XML 32 R17.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Stockholders' Equity | 12 Months Ended
--- | ---
Dec. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Stockholders' Equity | Stockholders’ Equity (a) Common Stock On November 23, 2016, the Company sold approximately 13.4 million shares of its common stock at a purchase price of $6.00 per share in an underwritten public offering. The Company received gross proceeds of approximately $80.5 million. After deducting underwriting fees and other offering expenses, the Company received approximately $76.2 million in net proceeds. The Company used $14.1 million of the net proceeds from this transaction to redeem approximately $14.5 million of its Notes. On March 7, 2017 and September 12, 2017, the Company sold approximately 11.9 million and 16.1 million, respectively, shares of common stock at a purchase price of $7.25 and $12.25, respectively, per share in underwritten public offerings. The Company received gross proceeds of approximately $283.5 million. After deducting underwriting fees and other offering expenses, the Company received approximately $269.1 million in net proceeds. The Company used the net proceeds to repurchase and extinguish $135.5 million of its outstanding 7% Notes. The remainder of the funds will be used for general corporate purposes, including funding expected growth and strategic investments in the Company’s high performance unmanned aerial vehicle business area and other new programs under contract. (b) Stock Option Plans and Restricted Stock Unit Plans In March 2014 the Company’s board of directors (the “Board”) approved the 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan is the successor to the Kratos Defense & Security Solutions, Inc. 2011 Equity Incentive Plan, the Kratos Defense & Security Solutions, Inc. Amended and Restated 2005 Equity Incentive Plan, the Kratos Defense & Security Solutions, Inc. 2000 Nonstatutory Stock Option Plan, the Kratos Defense & Security Solutions, Inc. 1999 Equity Incentive Plan, the Amended and Restated Integral Systems, Inc. 2008 Stock Incentive Plan, the Amended and Restated Herley Industries, Inc. 2010 Stock Plan, the Herley Industries, Inc. 2003 Stock Option Plan, the Henry Bros. Electronics, Inc. 2007 Stock Option Plan, the Henry Bros. Electronics, Inc. 2006 Stock Option Plan, the Amended and Restated 2005 Digital Fusion, Inc. Equity Incentive Plan, the 2000 Digital Fusion, Inc. Stock Option Plan, the 1999 Digital Fusion, Inc. Stock Option Plan, and the 1998 Digital Fusion, Inc. Stock Option Plan (collectively, the “Prior Plans”). The 2014 Plan became effective May 14, 2014 and no additional stock awards will be granted under the Prior Plans as of April 1, 2014. All outstanding stock awards granted subject to the terms of the Prior Plans will continue to be subject to the terms and conditions as set forth in the agreements evidencing such stock awards and the terms of the respective Prior Plans. Any shares subject to outstanding stock awards granted under the Prior Plans or granted outside of a Prior Plan that, at any time after March 27, 2014, (i) expire or terminate for any reason prior to exercise or settlement; (ii) are forfeited, canceled or otherwise returned to the Company because of the failure to meet a contingency or condition required to vest such shares; or (iii) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award (collectively, the “Returning Shares”) will immediately be added to the share reserve of the 2014 Plan and become available for issuance pursuant to stock awards granted under the 2014 Plan. As of March 27, 2014, there were 2,306,256 shares remaining available for issuance under the Prior Plans. The total number of awards outstanding under all of the Prior Plans and outside of any Prior Plan was 5,511,322 as of March 27, 2014. The 2014 Plan decreased the number of shares remaining available for issuance under its equity compensation plans from 2,306,256 to 1,550,000, although, per the 2014 Plan, up to 5,511,322 shares subject to outstanding awards under the Prior Plans and non-plan grants could potentially become Returning Shares available for issuance under the 2014 Plan. In May 2017, the Company’s shareholders approved an amendment to the 2014 Plan to increase the aggregate number of shares that may be issued under the plan by 2,500,000 shares. The Board may grant equity-based awards to selected employees, directors and consultants of the Company pursuant to its 2014 Plan. As of December 30, 2018, there were 2,864,476 shares reserved for issuance for future grant under the 2014 Plan. The Board may amend or terminate the 2014 Plan at any time. Certain amendments, including an increase in the share reserve, require stockholder approval. Generally, options and restricted stock units outstanding vest over periods not exceeding ten years. When the Company grants stock options, they are granted with a per share exercise price not less than the fair market value of the Company’s common stock on the date of grant, and generally would be exercisable for up to ten years from the grant date. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model or a trinomial lattice options pricing model with the weighted average assumptions (annualized percentages) included in the following table. Awards with graded vesting are recognized using the straight-line method with the following assumptions:
| 2018 |  | 2017 |  | 2016
Stock Options |  |  |  |  |
Expected life | 10.0 |  | 10.0 |  | 10.0
Risk-free interest rate(1) | 2.9% - 3.2% |  | 2.2% - 2.5% |  | 1.8% - 2.4%
Volatility(2) | 52.9% - 53.4% |  | 53.8% - 55.0% |  | 55.2% - 55.8%
Forfeiture rate(3) | 5.1% |  | 5.0% |  | 5.0%
Dividend yield(4) | —% |  | —% |  | —%
(1) The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant with a term equal to the expected term of the options. (2) In 2018, 2017, and 2016, the Company estimated implied volatility based upon trailing volatility. (3) Forfeitures are estimated at the time of grant based upon historical information. Forfeitures will be revised, if necessary, in subsequent periods if actual forfeitures differ from estimates. (4) The Company has no history or expectation of paying dividends on its common stock. A summary of the status of the Company’s stock option plan as of December 30, 2018, and changes in options outstanding under the plan for the year ended December 30, 2018, is as follows:
|  | Number of Shares Under Option |  | Weighted-Average Exercise Price per Share |  | Weighted- Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value
|  | (000’s) |  |  |  |  |  | (000’s)
Options outstanding at December 31, 2017 |  | 899 |  |  | $ | 7.82 |  |  | 4.4 |  | $ | 4,224.8 |
Granted |  | 5 |  |  | $ | 11.78 |  |  |  |  |
Exercised |  | (10 | ) |  | $ | 8.71 |  |  |  |  |
Forfeited or expired |  | (126 | ) |  | $ | 24.01 |  |  |  |  |
Options outstanding at December 30, 2018 |  | 768 |  |  | $ | 5.17 |  |  | 4.2 |  | 6,587.5 |
Options exercisable at December 30, 2018 |  | 767 |  |  | $ | 5.16 |  |  | 4.1 |  | $ | 6,586.5 |
As of December 30, 2018, there was $0.0 of total unrecognized stock-based compensation expense related to nonvested options. Upon exercise of an option, the Company issues new shares of common stock. During the years ended December 30, 2018, December 31, 2017, and December 25, 2016, the following values relate to the grants and exercises under the Company’s option plans:
| 2018 |  | 2017 |  | 2016
Weighted average grant date fair value of options granted | $ | 7.54 |  |  | $ | 6.39 |  |  | $ | 3.36 |
Total intrinsic value of options exercised (in thousands) | $ | 40.6 |  |  | $ | 67.1 |  |  | $ | — |
The following table summarizes the Company’s Restricted Stock Unit activity:
|  | Restricted Stock Units (000’s) |  | Weighted-Average Grant Date Fair Value
Nonvested balance at December 31, 2017 |  | 2,258 |  |  | $ | 6.83 |
Grants |  | 1,119 |  |  | $ | 11.08 |
Vested |  | (84 | ) |  | $ | 9.03 |
Forfeitures |  | — |  |  | $ | — |
Vested but not released |  | — |  |  | $ | — |
Nonvested balance at December 30, 2018 |  | 3,293 |  |  | $ | 8.22 |
As of December 30, 2018, there was $13.1 million of total unrecognized stock-based compensation expense related to nonvested restricted stock units which is expected to be recognized over a remaining weighted-average vesting period of 2.4 years. The fair value of restricted stock unit awards that vested in 2018, 2017, and 2016 was $0.8 million, $6.3 million, and $4.7 million, respectively.
(c) | Amended and Restated Employee Stock Purchase Plan
In August 1999, the Board approved the 1999 Employee Stock Purchase Plan (as amended from time to time, the “Purchase Plan”). A total of 5,200,000 shares of common stock had been previously approved for reservation of the Company’s common stock for purchase by employees under the Purchase Plan. In May 2017, the Company’s shareholders approved an amendment to the Purchase Plan to increase the maximum number of shares of common stock that may be issued under the Purchase Plan by 3,000,000 shares. The Purchase Plan qualifies as an employee stock purchase plan within the meaning of Section 423 of the Internal Revenue Service Code. Unless otherwise determined by the Compensation Committee of the Board, all employees are eligible to participate in the Purchase Plan, so long as they are employed by the Company (or a subsidiary designated by the Board) for at least 20 hours per week and were customarily employed by the Company (or a subsidiary designated by the Board) for at least 5 months per calendar year. Employees who actively participate in the Purchase Plan are eligible to have up to 15% of their earnings for each purchase period withheld pursuant to the Purchase Plan. The amount that is withheld is used at various purchase dates within the offering period to purchase shares of common stock. The price paid for common stock at each such purchase date is equal to the lower of 85% of the fair market value of the common stock at the commencement date of that offering period or 85% of the fair market value of the common stock on the relevant purchase date. Employees are also able to end their participation in the offering at any time during the offering period, and participation ends automatically upon termination of employment. From the Purchase Plan’s inception through December 30, 2018, the cumulative number of shares of common stock that have been issued under the Purchase Plan is 5.4 million and approximately 2.8 million shares are available for future issuance. During fiscal 2018, approximately 371,000 shares were issued under the plan at an average price of $9.54. The fair value of Kratos’ Purchase Plan shares for 2018 was estimated using the Black-Scholes option pricing model. The assumptions and resulting fair values of options granted for 2018, 2017 and 2016 were as follows:
| Offering Periods January 1 to December 31 2018 |  | Offering Periods January 1 to December 31, 2017 |  | Offering Periods January 1 to December 31, 2016
Expected term (in years)(1) | 0.5 |  | 0.5 |  | 0.5
Risk-free interest rate(2) | 1.53% - 2.11% |  | 0.62% - 1.14% |  | 0.36% - 0.49%
Expected volatility(3) | 40.24% - 44.83% |  | 44.38% - 53.70% |  | 53.00% - 55.55%
Expected dividend yield(4) | —% |  | —% |  | —%
Weighted average grant-date fair value per share | $3.03 |  | $2.51 |  | $1.23
(1) | The expected term is equivalent to the offering period.
(2) | The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant with a term equal to the expected term.
(3) The Company estimated implied volatility based upon trailing volatility. (4) The Company has no history or expectation of paying dividends on its common stock. As of December 30, 2018, there was no material unrecognized compensation expense related to the Purchase Plan.

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for accounts comprising shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income, and compensation-related costs for equity-based compensation. Includes, but is not limited to, disclosure of policies, compensation plan details, equity-based arrangements to obtain goods and services, deferred compensation arrangements, and employee stock purchase plan details. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
Name: | us-gaap_ShareholdersEquityAndShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration