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Wireless Facilities 8-K 2010 UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
March
10, 2010
Date of
Report (Date of earliest event reported)
Kratos
Defense & Security Solutions, Inc.
(Exact
name of registrant as specified in its charter)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
Item
2.02. Results of Operations and Financial Condition
On March
10, 2010, Kratos Defense & Security Solutions, Inc. (the “Company”) issued a
press release regarding the Company’s financial results for the fourth quarter
and fiscal 2009. The full text of the Company’s press release is
attached hereto as Exhibit 99.1.
Item 9.01. Exhibits.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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EXHIBIT
INDEX
4
Exhibit 99.1
KRATOS
DEFENSE & SECURITY SOLUTIONS ANNOUNCES FOURTH QUARTER AND FISCAL 2009
FINANCIAL RESULTS
SAN DIEGO, CA, March 10, 2010– Kratos Defense &
Security Solutions, Inc. (NASDAQ: KTOS), a leading National Security,
Information Technology Assurance and Public Safety Solutions provider, today
reported 2009 revenues of $334.5 million, a 16.9 percent increase over the prior
year. Kratos’ Government Solutions business segment, where Kratos performs its
Department of Defense and National Security related work, grew 23% year over
year. Fourth quarter 2009 revenues increased to $75.2 million, a 2.6
percent increase over fourth quarter 2008 revenues. The Company
reported fourth quarter 2009 EBITDA of $6.0 million, or 8.0% of revenues, a 13.2
percent increase over the previous year’s fourth quarter EBITDA of $5.3 million,
or 7.2% of revenues. Kratos’ Government Solutions business segment,
generated 2009 fourth quarter pro forma EBITDA of 8.7%. Also in the fourth
quarter, Kratos’ Public Safety and Security business segment returned to
profitability, and contributed to the overall EBITDA of the
Corporation. The Company generated fourth quarter pro forma EPS
of $.05, excluding a $0.7 million interest charge for the acceleration of
deferred financing costs, which resulted from the Company’s early pay down of
debt, with a net of tax impact of $0.4 million. Fourth quarter GAAP
net income was $0.4 million, and earnings per share of $0.02.
For 2009,
Kratos generated cash flow from operations of $26.2 million, with fourth quarter
cash flow generated from operations of $3.0 million. During 2009 the
Company reduced its days sales outstanding from 107 to 95 days.
As of
December 27, 2009, the Company had reduced its total bank debt to approximately
$54.4 million, down from $78.8 million at the end of 2008. Net debt
of the Company at December 27, 2009 was $46.4 million, including cash on hand at
year end of $9.9 million.
The
Company reported total backlog of approximately $565 million at December 27,
2009, and a qualified bid and proposal pipeline of $1.5 billion. The
Company does not include any amounts in backlog from its numerous GWAC, GSA or
other similar types of contract vehicles.
Fourth
quarter revenue highlights include contributions from Gun Range and Weapon
Systems related work at Dahlgren for the US Navy and other customers, various
Weapons Systems Sustainment, Preset and Reset work, Aegis Readiness Assessment
Vehicle (ARAV) work related to Ballistic Missile Defense
programs, Net Work Management, Protection and Information Assurance
program work, including the Company’s proprietary NeuralStar Product, C5ISR
related work including work on various Sensors, and Work Force Management,
Training and Performance Measurement Work on various contracts for the United
States Navy and other customers. Fourth quarter revenue also included
contributions from the Digital Fusion, Inc. (DFI) acquisition, which was
completed in December 2008. Revenue increases were offset by
reductions in the Company’s commercial and Public Safety & Security system
integration business, which has been negatively impacted by the current adverse
economic environment, as well as the planned and anticipated reductions of small
business and other set aside contract work from previously acquired companies,
pass through work and other contract work and the impact of in-sourcing by the
Government in the Company’s Government Solutions segment.
Eric
DeMarco, President and Chief Executive Officer, said “We are pleased with the
progress we have made in 2009, which we consider our first true year of
operations of the Company we are today. We have achieved the EBITDA
margins of our comparative peer group, the Corporation has returned to sustained
operational profitability and cash flow generation, and in 2009 we significantly
reduced our debt. As we begin 2010, with the recent release of the
2011 DoD Budget Proposal and the most recent Quadrennial Defense Review, we
believe that our business is well positioned in areas that are National Security
Priorities.”
