of the amendments in the same period. The Company does not believe that the adoption of this guidance will have a material impact on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09 (“ASU 2016-09”), Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies several aspects of the accounting for employee share-based payments, including accounting for income taxes, forfeitures, statutory tax withholding requirements, and classification on the statement of cash flows. The amendments in this ASU are effective for annual periods beginning after December 15, 2016. Early adoption was permitted. The Company early adopted this standard in the quarter ended December 25, 2016, which did not have a material impact on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 (“ASU 2016-02”), Leases . ASU 2016-02 requires that lessees recognize assets and liabilities for the rights and obligations for leases with a lease term of more than one year. The amendments in this ASU are effective for annual periods ending after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers . ASU 2014-09 establishes a broad principle that would require an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity identifies the contract with a customer, identifies the separate performance obligations in the contract, determines the transaction price, allocates the transaction price to the separate performance obligations and recognizes revenue when each separate performance obligation is satisfied. ASU 2014-09 was further updated in March, April, May, and December 2016 to provide clarification on a number of specific issues as well as requiring additional disclosures. ASU 2014-09 may be applied either retrospectively or through the use of a modified-retrospective method. The full retrospective method requires companies to recast each prior reporting period presented as if the new guidance had always existed. Under the modified retrospective method, companies would recognize the cumulative effect of initially applying the standard as an adjustment to opening retained earnings at the date of initial application. On July 9, 2015, the FASB approved a one year deferral of the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017. The Company plans to adopt the new revenue standard effective January 1, 2018. While the Company has not yet completed its evaluation of the impact of ASU 2014-09 upon adoption, based upon an assessment of material active contracts, the Company does not expect the impact on the results of operations or cash flows in the periods after adoption to be material. Under ASU 2014-09, revenue is recognized as control transfers to the customer. As such, revenue for the Company’s contracts will generally be recognized over time using the cost-to-cost method, which is consistent with the revenue recognition model currently in use for the majority of contracts. For those contracts where revenue is currently recognized as units are delivered, in most cases the accounting for those contracts will change under ASU 2014-09 such that revenue will be recognized as costs are incurred. This change will generally result in an acceleration of revenue as compared with the current revenue recognition method for those contracts. The Company expects to adopt the new standard using the modified retrospective method. There have been no changes in the Company’s significant accounting policies for the three months ended March 26, 2017 as compared to the significant accounting policies described in the Form 10-K. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts and the related estimated fair values of the Company’s long-term debt financial instruments not measured at fair value on a recurring basis at March 26, 2017 and December 25, 2016 are presented in Note 7. The carrying value of all other financial instruments, including cash equivalents, accounts receivable, accounts payable, accrued expenses, billings in excess of cost and earnings on uncompleted contracts, income taxes payable and short-term debt, approximated their estimated fair values at March 26, 2017 and December 25, 2016 due to the short-term nature of these instruments. |
Net Income (Loss) Per Common Share | Net Loss Per Common Share The Company calculates net loss per share in accordance with FASB Accounting Standards Codification Topic 260, Earnings per Share (Topic 260). Under Topic 260, basic net loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the reporting period. Diluted net loss per common share reflects the effects of potentially dilutive securities. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 26, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The carrying amounts of goodwill as of March 26, 2017 and December 25, 2016 by reportable segment are as follows (in millions): Kratos Government Solutions Public Safety & Security Unmanned Systems Total Gross value $ 567.8 $ 53.9 $ 111.1 $ 732.8 Less accumulated impairment 215.3 18.3 13.8 247.4 Net $ 352.5 $ 35.6 $ 97.3 $ 485.4 Public Safety & Security Kratos Government Solutions Unmanned Systems Total Gross value $ 53.9 $ 567.8 $ 111.1 $ 732.8 Less accumulated impairment 18.3 215.3 13.8 247.4 Net $ 35.6 $ 352.5 $ 97.3 $ 485.4 |
Schedule of Intangible Assets (Finite-Lived) | The following table sets forth information for finite-lived and indefinite-lived intangible assets (in millions): As of March 26, 2017 As of December 25, 2016 Gross Accumulated Net Gross Accumulated Net Acquired finite-lived intangible assets: Customer relationships $ 53.7 $ (46.2 ) $ 7.5 $ 53.7 $ (44.9 ) $ 8.8 Contracts and backlog 30.8 (24.2 ) 6.6 30.8 (23.7 ) 7.1 Developed technology and technical know-how 25.2 (16.5 ) 8.7 25.2 (15.7 ) 9.5 Trade names 1.4 (1.2 ) 0.2 1.4 (1.1 ) 0.3 Total finite-lived intangible assets 111.1 (88.1 ) 23.0 111.1 (85.4 ) 25.7 Indefinite-lived trade names 6.9 — 6.9 6.9 — 6.9 Total intangible assets $ 118.0 $ (88.1 ) $ 29.9 $ 118.0 $ (85.4 ) $ 32.6 |
Schedule of Intangible Assets (Indefinite-Lived) | The following table sets forth information for finite-lived and indefinite-lived intangible assets (in millions): As of March 26, 2017 As of December 25, 2016 Gross Accumulated Net Gross Accumulated Net Acquired finite-lived intangible assets: Customer relationships $ 53.7 $ (46.2 ) $ 7.5 $ 53.7 $ (44.9 ) $ 8.8 Contracts and backlog 30.8 (24.2 ) 6.6 30.8 (23.7 ) 7.1 Developed technology and technical know-how 25.2 (16.5 ) 8.7 25.2 (15.7 ) 9.5 Trade names 1.4 (1.2 ) 0.2 1.4 (1.1 ) 0.3 Total finite-lived intangible assets 111.1 (88.1 ) 23.0 111.1 (85.4 ) 25.7 Indefinite-lived trade names 6.9 — 6.9 6.9 — 6.9 Total intangible assets $ 118.0 $ (88.1 ) $ 29.9 $ 118.0 $ (85.4 ) $ 32.6 |
Inventoried Costs (Tables)
Inventoried Costs (Tables) | 3 Months Ended |
Mar. 26, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventoried Costs | Inventoried costs consisted of the following components (in millions): March 26, December 25, Raw materials $ 32.3 $ 31.9 Work in process 30.3 22.1 Finished goods 1.7 1.4 Supplies and other 3.0 1.8 Subtotal inventoried costs 67.3 57.2 Less: Customer advances and progress payments (2.5 ) (1.8 ) Total inventoried costs $ 64.8 $ 55.4 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 26, 2017 | |
