Kratos' Fourth Quarter and Fiscal 2016 Financial Results Exceed Company's Estimates
Fourth Quarter Revenues of
Fourth Quarter Adjusted EBITDA of
Full Year Revenue of
Affirms Fiscal 2017 Financial Guidance
Kratos' business units contributing to the fourth quarter 2016 sequential organic growth included: 39.3% in Unmanned Systems, 30.0% in
Kratos' book to bill ratio in the fourth quarter of 2016 and year to date book to bill ratio was 1.0 to 1.0. Kratos' total backlog at the end of the fourth quarter of 2016 was approximately
For the fourth quarter ended
During the fourth quarter of 2016,
For the quarter ended
For the year ended
Management will discuss the Company's 2016 financial results and fiscal year 2017 and first quarter 2017 guidance in a conference call beginning at
About Kratos Defense & Security Solutions
Notice Regarding Forward-Looking Statements
This news release contains certain forward-looking statements that involve risks and uncertainties, including, without limitation, express or implied statements concerning the Company's expectations regarding its future financial performance, including the Company's ability to achieve projected growth in certain of the Company's business
units and the expected timing of such growth, its bid and proposal pipeline, demand for its products and services, including the Company's ability to successfully compete in the tactical unmanned aerial system area and expected new customer awards, performance of key contracts, including the timing of production related to certain of the Company's contracts, the impact of the Company's restructuring efforts and cost reduction measures, including its ability to improve profitability and cash flow in certain business units as a result of these actions, benefits to be realized from the Company's net operating loss carryforwards and the availability and timing of government funding for the Company's UTAP-22, timing of LRIP related to the Company's unmanned aerial target system offerings, as well as the level of recurring revenues expected to be generated by these programs once they achieve
full rate production, and market and industry developments. Such statements are only predictions, and the Company's actual results may differ materially from the results expressed or implied by these statements. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Factors that may cause the Company's results to differ include, but are not limited to: risks to our business and financial results related to the reductions and other spending constraints imposed on the
Note Regarding Use of Non-GAAP Financial Measures
This news release contains non-GAAP financial measures, including Adjusted income per share (computed using income (loss) from continuing operations before income taxes, excluding amortization of intangible assets, stock compensation expense, loss on extinguishment of debt, contract design retrofit costs, acquisition and restructuring related items and other which includes but is not limited to unused office space expense, excess capacity, investments in unmanned combat systems initiatives, and foreign transaction gains and losses, less the estimated tax cash payments) and Adjusted EBITDA and Pro Forma Adjusted EBITDA (which
excludes, among other things, losses and gains from discontinued operations, restructuring and transaction related items, investments in unmanned combat systems initiatives, stock compensation expense, unused office space expense, foreign transaction gains and losses, the pro forma impact for the full year of restructuring actions we have taken as if such actions had been completed at the beginning of the year, and the associated margin rates).
| Unaudited Condensed Consolidated Statements of Operations | ||||||||||||||||
| (in millions, except per share data) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Service revenues | $ | 90.1 | $ | 90.7 | $ | 348.1 | $ | 354.2 | ||||||||
| Product sales | 92.0 | 86.8 | 320.6 | 302.9 | ||||||||||||
| Total revenues | 182.1 | 177.5 | 668.7 | 657.1 | ||||||||||||
| Cost of service revenues | 66.4 | 68.0 | 255.8 | 266.5 | ||||||||||||
| Cost of product sales | 69.1 | 67.3 | 259.3 | 228.8 | ||||||||||||
| Total costs | 135.5 | 135.3 | 515.1 | 495.3 | ||||||||||||
| Gross profit - service revenues | 23.7 | 22.7 | 92.3 | 87.7 | ||||||||||||
| Gross profit - product sales | 22.9 | 19.5 | 61.3 | 74.1 | ||||||||||||
| Total gross profit | 46.6 | 42.2 | 153.6 | 161.8 | ||||||||||||
| Selling, general and administrative expenses | 33.4 | 34.6 | 132.6 | 134.8 | ||||||||||||
| Unused office space, restructuring expenses, and other | 1.5 | (1.9 | ) | 12.0 | (0.6 | ) | ||||||||||
| Research and development expenses | 3.8 | 4.5 | 13.9 | 16.2 | ||||||||||||
| Depreciation | 0.7 | 0.6 | 3.2 | 2.9 | ||||||||||||
| Amortization of intangible assets | 2.6 | 2.9 | 10.5 | 13.0 | ||||||||||||
| Operating income (loss) from continuing operations | 4.6 | 1.5 | (18.6 | ) | (4.5 | ) | ||||||||||
| Interest expense, net | (8.6 | ) | (8.7 | ) | (34.7 | ) | (36.0 | ) | ||||||||
| Loss on extinguishment of debt | 0.2 | - | 0.2 | (3.4 | ) | |||||||||||
| Other income (expense), net | 0.2 | (0.1 | ) | 0.8 | (0.7 | ) | ||||||||||
| Loss from continuing operations before income taxes | (3.6 | ) | (7.3 | ) | (52.3 | ) | (44.6 | ) | ||||||||
| Provision (benefit) for income taxes from continuing operations | 0.8 | (0.3 | ) | 8.1 | (11.4 | ) | ||||||||||
| Loss from continuing operations | (4.4 | ) | (7.0 | ) | (60.4 | ) | (33.2 | ) | ||||||||
| Income (loss) from discontinued operations, net of income taxes | 0.1 | 3.0 | (0.1 | ) | 53.0 | |||||||||||
| Net Income (loss) | $ | (4.3 | ) | $ | (4.0 | ) | $ | (60.5 | ) | $ | 19.8 | |||||
| Basic income (loss) per common share: | ||||||||||||||||
| Loss from continuing operations | $ | (0.07 | ) | $ | (0.12 | ) | $ | (0.99 | ) | $ | (0.56 | ) | ||||
| Income from discontinued operations | - | 0.05 | - | 0.90 | ||||||||||||
| Net income (loss) | $ | (0.07 | ) | $ | (0.07 | ) | $ | (0.99 | ) | $ | 0.34 | |||||
| Diluted income (loss) per common share: | ||||||||||||||||
| Loss from continuing operations | $ | (0.07 | ) | $ | (0.12 | ) | $ | (0.99 | ) | $ | (0.56 | ) | ||||
| Income from discontinued operations | - | 0.05 | - | 0.90 | ||||||||||||
| Net income (loss) | $ | (0.07 | ) | $ | (0.07 | ) | $ | (0.99 | ) | $ | 0.34 | |||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic | 65.5 | 59.1 | 61.3 | 58.7 | ||||||||||||
| Diluted | 65.5 | 59.1 | 61.3 | 58.7 | ||||||||||||
| Adjusted EBITDA (1) | $ | 13.4 | $ | 13.4 | $ | 45.0 | $ | 44.6 | ||||||||
| Proforma Adjusted EBITDA (2) | $ | 47.0 | ||||||||||||||
| Unaudited Reconciliation of GAAP to Non-GAAP Measures | ||||||||||||||||
| Note: (1) Adjusted EBITDA is a non-GAAP measure defined as GAAP net income (loss) plus (income) loss from discontinued operations, net interest expense, income taxes, depreciation and amortization, stock compensation, amortization of intangible assets, foreign transaction gain (loss), acquisition and restructuring related items, contract design retrofit costs, investment in unmanned combat systems, litigation related charges, unused office space expense and costs related to pending customer change orders. | ||||||||||||||||
