Kratos Defense & Security Solutions (KTOS) 8-K 13 Jun 18 Entry into a Material Definitive Agreement Financial data

Document and Entity Information

Document and Entity Information	12 Months Ended
	Dec. 31, 2017
Document And Entity Information
Entity Registrant Name	KRATOS DEFENSE & SECURITY SOLUTIONS, INC.
Entity Central Index Key	1,069,258
Document Type	8-K
Document Period End Date	Dec. 31, 2017
Amendment Flag	false

PRO FORMA CONDENSED CONSOLIDATE

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 25, 2016	Dec. 27, 2015
Service revenues	$ 197.8	$ 221.3	$ 209.6
Product sales	405.5	320.6	302.9
Total revenues	603.3	541.9	512.5
Cost of service revenue	138.6	162.1	159.5
Cost of product sales	307.1	259.3	228.8
Total costs	445.7	421.4	388.3
Gross profit	157.6	120.5	124.2
Selling, general and administrative expenses	127.3	114.6	118.2
Merger and acquisition expenses	0	0	0.1
Research and development expenses	17.8	13.9	16.2
Impairment of goodwill	24.2
Unused office space and other restructuring	0.3	10	(0.7)
Operating income (loss) from continuing operations	(12)	(18)	(9.6)
Other income (expense):
Interest expense, net	(28.6)	(34.7)	(36)
Gain (loss) on extinguishment of debt	(17.3)	0.2	(3.4)
Other income (expense), net	0.8	0.7	(0.6)
Total other expense, net	(45.1)	(33.8)	(40)
Income (loss) from continuing operations before income taxes	(57.1)	(51.8)	(49.6)
Provision (benefit) for income taxes from continuing operations	(10.2)	5.8	(13.8)
Income (loss) from continuing operations	$ (46.9)	$ (57.6)	$ (35.8)
Basic income (loss) per common share:
Income (loss) from continuing operations (in dollars per share)	$ (0.52)	$ (0.94)	$ (0.61)
Diluted income (loss) per common share:
Income (loss) from continuing operations (in dollars per share)	$ (0.52)	$ (0.94)	$ (0.61)
Weighted average common shares outstanding:
Basic (in shares)	89.5	61.3	58.7
Diluted (in shares)	89.5	61.3	58.7
Historical
Service revenues	$ 346.4	$ 348.1	$ 354.2
Product sales	405.5	320.6	302.9
Total revenues	751.9	668.7	657.1
Cost of service revenue	247.5	255.8	266.5
Cost of product sales	307.1	259.3	228.8
Total costs	554.6	515.1	495.3
Gross profit	197.3	153.6	161.8
Selling, general and administrative expenses	160.6	146.3	150.7
Merger and acquisition expenses	0	1.9	0.1
Research and development expenses	17.8	13.9	16.2
Impairment of goodwill	24.2
Unused office space and other restructuring	0.5	10.1	(0.7)
Operating income (loss) from continuing operations	(5.8)	(18.6)	(4.5)
Other income (expense):
Interest expense, net	(28.6)	(34.7)	(36)
Gain (loss) on extinguishment of debt	(17.3)	0.2	(3.4)
Other income (expense), net	0.9	0.8	(0.7)
Total other expense, net	(45)	(33.7)	(40.1)
Income (loss) from continuing operations before income taxes	(50.8)	(52.3)	(44.6)
Provision (benefit) for income taxes from continuing operations	(8.2)	8.1	(11.4)
Income (loss) from continuing operations	$ (42.6)	$ (60.4)	$ (33.2)
Basic income (loss) per common share:
Income (loss) from continuing operations (in dollars per share)	$ (0.48)	$ (0.99)	$ (0.56)
Diluted income (loss) per common share:
Income (loss) from continuing operations (in dollars per share)	$ (0.48)	$ (0.99)	$ (0.56)
Weighted average common shares outstanding:
Basic (in shares)	89.5	61.3	58.7
Diluted (in shares)	89.5	61.3	58.7
Pro Forma Adjustments
Service revenues	$ 1.2	$ 0.3	$ 0.1
Product sales	0	0	0
Total revenues	1.2	0.3	0.1
Cost of service revenue	1.2	0.3	0.1
Cost of product sales	0	0	0
Total costs	1.2	0.3	0.1
Gross profit	0	0	0
Selling, general and administrative expenses	0.2	2	0
Merger and acquisition expenses	0	(1.9)	0
Research and development expenses	0	0	0
Impairment of goodwill	0
Unused office space and other restructuring	(0.2)	(0.1)	0
Operating income (loss) from continuing operations	0	0	0
Other income (expense):
Interest expense, net	0	0	0
Gain (loss) on extinguishment of debt	0	0	0
Other income (expense), net	0	0	0
Total other expense, net	0	0	0
Income (loss) from continuing operations before income taxes	0	0	0
Provision (benefit) for income taxes from continuing operations	2	2.3	2.4
Income (loss) from continuing operations	2	2.3	2.4
Pro Forma Adjustments | Discontinued Operations
Service revenues	(149.8)	(127.1)	(144.7)
Product sales	0	0	0
Total revenues	(149.8)	(127.1)	(144.7)
Cost of service revenue	(110.1)	(94)	(107.1)
Cost of product sales	0	0	0
Total costs	(110.1)	(94)	(107.1)
Gross profit	(39.7)	(33.1)	(37.6)
Selling, general and administrative expenses	(33.5)	(33.7)	(32.5)
Merger and acquisition expenses	0	0	0
Research and development expenses	0	0	0
Impairment of goodwill	0
Unused office space and other restructuring	0	0	0
Operating income (loss) from continuing operations	(6.2)	0.6	(5.1)
Other income (expense):
Interest expense, net	0	0	0
Gain (loss) on extinguishment of debt	0	0	0
Other income (expense), net	(0.1)	(0.1)	0.1
Total other expense, net	(0.1)	(0.1)	0.1
Income (loss) from continuing operations before income taxes	(6.3)	0.5	(5)
Provision (benefit) for income taxes from continuing operations	0	0	0
Income (loss) from continuing operations	$ (6.3)	$ 0.5	$ (5)

NOTES TO THE PRO FORMA CONDENSE

NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	12 Months Ended
	Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	Description of the Transaction and Basis of Presentation The unaudited pro forma condensed consolidated statements of operations are based upon the historical consolidated financial statements of the Company, which were included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on February 28, 2018. Pursuant to SEC rules and regulations, the unaudited pro forma condensed consolidated statements of operations include only the portion of the historical statements of operations and comprehensive income through income (loss) from continuing operations and exclude discontinued operations. The unaudited pro forma condensed consolidated statement of operations for each respective fiscal period reflects the completion of the sale of all of the issued and outstanding capital stock of PSS as if it had occurred on the first day of the respective fiscal year. Pro Forma Adjustments (a) Deconsolidation of PSS for the fiscal years ended December 31, 2017, December 25, 2016 and December 27, 2015, respectively, to reflect as discontinued operations. (b) Income tax expense or benefit for continuing and discontinued operations for the fiscal year ended December 25, 2016 was computed under the “with-and-without” approach. Under the “with-and-without” approach the income tax expense or benefit for continuing operations was determined by excluding the tax effects of pre-tax items recorded in discontinued operations. For fiscal years ended December 31, 2017 and December 27, 2015, an exception to the “with-and-without” approach applied and the income tax benefit for continuing operations was increased by the income tax expense recorded in discontinued operations. (c) Adjustment to service revenues and cost of service revenues reflects sales activity between the Company and PSS that was previously eliminated upon consolidation but as a result of the disposition has been reflected as product sales and cost of product sales to outside customers. (d) Restructuring costs of PSS have been allocated to discontinued operations.