Equity [Abstract] | |
Summary of Changes in Stockholders' Equity | A summary of the changes in stockholders’ equity is provided below (in millions): For the Three Months Ended March 26, 2017 March 27, 2016 Stockholders’ equity at beginning of period $ 276.4 $ 254.2 Comprehensive loss: Net loss (10.0 ) (22.2 ) Change in cumulative translation adjustment 0.1 — Total comprehensive loss (9.9 ) (22.2 ) Stock-based compensation 2.1 1.5 Issuance of common stock for cash 81.9 — Issuance of common stock for employee stock purchase plan 1.4 1.3 Restricted stock units exchanged for taxes (0.5 ) (0.1 ) Stockholders’ equity at end of period $ 351.4 $ 234.7 |
Components of Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss are as follows (in millions): March 26, 2017 March 27, 2016 Cumulative translation adjustment $ (1.0 ) $ (0.6 ) Post-retirement benefit reserve adjustment net of tax expense (0.6 ) (0.8 ) Total accumulated other comprehensive loss $ (1.6 ) $ (1.4 ) |
Rollforward of Common Stock Outstanding | Common stock issued by the Company for the three months ended March 26, 2017 and March 27, 2016 was as follows (in millions): For the Three Months Ended March 26, 2017 March 27, 2016 Shares outstanding at beginning of the period 73.9 59.1 Stock issued for cash 11.9 — Stock issued for employee stock purchase plan, stock options and restricted stock units exercised 0.6 0.5 Shares outstanding at end of the period 86.4 59.6 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 26, 2017 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of Income Tax Benefit at Statutory Rate to Income Tax Provision | A reconciliation of the income tax benefit from continuing operations computed by applying the statutory federal income tax rate of 35% to loss from continuing operations before income taxes to the income tax provision for the three months ended March 26, 2017 and March 27, 2016 was as follows (in millions): March 26, March 27, Income tax benefit at federal statutory rate $ (2.9 ) $ (6.5 ) State and foreign taxes, net of federal tax benefit and valuation allowance 0.2 0.4 Nondeductible expenses and other 0.4 0.4 Impact of deferred tax liabilities for indefinite-lived assets 1.2 1.5 Increase in reserves for uncertain tax positions 0.1 1.7 Increase in federal valuation allowance 2.5 6.1 Total income tax provision $ 1.5 $ 3.6 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 26, 2017 | |
Debt Disclosure [Abstract] | |
Carrying Amounts and Estimated Fair Value of Long-Term Debt | Carrying amounts and the related estimated fair values of the Company’s long-term debt financial instruments not measured at fair value on a recurring basis at March 26, 2017 and December 25, 2016 are presented in the following table: As of March 26, 2017 As of December 25, 2016 $ in millions Principal Carrying Fair Value Principal Carrying Fair Value Total long-term debt including current portion $ 374.3 $ 370.3 $ 374.3 $ 437.3 $ 432.0 $ 423.6 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 26, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Revenues, Depreciation and Amortization, and Operating Income (Loss) | Revenues, depreciation and amortization, and operating income (loss) generated by the Company’s reportable segments for the three month periods ended March 26, 2017 and March 27, 2016 are as follows (in millions): Three Months Ended March 26, 2017 March 27, 2016 Revenues: Kratos Government Solutions Service revenues $ 48.2 $ 52.4 Product sales 67.2 56.2 Total Kratos Government Solutions 115.4 108.6 Public Safety & Security Service revenues 36.8 30.2 Product sales — — Total Public Safety & Security 36.8 30.2 Unmanned Systems Service revenues — — Product sales 15.6 14.2 Total Unmanned Systems 15.6 14.2 Total revenues $ 167.8 $ 153.0 Depreciation & amortization: Kratos Government Solutions $ 3.7 $ 4.1 Public Safety & Security 0.1 0.1 Unmanned Systems 1.8 1.9 Total depreciation and amortization $ 5.6 $ 6.1 Operating income (loss) from continuing operations: Kratos Government Solutions $ 9.6 $ (1.8 ) Public Safety & Security (0.2 ) (2.7 ) Unmanned Systems (5.0 ) (4.2 ) Total segment operating income (loss) 4.4 (8.7 ) Unallocated corporate expense, net (2.7 ) (1.5 ) Total operating income (loss) from continuing operations $ 1.7 $ (10.2 ) |
Condensed Consolidating Finan24
Condensed Consolidating Financial Statements Condensed Consolidating Financial Statements (Tables) | 3 Months Ended |
Mar. 26, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Condensed Consolidating Balance Sheet | Condensed Consolidating Balance Sheet March 26, 2017 (Unaudited) (in millions) Parent Company Subsidiary Guarantors on a Combined Basis Non-Guarantors on a Combined Basis Eliminations Consolidated Assets Current Assets: Cash and cash equivalents $ 68.9 $ (1.1 ) $ 5.6 $ — $ 73.4 Accounts receivable, net — 198.1 29.8 — 227.9 Amounts due from affiliated companies 219.8 — — (219.8 ) — Inventoried costs — 45.9 18.9 — 64.8 Other current assets 4.7 13.8 2.7 — 21.2 Total current assets 293.4 256.7 57.0 (219.8 ) 387.3 Property, plant and equipment, net 1.5 42.8 6.5 — 50.8 Goodwill — 442.5 42.9 — 485.4 Intangible assets, net — 22.3 7.6 — 29.9 Investment in subsidiaries 460.6 67.2 — (527.8 ) — Other assets 0.3 7.9 — — 8.2 Total assets $ 755.8 $ 839.4 $ 114.0 $ (747.6 ) $ 961.6 Liabilities and Stockholders ’ Equity Current liabilities: Accounts payable $ 3.6 $ 43.1 $ 5.1 $ — $ 51.8 Accrued expenses 11.3 44.3 3.8 — 59.4 Accrued compensation 4.0 26.8 4.4 — 35.2 Billings in excess of costs and earnings on uncompleted contracts — 36.9 4.9 — 41.8 Amounts due to affiliated companies — 192.0 27.8 (219.8 ) — Other current liabilities 0.9 3.8 1.7 — 6.4 Current liabilities of discontinued operations 1.3 — 0.1 — 1.4 Total current liabilities 21.1 346.9 47.8 (219.8 ) 196.0 Long-term debt, net of current portion 368.8 — 0.5 — 369.3 Other long-term liabilities 10.8 19.9 10.5 — 41.2 Non-current liabilities of discontinued operations 3.7 — — — 3.7 Total liabilities 404.4 366.8 58.8 (219.8 ) 610.2 Total stockholders ’ equity 351.4 472.6 55.2 (527.8 ) 351.4 Total liabilities and stockholders ’ equity $ 755.8 $ 839.4 $ 114.0 $ (747.6 ) $ 961.6 Condensed Consolidating Balance Sheet December 25, 2016 (Unaudited) (in millions) Parent Company Subsidiary Guarantors on a Combined Basis Non-Guarantors on a Combined Basis Eliminations Consolidated Assets Current Assets: Cash and cash equivalents $ 67.2 $ (3.3 ) $ 5.2 $ — $ 69.1 Accounts receivable, net — 197.9 31.5 — 229.4 Amounts due from affiliated companies 204.6 — — (204.6 ) — Inventoried costs — 37.2 18.2 — 55.4 Other current assets 6.3 11.6 1.3 — 19.2 Total current assets 278.1 243.4 56.2 (204.6 ) 373.1 Property, plant and equipment, net 1.6 41.7 6.5 — 49.8 Goodwill — 442.5 42.9 — 485.4 Intangible assets, net — 24.5 8.1 — 32.6 Investment in subsidiaries 458.0 67.5 — (525.5 ) — Other assets 0.4 7.3 — — 7.7 Total assets $ 738.1 $ 826.9 $ 113.7 $ (730.1 ) $ 948.6 Liabilities and Stockholders ’ Equity Current liabilities: Accounts payable $ 4.5 $ 43.7 $ 4.5 $ — $ 52.7 Accrued expenses 5.6 44.5 3.5 — 53.6 Accrued compensation 4.0 31.2 3.9 — 39.1 Billings in excess of costs and earnings on uncompleted contracts — 38.9 2.9 — 41.8 Amounts due to affiliated companies — 174.6 30.0 (204.6 ) — Other current liabilities 1.4 4.1 2.2 — 7.7 Current liabilities of discontinued operations 1.5 — 0.1 — 1.6 Total current liabilities 17.0 337.0 47.1 (204.6 ) 196.5 Long-term debt, net of current portion 430.2 — 0.8 — 431.0 Other long-term liabilities 10.8 19.9 10.3 — 41.0 Non-current liabilities of discontinued operations 3.7 — — — 3.7 Total liabilities 461.7 356.9 58.2 (204.6 ) 672.2 Total stockholders ’ equity 276.4 470.0 55.5 (525.5 ) 276.4 Total liabilities and stockholders ’ equity $ 738.1 $ 826.9 $ 113.7 $ (730.1 ) $ 948.6 |
Schedule of Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) | Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) Three Months Ended March 26, 2017 (Unaudited) (in millions) Parent Company Subsidiary Guarantors on a Combined Basis Non-Guarantors on a Combined Basis Eliminations Consolidated Service revenues $ — $ 82.4 $ 2.6 $ — $ 85.0 Product sales — 73.3 12.7 (3.2 ) 82.8 Total revenues — 155.7 15.3 (3.2 ) 167.8 Cost of service revenues — 59.9 1.9 — 61.8 Cost of product sales — 54.0 10.1 (3.2 ) 60.9 Total costs — 113.9 12.0 (3.2 ) 122.7 Gross profit — 41.8 3.3 — 45.1 Selling, general and administrative expenses 2.1 33.8 3.1 — 39.0 Research and development expenses — 4.0 0.4 — 4.4 Operating income (loss) from continuing operations (2.1 ) 4.0 (0.2 ) — 1.7 Other income (expense): Interest income (expense), net (8.2 ) — — — (8.2 ) Loss on extinguishment of debt (2.1 ) — — — (2.1 ) Other income (expense), net — — 0.2 — 0.2 Total other income (expense), net (10.3 ) — 0.2 — (10.1 ) Income (loss) from continuing operations before income taxes (12.4 ) 4.0 — — (8.4 ) Provision for income taxes from continuing operations 0.1 1.1 0.3 — 1.5 Income (loss) from continuing operations (12.5 ) 2.9 (0.3 ) — (9.9 ) Loss from discontinued operations (0.1 ) — — — (0.1 ) Equity in net income (loss) of subsidiaries 2.6 (0.3 ) — (2.3 ) — Net income (loss) $ (10.0 ) $ 2.6 $ (0.3 ) $ (2.3 ) $ (10.0 ) Comprehensive income (loss) $ (9.9 ) $ 2.6 $ (0.2 ) $ (2.4 ) $ (9.9 ) Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) Three Months Ended March 27, 2016 (Unaudited) (in millions) Parent Company Subsidiary Guarantors on a Combined Basis Non-Guarantors on a Combined Basis Eliminations Consolidated Service revenues $ — $ 77.4 $ 5.2 $ — $ 82.6 Product sales — 59.0 13.1 (1.7 ) 70.4 Total revenues — 136.4 18.3 (1.7 ) 153.0 Cost of service revenues — 56.7 3.6 — 60.3 Cost of product sales — 48.0 10.5 (1.7 ) 56.8 Total costs — 104.7 14.1 (1.7 ) 117.1 Gross profit — 31.7 4.2 — 35.9 Selling, general and administrative expenses 1.3 39.6 2.3 — 43.2 Research and development expenses — 2.9 — — 2.9 Operating income (loss) from continuing operations (1.3 ) (10.8 ) 1.9 — (10.2 ) Other income (expense): Interest income (expense), net (8.6 ) (0.1 ) — — (8.7 ) Other income (expense), net — — 0.3 — 0.3 Total other income (expense), net (8.6 ) (0.1 ) 0.3 — (8.4 ) Income (loss) from continuing operations before income taxes (9.9 ) (10.9 ) 2.2 — (18.6 ) Provision (benefit) for income taxes from continuing operations 0.1 3.2 0.3 — 3.6 Income (loss) from continuing operations (10.0 ) (14.1 ) 1.9 — (22.2 ) Equity in net income (loss) of subsidiaries (12.2 ) 1.9 — 10.3 — Net income (loss) $ (22.2 ) $ (12.2 ) $ 1.9 $ 10.3 $ (22.2 ) Comprehensive income (loss) $ (22.2 ) $ (12.2 ) $ 1.9 $ 10.3 $ (22.2 ) |
Schedule of Condensed Consolidating Statement of Cash Flows | Condensed Consolidating Statement of Cash Flows Three Months Ended March 26, 2017 (Unaudited) (in millions) Parent Company Subsidiary Guarantors on a Combined Basis Non-Guarantors on a Combined Basis Eliminations Consolidated Net cash provided by (used in) operating activities from continuing operations $ (1.8 ) $ (7.7 ) $ 0.8 $ — $ (8.7 ) Investing activities: Investment in affiliated companies (15.0 ) — — 15.0 — Capital expenditures — (5.0 ) (0.2 ) — (5.2 ) Net cash provided by (used in) investing activities from continuing operations (15.0 ) (5.0 ) (0.2 ) 15.0 (5.2 ) Financing activities: Extinguishment of long-term debt (64.0 ) — — — (64.0 ) Repayment of debt — — (0.3 ) — (0.3 ) Proceeds from the issuance of common stock 81.9 — — — 81.9 Proceeds from the sale of employee stock purchase plan shares 0.8 — — — 0.8 Financings from affiliated companies — 15.0 — (15.0 ) — Net cash provided by (used in) financing activities from continuing operations 18.7 15.0 (0.3 ) (15.0 ) 18.4 Net cash flows of continuing operations 1.9 2.3 0.3 — 4.5 Net investing cash flows from discontinued operations (0.2 ) — — — (0.2 ) Net increase in cash and cash equivalents $ 1.7 $ 2.3 $ 0.3 $ — $ 4.3 Condensed Consolidating Statement of Cash Flows Three Months Ended March 27, 2016 (Unaudited) (in millions) Parent Company Subsidiary Guarantors on a Combined Basis Non-Guarantors on a Combined Basis Eliminations Consolidated Net cash provided by (used in) operating activities from continuing operations $ 3.9 $ (15.3 ) $ (0.1 ) $ — $ (11.5 ) Investing activities: Investment in affiliated companies (15.8 ) — — 15.8 — Capital expenditures (0.3 ) (1.4 ) (0.4 ) — (2.1 ) Net cash provided by (used in) investing activities from continuing operations (16.1 ) (1.4 ) (0.4 ) 15.8 (2.1 ) Financing activities: Repayment of debt — — (0.3 ) — (0.3 ) Proceeds from the sale of employee stock purchase plan shares 1.2 — — — 1.2 Financing from affiliated companies — 15.8 — (15.8 ) — Net cash provided by (used in) financing activities from continuing operations 1.2 15.8 (0.3 ) (15.8 ) 0.9 Net cash flows of continuing operations (11.0 ) (0.9 ) (0.8 ) — (12.7 ) Net operating cash flows from discontinued operations (0.4 ) — — — (0.4 ) Net investing cash flows from discontinued operations 4.7 — — — 4.7 Net decrease in cash and cash equivalents $ (6.7 ) $ (0.9 ) $ (0.8 ) $ — $ (8.4 ) |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | Dec. 25, 2016 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Fiscal year duration | 371 days | 364 days | |
First quarter duration | 91 days | 91 days | |
Minimum | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Fiscal year duration | 364 days | ||
Maximum | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Fiscal year duration | 371 days |
Goodwill and Intangible Asset26
Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Millions | Mar. 26, 2017 | Dec. 25, 2016 |
Goodwill [Line Items] | ||
Gross value | $ 732.8 | $ 732.8 |
Less accumulated impairment | 247.4 | 247.4 |
Net | 485.4 | 485.4 |
Kratos Government Solutions | ||
Goodwill [Line Items] | ||
Gross value | 567.8 | 567.8 |
Less accumulated impairment | 215.3 | 215.3 |
Net | 352.5 | 352.5 |
Public Safety & Security | ||
Goodwill [Line Items] | ||
Gross value | 53.9 | 53.9 |
Less accumulated impairment | 18.3 | 18.3 |
Net | 35.6 | 35.6 |
Unmanned Systems | ||
Goodwill [Line Items] | ||
Gross value | 111.1 | 111.1 |
Less accumulated impairment | 13.8 | 13.8 |
Net | $ 97.3 | $ 97.3 |
Goodwill and Intangible Asset27
Goodwill and Intangible Assets - Purchased Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 26, 2017 | Mar. 27, 2016 | Dec. 25, 2016 | |
Acquired finite-lived intangible assets: | |||
Gross Value | $ 111.1 | $ 111.1 | |
Accumulated Amortization | (88.1) | (85.4) | |
Net Value | 23 | 25.7 | |
Total intangible assets: Gross Value | 118 | 118 | |
Total intangible assets: Net Value | 29.9 | 32.6 | |
Aggregate amortization expense for finite-lived intangible assets | 2.7 | $ 2.7 | |
Trade names | |||
Acquired finite-lived intangible assets: | |||
Indefinite-lived trade names | 6.9 | 6.9 | |
Customer relationships | |||
Acquired finite-lived intangible assets: | |||
Gross Value | 53.7 | 53.7 | |
Accumulated Amortization | (46.2) | (44.9) | |
Net Value | 7.5 | 8.8 | |
Contracts and backlog | |||
Acquired finite-lived intangible assets: | |||
Gross Value | 30.8 | 30.8 | |
Accumulated Amortization | (24.2) | (23.7) | |
Net Value | 6.6 | 7.1 | |
Developed technology and technical know-how | |||
Acquired finite-lived intangible assets: | |||
Gross Value | 25.2 | 25.2 | |
Accumulated Amortization | (16.5) | (15.7) | |
Net Value | 8.7 | 9.5 | |
Trade names | |||
Acquired finite-lived intangible assets: | |||
Gross Value | 1.4 | 1.4 | |
Accumulated Amortization | (1.2) | (1.1) | |
Net Value | $ 0.2 | $ 0.3 |
Inventoried Costs (Details)
Inventoried Costs (Details) - USD ($) $ in Millions | Mar. 26, 2017 | Dec. 25, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 32.3 | $ 31.9 |
Work in process | 30.3 | 22.1 |
Finished goods | 1.7 | 1.4 |
Supplies and other | 3 | 1.8 |
Subtotal inventoried costs | 67.3 | 57.2 |
Less: Customer advances and progress payments | (2.5) | (1.8) |
Total inventoried costs | $ 64.8 | $ 55.4 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Changes in Stockholders' Equity (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Stockholders’ equity at beginning of period | $ 276.4 | $ 254.2 |
Comprehensive loss: | ||
Net loss | (10) | (22.2) |
Change in cumulative translation adjustment | 0.1 | 0 |
Comprehensive loss | (9.9) | (22.2) |
Stock-based compensation | 2.1 | 1.5 |
Issuance of common stock for cash | 81.9 | 0 |
Issuance of common stock for employee stock purchase plan | 1.4 | 1.3 |
Restricted stock units exchanged for taxes | (0.5) | (0.1) |
Stockholders’ equity at end of period | $ 351.4 | $ 234.7 |
Stockholders' Equity - Accumula
Stockholders' Equity - Accumulated Other Comprehensive Loss (Details) - USD ($) | 3 Months Ended | ||
Mar. 26, 2017 | Mar. 27, 2016 | Dec. 25, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Total accumulated other comprehensive loss | $ (1,600,000) | $ (1,400,000) | $ (1,700,000) |
Reclassifications from other comprehensive income | 0 | 0 | |
Cumulative translation adjustment | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Total accumulated other comprehensive loss | (1,000,000) | (600,000) | |
Post-retirement benefit reserve adjustment net of tax expense | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Total accumulated other comprehensive loss | $ (600,000) | $ (800,000) |
Stockholders' Equity - Rollforw
Stockholders' Equity - Rollforward of Common Stock Outstanding (Details) - shares | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Shares outstanding at beginning of the period | 73,945,533 | 59,100,000 |
Stock issued for cash | 11,900,000 | 0 |
Stock issued for employee stock purchase plan, stock options and restricted stock units exercised | 600,000 | 500,000 |
Shares outstanding at end of the period | 86,439,842 | 59,600,000 |
Net Loss Per Common Share (Deta
Net Loss Per Common Share (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Stock options and awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of EPS (in shares) | 0.2 | 2.5 |
Income Taxes - Income Tax Provi
Income Taxes - Income Tax Provision Reconciliation (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract] | ||
Federal statutory income tax rate (percent) | 35.00% | 35.00% |
Income tax benefit at federal statutory rate | $ (2.9) | $ (6.5) |
State and foreign taxes, net of federal tax benefit and valuation allowance | 0.2 | 0.4 |
Nondeductible expenses and other | 0.4 | 0.4 |
Impact of deferred tax liabilities for indefinite-lived assets | 1.2 | 1.5 |
Increase in reserves for uncertain tax positions | 0.1 | 1.7 |
Increase in federal valuation allowance | 2.5 | 6.1 |
Total income tax provision | $ 1.5 | $ 3.6 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2010 | Mar. 26, 2017 | Mar. 27, 2016 | Dec. 25, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Federal annual utilization of NOL carryforwards limit, next five years | $ 27 | |||
Threshold period for change in allowed annual amount of NOL to be recognized | 5 years | |||
Federal annual utilization of NOL carryforwards limit, after year five | $ 11.6 | |||
Unrecognized tax benefits that if recognized would impact the effective tax rate for continuing operations | $ 18.6 | |||
Expense for interest and penalties | $ 0.1 | $ 0.6 | ||
Liabilities for uncertain tax positions believed to be reasonably possible to expire within twelve months | $ 1.1 |
Debt - Issuance of 7% Senior Se
Debt - Issuance of 7% Senior Secured Notes due 2019 (Details) | Sep. 22, 2015USD ($) | May 14, 2014USD ($) | May 31, 2014USD ($) | Mar. 26, 2017USD ($) | Dec. 25, 2016USD ($) | Mar. 27, 2016USD ($) | Aug. 21, 2015USD ($) | Oct. 16, 2014 |
Debt Instrument [Line Items] | ||||||||
Principal | $ 374,300,000 | $ 437,300,000 | ||||||
Original issue discount | 1,800,000 | 2,400,000 | ||||||
Gain (loss) on extinguishment of debt | (2,100,000) | $ 0 | ||||||
Unamortized issuance cost | 2,200,000 | 2,900,000 | ||||||
Revolving credit facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Credit agreement borrowings | $ 41,000,000 | |||||||
Maximum borrowing capacity | $ 110,000,000 | 110,000,000 | ||||||
Fixed charge coverage ratio | 1.15 | |||||||
Outstanding borrowings | $ 0 | $ 41,000,000 | ||||||
Senior notes | 7% Senior Notes due 2019 | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate (percent) | 7.00% | 7.00% | ||||||
Principal | $ 625,000,000 | $ 372,800,000 | ||||||
Proceeds from the issuance of long-term debt | $ 618,500,000 | |||||||
Original issue discount | $ 1,400,000 | 6,500,000 | 300,000 | 100,000 | ||||
Debt issuance cost | $ 8,800,000 | |||||||
Reacquisition price | 175,000,000 | 62,700,000 | 14,500,000 | |||||
Repayment of outstanding borrowings | 178,400,000 | |||||||
Write off of unamortized issue costs | 1,800,000 | $ 400,000 | 100,000 | |||||
Fixed charge coverage ratio | 2 | |||||||
Period following asset disposition | 360 days | |||||||
Legal fees | 200,000 | |||||||
Gain (loss) on extinguishment of debt | $ (3,400,000) | $ 2,100,000 | 200,000 | |||||
Gain (loss) on extinguishment of debt, gross | 1,400,000 | $ 400,000 | ||||||
Notes outstanding | $ 372,800,000 | |||||||
Senior notes | 7% Senior Notes due 2019 | Between 5/15/2016 and 5/15/2017 | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption amount as percentage of aggregate principal amount | 105.25% | |||||||
Senior notes | 7% Senior Notes due 2019 | Between 5/15/2017 and 5/15/2018 | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption amount as percentage of aggregate principal amount | 102.625% | |||||||
Senior notes | 7% Senior Notes due 2019 | After 5/15/2018 | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption amount as percentage of aggregate principal amount | 100.00% | |||||||
Senior notes | 10% Senior Notes due in 2017 | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate (percent) | 10.00% | |||||||
Principal | $ 625,000,000 | |||||||
Reacquisition price | 661,500,000 | |||||||
Early termination fee | 31,200,000 | |||||||
Write off of unamortized issue costs | 15,500,000 | |||||||
Unamortized premium | 12,900,000 | |||||||
Interest accrued in escrow | 5,300,000 | |||||||
Gain (loss) on extinguishment of debt | $ (39,100,000) |
Debt - $110.0 million Credit Ag
Debt - $110.0 million Credit Agreement (Details) | Aug. 21, 2015USD ($) | May 14, 2014USD ($) | Mar. 26, 2017USD ($) | Aug. 20, 2015USD ($) | May 31, 2015USD ($) |
Herley | |||||
Line of Credit Facility [Line Items] | |||||
Disposition decrease to collateral assets | $ 0 | ||||
2014 Credit Agreement, Third Amendment | Herley | |||||
Line of Credit Facility [Line Items] | |||||
Reserve amount based on collateral carrying value | 50,800,000 | ||||
2014 Credit Agreement, Fourth Amendment | |||||
Line of Credit Facility [Line Items] | |||||
Letter of credit exposure outstanding | $ 17,000,000 | ||||
Fixed charge coverage ratio of at least 1.05 | 2014 Credit Agreement, Third Amendment | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 1.05 | ||||
Herley disposition proceeds reinvestment reserve, as defined in the amendment | 2014 Credit Agreement, Third Amendment | Minimum | |||||
Line of Credit Facility [Line Items] | |||||
Covenant Terms, percentage of reinvestment in excess of loans and credit | 0.00% | ||||
Herley disposition proceeds reinvestment reserve, as defined in the amendment | 2014 Credit Agreement, Third Amendment | Maximum | |||||
Line of Credit Facility [Line Items] | |||||
Covenant Terms, percentage of reinvestment in excess of loans and credit | 15.00% | ||||
Fixed charge coverage ratio of at least 1.10 | 2014 Credit Agreement, Third Amendment | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 1.10 | ||||
Fixed charge coverage ratio of at least 1.10 | 2014 Credit Agreement, Third Amendment | Minimum | |||||
Line of Credit Facility [Line Items] | |||||
Covenant Terms, percentage of reinvestment in excess of loans and credit | 15.00% | ||||
Fixed charge coverage ratio of at least 1.10 | 2014 Credit Agreement, Third Amendment | Maximum | |||||
Line of Credit Facility [Line Items] | |||||
Covenant Terms, percentage of reinvestment in excess of loans and credit | 25.00% | ||||
Fixed charge coverage ratio remains at 1.15 | 2014 Credit Agreement, Third Amendment | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 1.15 | ||||
Revolving Loans | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 110,000,000 | $ 110,000,000 | |||
Maturity period | 5 years | ||||
Potential maximum borrowing capacity, subject to Lender approval | $ 135,000,000 | ||||
Fixed charge coverage ratio | 1.15 | ||||
Outstanding borrowings | $ 41,000,000 | 0 | |||
Remaining borrowing capacity | $ 57,400,000 | ||||
Revolving Loans | Maximum | Herley | |||||
Line of Credit Facility [Line Items] | |||||
Period from sale allowed to reinvest in similar collateral assets | 360 days | ||||
Revolving Loans | Federal Funds rate | |||||
Line of Credit Facility [Line Items] | |||||
Base rate (the greater of prime rate or 0.5% over federal funds rate) | 0.50% | ||||
Revolving Loans | LIBOR rate | |||||
Line of Credit Facility [Line Items] | |||||
Base rate (floor, 1.0% over one-month LIBOR) | 1.00% | ||||
Revolving Loans | Base rate | Minimum | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 1.50% | ||||
Revolving Loans | Base rate | Maximum | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 2.00% | ||||
Revolving Loans | Eurodollar rate | Minimum | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 2.50% | ||||
Revolving Loans | Eurodollar rate | Maximum | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 3.00% | ||||
Revolving Loans | 2014 Credit Agreement, Third Amendment | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 1.15 | ||||
Revolving Loans | 2014 Credit Agreement, Third Amendment | Minimum | Herley | |||||
Line of Credit Facility [Line Items] | |||||
Minimum amount required for repurchase | $ 175,000,000 | ||||
Revolving Loans | Fixed charge coverage ratio not measured | 2014 Credit Agreement, Third Amendment | |||||
Line of Credit Facility [Line Items] | |||||
Covenant Terms, capacity of outstanding loans or credit | 0 | ||||
Letter of Credit | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 50,000,000 | ||||
Outstanding borrowings | $ 10,100,000 | ||||
Letter of Credit | Fixed charge coverage ratio not measured | 2014 Credit Agreement, Third Amendment | |||||
Line of Credit Facility [Line Items] | |||||
Covenant Terms, capacity of outstanding loans or credit | 17,000,000 | ||||
Swingline Loan | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 10,000,000 | ||||
Swingline Loan | Fixed charge coverage ratio not measured | 2014 Credit Agreement, Third Amendment | |||||
Line of Credit Facility [Line Items] | |||||
Covenant Terms, capacity of outstanding loans or credit | 0 | ||||
Revolving Loans plus outstanding Swingline Loans plus Letters of Credit | Fixed charge coverage ratio of at least 1.05 | 2014 Credit Agreement, Third Amendment | |||||
Line of Credit Facility [Line Items] | |||||
Covenant Terms, capacity of outstanding loans or credit | $ 17,000,000 |
Debt - Debt Acquired in Acquisi
Debt - Debt Acquired in Acquisition (Details) | Sep. 16, 2008USD ($)subsidiary | Mar. 26, 2017USD ($) | Dec. 25, 2016USD ($) |
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 374,300,000 | $ 437,300,000 | |
Carrying Amount | 370,300,000 | $ 432,000,000 | |
10-year term loan | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 10,000,000 | ||
Maturity period | 10 years | ||
Number of subsidiaries acquired | subsidiary | 1 | ||
Carrying Amount | 1,500,000 | ||
Quarterly installment payment - principal | $ 300,000 | ||
LIBOR rate | 10-year term loan | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.50% |
Debt - Fair Value of Long-term
Debt - Fair Value of Long-term Debt (Details) - USD ($) $ in Millions | Mar. 26, 2017 | Dec. 25, 2016 |
Debt Disclosure [Abstract] | ||
Principal | $ 374.3 | $ 437.3 |
Carrying Amount | 370.3 | 432 |
Fair Value | 374.3 | 423.6 |
Net unamortized original issue discount | 1.8 | 2.4 |
Unamortized issuance cost | $ 2.2 | $ 2.9 |
Segment Information - Additiona
Segment Information - Additional Information (Details) $ in Millions | 3 Months Ended | |
Mar. 26, 2017USD ($)Segment | Mar. 27, 2016USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | Segment | 3 | |
Litigation related charges | $ 0 | $ 1.7 |
Public Safety & Security | Settled Litigation | ||
Segment Reporting Information [Line Items] | ||
Litigation related charges | 1.9 | |
Kratos Government Solutions | Inventories | ||
Segment Reporting Information [Line Items] | ||
Impairment charges relating to inventories | $ 3 |
Segment Information - Schedule
Segment Information - Schedule of Segment Revenues, Depreciation and Amortization, and Operating (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Revenues: | ||