| Adjusted EBITDA as calculated by us may be calculated differently than Adjusted EBITDA for other companies. We have provided Adjusted EBITDA because we believe it is a commonly used measure of financial performance in comparable companies and is provided to help investors evaluate companies on a consistent basis, as well as to enhance understanding of our operating results. Adjusted EBITDA should not be construed as either an alternative to net income or as an indicator of our operating performance or an alternative to cash flows as a measure of liquidity. The adjustments to calculate this non-GAAP financial measure and the basis for such adjustments, are outlined below. Please refer to the following table below that reconciles GAAP net income (loss) to Adjusted EBITDA. | ||||||||||||||||
| (2) Pro forma Adjusted EBITDA as calculated by us may be calculated differently than Pro Forma Adjusted EBITDA for other companies. We have provided Pro Forma Adjusted EBITDA to reflect the impact of the restructuring actions that we took during the first quarter 2016 to eliminate personnel costs in our PSS and Modular Systems businesses. We believe that Pro Forma Adjusted EBITDA is helpful for investors to understand the pro forma full quarter's impact of the restructuring activities as if these actions had occurred at the beginning of the first quarter. | ||||||||||||||||
| The adjustments to calculate this non-GAAP financial measure, and the basis for such adjustments, are outlined below: | ||||||||||||||||
| Interest income and expense. The Company receives interest income on investments and incurs interest expense on loans, capital leases and other financing arrangements, including the amortization of issue discounts and deferred financing costs. These amounts may vary from period to period due to changes in cash and debt balances. | ||||||||||||||||
| Income taxes. The Company's tax expense can fluctuate materially from period to period due to tax adjustments that may not be directly related to underlying operating performance or to the current period of operations and may not necessarily reflect the impact of utilization of our NOLs. | ||||||||||||||||
| Depreciation. The Company incurs depreciation expense (recorded in cost of revenues and in operating expenses) related to capital assets purchased or constructed to support the ongoing operations of the business. The assets are recorded at cost or fair value and are depreciated over the estimated useful lives of individual assets. | ||||||||||||||||
| Amortization of intangible assets. The Company incurs amortization of intangible expense related to acquisitions it has made. These intangible assets are valued at the time of acquisition and are amortized over the estimated useful lives. | ||||||||||||||||
| Stock-based compensation expense. The Company incurs expense related to stock-based compensation included in its GAAP presentation of selling, general and administrative expense. Although stock-based compensation is an expense of the Company and viewed as a form of compensation, these expenses vary in amount from period to period, and are affected by market forces that are difficult to predict and are not within the control of management, such as the market price and volatility of the Company's shares, risk-free interest rates and the expected term and forfeiture rates of the awards. Management believes that exclusion of these expenses allows comparison of operating results to those of other companies that disclose non-GAAP financial measures that exclude stock-based compensation. | ||||||||||||||||
| Foreign transaction (gain) loss. The Company incurs transaction gains and losses related to transactions with foreign customers in currencies other than the | ||||||||||||||||
| Acquisition and restructuring related items. The Company incurs transaction related costs, such as legal and accounting fees and other expenses, related to acquisitions and divestiture activities. Management believes these items are outside the normal operations of the Company's business and are not indicative of ongoing operating results. | ||||||||||||||||