Kratos’
contractual and operational highlights during the quarter included:
DeMarco
concluded, “We completed 2009 with approximately $335 million in revenues, and
the most solid bid and proposal pipeline in our Company’s
history. Though our fourth quarter revenue was somewhat impacted by
continued Government procurement and contract award delays, we exceeded our
profitability targets. The contract delay issue seems to be abating
somewhat with the beginning of 2010, and we have now received a very large, $48
million fully funded weapons system contract, and a number of other awards in
the first quarter which we will be more formally announcing
shortly. Additionally, we are currently tracking and working on a
number of new opportunities which we intend to bid on in the future, some of
which are significantly larger contracts than we were previously qualified to
practically pursue. We will also continue to reduce lower margin
pass-through revenues to enhance our operating margins and improve liquidity,
and as we have stated before, in 2010 we expect that the effect of remaining
acquired small business contracts which we can no longer perform in the prime
position will be completed. Accordingly, we are expecting 2010 EBITDA
of $27 to $29 million, and we expect our 2010 revenues to be in the range of
$340 to $350 million, which reflects an implied organic growth rate of
approximately 10 percent, excluding the non continuing small business work we
generated in 2009. We also expect 2010 Operating Income, Net Income
and EPS all to improve above 2009 performance.”
Conference
Call
There
will be an analyst and investor conference call conducted by the Kratos
management team to discuss the fourth quarter and fiscal 2009 financial results
today at 2:00 p.m., Pacific Time/5:00 p.m. Eastern Time. The live
discussion can be accessed via webcast on the Internet at www.kratosdefense.com. There
will be a replay of the webcast available on the website for those shareholders
and analysts who are unable to listen to the live call.
The
financial results included in this release are
unaudited. The audited financial statements of the Company
for the year ended December 27, 2009 will be included in Kratos’ Annual Report
Form 10-K.
About
Kratos Defense & Security Solutions
Kratos
Defense & Security Solutions, Inc. (Nasdaq: KTOS) provides mission critical
engineering, IT services and war fighter solutions for the U.S. federal
government and for state and local agencies. Principal services include C5ISR,
weapon systems sustainment, military weapon range operations and technical
services, network engineering services, information assurance and cyber security
solutions, security and surveillance systems, and critical infrastructure design
and integration. The Company is headquartered in San Diego, California, with
resources located throughout the U.S. and at key strategic military locations.
News and information are available at www.KratosDefense.com.
Notice
Regarding Forward-Looking Statements
This news
release and filing contains certain forward-looking statements that involve
risks and uncertainties, including, without limitation, expressed or implied
statements concerning the Company’s expectations regarding future financial
performance, bid and proposal pipeline, performance of key contracts, market
developments and timing and impact of anticipated lawsuit settlement. Such
statements are only predictions, and the Company’s actual results may differ
materially. Factors that may cause the Company’s results to differ include, but
are not limited to: risks of adverse regulatory action or litigation; risks
associated with debt leverage; risks that our cost cutting initiatives will not
provide the anticipated benefits; risks that changes, cutbacks or delays in
spending by the U.S. Department of Defense may occur, which could cause delays
or cancellations of key government contracts; risks that changes may occur in
Federal government (or other applicable) procurement laws, regulations, policies
and budgets; risks of increases in the Federal Government initiatives related to
in-sourcing; risks related to our compliance with applicable contracting and
procurement laws, regulations and standards; risks relating to contract
performance; changes in the competitive environment (including as a result of
bid protests); failure to successfully consummate acquisitions or integrate
acquired operations and competition in the marketplace which could reduce
revenues and profit margins; risks that potential future goodwill impairments
will adversely affect our operating results; risks that anticipated tax benefits
will not be realized in accordance with our expectations; risks that a change in
ownership if our stock could limit future utilization of our Net Operating
Losses; and risks that the current economic environment will adversely impact
our business. The Company undertakes no obligation to update any forward-looking
statements. These and other risk factors are more fully discussed in the
Company’s Annual Report on Form 10-K for the period ended December 28, 2008, and
in other filings made with the Securities and Exchange Commission.
Note
Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth
herein, including EPS excluding interest charge, EBITDA and pro forma EBITDA and
the associated margin rates, are considered non-GAAP financial measures.
Kratos believes this information is useful to investors because it provides a
basis for measuring the Company’s available capital resources, the operating
performance of the Company’s business and the Company’s cash flow, excluding
extraordinary items and non-cash items that would normally be included in the
most directly comparable measures calculated and presented in accordance with
generally accepted accounting principles. The Company’s management uses
these non-GAAP financial measures along with the most directly comparable GAAP
financial measures in evaluating the Company’s operating performance and capital
resources and cash flow. Non-GAAP financial measures should not be
considered in isolation from, or as a substitute for, financial information
presented in compliance with GAAP, and non-financial measures as reported by the
Company may not be comparable to similarly titled amounts reported by other
companies.
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