Service revenues | $ 85 | $ 82.6 |
Product sales | 82.8 | 70.4 |
Total revenues | 167.8 | 153 |
Depreciation & amortization: | ||
Total depreciation and amortization | 5.6 | 6.1 |
Operating income (loss) from continuing operations: | ||
Total operating income (loss) from continuing operations | 1.7 | (10.2) |
Reportable Segments | ||
Depreciation & amortization: | ||
Total depreciation and amortization | 5.6 | 6.1 |
Operating income (loss) from continuing operations: | ||
Total operating income (loss) from continuing operations | 4.4 | (8.7) |
Reportable Segments | Kratos Government Solutions | ||
Revenues: | ||
Service revenues | 48.2 | 52.4 |
Product sales | 67.2 | 56.2 |
Total revenues | 115.4 | 108.6 |
Depreciation & amortization: | ||
Total depreciation and amortization | 3.7 | 4.1 |
Operating income (loss) from continuing operations: | ||
Total operating income (loss) from continuing operations | 9.6 | (1.8) |
Reportable Segments | Public Safety & Security | ||
Revenues: | ||
Service revenues | 36.8 | 30.2 |
Product sales | 0 | 0 |
Total revenues | 36.8 | 30.2 |
Depreciation & amortization: | ||
Total depreciation and amortization | 0.1 | 0.1 |
Operating income (loss) from continuing operations: | ||
Total operating income (loss) from continuing operations | (0.2) | (2.7) |
Reportable Segments | Unmanned Systems | ||
Revenues: | ||
Service revenues | 0 | 0 |
Product sales | 15.6 | 14.2 |
Total revenues | 15.6 | 14.2 |
Depreciation & amortization: | ||
Total depreciation and amortization | 1.8 | 1.9 |
Operating income (loss) from continuing operations: | ||
Total operating income (loss) from continuing operations | (5) | (4.2) |
Unallocated corporate expense, net | ||
Operating income (loss) from continuing operations: | ||
Total operating income (loss) from continuing operations | $ (2.7) | $ (1.5) |
Significant Customers (Details)
Significant Customers (Details) - U.S. Government - USD ($) $ in Millions | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Revenue, Major Customer [Line Items] | ||
Sales to the U.S. Government, amount | $ 96.3 | $ 95.4 |
Government contracts | Revenue | ||
Revenue, Major Customer [Line Items] | ||
Sales to the U.S. Government, percentage of total revenue (percent) | 57.00% | 62.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 1 Months Ended | 3 Months Ended | ||
Apr. 30, 2016USD ($) | Mar. 26, 2017USD ($) | Mar. 27, 2016USD ($) | Jul. 28, 2015subsidiary | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Number of subsidiaries with certain unallowable costs | subsidiary | 1 | |||
Loss Contingencies [Line Items] | ||||
Litigation related charges | $ 0 | $ 1.7 | ||
Settled Litigation | ||||
Loss Contingencies [Line Items] | ||||
Settlement amount related to unallowable costs | $ 0.2 | |||
Settled Litigation | Public Safety & Security | ||||
Loss Contingencies [Line Items] | ||||
Litigation related charges | $ 1.9 |
Condensed Consolidating Finan43
Condensed Consolidating Financial Statements - Balance Sheet (Details) - USD ($) | Mar. 26, 2017 | Dec. 25, 2016 | Mar. 27, 2016 | Dec. 27, 2015 | May 31, 2014 |
Condensed Financial Statements, Captions [Line Items] | |||||
Principal | $ 374,300,000 | $ 437,300,000 | |||
Current assets: | |||||
Cash and cash equivalents | 73,400,000 | 69,100,000 | $ 20,100,000 | $ 28,500,000 | |
Accounts receivable, net | 227,900,000 | 229,400,000 | |||
Amounts due from affiliated companies | 0 | 0 | |||
Inventoried costs | 64,800,000 | 55,400,000 | |||
Other current assets | 21,200,000 | 19,200,000 | |||
Total current assets | 387,300,000 | 373,100,000 | |||
Property, plant and equipment, net | 50,800,000 | 49,800,000 | |||
Goodwill | 485,400,000 | 485,400,000 | |||
Intangible assets, net | 29,900,000 | 32,600,000 | |||
Investment in subsidiaries | 0 | 0 | |||
Other assets | 8,200,000 | 7,700,000 | |||
Total assets | 961,600,000 | 948,600,000 | |||
Current liabilities: | |||||
Accounts payable | 51,800,000 | 52,700,000 | |||
Accrued expenses | 59,400,000 | 53,600,000 | |||
Accrued compensation | 35,200,000 | 39,100,000 | |||
Billings in excess of costs and earnings on uncompleted contracts | 41,800,000 | 41,800,000 | |||
Amounts due to affiliated companies | 0 | 0 | |||
Other current liabilities | 6,400,000 | 7,700,000 | |||
Current liabilities of discontinued operations | 1,400,000 | 1,600,000 | |||
Total current liabilities | 196,000,000 | 196,500,000 | |||
Long-term debt, net of current portion | 369,300,000 | 431,000,000 | |||
Other long-term liabilities | 41,200,000 | 41,000,000 | |||
Non-current liabilities of discontinued operations | 3,700,000 | 3,700,000 | |||
Total liabilities | 610,200,000 | 672,200,000 | |||
Total stockholders’ equity | 351,400,000 | 276,400,000 | |||
Total liabilities and stockholders’ equity | 961,600,000 | 948,600,000 | |||
Eliminations | |||||
Current assets: | |||||
Cash and cash equivalents | 0 | 0 | |||
Accounts receivable, net | 0 | 0 | |||
Amounts due from affiliated companies | (219,800,000) | (204,600,000) | |||
Inventoried costs | 0 | 0 | |||
Other current assets | 0 | 0 | |||
Total current assets | (219,800,000) | (204,600,000) | |||
Property, plant and equipment, net | 0 | 0 | |||
Goodwill | 0 | 0 | |||
Intangible assets, net | 0 | 0 | |||
Investment in subsidiaries | (527,800,000) | (525,500,000) | |||
Other assets | 0 | 0 | |||
Total assets | (747,600,000) | (730,100,000) | |||
Current liabilities: | |||||
Accounts payable | 0 | 0 | |||
Accrued expenses | 0 | 0 | |||
Accrued compensation | 0 | 0 | |||
Billings in excess of costs and earnings on uncompleted contracts | 0 | 0 | |||
Amounts due to affiliated companies | (219,800,000) | (204,600,000) | |||
Other current liabilities | 0 | 0 | |||
Current liabilities of discontinued operations | 0 | 0 | |||
Total current liabilities | (219,800,000) | (204,600,000) | |||
Long-term debt, net of current portion | 0 | 0 | |||
Other long-term liabilities | 0 | 0 | |||
Non-current liabilities of discontinued operations | 0 | 0 | |||
Total liabilities | (219,800,000) | (204,600,000) | |||
Total stockholders’ equity | (527,800,000) | (525,500,000) | |||
Total liabilities and stockholders’ equity | $ (747,600,000) | (730,100,000) | |||
Subsidiaries | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Ownership percentage | 100.00% | ||||
Parent Company | |||||
Current assets: | |||||
Cash and cash equivalents | $ 68,900,000 | 67,200,000 | |||
Accounts receivable, net | 0 | 0 | |||
Amounts due from affiliated companies | 219,800,000 | 204,600,000 | |||
Inventoried costs | 0 | 0 | |||
Other current assets | 4,700,000 | 6,300,000 | |||
Total current assets | 293,400,000 | 278,100,000 | |||
Property, plant and equipment, net | 1,500,000 | 1,600,000 | |||
Goodwill | 0 | 0 | |||
Intangible assets, net | 0 | 0 | |||
Investment in subsidiaries | 460,600,000 | 458,000,000 | |||
Other assets | 300,000 | 400,000 | |||
Total assets | 755,800,000 | 738,100,000 | |||
Current liabilities: | |||||
Accounts payable | 3,600,000 | 4,500,000 | |||
Accrued expenses | 11,300,000 | 5,600,000 | |||
Accrued compensation | 4,000,000 | 4,000,000 | |||
Billings in excess of costs and earnings on uncompleted contracts | 0 | 0 | |||