| Excess capacity and restructuring costs. The Company incurs excess capacity and excess overhead costs related to certain of its manufacturing businesses within its Unmanned Systems and Modular Systems businesses due primarily to underutilization of manufacturing facilities and support costs resulting from less than optimal volumes and efficiencies. The Company incurs restructuring costs for cost reduction actions which include employee termination costs, facility shut-down related costs and remaining lease commitment costs for excess or exited facilities. Management believes that these costs are not indicative of ongoing operating results as they are either non-recurring and/or not expected when full capacity and volumes are achieved. | ||||||||||||||||
| Litigation related items. The Company periodically incurs expenses related to pending claims and litigation and associated legal fees and potential case settlements and/or judgments. Although we may incur such costs and other related charges and adjustments, we do not believe it is indicative of any particular outcome until the matter is fully resolved. Management believes these items are outside the normal operations of the Company's business and are not indicative of ongoing operating results. | ||||||||||||||||
| Investment in unmanned combat systems. The Company makes discretionary investments related to its tactical unmanned combat systems initiative with the intention of retaining the intellectual property and data package rights of the technology it is developing. Management believes these rights will result in securing future sole source positions on new platforms which will provide an attractive rate of return. Management believes that these costs are not indicative of ongoing operating results. | ||||||||||||||||
| Contract design retrofits. The Company makes certain design retrofits primarily related to its development programs in its Unmanned Systems business which are necessary for the final design and configuration of these vehicles. Management believes that these costs are not indicative of ongoing operating results. | ||||||||||||||||
| Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. The Company expects to continue to incur expenses similar to the Adjusted EBITDA financial adjustments described above, and investors should not infer from the Company's presentation of this non-GAAP financial measure that these costs are unusual, infrequent, or non-recurring. | ||||||||||||||||
| Reconciliation of Net income (loss) to Adjusted EBITDA and Pro Forma Adjusted EBITDA is as follows: | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net income (loss) | $ | (4.3 | ) | $ | (4.0 | ) | $ | (60.5 | ) | $ | 19.8 | |||||
| (Income) loss from discontinued operations, net of income taxes | (0.1 | ) | (3.0 | ) | 0.1 | (53.0 | ) | |||||||||
| Interest expense, net | 8.6 | 8.7 | 34.7 | 36.0 | ||||||||||||
| Loss/(gain) on extinguishment of debt | (0.2 | ) | - | (0.2 | ) | 3.4 | ||||||||||
| Provision (benefit) for income taxes from continuing operations | 0.8 | (0.3 | ) | 8.1 | (11.4 | ) | ||||||||||
| Depreciation (including cost of service revenues and product sales) | 2.9 | 3.1 | 12.3 | 12.5 | ||||||||||||
| Stock-based compensation | 0.9 | 0.6 | 5.1 | 6.1 | ||||||||||||
| Foreign transaction (gain)/loss | 0.1 | 0.2 | (0.4 | ) | 0.8 | |||||||||||
| Unused office space expense and other | - | (2.3 | ) | - | (2.3 | ) | ||||||||||
| Amortization of intangible assets | 2.6 | 2.9 | 10.5 | 13.0 | ||||||||||||
| Acquisition and restructuring related items and other | 2.1 | 3.6 | 35.3 | 13.3 | ||||||||||||
| Contract design retrofits | - | 3.9 | - | 6.4 | ||||||||||||
| Adjusted EBITDA | $ | 13.4 | $ | 13.4 | $ | 45.0 | $ | 44.6 | ||||||||
| Personnel costs eliminated on a pro forma basis as if eliminated for the full quarter | 2.0 | |||||||||||||||
| Pro forma Adjusted EBITDA | $ | 47.0 | ||||||||||||||
