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United States securities and exchange commission logo
December 14, 2020
Deanna H. Lund
Chief Financial Officer
KRATOS DEFENSE & SECURITY SOLUTIONS, INC.
10680 Treena St., Suite 600
San Diego, CA 92131
Re: KRATOS DEFENSE &
SECURITY SOLUTIONS, INC.
Form 10-K for
Fiscal Year Ended December 29, 2019
Filed February 24,
2020
Form 8-K Filed
October 29, 2020
File No. 001-34460
Dear Ms. Lund:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 8-K Filed October 29, 2020
Exhibit 99.1
1. We note throughout your
earnings release you present non-GAAP financial measures with
greater prominence than
the most directly comparable GAAP measure. For example, we
note you consistently
present Adjusted EBITDA before GAAP measures, you discuss
Adjusted EBITDA without
any discussion of net income, and you discuss Adjusted EPS
before you discuss GAAP
EPS. We also note that you discuss forecasted Adjusted
EBITDA and Free Cash
Flow in your Financial Guidance section without a corresponding
discussion of the most
directly comparable forward-looking GAAP measures. Please
revise your disclosures
to comply with Question 102.10 of the Compliance and Disclosure
Interpretations on
Non-GAAP Financial Measures.
2. We note that you have
elected to disclose what appears to be a key performance indicator,
Deanna H. Lund
FirstName LastNameDeanna H. LundSOLUTIONS, INC.
KRATOS DEFENSE & SECURITY
Comapany14,
December NameKRATOS
2020 DEFENSE & SECURITY SOLUTIONS, INC.
December
Page 2 14, 2020 Page 2
FirstName LastName
your book to bill ratio. Please disclose how you compute the book to
bill ratio and explain
the significance of this ratio in understanding your business. Refer
to the metrics guidance
set forth in SEC Release No. 33-10751.
3. We note that you present adjusted income from continuing operations
and adjusted
income from continuing operations per diluted common share. We also
note your
disclosure that you use the estimated cash tax provision in computing
income tax expense
to reflect the benefit from the utilization of net operating losses.
Since it appears to us that
these are non-GAAP performance measures, as they do not appear to
fully comply with
the requirements for liquidity measures, it appears to us that your
determination of income
tax expenses related to these measures does not comply with Question
102.11 of the
Compliance and Disclosure Interpretations on Non-GAAP Financial
Measures. Please
revise your non-GAAP financial measures to comply with Question 102.11
or explain
why you believe your current measures are appropriate.
4. We note that you disclose Adjusted EBITDA for each reportable segment.
Please
provide reconciliations to the most directly comparable GAAP measure,
which appears to
be segment operating income, as required by Item 10(e)(1) of
Regulation S-K.
Form 10-K Filed February 24, 2020
General
5. We note that your forum selection provision identifies the Court of
Chancery of the State
of Delaware as the exclusive forum for certain litigation, including
any derivative
action. Please disclose whether this provision applies to actions
arising under the
Securities Act or Exchange Act. In that regard, we note that Section
27 of the Exchange
Act creates exclusive federal jurisdiction over all suits brought to
enforce any duty or
liability created by the Exchange Act or the rules and regulations
thereunder, and Section
22 of the Securities Act creates concurrent jurisdiction for federal
and state courts over all
suits brought to enforce any duty or liability created by the
Securities Act or the rules and
regulations thereunder. If the provision applies to Securities Act
claims, please also state
that there is uncertainty as to whether a court would enforce such
provision and that
investors cannot waive compliance with the federal securities laws and
the rules and
regulations thereunder.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Deanna H. Lund
KRATOS DEFENSE & SECURITY SOLUTIONS, INC.
December 14, 2020
Page 3
You may contact SiSi Cheng at 202-551-5004 or Anne Mcconnell at
202-551-3709 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Sergio Chinos at 202-551-7844 or Asia Timmons-Pierce at 202-551-3754
with any other
questions.
FirstName LastNameDeanna H. Lund Sincerely,
Comapany NameKRATOS DEFENSE & SECURITY SOLUTIONS, INC.
Division of Corporation Finance
December 14, 2020 Page 3 Office of Manufacturing
FirstName LastName