Amounts due to affiliated companies | 0 | 0 | |||
Other current liabilities | 900,000 | 1,400,000 | |||
Current liabilities of discontinued operations | 1,300,000 | 1,500,000 | |||
Total current liabilities | 21,100,000 | 17,000,000 | |||
Long-term debt, net of current portion | 368,800,000 | 430,200,000 | |||
Other long-term liabilities | 10,800,000 | 10,800,000 | |||
Non-current liabilities of discontinued operations | 3,700,000 | 3,700,000 | |||
Total liabilities | 404,400,000 | 461,700,000 | |||
Total stockholders’ equity | 351,400,000 | 276,400,000 | |||
Total liabilities and stockholders’ equity | 755,800,000 | 738,100,000 | |||
Subsidiary Guarantors on a Combined Basis | |||||
Current assets: | |||||
Cash and cash equivalents | (1,100,000) | (3,300,000) | |||
Accounts receivable, net | 198,100,000 | 197,900,000 | |||
Amounts due from affiliated companies | 0 | 0 | |||
Inventoried costs | 45,900,000 | 37,200,000 | |||
Other current assets | 13,800,000 | 11,600,000 | |||
Total current assets | 256,700,000 | 243,400,000 | |||
Property, plant and equipment, net | 42,800,000 | 41,700,000 | |||
Goodwill | 442,500,000 | 442,500,000 | |||
Intangible assets, net | 22,300,000 | 24,500,000 | |||
Investment in subsidiaries | 67,200,000 | 67,500,000 | |||
Other assets | 7,900,000 | 7,300,000 | |||
Total assets | 839,400,000 | 826,900,000 | |||
Current liabilities: | |||||
Accounts payable | 43,100,000 | 43,700,000 | |||
Accrued expenses | 44,300,000 | 44,500,000 | |||
Accrued compensation | 26,800,000 | 31,200,000 | |||
Billings in excess of costs and earnings on uncompleted contracts | 36,900,000 | 38,900,000 | |||
Amounts due to affiliated companies | 192,000,000 | 174,600,000 | |||
Other current liabilities | 3,800,000 | 4,100,000 | |||
Current liabilities of discontinued operations | 0 | 0 | |||
Total current liabilities | 346,900,000 | 337,000,000 | |||
Long-term debt, net of current portion | 0 | 0 | |||
Other long-term liabilities | 19,900,000 | 19,900,000 | |||
Non-current liabilities of discontinued operations | 0 | 0 | |||
Total liabilities | 366,800,000 | 356,900,000 | |||
Total stockholders’ equity | 472,600,000 | 470,000,000 | |||
Total liabilities and stockholders’ equity | 839,400,000 | 826,900,000 | |||
Non-Guarantors on a Combined Basis | |||||
Current assets: | |||||
Cash and cash equivalents | 5,600,000 | 5,200,000 | |||
Accounts receivable, net | 29,800,000 | 31,500,000 | |||
Amounts due from affiliated companies | 0 | 0 | |||
Inventoried costs | 18,900,000 | 18,200,000 | |||
Other current assets | 2,700,000 | 1,300,000 | |||
Total current assets | 57,000,000 | 56,200,000 | |||
Property, plant and equipment, net | 6,500,000 | 6,500,000 | |||
Goodwill | 42,900,000 | 42,900,000 | |||
Intangible assets, net | 7,600,000 | 8,100,000 | |||
Investment in subsidiaries | 0 | 0 | |||
Other assets | 0 | 0 | |||
Total assets | 114,000,000 | 113,700,000 | |||
Current liabilities: | |||||
Accounts payable | 5,100,000 | 4,500,000 | |||
Accrued expenses | 3,800,000 | 3,500,000 | |||
Accrued compensation | 4,400,000 | 3,900,000 | |||
Billings in excess of costs and earnings on uncompleted contracts | 4,900,000 | 2,900,000 | |||
Amounts due to affiliated companies | 27,800,000 | 30,000,000 | |||
Other current liabilities | 1,700,000 | 2,200,000 | |||
Current liabilities of discontinued operations | 100,000 | 100,000 | |||
Total current liabilities | 47,800,000 | 47,100,000 | |||
Long-term debt, net of current portion | 500,000 | 800,000 | |||
Other long-term liabilities | 10,500,000 | 10,300,000 | |||
Non-current liabilities of discontinued operations | 0 | 0 | |||
Total liabilities | 58,800,000 | 58,200,000 | |||
Total stockholders’ equity | 55,200,000 | 55,500,000 | |||
Total liabilities and stockholders’ equity | 114,000,000 | $ 113,700,000 | |||
Senior notes | 7% Senior Notes due 2019 | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Principal | $ 372,800,000 | $ 625,000,000 |
Condensed Consolidating Finan44
Condensed Consolidating Financial Statements - Statement of Operations and Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Condensed Financial Statements, Captions [Line Items] | ||
Service revenues | $ 85 | $ 82.6 |
Product sales | 82.8 | 70.4 |
Total revenues | 167.8 | 153 |
Cost of service revenues | 61.8 | 60.3 |
Cost of product sales | 60.9 | 56.8 |
Total costs | 122.7 | 117.1 |
Gross profit | 45.1 | 35.9 |
Selling, general and administrative expenses | 39 | 43.2 |
Research and development expenses | 4.4 | 2.9 |
Operating income (loss) from continuing operations | 1.7 | (10.2) |
Other income (expense): | ||
Interest income (expense), net | (8.2) | (8.7) |
Loss on extinguishment of debt | (2.1) | 0 |
Other income (expense), net | 0.2 | 0.3 |
Total other expense, net | (10.1) | (8.4) |
Loss from continuing operations before income taxes | (8.4) | (18.6) |
Provision (benefit) for income taxes from continuing operations | 1.5 | 3.6 |
Loss from continuing operations | (9.9) | (22.2) |
Income (loss) from discontinued operations | (0.1) | 0 |
Equity in net income (loss) of subsidiaries | 0 | 0 |
Net loss | (10) | (22.2) |
Comprehensive income (loss) | (9.9) | (22.2) |
Eliminations | ||
Condensed Financial Statements, Captions [Line Items] | ||
Service revenues | 0 | 0 |
Product sales | (3.2) | (1.7) |
Total revenues | (3.2) | (1.7) |
Cost of service revenues | 0 | 0 |
Cost of product sales | (3.2) | (1.7) |
Total costs | (3.2) | (1.7) |
Gross profit | 0 | 0 |
Selling, general and administrative expenses | 0 | 0 |
Research and development expenses | 0 | 0 |
Operating income (loss) from continuing operations | 0 | 0 |
Other income (expense): | ||
Interest income (expense), net | 0 | 0 |
Loss on extinguishment of debt | 0 | |
Other income (expense), net | 0 | 0 |
Total other expense, net | 0 | 0 |
Loss from continuing operations before income taxes | 0 | 0 |
Provision (benefit) for income taxes from continuing operations | 0 | 0 |
Loss from continuing operations | 0 | 0 |
Income (loss) from discontinued operations | 0 | |
Equity in net income (loss) of subsidiaries | (2.3) | 10.3 |
Net loss | (2.3) | 10.3 |
Comprehensive income (loss) | (2.4) | 10.3 |
Parent Company | ||
Condensed Financial Statements, Captions [Line Items] | ||
Service revenues | 0 | 0 |
Product sales | 0 | 0 |
Total revenues | 0 | 0 |
Cost of service revenues | 0 | 0 |
Cost of product sales | 0 | 0 |
Total costs | 0 | 0 |
Gross profit | 0 | 0 |
Selling, general and administrative expenses | 2.1 | 1.3 |
Research and development expenses | 0 | 0 |
Operating income (loss) from continuing operations | (2.1) | (1.3) |
Other income (expense): | ||
Interest income (expense), net | (8.2) | (8.6) |
Loss on extinguishment of debt | (2.1) | |
Other income (expense), net | 0 | 0 |
Total other expense, net | (10.3) | (8.6) |
Loss from continuing operations before income taxes | (12.4) | (9.9) |
Provision (benefit) for income taxes from continuing operations | 0.1 | 0.1 |
Loss from continuing operations | (12.5) | (10) |
Income (loss) from discontinued operations | (0.1) | |
Equity in net income (loss) of subsidiaries | 2.6 | (12.2) |
Net loss | (10) | (22.2) |
Comprehensive income (loss) | (9.9) | (22.2) |