| Reconciliation of acquisition and restructuring related items and other included in Adjusted EBITDA: | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Acquisition and transaction related items | $ | - | $ | 0.4 | $ | - | $ | 2.2 | ||||||||
| Excess capacity and restructuring costs | 2.1 | 1.0 | 13.4 | 6.6 | ||||||||||||
| Litigation related items | - | - | 1.9 | 0.1 | ||||||||||||
| Reserve on customer receivable due to liquidation proceedings | - | - | - | 0.7 | ||||||||||||
| Investment in unmanned combat systems | - | 2.2 | 20.0 | 3.4 | ||||||||||||
| Costs related to pending customer change orders | - | - | - | 0.3 | ||||||||||||
| $ | 2.1 | $ | 3.6 | $ | 35.3 | $ | 13.3 | |||||||||
| Unaudited Segment Data | ||||||||||||||||
| (in millions) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenues: | ||||||||||||||||
| Unmanned Systems | $ | 25.5 | $ | 16.0 | $ | 75.8 | $ | 66.3 | ||||||||
| Kratos Government Solutions | 124.4 | 122.9 | 465.8 | 446.1 | ||||||||||||
| Public Safety & Security | 32.2 | 38.6 | 127.1 | 144.7 | ||||||||||||
| Total revenues | $ | 182.1 | $ | 177.5 | $ | 668.7 | $ | 657.1 | ||||||||
| Operating income (loss) from continuing operations: | ||||||||||||||||
| Unmanned Systems | $ | (0.1 | ) | $ | (8.9 | ) | $ | (27.7 | ) | $ | (16.2 | ) | ||||
| Kratos Government Solutions | 6.9 | 9.8 | 17.3 | 16.1 | ||||||||||||
| Public Safety & Security | (1.3 | ) | 1.6 | (3.0 | ) | 2.6 | ||||||||||
| Unallocated corporate expense, net | (0.9 | ) | (1.0 | ) | (5.2 | ) | (7.0 | ) | ||||||||
| Total operating income (loss) from continuing operations | $ | 4.6 | $ | 1.5 | $ | (18.6 | ) | $ | (4.5 | ) | ||||||
| Note: 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. | ||||||||||||||||
| Reconciliation of consolidated Adjusted EBITDA to Adjusted EBITDA by segment is as follows: | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Unmanned Systems | $ | 2.2 | $ | (0.3 | ) | $ | 2.2 | $ | 2.4 | |||||||
| % of revenue | 8.6 | % | -1.9 | % | 2.9 | % | 3.6 | % | ||||||||
| Kratos Government Solutions | 12.1 | 11.8 | 43.1 | 37.7 | ||||||||||||
| % of revenue | 9.7 | % | 9.6 | % | 9.3 | % | 8.5 | % | ||||||||
| Public Safety & Security | (0.9 | ) | 1.9 | (0.3 | ) | 4.5 | ||||||||||
| % of revenue | -2.8 | % | 4.9 | % | -0.2 | % | 3.1 | % | ||||||||
| Total Adjusted EBITDA | $ | 13.4 | $ | 13.4 | $ | 45.0 | $ | 44.6 | ||||||||
| % of revenue | 7.4 | % | 7.5 | % | 6.7 | % | 6.8 | % | ||||||||
| Reconciliation of consolidated Pro Forma Adjusted EBITDA to Pro Forma Adjusted EBITDA by segment is as follows: | ||||||||||||||||
| Unmanned Systems | $ | 2.2 | ||||||||||||||
| % of revenue | 2.9 | % | ||||||||||||||
| Kratos Government Solutions | 44.1 | |||||||||||||||
| % of revenue | 9.5 | % | ||||||||||||||
| Public Safety & Security | 0.7 | |||||||||||||||
| % of revenue | 0.6 | % | ||||||||||||||
| Total Pro Forma Adjusted EBITDA | $ | 47.0 | ||||||||||||||
| % of revenue | 7.0 | % | ||||||||||||||
| Unaudited Condensed Consolidated Balance Sheets | ||||||||||||||||
| (in millions) | ||||||||||||||||
| 2016 | 2015 | |||||||||||||||
| Assets | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 69.1 | $ | 28.5 | ||||||||||||
| Restricted cash | 0.5 | 0.7 | ||||||||||||||
| Accounts receivable, net | 229.4 | 206.8 | ||||||||||||||
| Inventoried costs | 55.4 | 55.6 | ||||||||||||||
| Prepaid expenses | 8.9 | 10.6 | ||||||||||||||
| Other current assets | 9.8 | 18.2 | ||||||||||||||
| Total current assets | 373.1 | 320.4 | ||||||||||||||
| Property, plant and equipment, net | 49.8 | 56.2 | ||||||||||||||
| 485.4 | 483.4 | |||||||||||||||
| Intangible assets, net | 32.6 | 36.5 | ||||||||||||||
| Other assets | 7.7 | 6.8 | ||||||||||||||
| Total assets | $ | 948.6 | $ | 903.3 | ||||||||||||
| Liabilities and Stockholders' Equity | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Accounts payable | $ | 52.7 | $ | 48.3 | ||||||||||||
| Accrued expenses | 50.0 | 33.1 | ||||||||||||||
| Accrued compensation | 39.1 | 36.8 | ||||||||||||||
| Accrued interest | 3.6 | 3.9 | ||||||||||||||
| Billings in excess of costs and earnings on uncompleted contracts | 41.8 | 42.3 | ||||||||||||||
| Other current liabilities | 7.7 | 6.1 | ||||||||||||||
| Other current liabilities of discontinued operations | 1.6 | 1.9 | ||||||||||||||
| Total current liabilities | 196.5 | 172.4 | ||||||||||||||
| Long-term debt principal, net of current portion | 431.0 | 444.1 | ||||||||||||||
| Other long-term liabilities | 41.0 | 28.5 | ||||||||||||||
| Other long-term liabilities of discontinued operations | 3.7 | 4.1 | ||||||||||||||
| Total liabilities | 672.2 | 649.1 | ||||||||||||||
| Commitments and contingencies | ||||||||||||||||
| Stockholders' equity: | ||||||||||||||||
| Common stock | - | - | ||||||||||||||
| Additional paid-in capital | 956.2 | 873.2 | ||||||||||||||
| Accumulated other comprehensive loss | (1.7 | ) | (1.4 | ) | ||||||||||||
| Accumulated deficit | (678.1 | ) | (617.6 | ) | ||||||||||||
| Total stockholders' equity | 276.4 | 254.2 | ||||||||||||||
| Total liabilities and stockholders' equity | $ | 948.6 | $ | 903.3 | ||||||||||||
| Unaudited Condensed Consolidated Statements of Cash Flows | ||||||||||||||||
| (in millions) | ||||||||||||||||
| Twelve Months Ended | ||||||||||||||||
| 2016 | 2015 | |||||||||||||||
| Operating activities: | ||||||||||||||||
| Net income (loss) | $ | (60.5 | ) | $ | 19.8 | |||||||||||
| Less: income (loss) from discontinued operations | (0.1 | ) | 53.0 | |||||||||||||
| Loss from continuing operations | (60.4 | ) | (33.2 | ) | ||||||||||||
| Adjustments to reconcile loss from continuing operations to net cash used in operating activities from continuing operations: | ||||||||||||||||
| Depreciation and amortization | 22.8 | 25.5 | ||||||||||||||
| Deferred income taxes | 4.7 | 0.9 | ||||||||||||||
| Stock-based compensation | 5.1 | 6.1 | ||||||||||||||
| Litigation related charges | 1.7 | - | ||||||||||||||
| Change in unused office space accrual | - | (2.3 | ) | |||||||||||||
| Amortization of deferred financing costs | 1.5 | 1.9 | ||||||||||||||
| Amortization of discount on Senior Secured Notes | 0.9 | 1.1 | ||||||||||||||
| Loss on extinguishment of debt | (0.2 | ) | 3.4 | |||||||||||||
| Provision for non-cash restructuring costs | 9.1 | - | ||||||||||||||
| Non-cash income tax benefit | - | (18.7 | ) | |||||||||||||
| Provision for doubtful accounts | 0.3 | 0.4 | ||||||||||||||
| Changes in assets and liabilities, net of acquisitions: | ||||||||||||||||
| Accounts receivable | (24.7 | ) | 10.3 | |||||||||||||
| Inventoried costs | (2.7 | ) | (8.2 | ) | ||||||||||||
| Prepaid expenses and other assets | 5.0 | (6.7 | ) | |||||||||||||
| Accounts payable | 2.9 | 2.9 | ||||||||||||||
| Accrued compensation | 2.3 | (4.4 | ) | |||||||||||||
| Accrued expenses | 16.5 | 0.6 | ||||||||||||||
| Accrued interest | (0.3 | ) | 1.5 | |||||||||||||
| Billings in excess of costs and earnings on uncompleted contracts | (0.4 | ) | (7.3 | ) | ||||||||||||
| Income tax receivable and payable | 1.2 | (3.1 | ) | |||||||||||||
| Other liabilities | 2.3 | (0.4 | ) | |||||||||||||
| Net cash used in operating activities from continuing operations | (12.4 | ) | (29.7 | ) | ||||||||||||
| Investing activities: | ||||||||||||||||
| Cash paid for acquisitions, net of cash acquired | (5.1 | ) | - | |||||||||||||
| Change in restricted cash | 0.3 | 4.7 | ||||||||||||||
| Proceeds from the sale of assets | 0.1 | 0.9 | ||||||||||||||
| Capital expenditures | (9.2 | ) | (11.3 | ) | ||||||||||||
| Net cash used in investing activities from continuing operations | (13.9 | ) | (5.7 | ) | ||||||||||||
| Financing activities: | ||||||||||||||||
| Payment of long-term debt | (14.1 | ) | (175.0 | ) | ||||||||||||