Subsidiary Guarantors on a Combined Basis | ||
Condensed Financial Statements, Captions [Line Items] | ||
Service revenues | 82.4 | 77.4 |
Product sales | 73.3 | 59 |
Total revenues | 155.7 | 136.4 |
Cost of service revenues | 59.9 | 56.7 |
Cost of product sales | 54 | 48 |
Total costs | 113.9 | 104.7 |
Gross profit | 41.8 | 31.7 |
Selling, general and administrative expenses | 33.8 | 39.6 |
Research and development expenses | 4 | 2.9 |
Operating income (loss) from continuing operations | 4 | (10.8) |
Other income (expense): | ||
Interest income (expense), net | 0 | (0.1) |
Loss on extinguishment of debt | 0 | |
Other income (expense), net | 0 | 0 |
Total other expense, net | 0 | (0.1) |
Loss from continuing operations before income taxes | 4 | (10.9) |
Provision (benefit) for income taxes from continuing operations | 1.1 | 3.2 |
Loss from continuing operations | 2.9 | (14.1) |
Income (loss) from discontinued operations | 0 | |
Equity in net income (loss) of subsidiaries | (0.3) | 1.9 |
Net loss | 2.6 | (12.2) |
Comprehensive income (loss) | 2.6 | (12.2) |
Non-Guarantors on a Combined Basis | ||
Condensed Financial Statements, Captions [Line Items] | ||
Service revenues | 2.6 | 5.2 |
Product sales | 12.7 | 13.1 |
Total revenues | 15.3 | 18.3 |
Cost of service revenues | 1.9 | 3.6 |
Cost of product sales | 10.1 | 10.5 |
Total costs | 12 | 14.1 |
Gross profit | 3.3 | 4.2 |
Selling, general and administrative expenses | 3.1 | 2.3 |
Research and development expenses | 0.4 | 0 |
Operating income (loss) from continuing operations | (0.2) | 1.9 |
Other income (expense): | ||
Interest income (expense), net | 0 | 0 |
Loss on extinguishment of debt | 0 | |
Other income (expense), net | 0.2 | 0.3 |
Total other expense, net | 0.2 | 0.3 |
Loss from continuing operations before income taxes | 0 | 2.2 |
Provision (benefit) for income taxes from continuing operations | 0.3 | 0.3 |
Loss from continuing operations | (0.3) | 1.9 |
Income (loss) from discontinued operations | 0 | |
Equity in net income (loss) of subsidiaries | 0 | 0 |
Net loss | (0.3) | 1.9 |
Comprehensive income (loss) | $ (0.2) | $ 1.9 |
Condensed Consolidating Finan45
Condensed Consolidating Financial Statements - Statement of Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Condensed Financial Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities from continuing operations | $ (8.7) | $ (11.5) |
Investing activities: | ||
Investment in affiliated companies | 0 | 0 |
Capital expenditures | (5.2) | (2.1) |
Net cash used in investing activities from continuing operations | (5.2) | (2.1) |
Financing activities: | ||
Extinguishment of long-term debt | (64) | 0 |
Repayment of debt | (0.3) | (0.3) |
Proceeds from the issuance of common stock | 81.9 | 0 |
Proceeds from exercise of restricted stock units, employee stock options, and employee stock purchase plan | 0.8 | 1.2 |
Financing from affiliated companies | 0 | 0 |
Net cash provided by financing activities from continuing operations | 18.4 | 0.9 |
Net cash flows of continuing operations | 4.5 | (12.7) |
Net operating cash flows of discontinued operations | 0 | (0.4) |
Net investing cash flows of discontinued operations | (0.2) | 4.7 |
Net increase (decrease) in cash and cash equivalents | 4.3 | (8.4) |
Eliminations | ||
Condensed Financial Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities from continuing operations | 0 | 0 |
Investing activities: | ||
Investment in affiliated companies | 15 | 15.8 |
Capital expenditures | 0 | 0 |
Net cash used in investing activities from continuing operations | 15 | 15.8 |
Financing activities: | ||
Extinguishment of long-term debt | 0 | |
Repayment of debt | 0 | 0 |
Proceeds from the issuance of common stock | 0 | |
Proceeds from exercise of restricted stock units, employee stock options, and employee stock purchase plan | 0 | 0 |
Financing from affiliated companies | (15) | (15.8) |
Net cash provided by financing activities from continuing operations | (15) | (15.8) |
Net cash flows of continuing operations | 0 | 0 |
Net operating cash flows of discontinued operations | 0 | |
Net investing cash flows of discontinued operations | 0 | 0 |
Net increase (decrease) in cash and cash equivalents | 0 | 0 |
Parent Company | ||
Condensed Financial Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities from continuing operations | (1.8) | 3.9 |
Investing activities: | ||
Investment in affiliated companies | (15) | (15.8) |
Capital expenditures | 0 | (0.3) |
Net cash used in investing activities from continuing operations | (15) | (16.1) |
Financing activities: | ||
Extinguishment of long-term debt | (64) | |
Repayment of debt | 0 | 0 |
Proceeds from the issuance of common stock | 81.9 | |
Proceeds from exercise of restricted stock units, employee stock options, and employee stock purchase plan | 0.8 | 1.2 |
Financing from affiliated companies | 0 | 0 |
Net cash provided by financing activities from continuing operations | 18.7 | 1.2 |
Net cash flows of continuing operations | 1.9 | (11) |
Net operating cash flows of discontinued operations | (0.4) | |
Net investing cash flows of discontinued operations | (0.2) | 4.7 |
Net increase (decrease) in cash and cash equivalents | 1.7 | (6.7) |
Subsidiary Guarantors on a Combined Basis | ||
Condensed Financial Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities from continuing operations | (7.7) | (15.3) |
Investing activities: | ||
Investment in affiliated companies | 0 | 0 |
Capital expenditures | (5) | (1.4) |
Net cash used in investing activities from continuing operations | (5) | (1.4) |
Financing activities: | ||
Extinguishment of long-term debt | 0 | |
Repayment of debt | 0 | 0 |
Proceeds from the issuance of common stock | 0 | |
Proceeds from exercise of restricted stock units, employee stock options, and employee stock purchase plan | 0 | 0 |
Financing from affiliated companies | 15 | 15.8 |
Net cash provided by financing activities from continuing operations | 15 | 15.8 |
Net cash flows of continuing operations | 2.3 | (0.9) |
Net operating cash flows of discontinued operations | 0 | |
Net investing cash flows of discontinued operations | 0 | 0 |
Net increase (decrease) in cash and cash equivalents | 2.3 | (0.9) |
Non-Guarantors on a Combined Basis | ||
Condensed Financial Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities from continuing operations | 0.8 | (0.1) |
Investing activities: | ||
Investment in affiliated companies | 0 | 0 |
Capital expenditures | (0.2) | (0.4) |
Net cash used in investing activities from continuing operations | (0.2) | (0.4) |
Financing activities: | ||
Extinguishment of long-term debt | 0 | |
Repayment of debt | (0.3) | (0.3) |
Proceeds from the issuance of common stock | 0 | |
Proceeds from exercise of restricted stock units, employee stock options, and employee stock purchase plan | 0 | 0 |
Financing from affiliated companies | 0 | 0 |
Net cash provided by financing activities from continuing operations | (0.3) | (0.3) |
Net cash flows of continuing operations | 0.3 | (0.8) |
Net operating cash flows of discontinued operations | 0 | |
Net investing cash flows of discontinued operations | 0 | 0 |
Net increase (decrease) in cash and cash equivalents | $ 0.3 | $ (0.8) |