| Proceeds from the issuance of common stock | 76.2 | |||||||||||||||
| Cash paid for deferred acquisition consideration | - | (1.1 | ) | |||||||||||||
| Repayment of debt | (1.0 | ) | (42.0 | ) | ||||||||||||
| Proceeds from exercise of restricted stock units, employee stock options, and employee stock purchase plan | 2.0 | 3.4 | ||||||||||||||
| Net cash provided by (used in) financing activities from continuing operations | 63.1 | (214.7 | ) | |||||||||||||
| Net cash flows from continuing operations | 36.8 | (250.1 | ) | |||||||||||||
| Net operating and investing cash flows of discontinued operations | 4.1 | 245.3 | ||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (0.3 | ) | (0.2 | ) | ||||||||||||
| Net increase (decrease) in cash and cash equivalents | 40.6 | (5.0 | ) | |||||||||||||
| Cash and cash equivalents at beginning of period | 28.5 | 33.5 | ||||||||||||||
| Cash and cash equivalents at end of period | $ | 69.1 | $ | 28.5 | ||||||||||||
| Unaudited Non-GAAP Measures | ||||||||||||||||
| Computation of Adjusted Earnings Per Share | ||||||||||||||||
| (in millions, except per share data) | ||||||||||||||||
| Adjusted income (loss) from continuing operations and adjusted earnings per share (Adjusted EPS) are non-GAAP measure for reporting financial performance, exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. Management believes that exclusion of these items assists in providing a more complete understanding of the Company's underlying continuing operations results and trends and allows for comparability with our peer company index and industry. The Company uses these measures along with the corresponding GAAP financial measures to manage the Company's business and to evaluate its performance compared to prior periods and the marketplace. The Company defines adjusted income (loss) from continuing operations before amortization of intangible assets, stock-based compensation, foreign transaction gain/loss, contract design retrofit costs and acquisition and restructuring related items and other. The Company uses the estimated cash tax provision in computing adjusted earnings per share to reflect the benefit from the utilization of the Company's net operating losses. Adjusted EPS expresses adjusted income (loss) from continuing operations on a per share basis using weighted average diluted shares outstanding. | ||||||||||||||||
| The following table reconciles the most directly comparable GAAP financial measures to the non-GAAP financial measures. | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Loss from continuing operations before taxes | $ | (3.6 | ) | $ | (7.3 | ) | $ | (52.3 | ) | $ | (44.6 | ) | ||||
| Add: Amortization of intangible assets | 2.6 | 2.9 | 10.5 | 13.0 | ||||||||||||
| Add: Stock-based compensation | 0.9 | 0.6 | 5.1 | 6.1 | ||||||||||||
| Add: Loss/(gain) on extinguishment of debt | (0.2 | ) | - | (0.2 | ) | 3.4 | ||||||||||
| Add: Foreign transaction (gain)/loss | 0.1 | 0.2 | (0.4 | ) | 0.8 | |||||||||||
| Add: Contract design retrofit costs | - | 3.9 | - | 6.4 | ||||||||||||
| Add: Acquisition and restructuring related items and other | 2.1 | 3.6 | 35.3 | 13.3 | ||||||||||||
| Adjusted income (loss) from continuing operations before income taxes | 1.9 | 3.9 | (2.0 | ) | (1.6 | ) | ||||||||||
| Estimated cash tax provision | 0.7 | 0.4 | 2.4 | 2.6 | ||||||||||||
| Adjusted income (loss) from continuing operations | $ | 1.2 | $ | 3.5 | $ | (4.4 | ) | $ | (4.2 | ) | ||||||
| Diluted income per common share: | ||||||||||||||||
| Adjusted income (loss) from continuing operations | $ | 0.02 | $ | 0.06 | $ | (0.07 | ) | $ | (0.07 | ) | ||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Diluted | 67.0 | 60.1 | 61.3 | 58.7 | ||||||||||||
Press Contact:Yolanda White 858-812-7302 Direct Investor Information: 877-934-4687 investor@kratosdefense.com
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